<PAGE>
As filed with the Securities and Exchange Commission on July 6, 1999.
Registration No. 333-73435
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
---------------
AMENDMENT NO. 3
TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
CENTENNIAL CELLULAR CORP.
CENTENNIAL CELLULAR OPERATING CO. LLC
(Exact Name of Registrant as Specified in Its Charter)
Delaware 4841 06-1158179
Delaware 4841 13-4035089
(State or Other (Primary Standard (I.R.S. Employer
Jurisdiction of Industrial Identification Number)
Incorporation or Classification Code
Organization) Number)
---------------
1305 Campus Parkway
Neptune, New Jersey 07753
(732) 919-1000
(Address, Including Zip Code, and Telephone Number, Including Area Code,
of Registrants' Principal Executive Offices)
---------------
Michael J. Small
Chief Executive Officer
Centennial Cellular Corp.
1305 Campus Parkway
Neptune, New Jersey 07753
(732) 919-1000
(Name, Address, Including Zip Code, and Telephone Number, Including
Area Code, of Agent For Service)
---------------
with a copy to:
Robert A. Schwed, Esq.
Reboul, MacMurray, Hewitt, Maynard & Kristol
45 Rockefeller Plaza
New York, New York 10111
(212) 841-5700
---------------
Approximate date of commencement of proposed sale to the public: As soon
as practicable after the effective date of this Registration Statement.
If 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, check the following box. [_]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]
---------
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
---------
CALCULATION OF REGISTRATION FEE
<TABLE>
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
<CAPTION>
Title Of Each Proposed Maximum Proposed Maximum
Class Of Securities To Amount To Be Offering Aggregate Amount Of
Be Registered Registered Price Per Note(1) Offering Price(1) Registration Fee
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
10 3/4% Senior
Subordinated Notes due
2008, Series B $370,000,000 100% $370,000,000 $102,860*
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
</TABLE>
* Fee previously paid.
The registrants hereby amend this registration statement on such date or
dates as may be necessary to delay its effective date until the registrants
shall file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+This information in this prospectus is not complete and may be changed. We +
+may not sell these securities until the registration statement filed with the +
+Securities and Exchange Commission is effective. This prospectus is not an +
+offer to sell these securities and it is not soliciting an offer to buy these +
+securities in any state where the offer or sale is not permitted. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED JULY 6, 1999
PROSPECTUS
Centennial Cellular Corp. and
Centennial Cellular Operating Co. LLC,
Exchange Offer for $370,000,000
10 3/4% Senior Subordinated Notes due 2008
-----------
This is an offer to exchange the outstanding, unregistered 10 3/4% Senior
Subordinated Notes of Centennial Cellular Corp. and Centennial Cellular
Operating Co. LLC you now hold for new, substantially identical 10 3/4% Senior
Subordinated Notes that will be free of the transfer restrictions that apply to
the old notes. This offer will expire at 5:00 p.m., New York City time, on
, 1999, unless we extend it.
The new notes will not trade on any established exchange.
A description of those risks begins on page 13 of this prospectus.
This prospectus is dated , 1999.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Where You Can Find More Information........................................ 2
Summary of the Prospectus.................................................. 3
Risk Factors............................................................... 13
This Prospectus Includes Forward-Looking Statements........................ 24
The Merger................................................................. 25
Use of Proceeds............................................................ 27
The Exchange Offer......................................................... 29
Capitalization............................................................. 36
Selected Financial and Operating Information............................... 37
Unaudited Pro Forma Financial Information.................................. 41
Business................................................................... 46
Management................................................................. 50
Principal Stockholders..................................................... 56
Certain Relationships and Related Transactions............................. 58
Description of Certain Indebtedness........................................ 66
Description of the New Notes............................................... 72
Certain Federal Income Tax Considerations.................................. 129
Plan of Distribution....................................................... 129
Incorporation of Material Document by Reference............................ 130
Legal Matters.............................................................. 130
Experts.................................................................... 131
</TABLE>
----------------
WHERE YOU CAN FIND MORE INFORMATION
We have filed with the SEC a registration statement on Form S-4 under the
Securities Act concerning the new notes. For further information concerning
Centennial Cellular Corp. and the notes, we refer you to the registration
statement and the documents filed as exhibits to the registration statement.
Centennial Cellular Corp. also files annual, quarterly and special
reports, proxy and information statements and other information with the SEC.
You may read and copy any document we file with the SEC, including the
registration statement, at the SEC's public reference room at Judiciary Plaza,
450 Fifth Street, N.W., Washington, D.C. 20549, and at the SEC's web site
(http://www.sec.gov). You may also request copies of such documents, upon
payment of a duplicating fee, by writing to the SEC at 450 Fifth Street, N.W.,
Washington, D.C. 20549. Centennial's common stock is listed on the Nasdaq
National Market. You may read reports and other information filed by Centennial
with the Nasdaq National Market at the offices of the National Association of
Securities Dealers, Inc., 1735 K Street, N.W., Washington, D.C. 20006.
This prospectus incorporates important business and financial information
about Centennial and Centennial Cellular Operating that is not included in, or
delivered with, the prospectus. This information is available without charge to
you by making a written or oral request to Centennial at 1305 Campus Parkway,
Neptune, New Jersey 07753, Attention: Chief Financial Officer (telephone: (732)
919-1000). To obtain timely delivery of such information, you should request
the information no later than five business days prior to the expiration date
of the exchange offer.
----------------
2
<PAGE>
SUMMARY OF THE PROSPECTUS
The following summary contains a general discussion of our businesses,
the offering and summary financial information. We encourage you to read this
entire prospectus for a more complete understanding of Centennial, Centennial
Cellular Operating and the exchange offer. Centennial Cellular Operating became
a wholly-owned subsidiary of Centennial on January 7, 1999 as a result of the
merger of Centennial and CCW Acquisition Corp.
Centennial Cellular Corp.
Our company is one of the largest independent wireless telecommunications
service providers in the United States and Puerto Rico with approximately
426,700 subscribers as of February 28, 1999. Our domestic rural cellular
systems provide service in areas with an aggregate population of 5.8 million,
adjusted for our percentage ownership in entities serving these areas, and
these systems cover approximately 81,645 square miles. This adjusted population
is commonly referred to as net pops. Our subsidiary in Puerto Rico is a
provider of wireless, local telephone, long distance and internet
communications services in Puerto Rico. These operations use a license that
covers a population of 3.8 million net pops in Puerto Rico and the U.S. Virgin
Islands and a competitive local telephone service license to operate in Puerto
Rico. In addition, we own minority shares, representing approximately 1.2
million net pops, in certain other cellular operations controlled and managed
by other cellular operators.
Our Principal Executive Offices
The address of our principal executive offices is 1305 Campus Parkway,
Neptune, New Jersey 07753. Our telephone number is (732) 919-1000. Centennial
is the sole member of Centennial Cellular Operating and holds all of its
material assets through Centennial Cellular Operating.
Risk Factors
You should consider all of the information in this prospectus before
tendering your outstanding notes in the exchange offer. The risks of an
investment in Centennial and Centennial Cellular Operating include our
substantial indebtedness, our history of net losses, competitive conditions and
the potential for adverse regulatory impact. See the "Risk Factors" section of
this prospectus for a discussion of these and other risks involved in an
investment in Centennial and Centennial Cellular Operating.
The Merger
On January 7, 1999, Centennial merged with CCW acquisition Corp. As a
result of the merger, a new group of equity investors acquired a 92.9%
ownership interest in Centennial. The remaining 7.1% interest is owned by
public stockholders. We entered into several financings, including the issuance
of the old notes, in order to fund the merger. See "The Merger" for a more
complete description.
3
<PAGE>
Summary of the Terms of the Exchange Offer
On December 14, 1998, we completed the private offering of $370.0 million
principal amount of our 10 3/4% Senior Subordinated Notes due 2008. In
connection with that offering, we agreed, among other things, to deliver to you
this prospectus and to use our best efforts to complete the exchange offer by
July 6, 1999.
The Exchange Offer
We are offering to exchange an equal principal amount of our 10 3/4%
Senior Subordinated Notes due 2008, which have been registered under the
Securities Act, for our outstanding 10 3/4% Senior Subordinated Notes due 2008.
In order to be exchanged, an outstanding note must be properly tendered and
accepted. You may tender outstanding notes only in integral multiples of
$1,000.
As of this date, there is $370.0 million principal amount of notes
outstanding. The exchange offer will be completed regardless of whether all or
less than all of the outstanding notes are tendered for exchange.
Expiration Date
The exchange offer will expire at 5:00 p.m., New York City time, ,
1999, unless we decide to extend the expiration date.
Procedures for Tendering Outstanding Notes
If you wish to tender your outstanding notes for exchange, you must
transmit on or before the expiration date a properly completed and executed
copy of the letter of transmittal delivered with this prospectus, or a
facsimile of the letter of transmittal, and all other documents required by the
letter of transmittal, together with certificates for your outstanding notes,
to Norwest Bank Minnesota, National Association, as exchange agent for the
exchange offer. In the alternative, you can tender your old notes by book-entry
delivery following the procedures described in this prospectus in "The Exchange
Offer" section under the heading "Procedures for Tendering."
Guaranteed Delivery Procedures
If you wish to tender your outstanding notes and, before the expiration
date of the exchange offer,
. your outstanding notes are not immediately available,
. you cannot deliver your outstanding notes, the letter of transmittal
or any other required documents to Norwest Bank Minnesota, National
Association, as exchange agent, or
. you cannot complete the procedures for book-entry transfer,
you may tender your outstanding notes by following the guaranteed delivery
procedures described in "The Exchange Offer" section under the heading
"Guaranteed Delivery Procedures."
4
<PAGE>
Special Procedures for Beneficial Owners
If you wish to tender outstanding notes that are registered in the name
of a broker, dealer, commercial bank, trust company or other nominee, you
should promptly instruct the registered holder to tender on your behalf. If
you wish to tender on your own behalf, you must, prior to completing the
procedures described above under the heading "Procedures for Tendering
Outstanding Notes," either register ownership of the outstanding notes in your
name or obtain a properly completed bond power from the registered holder.
Withdrawal Rights
You may withdraw the tender of your notes at any time prior to 5:00 p.m.,
New York City time, on the expiration date.
Certain U.S. Federal Income Tax Consequences
The exchange of new notes for outstanding notes in the exchange offer
will generally not be a taxable event for United States federal income tax
purposes.
Conditions to the Exchange Offer
The exchange offer is not subject to any conditions other than that it
does not violate applicable law or any applicable interpretation of the SEC
staff.
Use of Proceeds
We will not receive any proceeds from the issuance of the new notes in
the exchange offer.
Summary of Ability to Resell the New Notes
We believe that the new notes issued in the exchange offer may be offered
for resale, resold or otherwise transferred by you without compliance with the
registration and prospectus delivery provisions of the Securities Act, but
only if:
. you acquire the new notes in the ordinary course of business,
. you are not participating, do not intend to participate and have no
arrangement or understanding with any person to participate in a
distribution of the new notes, and
. you are not an affiliate of ours, as the term affiliate is defined in
Rule 405 under the Securities Act and which may include our executive
officers and directors, another person having control over our
operations or management or an entity we control.
By executing and delivering the letter of transmittal, you will represent
to us that the above statements by you are true. If any of these statements
are untrue, you may not resell your notes unless an exemption from the
registration provisions of the Securities Act is available for the transfer or
you resell your notes in compliance with the prospectus delivery provisions of
the Securities Act.
5
<PAGE>
Each broker-dealer that is issued new notes in the exchange offer for its
own account in exchange for outstanding notes which were acquired by the
broker-dealer as a result of market-making or other trading activities, must
acknowledge that it will deliver a prospectus meeting the requirements of the
Securities Act in connection with any resale of the new notes. A broker-dealer
may use this prospectus, as it may be amended or supplemented from time to
time, for an offer to resell, resale or similar transfer of the new notes
issued to it in the exchange offer.
Summary Description of the New Notes
Notes Offered
We are offering $370.0 million aggregate principal amount of 10 3/4%
Senior Subordinated Notes due 2008. The form and terms of the new notes will be
the same as the form and terms of the outstanding notes except that:
. the new notes will bear a different CUSIP number from the
outstanding notes,
. the new notes will have been registered under the Securities Act
and, therefore, will not bear legends restricting their transfer,
and
. you will not be entitled to any exchange or registration rights with
respect to the new notes.
The new notes will evidence the same debt as the outstanding notes, will
be entitled to the benefits of the indenture governing the outstanding notes
and will be treated under the indenture as a single class with the outstanding
notes.
Issuers
Centennial Cellular and its wholly owned subsidiary, Centennial Cellular
Operating. Centennial Cellular and Centennial Cellular Operating are each
liable for repayment of the 10 3/4% Senior Subordinated Notes. Centennial
Cellular is a holding company and does not conduct any direct business
operations.
Maturity
December 15, 2008.
Interest Payment Dates
We will pay interest on the notes on June 15 and December 15 of each
year, beginning June 15, 1999.
6
<PAGE>
Ranking
The notes are subordinated to all our senior debt, including all our debt
under our senior secured credit facility. The notes rank equally with any
senior subordinated debt, and rank senior to all our subordinated debt. Both
Centennial and Centennial Operating are holding companies. The notes are
neither guaranteed by our subsidiaries nor secured by their assets, so they
will effectively rank below all debt of our subsidiaries, including money we
owe to our suppliers. Our ability to pay interest on the notes and to redeem
the notes at maturity will depend on whether our subsidiaries can pay dividends
and make other distributions to us.
On February 28, 1999, the notes:
. were subordinated to $933.9 million of senior debt under the credit
facility, and
. were effectively ranked junior to the guarantees of $933.9 million
of this debt by the subsidiaries of Centennial Cellular Operating,
other than a portion of such debt that was borrowed directly by our
subsidiary in Puerto Rico, which has not initially guaranteed this
debt.
The notes are senior to a face amount of $180 million of subordinated
notes issued to WCAS Capital Partners III, L.P. The only debt of Centennial,
without its subsidiaries, as of February 28, 1999 were these subordinated
notes, Centennial's guarantee under the credit facility and the notes for which
the exchange offer is being made.
Security
At the time the outstanding notes were issued, we used a portion of the
proceeds to purchase a portfolio of government securities in an amount
sufficient to pay the first three interest payments on the notes. We pledged
this portfolio of securities for your benefit and the benefit of other holders
of the notes. The notes are otherwise unsecured. You should also read the
section captioned "Description of the New Notes" under the heading "Security."
Optional Redemption
We may redeem any of the notes on or after December 15, 2003 at the
redemption prices set forth in the "Description of the New Notes" section under
the heading "Optional Redemption."
Prior to December 15, 2001, we may redeem up to 35% of the aggregate
principal amount of the then outstanding notes with the net proceeds of one or
more public equity offerings or strategic equity offerings at 110.75% of their
principal amount, plus accrued interest.
Change of Control
If we experience specific kinds of changes in control, we must offer to
repurchase any then-outstanding notes at 101% of their principal amount, plus
any accrued interest to the date of repurchase. In addition, if the change of
control occurs before December 15, 2003, we may elect to redeem the notes at
100% of their principal amount, plus interest, if any, to the date of
redemption, plus a computed premium, which will not be less than 5.375%.
7
<PAGE>
Covenants
The indenture governing the notes contains covenants that, among other
things, limit our ability and the ability of our restricted subsidiaries to:
. incur additional debt,
. pay dividends on, redeem or repurchase our capital stock,
. make investments,
. restrict dividend or other payments to us,
. enter into transactions with affiliates or related persons,
. guarantee indebtedness,
. sell assets,
. create liens,
. engage in a merger, sale or consolidation, and
. enter into new lines of business.
These covenants are subject to important exceptions and qualifications,
which are described under the heading "Description of the New Notes--Covenants"
in this prospectus.
8
<PAGE>
Summary Historical Financial Information
The following table sets forth summary historical consolidated financial
information for Centennial as of February 28, 1999 and 1998 and for the nine
months ended February 28, 1999 and 1998. Such data were derived from our
unaudited condensed consolidated financial statements and notes, but, in the
opinion of our management, include all adjustments, consisting only of normal
recurring adjustments, necessary for a fair presentation of the financial
position and results of operations for such periods. Operating results for the
nine months ended February 28, 1999 and 1998 do not necessarily show what the
results for a full year may be. The table also sets forth summary historical
consolidated financial information for Centennial for the five years ended May
31, 1998. Such data were derived from our audited consolidated financial
statements and notes. Separate financial statements for Centennial Cellular
Operating have not been included in this prospectus because management believes
that these financial statements would not be material to holders of the notes.
Since the information in this table is only a summary, you should read our
historical financial statements and the related notes, "--Sources and Uses of
Funds," and "Unaudited Pro Forma Financial Information" found elsewhere in this
prospectus.
<TABLE>
<CAPTION>
Nine months ended
February 28, Years ended May 31,
------------------------ -------------------------------------------------------------
1999 1998 1998 1997 1996 1995 1994
----------- ----------- ----------- ----------- ----------- ---------- ----------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Statement of Operations
Data:
Domestic operating
revenue............... $ 174,980 $ 133,953 $ 182,944 $ 145,120 $ 112,197 $ 85,419 $ 56,373
Puerto Rico operating
revenue............... 87,611 35,752 54,557 5,903 -- -- --
----------- ----------- ----------- ----------- ----------- ---------- ----------
Total operating
revenue................ 262,591 169,705 237,501 151,023 112,197 85,419 56,373
Cost of services and
equipment sold......... 50,783 42,248 54,818 38,228 26,129 22,152 13,424
----------- ----------- ----------- ----------- ----------- ---------- ----------
Gross profit............ 211,808 127,457 182,683 112,795 86,068 63,267 42,949
Selling, general and
administrative......... 81,460 62,142 81,790 55,132 34,188 26,055 17,787
Depreciation and
amortization........... 97,702 82,637 114,194 83,720 70,989 65,642 47,652
Recapitalization costs.. 58,852 0 0 0 0 0 0
----------- ----------- ----------- ----------- ----------- ---------- ----------
Operating loss.......... (26,206) (17,322) (13,301) (26,057) (19,109) (28,430) (22,490)
Interest expense--net... 48,553 31,801 45,155 33,379 27,886 23,357 21,040
Gain on sale of assets.. 8,414 8 5 3,819 8,310 -- --
Income from minority
cellular investment
interests(1)........... 9,352 9,843 13,069 15,180 10,473 4,670 3,645
----------- ----------- ----------- ----------- ----------- ---------- ----------
Loss before income tax
benefit and minority
interest............... (56,993) (39,272) (45,382) (40,437) (28,212) (47,117) (39,885)
Income tax benefit...... (10,114) (13,527) (13,597) (7,295) (11,596) (14,456) (11,780)
Minority interest in
income (loss) of
subsidiaries(2)........ 142 (337) 162 153 15 69 (321)
----------- ----------- ----------- ----------- ----------- ---------- ----------
Loss from continuing
operations............. (46,737) (26,082) (31,947) (33,295) (16,631) (32,730) (27,784)
Extraordinary loss on
early extinguishment of
debt, net of tax....... (40,526) 0 0 0 0 0 0
----------- ----------- ----------- ----------- ----------- ---------- ----------
Net loss................ $ (87,263) $ (26,082) $ (31,947) $ (33,295) $ (16,631) $ (32,730) $ (27,784)
=========== =========== =========== =========== =========== ========== ==========
Ratio of earnings to
fixed charges(3)....... -- -- -- -- -- -- --
Other Consolidated Data:
Adjusted EBITDA(4)...... $ 130,348 $ 65,315 $ 99,208 $ 55,852 $ 47,793 $ 34,444 $ 24,080
Adjusted EBITDA margin.. 49.6% 38.5% 42.1% 37.4% 44.2% 41.7% 43.6%
Cash flows provided by
(used in):
Operating activities... $ 98,654 $ 46,196 $ 54,771 $ 26,956 $ 24,282 $ 10,390 $ (3,558)
Investing activities... (51,262) (99,290) (126,111) (118,094) (78,765) (79,834) (64,749)
Financing activities... (28,098) 24,274 42,545 67,256 152 182,722 65,702
Capital expenditures.... 69,819 103,187 129,300 88,990 38,082 17,538 8,947
Net Pops(5)(6).......... 10,846,000 10,846,000 10,846,000 10,846,000 10,661,000 6,491,500 5,020,400
Subscribers(5).......... 426,700 298,500 322,200 203,900 135,000 85,900 49,000
</TABLE>
9
<PAGE>
(Table continued from preceding page)
<TABLE>
<CAPTION>
Nine months ended
February 28, Years ended May 31,
---------------------- ----------------------------------------------------------
1999 1998 1998 1997 1996 1995 1994
---------- ---------- ---------- ---------- ---------- ---------- ----------
(Dollars in thousands, except as noted)
<S> <C> <C> <C> <C> <C> <C> <C>
Other Rural Cellular
Data:
Adjusted EBITDA(4)...... $ 91,520 $ 60,249 $ 86,669 $ 64,278 $ 48,208 $ 34,511 $ 24,080
Adjusted EBITDA margin.. 52.3% 45.0% 47.8% 44.9% 44.6% 41.8% 43.6%
Net loss: .............. (76,736) (1,890) (1,188) (16,081) (15,585) (32,650) (27,784)
Cash Flow provided by
(used in):
Operating............. 69,385 46,441 50,139 36,919 25,068 10,430 (3,558)
Investing............. (7,018) (21,395) (52,023) (59,633) (79,574) (79,874) (64,749)
Financing............. (37,702) (56,848) (32,431) (3,742) 152 182,722 65,702
Capital expenditures.... $ 25,130 $ 31,363 $ 38,996 $ 38,921 $ 22,604 $ 17,319 $ 8,947
Net Pops (excluding
Minority Cellular
Investment
Interests)(5)(6)....... 5,831,000 5,777,000 5,777,000 5,777,000 5,592,000 5,412,100 3,941,000
Subscribers............. 309,300 237,900 252,700 187,000 135,000 85,900 49,000
Penetration(5)(7)....... 5.3% 4.1% 4.4% 3.2% 2.4% 1.6% 1.2%
Churn rate(10).......... 1.9% 1.8% 1.8% 2.3% 2.5% 2.5% 3.0%
Average monthly revenue
per unit (actual
dollars)(8)............ $ 69 $ 70 $ 68 $ 73 $ 74 $ 68 $ 69
Acquisition cost per
cellular customer
(actual dollars)(9).... $ 316 $ 307 $ 308 $ 343 $ 351 $ 431 $ --
Cell sites(5)........... 400 329 363 212 185 -- --
Retail and service
centers(5)............. 69 58 59 41 25 -- --
Other Centennial de
Puerto Rico Data:
Adjusted EBITDA(4)...... $ 38,828 $ 5,066 $ 12,539 $ (8,426) $ (415) $ (67) --
Adjusted EBITDA margin.. 44.3% 14.2% 23.1% n.a. n.a. n.a. --
Net loss: .............. (10,527) (24,192) (30,759) (17,214) (1,046) (80) --
Cash Flow provided by
(used in):
Operating............. 29,269 (245) 4,632 (9,963) (786) (40) --
Investing............. (44,244) (77,895) (74,088) (58,461) 809 40 --
Financing............. 9,604 81,122 74,976 70,998 -- -- --
Capital expenditures.... $ 44,689 $ 71,824 $ 90,304 $ 50,069 $ 15,478 $ 219 --
Net Pops(5)............. 3,839,000 3,839,000 3,839,000 3,839,000 3,839,000 -- --
Subscribers(5).......... 117,400 60,600 69,500 16,900 -- -- --
Penetration(5)(7)....... 3.1% 1.6% 1.8% 0.4% -- -- --
Churn rate(10).......... 3.5% 4.0% 4.6% 2.6% -- -- --
Average monthly revenue
per unit (actual
dollars)(8)............ $ 91 $ 94 $ 92 $ 113 -- -- --
Acquisition cost per
cellular customer
(actual dollars)(9).... $ 203 $ 166 $ 164 $ 310 -- -- --
Cell sites(5)........... 125 109 113 74 -- -- --
Retail and service
centers(5)............. 51 35 44 25 -- -- --
</TABLE>
<TABLE>
<CAPTION>
As of February 28, As of May 31,
-------------------- --------------------------------------------
1999 1998 1998 1997 1996 1995 1994
---------- -------- -------- -------- -------- -------- --------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Balance Sheet Data:
Total Assets............ $ 956,672 $837,056 $847,417 $844,850 $785,812 $844,384 $502,384
Long-term Debt.......... 1,458,857 490,000 510,000 429,000 350,000 350,000 250,000
Redeemable preferred
stock.................. 0 193,539 193,539 193,539 189,930 176,340 163,706
Common stockholders'
equity (deficit)....... (605,800) 51,205 40,409 112,882 160,006 188,831 24,143
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
Nine months ended Year ended
February 28, 1999 May 31, 1998
-------------------- --------------------
(Dollars in thousands)
Historical Pro Forma Historical Pro Forma
---------- --------- ---------- ---------
<S> <C> <C> <C> <C>
Pro Forma Data:
Revenues........................... $262,591 $262,591 $237,501 $ 235,816
Costs and expenses................. 288,797 230,508 250,802 251,552
-------- -------- -------- ---------
Operating income (loss)............ (26,206) 32,083 (13,301) (15,736)
Net loss........................... $(87,263) $(54,931) $(31,947) $(143,411)
======== ======== ======== =========
</TABLE>
- --------
(1) Represents our proportionate share of profits and losses based on our
interest in earnings of limited partnerships controlled and managed by
other cellular operators accounted for on the equity method.
(2) Represents the percentage share of earnings of our consolidated
subsidiaries that is allocable to unaffiliated holders of minority
interests.
(3) For the purposes of determining the ratio of earnings to fixed charges,
earnings are defined as earnings before income taxes, minority interest
and extraordinary items, plus fixed charges. Fixed charges include
interest expense on all indebtedness, amortization of deferred debt
issuance costs and one-third of rental expense on operating leases
representing that portion of rental expense deemed to be attributable to
interest. The ratio of earnings to fixed charges is less than one-to-one
for all periods presented and, therefore, earnings are inadequate to cover
fixed charges. The amount by which earnings are less than fixed charges
for the nine months ended February 28, 1999 and 1998 are $56,993 and
$39,272, respectively, and for the years ended May 31, 1998, 1997, 1996,
1995 and 1994 are $45,382, $43,189, $33,412, $47,117 and $39,885,
respectively.
(4) Adjusted EBITDA is defined, for any period, as earnings before income from
our minority cellular investment interests that are controlled and managed
by third parties, allocations to minority interests in consolidated
subsidiaries, interest expense, interest income, income taxes,
depreciation and amortization, recapitalization costs, extraordinary loss
on early extinguishment of debt and gain on sale of assets. EBITDA is
commonly used to analyze companies on the basis of operating performance,
leverage and liquidity. While Adjusted EBITDA should not be construed as a
substitute for operating income or a better measure of liquidity than cash
flow from operating activities, which are determined in accordance with
generally accepted accounting principles. It is included in this
prospectus because management believes that it provides additional
information with respect to the anticipated ability of Centennial to meet
future debt service, capital expenditures and working capital
requirements.
(5) As of period-end.
(6) For the periods ended January 28, 1999 and 1998 and the years ended May
31, 1998, 1997 and 1996, the number of Net Pops is based on the 1997
Kagan's Cellular Telephone Atlas. For the years ended May 31, 1995 and May
31, 1994, the number of Net Pops is based on 1990 population figures of a
metropolitan service area or rural service area, as derived from the 1990
U.S. Census data.
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(7) The penetration rate equals the percentage of total population in our
service areas who are subscribers to our cellular service as of period-
end.
(8) ARPU is defined as total monthly revenue per average subscriber.
(9) For the year ended as of the date shown. Determined for each period as
total marketing cost plus cost of equipment sales (net of associated
revenue), divided by the total subscriber activations during the fiscal
year.
(10) Churn is defined as the number of wireless subscriber cancellations per
month as a percentage of the weighted average total wireless subscribers
at the beginning of the period. Churn is stated as the average monthly
churn rate for the period.
Subsequent Event
We have entered into an agreement to acquire 100% of the ownership
interests in a partnership owning the wireless telephone system serving the
Allegen, Michigan rural service area. The Allegen market represents
approximately 100,000 net pops. Our obligation to consummate this transaction
is subject to certain closing conditions, including the relevant regulatory
approvals. We have anticipated completing this acquisition in October 1999.
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RISK FACTORS
You should carefully consider the following factors and other information
in this prospectus before deciding to exchange outstanding notes for new notes.
Any of the following risks could have a material adverse impact on our
business, financial condition or results of operations or on the value of the
notes.
Risks Relating to the Notes
We expect to incur losses for the foreseeable future and may not be able to
generate enough cash to repay the notes.
We cannot assure you that our business will generate cash flow or that we
will be able to obtain funding sufficient to satisfy our debt service
requirements. Our business operations have incurred net losses for each of the
past five fiscal years and, after giving pro forma effect to the offering of
the notes and borrowings under the credit facility, Centennial Cellular
Operating would have incurred a net loss of $120.5 million for the fiscal year
ended May 31, 1998. We expect to report net losses for the foreseeable future
due to increased interest payments and non-cash charges such as depreciation
and amortization. In addition, prevailing economic conditions and financial,
business and other factors in the markets we serve, many of which are beyond
our control, will affect our ability to pay interest on the notes and satisfy
our other debt obligations.
Payment of our debt obligations reduces the cash available to use in our
business.
After the merger our total long term debt was significantly greater than
before the merger. Our large amount of debt could adversely affect our business
and you because we must use a substantial portion of our cash to pay our debt
obligations. As a result, we have less cash to use in other areas of our
business. In addition, our debt service obligations increase our
vulnerabilities to:
. adverse economic and industry conditions;
. interest rate increases because borrowings under our credit facility
are at variable interest rates; and
. competitive pressures, as many of our competitors will be less
leveraged than we are.
In addition, we may incur significantly more debt. This may further
reduce the cash we have available to invest in our operations. If we cannot
generate sufficient cash from operations to make scheduled payments on the
notes or to meet our other obligations, we will need to refinance, obtain
additional financing or sell assets.
Because the notes rank below our senior debt and below all debt of our
subsidiaries, you may not receive full payment on your notes.
In the event of our bankruptcy, liquidation or dissolution, our assets
would be available to pay obligations on the notes only after all payments had
been made on our credit facility and other senior indebtedness, including the
liabilities of our subsidiaries. We cannot assure you that sufficient assets
will remain to make any payments on the notes. We and our subsidiaries also may
incur additional indebtedness that ranks senior to the notes.
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We may not be able to repay the notes because our subsidiaries may not be
permitted to distribute cash to us.
If we do not receive sufficient cash flow from our subsidiaries we will
not be able to make payments on the notes. We cannot assure that our
subsidiaries will have sufficient funds to distribute to us or that state
corporate laws will allow dividends to be paid. In addition, the terms of
existing and future debt of our subsidiaries may restrict our subsidiaries from
distributing cash to us. Our credit facility limits dividends from our
subsidiaries to a specified amount so long as no event of default exists under
the credit agreement. The indenture for the notes permits our subsidiaries to
enter into agreements which restrict dividends and distributions to us and the
subsidiaries have no legal obligation to pay dividends. See "Description of the
New Notes--Covenants--Limitation on Restrictions on Subsidiary Dividends."
Because the notes are unsecured, other lenders will have prior claims to our
assets in the event we become insolvent or are liquidated.
The notes are not secured by any of our assets, other than the funds
pledged to pay the first three interest payments. If we became insolvent or are
liquidated, or if payment under our credit facility is accelerated, the lenders
under our credit facility would be entitled to exercise the remedies available
to a secured lender under applicable law. Our bank lenders will have a claim on
substantially all our assets before the holders of the notes. Accordingly,
there may be no assets remaining for the holders of notes or any assets may be
insufficient to pay off the notes. See "Description of Certain Indebtedness."
If we entered bankruptcy, you would not be able to foreclose on the escrow
funds securing the interest payments without approval from a bankruptcy court.
The bankruptcy law may prevent the trustee under the indenture governing
the notes from foreclosing on and selling the escrow funds if an event of
default on the notes occurs. Under applicable bankruptcy law, the holders of
the notes would be prohibited from foreclosing upon or disposing of the escrow
funds without prior bankruptcy court approval. See "Description of the New
Notes--Security."
We may not be able to satisfy our obligation to repurchase the notes upon a
change of control.
Our ability to repurchase the notes upon a change of control event will
be limited by the terms of our debt agreements. Upon a change of control event,
we may be required immediately to repay all amounts owed by us under our credit
facility or the subordinated notes financing provided by WCAS Capital Partners
III, L.P. There can be no assurance that we would be able to repay amounts
outstanding under our credit facility or obtain necessary consents under such
facility to repurchase these notes. Any requirement to offer to purchase any
outstanding notes may result in us having to refinance our outstanding
indebtedness, which we may not be able to do. The term "change of control" is
defined in the section "Description of the New Notes--Certain Definitions."
We may not be able to repay the notes if we default on our debt covenants.
We or our subsidiaries may fail to comply with restrictions contained in
our debt instruments, even if we are otherwise able to meet our debt service
obligations. In the event of a default, the holders of our debt could elect to
declare all our debt, together with accrued interest, to
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be due and payable. We cannot assure you that we or our subsidiaries would be
able to make these payments. Covenants contained in the instruments governing
the notes and our credit facility include, among other things, restrictions on
our ability to:
.borrow more funds or create liens,
. repay indebtedness prior to stated maturities,
. sell assets,
. make investments and capital expenditures,
. engage in transactions with stockholders and affiliates,
. engage in mergers or acquisitions, or
. otherwise conduct necessary corporate activities.
We may encounter difficulties obtaining future financing on favorable terms.
We cannot assure you that we will be able to borrow sufficient funds in
the future to satisfy our debt service and working capital requirements or to
finance our acquisition strategy. Even if we were to obtain additional
financing, such financing may be on terms unfavorable to us. Centennial
Cellular Operating has pledged as security to the lenders under its credit
facility the shares of all its direct and indirect subsidiaries other than the
shares of its foreign subsidiaries. The pledge of such shares could impair our
ability to obtain future financing on favorable terms, if at all. See
"Description of Certain Indebtedness."
Our holding company may not be able to make payments on the notes if our
operating subsidiary defaults on its obligations.
Centennial is a co-obligor of the notes. Centennial has no assets other
than the stock of Centennial Cellular Operating. Therefore, Centennial would be
unlikely to be able to make payments on the notes if Centennial Cellular
Operating fails to make payments on the notes. In addition, Centennial is not
subject to the covenants of the indenture governing the notes. Accordingly,
Centennial may take actions that reduce its creditworthiness and adversely
affect its ability to repay the notes.
Centennial has unconditionally guaranteed all obligations of Centennial
Cellular Operating, which is the borrower under the credit facility. In the
event that Centennial Cellular Operating were to default on its obligations
under the credit facility and the lenders were to seek to enforce such
guarantee, Centennial would not likely be able to service or repay its
indebtedness, including the notes. See "Description of Certain Indebtedness."
Your rights to be repaid would be adversely affected if a court determined that
we issued the notes for inadequate consideration or with intent to defraud our
creditors.
Our ability to repay the notes may be adversely affected if it is
determined in a bankruptcy, insolvency or similar proceeding that:
. we issued the notes with intent to delay or defraud any creditor,
. we contemplated insolvency with a design to prefer some creditors to
the exclusion of others, or
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. we issued the notes for less than reasonably equivalent value and
were insolvent at the time the notes were originally issued.
In such event, a court could, among other things, void all or a portion
of our obligations to you. In this case, you may not be repaid in full. A court
may also subordinate our obligations to you to our other indebtedness to a
greater extent than would otherwise be the case. In this case, other creditors
would be entitled to be paid in full before any payment could be made on the
notes. We cannot assure you that, after providing for all prior claims, there
would be sufficient assets to satisfy your claims.
If an active trading market does not develop, you may have difficulties
reselling the notes.
The notes are securities for which there currently is no market. If the
notes are traded, they may trade at a discount from their face value, depending
upon prevailing interest rates, the market for similar securities and other
factors. We do not intend to apply for listing of the notes on any securities
exchange or the Nasdaq National Market. Accordingly, we cannot assure you that
a liquid trading market for the notes will develop. In addition, substantial
volatility in the market for non-investment grade debt, such as the notes, may
have a material adverse effect on the holders of the notes. This volatility has
increased in recent months and the liquidity of non-investment grade securities
has declined significantly.
If you do not exchange your notes for new notes, your outstanding notes may
trade at discount because you may not be able to transfer such notes.
In the event the exchange offer is consummated, we will not be required
to register the outstanding notes under the Securities Act. In such event, the
notes would rank equally with the outstanding notes. Holders of outstanding
notes seeking liquidity in their investment would have to rely on exemptions
from registration requirements under the securities laws, including the
Securities Act. A reduction of the aggregate principal amount of the currently
outstanding notes as a result of the consummation of the exchange offer may
have an adverse effect on the ability of holders of the outstanding notes to
transfer such notes.
Risks Relating to Our Business
We may be adversely affected by our competitors, many of whom have greater
financial resources than we do.
Our principal business, wireless telephone service, is highly
competitive. We compete with one cellular licensee in each geographic area.
Most of these competitors are larger, have greater financial resources than we
do and may be less leveraged than we are. We also face competition from paging
companies, traditional telephone companies and resellers. The FCC requires all
cellular and personal communication system operators to provide service on a
nondiscriminatory basis to resellers. Resellers provide service to customers
but do not hold an FCC license or own facilities to provide such services.
Instead, a reseller buys blocks of cellular telephone numbers from a licensed
carrier, usually at a discounted rate, and resells service to the public. Thus,
a reseller may be both a customer of a cellular or personal communications
services provider and also a competitor.
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We face increased competition from entities using communications technologies
comparable to cellular service.
Competing technologies or any new technologies may provide significant
competition for us. We cannot assure you that one or more of the technologies
that we currently use in our business will not become inferior or obsolete at
some time in the future. New technologies that are comparable to cellular
service include:
.personal communications services,
.ESMR and
.satellite-based services.
Personal communications services refer to the series of two-way
communication licenses recently awarded by the FCC which are expected to use
digital wireless technologies. Many personal communication services licensees
who will compete with us have access to substantial capital resources. In
addition, many of these companies, or their affiliates, already operate large
cellular telephone systems and thus bring significant wireless experience to
this new marketplace.
ESMR is a two-way wireless communications service that incorporates
characteristics of cellular technology, including many low-power transmitters
and connection with the landline telephone network. ESMR service may compete
with cellular service by providing digital communication technology, lower
rates, enhanced privacy and additional features such as electronic mail and
built-in paging. Nextel Communications, Inc. is the primary provider of such
services today.
The FCC has issued a number of licenses for satellite-based services that
would enable subscribers to access mobile communications systems throughout the
world. Additional proposals for the provision of satellite services remain
pending with the FCC and foreign regulatory bodies must approve certain aspects
of some satellite systems.
Competition from other wireless and traditional telephone service providers in
Puerto Rico may reduce our market share and adversely affect prices.
The market for wireless services is highly competitive in Puerto Rico.
Competition from these of telecommunications providers may reduce our market
share and have an adverse effect on our prices and profitability. Our main
competitors for wireless services in the Puerto Rico market are Cellular
Communications of Puerto Rico, Inc. and the Puerto Rico Telephone Company. Both
competitors were earlier entrants into the Puerto Rico wireless market, have
greater resources than we do. They currently hold subscriber market shares of
approximately 47% and 40%, respectively. Cellular Communications and the Puerto
Rico Telephone Company offer cellular service based on both analog and digital
technology and offer greater cellular capability than we do to their customers
traveling outside Puerto Rico. We only offer digital service in Puerto Rico.
The FCC has issued large capacity personal communication services
licenses for the Puerto Rico market. These systems present additional
competition to our large capacity personal communication services operations in
Puerto Rico.
The Puerto Rico Telephone Company is also our primary competitor for
traditional telephone service. GTE has bought a majority stake in the Puerto
Rico Telephone Company and may make
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changes to improve its competitive position. Any increase in our market
presence will depend upon our ability to obtain customers that are underserved
by the Puerto Rico Telephone Company or looking for an alternative.
If we are successful in making acquisitions, the acquired properties may
adversely affect our business.
We face risks that the systems we own and those we acquire in the future
will not perform as expected and that such systems will not generate the
returns necessary to repay the indebtedness incurred to acquire, or fund the
capital expenditures needed to develop, the systems. We intend to expand our
current business in adjacent areas through acquisition and also to acquire
other small to mid-sized metropolitan service areas and strategic rural service
areas that we believe are undervalued or underdeveloped or that possess traits
that indicate high potential cellular use and superior financial performance.
In addition, expansion of our operations may place a significant strain
on our management, financial and other resources. Our ability to manage future
growth will depend upon our ability to:
.monitor operations,
.control costs,
.integrate acquired properties,
.maintain effective quality controls and
.significantly expand our internal management, technical and accounting
systems.
Management of those areas will result in higher operating expenses. A
failure to expand these areas or to implement and improve our systems,
procedures and controls in an efficient manner and at a pace consistent with
the growth of our business could have a material adverse effect on our
business, prospects, operating results and ability to service our indebtedness,
including the notes.
Rapid and significant technological changes in the telecommunications industry
may adversely affect us.
We face rapid and significant changes in technology. New technologies may
be protected by patents or other intellectual property laws and therefore may
not be available. In particular, the wireless telecommunications industry is
experiencing significant technological change, including:
. the increasing pace of digital upgrades in existing analog wireless
systems,
. evolving industry standards,
. the allocation of new radio frequency spectrum in which to license
and operate wireless services,
. ongoing improvements in the capacity and quality of digital
technology,
. shorter development cycles for new products and enhancements, and
. changes in end-user requirements and preferences.
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Like others in the industry, we are uncertain about the extent of
customer demand as well as the extent to which airtime and monthly access rates
may continue to decline. We cannot predict the effect of technological changes
on our business, and it is possible that technological developments will have a
material adverse effect on us.
We may not be able to modify our business to comply with regulatory changes.
The telecommunications industry is subject to federal and state
regulation that is continually evolving. As new telecommunications laws and
regulations are issued, we may be required to modify our business plans or
operations. There can be no assurance that we can do so in a cost effective
manner. Further, we cannot assure you that federal or state governments or the
government of the Commonwealth of Puerto Rico will not make regulations or take
other actions that might have a material adverse effect on our business. If the
FCC allocates radio spectrum for services that compete with our business
thereby introducing additional competitors, these changes could materially and
adversely affect our business prospects, operating results or our ability to
service our indebtedness, including the notes.
The FCC and state regulatory agencies continue to issue rules
implementing the requirements of the 1996 Telecommunications Act. Such rules
address obligations, which include the obligation of incumbent telephone
companies to allow other carriers to connect to their network by reasonable
means at rates based on cost. The interpretation of these and other provisions
of the 1996 Telecommunications Act and the FCC rules implementing the
Telecommunications Act continue to be heavily debated and subject to legal
challenges. The FCC has also made legal challenges against winners of personal
communication services licenses that have failed to pay for the licenses. These
challenges do not directly affect our operations because our licenses have
already been paid for.
The loss of our licenses could adversely affect our ability to provide wireless
and wireline services.
Cellular and personal communications services licenses are valid for 10
years from the effective date of the license. Failure to file for such renewal
or failure to meet any licensing requirements could lead to a denial of the
application and thus adversely effect our ability to continue to provide
service in that license area. Licensees may renew their licenses for additional
ten year periods by filing a renewal application with the FCC. The renewal
applications are subject to FCC review and are put out for public comment to
ensure that the licensees meet their licensing requirements and comply with
other applicable FCC mandates.
Our wireless subsidiary in Puerto Rico is a holder of a B Block personal
communication services license. The FCC requires that our subsidiary cover at
least one-third of the population of Puerto Rico in five years and two-thirds
of the population in ten years. Failure to meet these build-out requirements
could have a material effect on our ability to continue operations.
Local telephone companies are subject to local state and municipal
regulation. These regulations often require that carriers be authorized to
provide local service via a franchise or licensing procedure. Lambda Operations
Corp., our wholly owned telephone subsidiary, falls under such regulation.
Lambda is subject to the regulation of the Puerto Rico Telecommunications Board
and is authorized to connect customers to the local telephone network and to
provide local telephone service. The Puerto Rico Telecommunications Basis rules
require that carriers file their tariffs and
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applicable rates. Such tariffs and rates are subject to review by the Puerto
Rico Telecommunications Board to ensure that those rates are cost based and
that the tariffs are in the public interest.
Both the wireless and local telephone subsidiaries are subject to siting
and zoning regulation which could materially affect our ability to build new
sites and expand our coverage. All telecommunication providers are obligated to
contribute to the federal universal fund based upon a percentage of interstate
revenue. Universal service funds are used to provide local telephone service to
individuals or families qualifying for federal assistance or households in
areas not served by the local telephone company. Many states, including those
we operate in, are implementing local universal service programs that would
also require carriers to contribute additional funds.
Our cellular licenses may decrease in value, reducing the asset base that
supports our debt.
A substantial portion of our assets consists of our interests in cellular
licenses held by subsidiaries. While there currently exists a market for the
purchase and sale of cellular licenses, including those in our markets, that
market may not exist in the future or the values of our licenses in that market
may fall. The future value of our interests in our cellular licenses will
depend significantly upon the success of our business. The transfer of
interests in such licenses is subject to prior FCC approval, which may have the
effect of reducing the value of the license. As a consequence, if the market
value of our cellular licenses decreases significantly, we may realize a
material loss upon the sale of any of our licenses and our ability to sell
assets to repay debt would be significantly affected.
Business and economic factors, severe weather and political conditions in
Puerto Rico may significantly affect our operations in Puerto Rico and hurt our
overall performance.
Our business in Puerto Rico is dependent on the business and economic
conditions and consumer spending generally in Puerto Rico. If existing economic
conditions in Puerto Rico were to deteriorate, the market for wireless or
telephone services in Puerto Rico may grow more slowly or decline. This would
have an adverse impact on our business in Puerto Rico and, because our Puerto
Rico operations currently generate approximately 30% of our company's adjusted
EBITDA, on our financial condition and results of operations generally.
In particular, our business in Puerto Rico may be materially adversely
affected by events such as hurricanes, labor strikes and the like which affect
Puerto Rico generally. Any change in Puerto Rico's political status with the
U.S., or the ongoing debate on such status, could also affect the economy of
Puerto Rico. The ultimate effect of possible changes in Puerto Rico's
governmental and political status is uncertain and, accordingly, we cannot
assure you that such changes will not materially adversely affect our business
and results of operations.
A substantial increase in fraudulent and/or unbilled use of our network would
affect our business operations.
We incur costs associated with unauthorized use of our network. Fraud
adversely affects our business by increasing:
.interconnection costs,
.capacity costs,
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.administrative costs,
.costs incurred for fraud prevention and
.payments to other carriers for unbillable fraudulent roaming.
We cannot assure you that costs associated with unauthorized use of our
cellular network will not become substantial in the future.
Our results of operations may decline because of a market decline in roaming
rates and our strategy of aggressively pricing roaming rates.
We earn much of our revenue from customers of other wireless
communications providers who enter our service areas and use their wireless
phones. Roaming rates per minute under reciprocal roaming arrangements have
declined over the last several years and we expect that such declines will
continue for the foreseeable future. We have also implemented a strategy of
aggressively pricing roaming rates to encourage other cellular and personal
communications services providers to include portions of our service areas
within their home calling regions and to discourage wireless providers from
expanding their footprints into our service areas. Our results of operations
may decline because the decline in roaming rates may not be offset by the
decrease in roaming expenses we pay to other cellular and personal
communication services providers for roaming changes incurred by our
subscribers in other calling regions.
Our operations in Puerto Rico may be adversely affected if changes in tax
benefits available to businesses in Puerto Rico cause companies to reduce their
business activities in Puerto Rico.
The demand for our services in Puerto Rico is significantly affected by
the level of business activity in the island providing tax incentives for U.S.
companies to operate in Puerto Rico and to reinvest the earnings from their
Puerto Rico operations in Puerto Rico. As a result of a 1996 amendment to the
Internal Revenue Code, the tax benefits available to corporations doing
business in Puerto Rico phase out in annual increments through 2005.
Consequently, such corporations may reduce or close their Puerto Rico
operations and may reduce their re-investments in Puerto Rico. The changes may
also reduce the incentives for new investments in Puerto Rico. Our business in
Puerto Rico may be adversely affected by such changes in the tax law.
The failure of our computer systems and those of third parties with whom we
deal to recognize the year 2000 could significantly disrupt our operations,
causing a decline in cash flow and revenue and other difficulties.
The Year 2000 issue is the result of many computer programs being written
abbreviating dates by using two digits rather that four digits in the year
field. As a result, unless corrected, a computer program that has date
sensitive software may recognize a date using "00" in the year field as 1900
rather than the year 2000. This could result in system failures and errors
causing disruptions to various aspects of our business, including computer
systems, voice and data networks and building infrastructures.
We currently believe that our worst case scenario with respect to the
Year 2000 may involve the interruption of telecommunications services and/or
interruption of customer billing. Either or both of these events could have a
material adverse effect on our financial condition, results of operations or
cash flows.
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Most of our customer-related computer systems and databases, including
our billing systems, are managed by third parties under contractual
arrangements. We have been informed by these third parties that the remediation
efforts are in various stages with final completion anticipated in September
1999.
Our systems are interconnected with various networks and systems operated
by third parties, including traditional land-based communications networks,
long-distance networks, the networks of other wireless service providers as
well as public utilities. The operators of these networks and systems are
responsible for addressing the Year 2000 issue in their own systems. The
ability of our systems to operate, including the ability to provide wireless
service, is dependent upon these third party networks and systems being Year
2000 compliant. We have requested information from these vendors in order to
determine to what extent we may be exposed to their failure to correct their
own year 2000 problems. While many of these third parties have indicated to us
that they are or anticipate being Year 2000 compliant prior to December 31,
1999, we cannot assure you that these third parties will have taken the
necessary corrective actions prior to the year 2000.
Our management team is newly-formed and has not yet demonstrated its
effectiveness in managing Centennial.
Michael J. Small, who is the President and Chief Executive Officer of
Centennial, became the Chief Executive Officer of Centennial upon the
consummation of the merger with CCW Acquisition Corp. Mr. Small has had no
prior experience managing our operations.
The loss of any of our senior management employees could have a material
adverse effect on our company unless we can obtain a suitable replacement in a
timely manner. We have employment contracts with seventeen members of senior
management, including Mr. Small, whose contract expires on September 30, 2002;
Rudy J. Graf, who is the President and Chief Executive Officer of Centennial de
Puerto Rico and Peter Chehayl, who became Senior Vice President and Chief
Financial Officer following the merger. In the event of vacancies in senior
management, the additional time and resources toward recruitment, hiring and
training to fill such positions, could result in a material adverse effect on
our business, prospects, operations or results of operations. If management
vacancies are not filled, or if our executive officers do not achieve their
management objectives in a timely manner, our business, prospects, operating
results and ability to service our indebtedness, including the notes, may be
materially adversely affected.
A group of affiliated stockholders control the voting power of Centennial which
may have interests adverse to the interests of the holders of the notes.
Welsh Carson VIII, certain of its affiliates and certain other equity
investors hold 92.9% of Centennial's outstanding shares of common stock.
Accordingly, these equity investors, directly or indirectly, control our
company and have the power to elect all of our directors, appoint new
management and approve or reject any action requiring the approval of
stockholders, including adopting amendments to our charter and approving
mergers and sales of all or substantially all of our assets. The equity
investors may make decisions that are adverse to your interests. In addition,
the existence of a controlling stockholder may have the effect of making it
difficult for a third party to acquire, or of discouraging a third party from
seeking to acquire, a majority of the outstanding Centennial common stock. See
"Principal Stockholders" and "Certain Relationships and Related Transactions--
Agreements between Centennial Cellular Corp. and Its Stockholders."
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A portion of our operations are conducted through partnerships in which we have
a minority interest. We do not control such operations and are subject to
capital calls made by the controlling partner.
We have a limited ability to direct the operation of any system conducted
through a partnership in which we hold a minority investment as a limited
partner. In addition, these investment partnerships are entitled to make
certain demands for capital contributions, including to complete acquisitions
by the limited partnerships. If we do not meet such a capital call, our
ownership interest in such system may be diluted. Capital calls with respect to
such investment interests for the fiscal years ended May 31, 1998, 1997 and
1996 were approximately $0.8 million, $2.9 million and $1.5 million,
respectively. We cannot assure you that we will be able to pay future capital
calls when due. In addition, under the indenture relating to the notes,
Centennial Cellular Operating will be permitted to dividend to Centennial all
cash received from Centennial Cellular Operating's non-subsidiary investment
interests. These partnerships accounted for none of our total revenues for the
fiscal year ended May 31, 1998.
Our operations may be adversely affected by equipment failures or by natural
disasters that disrupt our network.
A major equipment failure or a natural disaster affecting any one of our
network control centers or certain of our wireless antenna sites or microwave
links could have a material adverse effect on our business, prospects,
operating results or ability to service our indebtedness, including the notes.
Although we currently carry "business interruption" insurance, our insurance
policies may not entirely cover all damages we may suffer.
Possible health effects of radio frequency emission may adversely affect the
demand for cellular telephone services.
Media reports have suggested that certain radio frequency emissions from
portable cellular telephones may be linked to cancer and interfere with heart
pacemakers and other medical devices. Concerns over radio frequency emissions
and interference may have the effect of discouraging the use of cellular
telephones, which could have an adverse effect upon our business. There is no
assurance that government authorities would not increase regulation of cellular
telephones resulting from these concerns or that cellular telephone companies
may be liable for costs or damages associated with these concerns.
23
<PAGE>
THIS PROSPECTUS INCLUDES FORWARD-LOOKING STATEMENTS
Some statements and information contained in this prospectus are not
historical facts, but are "forward-looking statements", as such term is defined
in the Private Securities Litigation Reform Act of 1995. We wish to caution you
that these forward-looking statements are only predictions, and actual events
or results may differ materially as a result of risks that we face, including
those set forth herein under "Risk Factors." These forward-looking statements
can be identified by the use of forward-looking terminology such as "believes",
"expects", "plans", "may", "will", "would", "could", "should", or "anticipates"
or the negative of these words or other variations of these words or other
comparable words, or by discussions of strategy that involve risks and
uncertainties.
24
<PAGE>
THE MERGER
On January 7, 1999, Centennial merged with CCW Acquisition Corp., a new
Delaware corporation organized by Welsh, Carson, Anderson & Stowe VIII, L.P. As
a result of the merger, a new group of equity investors acquired a 92.9%
ownership interest in Centennial. The remaining 7.1% interest is owned by
public stockholders. The merger was accounted for as a recapitalization in
which the historical basis of our company's assets and liabilities was not
affected and no new goodwill related to the merger was created.
Merger Financing
A total of approximately $1.87 billion was required to pay the cash
consideration to Centennial stockholders in the merger, repay our indebtedness,
pay fees and expenses related to the merger and its financing and purchase
pledged securities. The sources of funding for the merger and the related
transactions are described below.
. Equity Financing. Welsh, Carson, Anderson & Stowe VIII, L.P., certain
of its affiliates, including WCAS Capital Partners III, L.P., certain
affiliates of Blackstone Capital Partners, L.P. and certain other
investors purchased $400 million in common shares of CCW Acquisition
Corp. The CCW Acquisition Corp. shares were converted into Centennial
common shares in the merger.
. Bank Financing. Centennial Cellular Operating and its Puerto Rico
subsidiary borrowed approximately $936.0 million under a new $1,050
million credit facility. A group of lenders provided Centennial
Cellular Operating with the credit facility, consisting of an $900
million term loan facility and a $150 million revolving credit
facility. See "Description of Certain Indebtedness" for a description
of the credit facility's principal terms.
. High Yield Notes Financing. Centennial Cellular Operating, together
with a co-obligor that has merged into Centennial, issued $370
million of old notes on December 14, 1998.
. Subordinated Debt Financing. WCAS Capital Partners III, L.P., an
investment partnership affiliated with Welsh Carson VIII, purchased
unsecured subordinated notes due 2009 of Centennial and common shares
of Centennial at an aggregate price of $180 million. See "Description
of Certain Indebtedness" for a description of the principal terms of
the subordinated debt.
25
<PAGE>
The chart below shows our organizational structure after the merger and
related transactions.
[CHART GOES HERE]
26
<PAGE>
USE OF PROCEEDS
We will not receive any proceeds from the issuance of new notes in the
exchange offer. The offering of notes resulted in net proceeds to us of
approximately $357.1 million, after payment of underwriting discounts and other
issuance costs totaling approximately $12.9 million.
The net proceeds from the offering, the mezzanine financing and the
common equity contribution, together with borrowings under the credit facility,
were used to:
. fund payment of the cash consideration in the merger,
. repay or repurchase indebtedness of Centennial,
. pay the fees and expenses incurred in connection with the merger, the
merger financings and related transactions, and
.purchase the pledged securities.
The following table sets forth the sources and uses of funds in
connection with the financing of the merger as of the merger's consummation on
January 7, 1999:
<TABLE>
<CAPTION>
Amount
---------------------
(Dollars in millions)
<S> <C>
Sources of Funds
Credit facility(1)...................................... $ 936.0
Old notes(2)............................................ 370.0
Subordinated debt financing of parent (Centennial)(3)... 180.0
Common equity contribution.............................. 400.0
--------
Total Sources of Funds................................ $1,886.0
========
Uses of Funds
Cash merger consideration(4)............................ $1,210.7
Repayment of net existing indebtedness and preferred
dividends accrued(5)................................... 535.4
Restricted interest escrow investment(2)................ 57.5
Premiums on debt tender offers for tendered notes(6).... 39.8
Fees and expenses(7).................................... 42.6
--------
Total Uses of Funds................................... $1,886.0
========
</TABLE>
- --------
(1) Our credit facility consists of three term loans in aggregate principal
amount of $900.0 million and a revolving credit facility in an aggregate
principal amount of up to $150.0 million. The borrowers under these
facilities are Centennial Cellular Operating and, for $125.0 million of the
term loans and up to $60.0 million of the revolving credit facility,
Centennial de Puerto Rico. At the time of the merger, Centennial de Puerto
Rico borrowed $36.0 million under the credit facility. Centennial, together
with the subsidiaries of Centennial Cellular Operating, excluding initially
Centennial de Puerto Rico and its subsidiaries, which subsidiaries have
guaranteed the obligations of Centennial de Puerto Rico under the credit
facility, have unconditionally guaranteed, jointly and severally, the debt
under our credit facilities. See "Description of Certain Indebtedness."
(2) Upon consummation of the merger, approximately $57.5 million of the
proceeds from the old notes was deposited with the trustee to purchase
pledged securities to pay the first three
27
<PAGE>
scheduled interest payments on the notes at the stated interest rate. See
"Description of the New Notes--Security."
(3) WCAS Capital Partners III, L.P., an investment partnership affiliated with
Welsh Carson VIII, purchased, at the time of the consummation of the
merger, unsecured subordinated notes due 2009 and common shares of
Centennial at an aggregate price of $180 million. This $180 million of
financing has been allocated as $157.5 million debt and $22.5 million
equity. The subordinated notes are obligations of Centennial only and,
accordingly, pro forma financial information for Centennial Cellular
Operating does not reflect any obligation for this debt.
(4) Includes $1,033.1 million in consideration for the Centennial common
shares, $128.2 million in consideration for the Centennial common shares
issued upon conversion of Centennial's preferred stock and $49.4 million
in consideration for the settlement of outstanding options to purchase
Centennial common shares and the settlement of restricted shares. The
options were exercised or cancelled in exchange for a cash amount equal to
the difference between $13.83 and the exercise price of the option
immediately before the merger. The restricted shares were acquired in
exchange for the cash amount of $13.83.
(5) Represents the amount required to repay our total pre-merger indebtedness
and pay interest on our indebtedness and dividends on our then outstanding
preferred stock. At the time of the merger, we repurchased 99.4% of our
then outstanding 8 7/8% senior notes due 2001 and 99.8% of our then
outstanding 10 1/8% senior notes due 2005. The amount shown includes
accrued interest of $6.9 million and preferred dividends of $18.1 million.
(6) The amount required to pay the debt tender premiums associated with the
debt tender offers for our notes due 2001 and 2005. The amount shown above
includes the consent solicitation fees associated with the debt tender
offers.
(7) Assumed for simplicity to be paid by Centennial and includes all fees and
expenses related to the merger, the offering of old notes and related
transactions.
28
<PAGE>
THE EXCHANGE OFFER
Purpose of the Exchange Offer
The holders of the notes currently are entitled to registration rights
under a registration rights agreement. Pursuant to the registration rights
agreement, we became obligated to file with the SEC a registration statement
covering the offer by us to the holders of the notes to exchange all of the
notes for the new notes. This exchange offer, if consummated, will satisfy our
obligations under the registration rights agreement.
Because the registration statement of which this prospectus forms a part
was not declared effective by the SEC by June 6, 1999, we have been paying
$2,569.00 per day in additional interest under the registration rights
agreement since such date. In addition, since the exchange offer was not
consummated by July 6, 1999, we will be paying an additional $2,569.00 per day
in additional interest under the registration rights agreement from such date
for an aggregate amount of $5,138.00 per day in additional interest. Once the
registration statement is declared effective, we will no longer be required to
pay $2,569.00 of such additional interest however, we will be required to pay
$2,569.00 of such additional interest per day until this exchange offer is
consummated.
Upon the terms and subject to the conditions set forth in this prospectus
and in the accompanying letter of transmittal, we will accept all notes
properly tendered and not withdrawn prior to 5:00 p.m., New York City time, on
the expiration date. We will issue $1,000 principal amount of new notes in
exchange for each $1,000 principal amount of outstanding notes accepted in the
exchange offer. Holders may tender some or all of their notes pursuant to the
exchange offer.
Based on an interpretation by the staff of the SEC set forth in no-action
letters issued to third parties, we believe that the new notes issued pursuant
to the exchange offer in exchange for old notes may be offered for resale,
resold and otherwise transferred by the holders other than any such holder that
is our "affiliate" within the meaning of the Securities Act or such holder that
is a broker-dealer, without compliance with the registration and prospectus
delivery provisions of the Securities Act, provided that such new notes are
acquired in the ordinary course of such holders' business, and such holders
have no arrangement with any person to participate in the distribution of such
new notes. See Morgan Stanley & Co., Inc., SEC No-Action Letter (available June
5, 1991), Exxon Capital Holdings Corporation, SEC No-Action Letter (available
May 13, 1988), and Shearman & Sterling, SEC No-Action Letter (available July 2,
1993).
If you were to be participating in the exchange offer for the purposes of
distributing securities in a manner not permitted by the SEC's interpretation,
you could not rely on the position of the staff of the SEC in Exxon Capital
Holdings Corporation or similar interpretive letters and could not resell your
notes unless an exemption from the registration provisions of the Securities
Act is available for the transfer or you resell your notes in compliance with
the registration and prospectus delivery requirements of the Securities Act.
Each broker-dealer that is issued new notes in the exchange offer for its
own account which were acquired by the broker-dealer as a result of market-
making activities or other trading activities, must acknowledge that it will
deliver a prospectus meeting the requirements of the Securities Act in
connection with any resale of new notes. The letter of transmittal states that
by so acknowledging and by delivering a prospectus, a broker-dealer will not be
deemed to admit that it is an
29
<PAGE>
"underwriter" within the meaning of the Securities Act. This prospectus, as it
may be amended or supplemented from time to time, may be used by a broker-
dealer in connection with resales of new notes. See "Plan of Distribution."
Except as described above, this prospectus may not be used for an offer
to resell, resale or other transfer of new notes.
The exchange offer is not being made to, nor will we accept tenders for
exchange from, holders of old notes in any jurisdiction in which the exchange
offer or the acceptance of it would not be in compliance with the securities or
blue sky laws of such jurisdiction.
Terms of the Exchange Offer
As of the date of this prospectus, there was $370,000,000 aggregate
principal amount of the notes outstanding. This prospectus, together with the
letter of transmittal, is being sent to all registered holders of old notes as
of the date of this prospectus.
We will be deemed to have accepted validly tendered notes when, as and if
we have given written notice of acceptance to the exchange agent. The exchange
agent will act as agent for the tendering holders of notes for the purposes of
receiving the new notes from us and delivering new notes to the tendering
holders.
If notes are not tendered, they will remain outstanding and will continue
to accrue interest from their date of issue, December 14, 1998, at a rate of 10
3/4% per annum.
Except as noted below, in the event the exchange offer is consummated, we
will not be required to register the old notes that are not tendered. In that
event, holders of notes seeking liquidity in their investment would have to
rely on exemptions to registration requirements under the securities laws,
including the Securities Act. See "Risk Factors--Risks Relating to the Notes."
Pursuant to the registration rights agreement, we are required to file a shelf
registration statement with the SEC if a holder of notes is not allowed to
participate in this exchange offer by law.
Expiration Date; Extensions
The term "expiration date" means the expiration date set forth on the
cover page of this prospectus, unless we, in our discretion, extend the
exchange offer, in which case the term "expiration date" means the latest date
to which the exchange offer is extended.
In order to extend the expiration date, we will notify the exchange agent
of any extension by written notice and will make a public announcement of such
extension, each prior to 9:00 a.m., New York City time, on the next business
day after the previously scheduled expiration date. Such announcement may state
that we are extending the exchange offer for a specified period of time.
Procedures for Tendering
Unless the tender is being made in book-entry form, to tender in the
exchange offer, a holder must complete, sign and date the letter of
transmittal, or a facsimile of it,
. have the signatures guaranteed if required by the letter of
transmittal and
30
<PAGE>
. mail or otherwise deliver the letter of transmittal or the
facsimile, the old notes and any other required documents, to the
exchange agent prior to 5:00 p.m., New York City time, on the
expiration date.
Any financial institution that is a participant in DTC's system may make
book-entry delivery of the old notes by causing DTC to transfer the old notes
into the exchange agent's account. In connection with the delivery of old notes
through book-entry transfer into the exchange agent's account at DTC, the
letter of transmittal (or facsimile), with any required signature guarantees
and any other required documents or an agent's message (as described below),
must be transmitted to and received or confirmed by the exchange agent at its
addresses set forth under the caption "Exchange Agent," below, prior to 5:00
p.m., New York City time, on the expiration date. Delivery of documents to DTC
in accordance with its procedures does not constitute delivery to the exchange
agent.
To effectively tender notes through DTC, the financial institution that
is a participant in DTC will electronically transmit its acceptance through the
Automatic Tender Offer Program. DTC will then edit and verify the acceptance
and send an agent's message to the exchange agent for its acceptance. The term
"agent's message" means a message transmitted by DTC, received by the exchange
agent and forming part of the book-entry confirmation, which states that DTC
has received an express acknowledgment from a participant in DTC that is
tendering old notes that are the subject of such book-entry confirmation; that
the participant has received and agrees to be bound by the terms of the
applicable letter of transmittal; and that we may enforce such agreement
against that participant. The exchange agent will make a request to establish
an account for the notes of DTC for the purposes of the exchange offer promptly
after the date of this prospectus.
The method of delivery of old notes and the letter of transmittal and all
other required documents to the exchange agent is at the election and risk of
the holders. Instead of delivery by mail, we recommend that holders use an
overnight or hand delivery service. In all cases, holders should allow
sufficient time to assure delivery to the exchange agent before the expiration
date. No letter of transmittal of old notes should be sent to us. Holders may
request their respective brokers, dealers, commercial banks, trust companies or
nominees to effect the tenders for such holders.
Any beneficial owner whose old notes are registered in the name of a
broker, dealer, commercial bank, trust company or other nominee and who wishes
to tender should contact the registered holder promptly and instruct such
registered holder to tender on behalf of the beneficial owner. If the
beneficial owner wishes to tender on that owner's own behalf, the owner must,
prior to completing and executing the letter of transmittal and delivery of
such owner's old notes, either make appropriate arrangements to register
ownership of the old notes in the owner's name or obtain a properly completed
bond power from the registered holder. The transfer of registered ownership may
take considerable time.
Signature on a letter of transmittal or a notice of withdrawal, must be
guaranteed, unless the old notes tendered pursuant thereto are tendered:
. by a registered holder who has not completed the box entitled
"Special Issuance Instructions" or "Special Delivery Instructions"
on the letter of transmittal, or
. for the account of an eligible institution (as described below).
31
<PAGE>
In the event that signatures on a letter of transmittal or a notice of
withdrawal, are required to be guaranteed, such guarantee must be by an
eligible institution.
An "eligible institution" is a member firm of a registered notional
securities exchange or of the National Association of Securities Dealers, Inc.,
a commercial bank or trust company having an office or correspondent in the
United States or an eligible guarantor institution within the meaning of the
Exchange Act, which is a member of the Securities Transfer Agents Medallion
Program or the Stock Exchange Medallion Signature Program.
If the letter of transmittal is signed by a person other than the
registered holder of any old notes, the old notes must be endorsed by the
registered holder or accompanied by a properly completed bond power signed by
the registered holder.
If the letter of transmittal or bond powers are signed or endorsed by
trustees, executors, administrators, guardians, attorney-in-fact, officers of
corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and unless waived by us, submit
evidence satisfactory to us of their authority to act in that capacity with the
letter of transmittal.
Guaranteed Delivery Procedures
If you desire to accept the exchange offer, and
. certificates for the old notes are not immediately available,
. time will not permit a letter of transmittal or notes to reach the
exchange agent before the expiration date, or
. the procedure for book-entry transfer cannot be completed on a
timely basis,
a tender may be effected if the exchange agent has received at its addresses
set forth under the caption "Exchange Agent" below prior to 5:00 p.m., New York
City time, on the expiration date from an eligible institution a properly
completed and duly executed notice of guaranteed delivery, substantially in the
form provided by us, setting forth:
. the name and address of the registered holder,
. the certificate numbers of the old notes,
. the principal amount of such notes to be tendered,
. stating that the tender is being made thereby and
. guaranteeing that within five New York Stock Exchange trading days
after the expiration date, the old notes, in proper form for
transfer, or a confirmation of book-entry transfer of such notes
into the exchange agent's account at DTC, will be delivered by such
eligible institution together with a properly completed and duly
executed letter of transmittal, and any other required documents,
or, if applicable, an agent's message in lieu of the letter of
transmittal.
Unless notes being tendered by the above-described method are deposited with
the exchange agent within the time period set forth above, accompanied or
preceded by a properly completed letter
32
<PAGE>
of transmittal and any other required documents or, if applicable, an agent's
message in lieu of the letter of transmittal, we may, at our option, reject the
tender.
Acceptance of Old Notes for Exchange
The tender by a holder of old notes will constitute an agreement between
us and the holder in accordance with the terms and subject to the conditions
set forth in this prospectus and in the letter of transmittal.
All questions as to the validity, form, eligibility, including time of
receipt and acceptance for exchange of any tender of notes will be determined
by us, which determination will be final and binding. We reserve the absolute
right to reject any or all tenders not in proper form or the acceptance for
exchange of which may, in the opinion of our counsel, be unlawful. We also
reserve the absolute right to waive any defect or irregularity in the tender of
any notes. In addition, we reserve the right to waive any of the conditions of
the exchange offer in our reasonable discretion.
Our interpretation of the terms and conditions of the exchange offer
(including the instructions in the letter of transmittal) will be final and
binding, on all parties. Unless waived, any defects or irregularities in
connection with tenders of old notes must be cured within a time period we will
determine. Although we intend to request the exchange agent to notify holders
of defects or irregularities relating to tenders of old notes, neither we, the
exchange agent nor any other person will have any duty or incur any liability
for failure to give such notification. Tenders of old notes will not be
considered to have been made until such defects or irregularities have been
cured or waived. Any old notes received by the exchange agent that are not
properly tendered and as to which the defects or irregularities have not been
cured or waived will be returned by the exchange agent to the tendering
holders, unless otherwise provided in the letter of transmittal, as soon as
practicable following the expiration date.
By tendering, you will represent to us that, among other things,
. the new notes acquired pursuant to the exchange offer are being
obtained in the ordinary course of your business,
. you have no arrangement with any person to participate in the
distribution of such new notes,
. you are not an "affiliate," as defined under the Securities Act, of
us, and
. if you are a broker or a dealer, as defined in the Exchange Act,
that you acquired the old notes for your own account as a result of
market-making activities or other trading activities and that you
will comply with the registration and prospectus delivery
requirements of the Securities Act.
Withdrawal of Tenders
Except as otherwise provided herein, tenders of notes may be withdrawn at
any time prior to 5:00 p.m., New York City time, on the expiration date.
To withdraw a tender of notes in the exchange offer, a written
transmission notice of withdrawal via telegram, telex, facsimile transmission
or letter must be received by the exchange agent at its address set forth under
the caption "Exchange Agent" below prior to 5:00 p.m., New York City time, on
the expiration date. Any such notice of withdrawal must:
. specify the name of the person having deposited the notes to be
withdrawn,
. identify the notes to be withdrawn (including the certificate number
or numbers and principal amount of such notes) or, in the case of
old notes transferred by book-entry transfer, the name and number of
the account at DTC to be credited,
33
<PAGE>
. be signed by the person having deposited the notes to be withdrawn
in the same manner as the original signature on the letter of
transmittal by which such notes were tendered (including any
required signature guarantees) or be accompanied by documents of
transfer sufficient to have the trustee with respect to the notes
register the transfer of such notes into the name of the person
having made the original tender and withdrawing the tender, and
. specify the name in which any such notes are to be registered, if
different from that of the person having deposited the notes to be
withdrawn.
All questions as to the validity, form and eligibility, including time of
receipt, of such withdrawal notices will be determined by us, which
determination shall be final and binding on all parties. Any old notes you
withdraw will be deemed not to have been validly tendered for purposes of the
exchange offer, and no new notes will be issued to you with respect thereto
unless the old notes so withdrawn are validly retendered. Any old notes that
have been tendered but that are not accepted for exchange will be returned to
you as soon as practicable after withdrawal, rejection of tender or termination
of the exchange offer. Properly withdrawn notes may be retendered by following
one of the procedures described above under "Procedures for Tendering" at any
time prior to the expiration date.
Conditions
The exchange offer is not subject to any conditions other than that the
exchange offer does not violate applicable law or any applicable interpretation
of the staff of the SEC.
Accounting Treatment
The new notes will be recorded at the same carrying value as the old
notes as reflected in our accounting records on the date of the exchange.
Accordingly, we will not recognize any gain or loss for accounting purposes
upon the completion of the exchange offer. Any expenses of the exchange offer
that we paid will be capitalized and amortized over the term of the new notes.
34
<PAGE>
Exchange Agent
Norwest Bank Minnesota, National Association has been appointed as
exchange agent for the exchange offer. Questions and requests for assistance
and requests for additional copies of this prospectus or of the letter of
transmittal and deliveries of completed letters of transmittal with tendered
notes should be directed to the exchange agent addressed as follows:
<TABLE>
<S> <C> <C>
BY REGISTERED OR BY HAND DELIVERY OR
CERTIFIED MAIL: OVERNIGHT COURIER: IN PERSON:
Norwest Bank Minnesota Norwest Bank Minnesota, Norwest Bank Minnesota,
National Association National Association National Association
Corporate Trust Operations Corporate Trust Operations Norstar East Bldg.
P.O. Box 1517 Norwest Center 608 2nd Ave. S.
Minneapolis, MN 55480-1517 Sixth and Marquette 12th Floor
Minneapolis, MN 55479-0113 Corporate Trust Services
Minneapolis, MN 55479-0113
</TABLE>
BY FACSIMILE:
(612) 667-4927
CONFIRM BY TELEPHONE
(612) 667-9764
Fees and Expenses
We will not make any payments to brokers, dealers, or others soliciting
acceptances of the exchange offer. We will, however, pay the exchange agent
reasonable and customary fees for its services and will reimburse the exchange
agent for its reasonable out-of-pocket expenses in connection with the exchange
offer. We may also pay brokerage houses and other custodians, nominees and
fiduciaries the reasonable out-of-pocket expenses incurred by them in
forwarding copies of this prospectus, letters of transmittal and related
documents to you in handling or forwarding tenders for exchange. In addition we
will pay legal and accounting fees that we incur in connection with this
exchange offer.
35
<PAGE>
CAPITALIZATION
The following table presents the actual consolidated capitalization of
Centennial and Centennial Cellular Operating as of February 28, 1999. You
should read this table with "The Merger," the unaudited consolidated financial
statements of Centennial, including the notes to the unaudited consolidated
financial statements for the nine months ended February 28, 1999, incorporated
by reference into this prospectus and the unaudited pro forma financial
statements included in this prospectus. See "Unaudited Pro Forma Financial
Information."
<TABLE>
<CAPTION>
As of February 28, 1999
------------------------------
Centennial
Centennial Cellular Operating
---------- ------------------
(Dollars in thousands)
<S> <C> <C>
Cash........................................... $ 33,914 $ 33,914
========== ==========
Restricted investments(1)...................... $ 57,501 $ 57,501
========== ==========
Debt (including current portion):
Credit facility(2)............................. $ 933,875 $ 933,875
Notes issued in the offering(1)................ 370,000 370,000
Notes issued in WCAS Capital Partners
financing(3).................................. 157,875 --
Senior notes due 2001 and 2005................. 1,607 1,607
---------- ----------
Total debt..................................... 1,463,357 1,305,482
Stockholders' deficit.......................... (605,800) (447,925)
---------- ----------
Total capitalization........................... $ 857,557 $ 857,557
========== ==========
</TABLE>
- --------
(1) Upon consummation of the merger, approximately $57,501 of the proceeds from
the notes were used to purchase securities pledged to pay the first three
scheduled interest payments on the notes. See "Description of the New
Notes--Security."
(2) Centennial has the ability to borrow an additional $116,125 for general
corporate purposes pursuant to a revolving credit facility under the credit
facility.
(3) Represents the debt portion of $180,000 principal amount of subordinated
notes and Centennial common shares issued in the financing provided by WCAS
Capital Partners III, L.P.
36
<PAGE>
SELECTED FINANCIAL AND OPERATING INFORMATION
The following table presents certain selected unaudited historical
consolidated financial information for Centennial and its subsidiaries
. as of February 28, 1999 and 1998 and for the nine months ended
February 28, 1999 and 1998,
. as of and for the five years ended May 31, 1998.
You should read this table with "Use of Proceeds," "Unaudited Pro Forma
Financial Information" and the consolidated financial statements, including in
each case the notes to those financial statements, included elsewhere in this
prospectus.
<TABLE>
<CAPTION>
Nine months ended
February 28, Years ended May 31,
---------------------- --------------------------------------------------------
1999 1998 1998 1997 1996 1995 1994
---------- ---------- ---------- ---------- ---------- --------- ---------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Statement of Operations
Data:
Domestic operating
revenue................ $ 174,980 $ 133,953 $ 182,944 $ 145,120 $ 112,197 $ 85,419 $ 56,373
Puerto Rico operating
revenue................ 87,611 35,752 54,557 5,903 -- -- --
---------- ---------- ---------- ---------- ---------- --------- ---------
Total operating
revenue................ 262,591 169,705 237,501 151,023 112,197 85,419 56,373
Cost of services and
equipment sold......... 50,783 42,248 54,818 38,228 26,129 22,152 13,424
---------- ---------- ---------- ---------- ---------- --------- ---------
Gross profit............ 211,808 127,457 182,683 112,795 86,068 63,267 42,949
Selling, general and
administrative......... 81,460 62,142 81,790 55,132 34,188 26,055 17,787
Depreciation and
amortization........... 97,702 82,637 114,194 83,720 70,989 65,642 47,652
Recapitalization costs.. 58,852 0 0 0 0 0 0
---------- ---------- ---------- ---------- ---------- --------- ---------
Operating loss.......... (26,206) (17,322) (13,301) (26,057) (19,109) (28,430) (22,490)
Interest expense--net... 48,553 31,801 45,155 33,379 27,886 23,357 21,040
Gain on sale of assets.. 8,414 8 5 3,819 8,310 -- --
Income from Minority
Cellular Investment
Interests(1)........... 9,352 9,843 13,069 15,180 10,473 4,670 3,645
---------- ---------- ---------- ---------- ---------- --------- ---------
Loss before income tax
benefit and minority
interest............... (56,993) (39,272) (45,382) (40,437) (28,212) (47,117) (39,885)
Income tax benefit...... (10,114) (13,527) (13,597) (7,295) (11,596) (14,456) (11,780)
Minority interest in
income (loss) of
subsidiaries(2)........ 142 (337) 162 153 15 69 (321)
---------- ---------- ---------- ---------- ---------- --------- ---------
Loss from continuing
operations............. (46,737) (26,082) (31,947) (33,295) (16,631) (32,730) (27,784)
Extraordinary loss on
early extinguishment of
debt, net of tax....... (40,526) 0 0 0 0 0 0
---------- ---------- ---------- ---------- ---------- --------- ---------
Net loss................ $ (87,263) $ (26,082) $ (31,947) $ (33,295) $ (16,631) $ (32,730) $ (27,784)
========== ========== ========== ========== ========== ========= =========
Ratio of earnings to
fixed Charges(3)....... -- -- -- -- -- -- --
Other Consolidated Data:
Adjusted EBITDA(4)...... $ 130,348 $ 65,315 $ 99,208 $ 55,852 $ 47,793 $ 34,444 $ 24,080
Adjusted EBITDA margin.. 49.6% 38.5% 42.1% 37.4% 44.2% 41.7% 43.6%
Cash flows provided by
(used in):
Operating activities... $ 98,654 $ 46,196 $ 54,771 $ 26,956 $ 24,282 $ 10,390 $ (3,558)
Investing activities... (51,262) (99,290) (126,111) (118,094) (78,765) (79,834) (64,749)
Financing activities... (28,098) 24,274 42,545 67,256 152 182,722 65,702
Capital expenditures.... 69,819 103,187 129,300 88,990 38,082 17,538 8,947
Net Pops(5)(6).......... 10,846,000 10,846,000 10,846,000 10,846,000 10,661,000 6,491,500 5,020,400
Subscribers(5).......... 426,700 298,500 322,200 203,900 135,000 85,900 49,000
</TABLE>
37
<PAGE>
<TABLE>
<CAPTION>
Nine months ended
February 28, Years ended May 31,
---------------------- ----------------------------------------------------------
1999 1998 1998 1997 1996 1995 1994
---------- ---------- ---------- ---------- ---------- ---------- ----------
(Dollars in thousands, except as noted)
<S> <C> <C> <C> <C> <C> <C> <C>
Other Rural Cellular
Data:
Adjusted EBITDA(4)...... $ 91,520 $ 60,249 $ 86,669 $ 64,278 $ 48,208 $ 34,511 $ 24,080
Adjusted EBITDA margin.. 52.3% 45.0% 47.8% 44.9% 44.6% 41.8% 43.6%
Net loss: .............. (76,736) (1,890) (1,188) (16,081) (15,585) (32,650) (27,784)
Cash Flow provided by
(used in):
Operating............. 69,385 46,441 50,139 36,919 25,068 10,430 (3,558)
Investing............. (7,018) (21,395) (52,023) (59,633) (79,574) (79,874) (64,749)
Financing............. (37,702) (56,848) (32,431) (3,742) 152 182,722 65,702
Capital expenditures.... $ 25,130 $ 31,363 $ 38,996 $ 38,921 $ 22,604 $ 17,319 $ 8,947
Net Pops (excluding
Minority Cellular
Investment
Interests)(5)(6)....... 5,831,000 5,777,000 5,777,000 5,777,000 5,592,000 5,412,100 3,941,000
Subscribers............. 309,300 237,900 252,700 187,000 135,000 85,900 49,000
Penetration(5)(7)....... 5.3% 4.1% 4.4% 3.2% 2.4% 1.6% 1.2%
Churn rate(10).......... 1.9% 1.8% 1.8% 2.3% 2.5% 2.5% 3.0%
Average monthly revenue
per unit (actual
dollars)(8)............ $ 69 $ 70 $ 68 $ 73 $ 74 $ 68 $ 69
Acquisition cost per
cellular customer
(actual dollars)(9).... $ 316 $ 307 $ 308 $ 343 $ 351 $ 431 $ --
Cell sites(5)........... 400 329 363 212 185 -- --
Retail and service
centers(5)............. 69 58 59 41 25 -- --
Other Centennial de
Puerto Rico Data:
Adjusted EBITDA(4)...... $ 38,828 $ 5,066 $ 12,539 $ (8,426) $ (415) $ (67) --
Adjusted EBITDA margin.. 44.3% 14.2% 23.1% n.a. n.a. n.a. --
Net loss: .............. (10,527) (24,192) (30,759) (17,214) (1,046) (80)
Cash Flow provided by
(used in):
Operating............. 29,269 (245) 4,632 (9,963) (786) (40) --
Investing............. (44,244) (77,895) (74,088) (58,461) 809 40 --
Financing............. 9,604 81,122 74,976 70,998 -- -- --
Capital expenditures.... $ 44,689 $ 71,824 $ 90,304 $ 50,069 $ 15,478 $ 219 --
Net Pops(5)............. 3,839,000 3,839,000 3,839,000 3,839,000 3,839,000 -- --
Subscribers(5).......... 117,400 60,600 69,500 16,900 -- -- --
Penetration(5)(7)....... 3.1% 1.6% 1.8% 0.4% -- -- --
Churn rate(10).......... 3.5% 4.0% 4.6% 2.6% -- -- --
Average monthly revenue
per unit (actual
dollars)(8)............ $ 91 $ 94 $ 92 $ 113 -- -- --
Acquisition cost per
cellular customer
(actual dollars)(9).... $ 203 $ 166 $ 164 $ 310 -- -- --
Cell sites(5)........... 125 109 113 74 -- -- --
Retail and service
centers(5)............. 51 35 44 25 -- -- --
</TABLE>
<TABLE>
<CAPTION>
As of February 28, As of May 31,
-------------------- --------------------------------------------
1999 1998 1998 1997 1996 1995 1994
---------- -------- -------- -------- -------- -------- --------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Balance Sheet Data:
Total Assets............ $ 956,672 $837,056 $847,417 $844,850 $785,812 $844,384 $502,384
Long-term Debt.......... 1,458,857 490,000 510,000 429,000 350,000 350,000 250,000
Redeemable preferred
stock.................. 0 193,539 193,539 193,539 189,930 176,340 163,706
Common stockholders'
equity (deficit)....... (605,800) 51,205 40,409 112,882 160,006 188,831 24,143
</TABLE>
38
<PAGE>
<TABLE>
<CAPTION>
Nine months ended Year ended
February 28, 1999 May 31, 1998
-------------------- --------------------
(Dollars in thousands)
Historical Pro Forma Historical Pro Forma
---------- --------- ---------- ---------
<S> <C> <C> <C> <C>
Pro Forma Data:
Revenues........................... $262,591 $262,591 $237,501 $ 235,816
Costs and expenses................. 288,797 230,508 250,802 251,552
-------- -------- -------- ---------
Operating income (loss)............ (26,206) 32,083 (13,301) (15,736)
Net loss........................... $(87,263) $(54,931) $(31,947) $(143,411)
======== ======== ======== =========
</TABLE>
- --------
(1) Represents our proportionate share of profits and losses based on our
interest in earnings of limited partnerships controlled and managed by
other cellular operators which we account for on the equity method.
(2) Represents the percentage share of earnings of our consolidated
subsidiaries that is allocable to unaffiliated holders of minority
interests.
(3) For the purposes of determining the ratio of earnings to fixed charges,
earnings are defined as earnings before income taxes, minority interest and
extraordinary items, plus fixed charges. Fixed charges include interest
expense on all indebtedness, amortization of deferred debt issuance costs
and one-third of rental expense on operating leases representing that
portion of rental expense deemed to be attributable to interest. The ratio
of earnings to fixed charges is less than one-to-one for all periods
presented and, therefore, earnings are inadequate to cover fixed charges.
The amount by which earnings are less than fixed charges for the nine
months ended February 28, 1999 and 1998 are $56,993 and $39,272,
respectively, and for the years ended May 31, 1998, 1997, 1996, 1995 and
1994 are $45,382, $43,189, $33,412, $47,117 and $39,885, respectively.
(4) Adjusted EBITDA is defined, for any period, as earnings before income from
minority cellular investment interests that are controlled and managed by
third parties, allocations to minority interests in consolidated
subsidiaries, interest expense, interest income, income taxes, depreciation
and amortization, recapitalization costs, extraordinary loss on early
extinguishment of debt and gain on sale of assets. EBITDA is commonly used
to analyze companies on the basis of operating performance, leverage and
liquidity. While Adjusted EBITDA should not be construed as a substitute
for operating income or a better measure of liquidity than cash flow from
operating activities, which are determined in accordance with generally
accepted accounting principles. It is included in this prospectus because
management believes that it provides additional information with respect to
the anticipated ability of Centennial to meet future debt service, capital
expenditures and working capital requirements.
(5) As of period-end.
(6) For the periods ended January 28, 1999 and 1998 and the years ended May 31,
1997 and 1996, the number of Net Pops is based on the 1997 Kagan's Cellular
Telephone Atlas. For the years ended May 31, 1995 and May 31, 1994, the
number of Net Pops is based on 1990 population figures of a metropolitan
service area or a rural service area, as derived from the 1990 U.S. Census
data.
(7) The penetration rate equals the percentage of total population in our
service areas who are subscribers to our cellular service as of period-end.
(8) ARPU is defined as total monthly revenue per average subscriber.
39
<PAGE>
(9) For the year ended as of the date shown. Determined for each period as
total marketing cost plus cost of equipment sales (net of associated
revenue), divided by the total subscriber activations during the fiscal
year.
(10) Churn is defined as the number of wireless subscriber cancellations per
month as a percentage of the weighted average total wireless subscribers
at the beginning of the period. Churn is stated as the average monthly
churn rate for the period.
Subsequent Event
We have entered into an agreement to acquire 100% of the ownership
interests in a partnership owning the wireless telephone system serving the
Allegen, Michigan rual service area. The Allegen market represents
approximately 100,000 net pops. Our obligation to consummate this transaction
is subject to certain closing conditions, including the relevant regulatory
approvals. We have anticipated completing this acquisition in October 1999.
40
<PAGE>
CENTENNIAL CELLULAR CORP.
CENTENNIAL CELLULAR OPERATING CO. LLC
UNAUDITED PRO FORMA FINANCIAL INFORMATION
We created the following pro forma consolidated financial statements by
making adjustments to our historical consolidated financial statements
incorporated by reference into this prospectus. The unaudited pro forma
statements of operations and other unaudited pro forma supplemental financial
information gives effect to
.financings related to the merger and
. the debt tender offers and the repayment or conversion of our other
existing indebtedness.
The pro forma statements of operations information for the fiscal year
ended May 31, 1998 and the nine months ended February 28, 1999 have been
prepared as if such transactions had occurred on June 1, 1997. The adjustments
are described in the accompanying notes.
You should not consider the pro forma consolidated financial statements
to be indicative of actual results that would have been achieved had the merger
and related transactions been consummated on the date or for the periods
indicated and do not purport to indicate results of operations as of any future
date or for any future period. You should read the pro forma consolidated
financial statements with our historical financial statements and the notes to
the historical financial statements incorporated by reference in this
prospectus.
A pro forma balance sheet as of February 28, 1999 is not presented
because the merger occurred on January 7, 1999.
The pro forma adjustments were applied to the respective historical
consolidated financial statements to reflect and account for the merger as a
recapitalization. Accordingly, the historical basis of the Centennial's assets
and liabilities have not been affected by the transaction.
41
<PAGE>
CENTENNIAL CELLULAR CORP.
CENTENNIAL CELLULAR OPERATING CO. LLC
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
For the Year Ended May 31, 1998
(Dollars in thousands)
<TABLE>
<CAPTION>
Pro Forma
------------------------
Centennial
Pro Forma Cellular
Historical Adjustments Centennial Operating(a)
---------- ----------- ---------- ------------
<S> <C> <C> <C> <C>
Revenues:
Service revenue.......... $231,097 $ -- $ 231,097 $ 231,097
Equipment sales.......... 4,719 -- 4,719 4,719
Interest income.......... 1,685 (1,685)(b) -- --
-------- --------- --------- ---------
237,501 (1,685) 235,816 235,816
-------- --------- --------- ---------
Cost and expenses:
Cost of cellular
service................. 38,389 -- 38,389 38,389
Cost of equipment sold... 16,429 -- 16,429 16,429
Selling, general and
administrative.......... 81,790 750 (c) 82,540 82,540
Depreciation and
amortization............ 114,194 -- 114,194 114,194
-------- --------- --------- ---------
250,802 750 251,552 251,552
-------- --------- --------- ---------
Operating loss............. (13,301) (2,435) (15,736) (15,736)
Interest expense........... 45,155 109,029 (e) 154,184 131,273
Gain on sale of assets..... 5 -- 5 5
Income from equity
investments............... 13,069 -- 13,069 13,069
-------- --------- --------- ---------
Loss before income tax
benefit and minority
interests................. (45,382) (111,464) (156,846) (133,935)
Income tax benefit......... (13,597) -- (f) (13,597) (13,597)
-------- --------- --------- ---------
Loss before minority
interest.................. (31,785) (111,464) (143,249) (120,338)
Minority income in income
of subsidiaries........... (162) -- (162) (162)
-------- --------- --------- ---------
Net loss................... $(31,947) $(111,464) $(143,411) $(120,500)
======== ========= ========= =========
Dividend on preferred
stock..................... $ 16,451 $ (16,451)(g) -- --
======== ========= ========= =========
Net loss applicable to
common stock.............. $(48,398) $ (95,013) $(143,411) $(120,500)
======== ========= ========= =========
</TABLE>
See Notes to Pro Forma Statements of Operations.
42
<PAGE>
CENTENNIAL CELLULAR CORP.
CENTENNIAL CELLULAR OPERATING CO. LLC
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
For the Nine Months Ended February 28, 1999
(Dollars in thousands)
<TABLE>
<CAPTION>
Pro Forma
-----------------------
Centennial
Pro Forma Cellular
Historical Adjustments Centennial Operating(a)
---------- ----------- ---------- ------------
<S> <C> <C> <C> <C>
Revenues:
Service revenue............ $257,209 $ -- $257,209 $257,209
Equipment sales............ 5,382 -- 5,382 5,382
-------- ------- -------- --------
Revenue...................... 262,591 -- 262,591 262,591
-------- ------- -------- --------
Cost and expenses:
Cost of cellular service... 35,347 -- 35,347 35,347
Cost of equipment sold..... 15,436 -- 15,436 15,436
Selling, general and
administrative............ 81,460 563 (c) 82,023 82,023
Depreciation and
amortization.............. 97,702 -- 97,702 97,702
Recapitalization expenses.... 58,852 (58,852)(d) -- --
-------- ------- -------- --------
288,797 58,289 230,508 230,508
-------- ------- -------- --------
Operating income (loss)...... (26,206) 58,289 32,083 32,083
Interest expense, net........ 48,553 66,483 (e) 115,036 98,456
Gain on sale of assets....... 8,414 -- 8,414 8,414
Income from equity
investments................. 9,352 -- 9,352 9,352
-------- ------- -------- --------
Loss before income tax
benefit and minority
interests................... (56,993) (8,194) (65,187) (48,607)
Income tax benefit........... (10,114) -- (f) (10,114) (10,114)
-------- ------- -------- --------
Income (loss) before minority
interest.................... (46,879) (8,194) (55,073) (38,493)
Minority interest in income
of subsidiaries............. 142 -- 142 142
-------- ------- -------- --------
Loss from continuing
operations.................. $(46,737) $(8,194) $(54,931) $(38,351)
======== ======= ======== ========
Dividend on preferred stock.. $ 9,906 $(9,906)(g) -- --
======== ======= ======== ========
Loss from continuing
operations applicable to
common stock................ $(56,643) $ -- $(54,931) $(38,351)
======== ======= ======== ========
</TABLE>
See Notes to Pro Forma Statements of Operations.
43
<PAGE>
CENTENNIAL CELLULAR CORP.
CENTENNIAL CELLULAR OPERATING CO. LLC
NOTES TO PRO FORMA STATEMENTS OF OPERATIONS
(Dollars in thousands)
We created the following pro forma financial data by making adjustments
to our historical financial statements for the periods noted. The merger has
been accounted for as a recapitalization. Accordingly, the historical basis of
our assets and liabilities have not been affected by the transaction. The pro
forma financial data assume that there were no dissenting stockholders to the
merger.
(a) The pro forma statement of operations of Centennial Cellular
Operating includes all of the same adjustments made for Centennial noted below
except interest expense related to the subordinated notes described in the
table under note (e).
(b) To eliminate interest income on overnight deposits.
(c) Represents estimated monitoring fee to be paid to Welsh Carson and
Blackstone.
(d) The pro forma statements of operations for the year ended May 31,
1998 do not include any adjustments for one-time non-recurring expenses
incurred at the closing of the recapitalization by Centennial and Centennial
Cellular Operating. Such amounts are recorded in the Statement of Operations
for the nine months ended February 28, 1999 and are deducted as an adjustment
in determining pro forma loss for the period.
(e) The pro forma adjustments to interest expense reflect the following:
<TABLE>
<CAPTION>
Year Ended Nine Months Ended
May 31, 1998 February 28, 1999
--------------------------------- ---------------------------------
Consolidated Centennial Consolidated Centennial
(including Parent) Rural Cellular (including Parent) Rural Cellular
------------------ -------------- ------------------ --------------
<S> <C> <C> <C> <C>
Credit Facility
Revolving credit
facility(1).......... $ 3,128 $ 3,128 $ 2,346 $ 2,346
Tranche A term
loans(2)............. 43,450 43,450 32,588 32,588
Tranche B term
loans(3)............. 18,380 18,380 13,785 13,785
Tranche C term
loans(4)............. 18,880 18,880 14,160 14,160
Notes issued in the
offering(5)............ 39,775 39,775 29,831 29,831
Notes issued in the WCAS
Capital Partners
financing(6)........... 9,199 -- 8,910 --
Commitment fee(7)....... 570 570 428 428
-------- -------- -------- --------
Cash Interest Expense... 133,382 124,183 102,048 93,138
Notes issued in the WCAS
Capital Partners
Financing(8)........... 11,441 -- 5,967 --
Amortization of discount
on subordinated
notes(9)............... 2,271 -- 1,703 --
Amortization of debt
issuance costs(10)..... 7,090 7,090 5,318 5,318
-------- -------- -------- --------
Pro forma interest
expense................ 154,184 131,273 115,036 98,456
Less: historical
interest expense on
debt repaid(11)........ (45,155) (45,155) (48,553) (48,553)
-------- -------- -------- --------
Total adjustment.... $109,029 $ 86,118 $ 66,483 $ 49,903
======== ======== ======== ========
</TABLE>
44
<PAGE>
- --------
(1) Represents interest on our revolving credit facility using an assumed
interest rate of 8.69%, assuming $36.0 million drawdown at the closing of
the merger.
(2) Represents interest on an assumed $500 million of the under our credit
facility tranche A term loans using an assumed interest rate of 8.69%.
(3) Represents interest on an assumed $200 million of the under our credit
facility tranche B term loans using an assumed interest rate of 9.19%.
(4) Represents interest on an assumed $200 million of the under our credit
facility tranche C term loans using an assumed interest rate of 9.44%.
(5) Represents interest on $370 million of the notes using an interest rate of
10.75%.
(6) Represents cash interest portion of the $180 million (in principal amount
at maturity) of the subordinated discount notes issued to WCAS Capital
Partners III.
(7) Represents a 0.5% commitment fee on the unused portion of our revolving
credit facility.
(8) Represents Paid in Kind portion of the $180 million of subordinated notes
issued in the WCAS Capital Partners financing.
(9) Represents the amortization of the discount ($22.5 million) on the shares
issued to the holder of notes issued to WCAS Capital Partners III.
(10) Represents amortization of deferred financing costs of $60.9 million over
the term of the related debt.
(11) Represents the elimination of historical interest expense.
A 0.125% increase or decrease in the assumed weighted average interest
rate applicable to our credit facility and the notes would change the pro forma
interest expense and income before taxes as follows:
<TABLE>
<CAPTION>
Year Ended Nine Months Ended
May 31, 1998 February 28, 1999
------------ -----------------
<S> <C> <C>
Credit facility
Revolving credit facility................. $ 45 $ 34
Tranche A term loans...................... 625 469
Tranche B term loans...................... 250 187
Tranche C term loans...................... 250 187
------ ----
Total................................... $1,170 $877
====== ====
</TABLE>
(f) No net tax benefit is provided for the pro forma adjustments to
earnings before taxes on the assumption that an offsetting increase to the
valuation allowance would be recorded with respect to the resultant tax loss
carryforward asset.
(g) To eliminate dividends on preferred stock redeemed as part of the
merger.
45
<PAGE>
BUSINESS
Centennial Cellular Corp.
Our company is one of the largest independent wireless communications
providers in the United States and Puerto Rico. Our service areas have a total
population of approximately 10.8 million, adjusted for our percentage ownership
in entities serving these areas. This adjusted population is commonly referred
to as net pops. We had 426,700 subscribers as of February 28, 1999. Centennial
Rural Cellular serves 5.8 million net pops and its service area covers
approximately 81,645 square miles. Our subsidiary, Centennial de Puerto Rico,
provides wireless and traditional telephone services over a common
communications network in Puerto Rico. Its licensed service areas cover 3.8
million net pops in Puerto Rico and the U.S. Virgin Islands. In addition, we
own minority shares, representing approximately 1.2 million net pops, in other
cellular operations controlled and managed by other cellular operators
(referred to as minority cellular investment interests).
The table below shows certain data for each of our two principal business
segments.
<TABLE>
<CAPTION>
Centennial de Puerto Rico
(Personal communication services
Centennial Rural Cellular wireless and traditional
(Cellular services) telephone services)
------------------------------ ---------------------------------------
Year ended Nine months ended Year ended Nine months ended
May 31, 1998 February 28, 1999 May 31, 1998 February 28, 1999
------------ ----------------- ---------------- ------------------
(in millions, except as noted)
<S> <C> <C> <C> <C>
Net pops................ 5.8 5.8 3.8 3.8
Subscribers (in
thousands)............. 252.7 309.3 69.5 117.4
Penetration............. 4.4% 5.3% 1.8% 3.1%
Revenue................. $182.9 $175.0 $ 54.6 $ 87.6
Adjusted EBITDA......... $ 86.7 $ 91.5 $ 12.5 $ 38.8
Annualized Adjusted
EBITDA................. $ 86.7 $122.0 $ 12.5 $ 51.8
Net loss................ $ (1.2) $(76.7) $ (30.7) $(10.5)
</TABLE>
For the year ended May 31, 1998, our company earned revenue of $237.5
million, representing a compound annual growth rate of 45% over the previous
two fiscal years. Adjusted EBITDA for the year ended May 31, 1998 was $99.2
million, representing a compound annual growth rate of 44% over the previous
two fiscal years. Net loss for the year ended May 31, 1998 was $31.9 million.
The success of our company's operating and financial performance has been
driven by the quality and experience of its management and employees. We expect
to continue to benefit from the experienced members of operating management who
are expected to remain at Centennial Rural Cellular following the merger. This
management team built us through internal growth and acquisitions from
approximately 1.7 million net pops in 1988 to approximately 10.8 million net
pops (including those in Puerto Rico and minority cellular investment
interests) as of February 28, 1999. The addition of Michael Small, formerly the
Chief Financial Officer of 360(degrees) Communications Company, now a
subsidiary of ALLTEL Corporation, as our Chief Executive Officer since January
7, 1999complements the existing management team. Rudy J. Graf, currently
President and Chief Executive Officer of Centennial de Puerto Rico, who was the
Chief Operating Officer of Centennial since 1991, manages the day-to-day
operations of Centennial de Puerto Rico, our subsidiary inPuerto Rico.
46
<PAGE>
Rural Cellular Systems
Our domestic consolidated systems are among the leading independent
providers of rural non-wireline cellular telecommunications services. We
attempt to acquire cellular systems next to our existing markets. We focus on
underdeveloped rural and small-city cellular areas that have a significant
number of potential customers for wireless communications because we believe
these areas offer:
. Potential Penetration Growth. We believe these areas are in the
early stages of their growth cycles and offer significant
opportunities for increases in penetration of the market for users
and potential users of cellular services and in cellular usage by
subscribers;
. Insulation from Potential Competition. These regions are currently
subject to less competition from other wireless providers, such as
personal communications services, as compared to larger metropolitan
service areas. The population density of these regions suggests that
the construction of a personal communications services network may
not be economically attractive to competitors at present.
. Above-Average Revenue per Subscriber. Our domestic markets are
strategically located between larger metropolitan areas and tend to
exhibit long commute times and well-traveled roadways. Customers of
other wireless communications providers who enter our service areas
and use their wireless phones have the potential to generate high
levels of cellular revenues. That use outside the subscriber's local
area is commonly referred to as roaming.
Our domestic cellular interests consist primarily of three operating
clusters:
. Michiana Cluster contains approximately 3.4 million net pops in
Michigan, Ohio and Indiana, covering portions of three major
interstate highways that connect Chicago, Detroit and Indianapolis.
. East Texas/Louisiana Cluster contains approximately 2.1 million net
pops, covering portions of interstate highway I-10, as well as
sections of Texas, Louisiana and Mississippi adjacent to Houston,
New Orleans, Shreveport and Baton Rouge.
. Southwestern Cluster contains approximately 296,000 net pops,
covering the Yuma, Arizona and El Centro, California markets and is
bordered by Los Angeles to the northwest, San Diego to the west,
Phoenix to the east and Mexicali, Mexico to the south.
Our domestic operations have achieved significant increases in revenue,
Adjusted EBITDA and number of subscribers since 1988. For the year ended May
31, 1998, our domestic operations earned revenue of $182.9 million,
representing a compound annual growth rate of 28% over the previous two fiscal
years. Adjusted EBITDA from domestic operations for the year ended May 31, 1998
was $86.7 million, representing a compound annual growth rate of 34% over the
previous two fiscal years. Net loss for the year ended May 31, 1998 was $1.2
million. As of May 31, 1998, our domestic operations had approximately 252,700
subscribers, representing a compound annual growth rate of 37% over the number
of subscribers in the previous two fiscal years.
47
<PAGE>
Puerto Rico Systems
Our Puerto Rico business, which is conducted through our subsidiary in
Puerto Rico, provides a broad range of wireless and traditional telephone
services in the Commonwealth of Puerto Rico, an area covering approximately
3.8 million net pops. Centennial de Puerto Rico owns its own communications
network, making it a so-called "facilities-based" provider of communications
services. It is
. the only provider of personal communications services in the Puerto
Rico market,
. a provider of wireless telephone services to both business and
residential customers, and
. a provider of local and long distance telephone services and data
services through its subsidiary, Lambda Operations, Inc., which
competes with the incumbent Puerto Rico Telephone Company. We
believe that Puerto Rico represents an attractive market for
communications services due to unmet demand for wireless and local
phone service, high population density in the island's metropolitan
areas, a growing economy and a stable business environment.
Our subsidiary in Puerto Rico offers communications services using a
shared switch and its sophisticated fiber optic network, which contains over
314 miles of fiber laid throughout the island of Puerto Rico. The digital
personal communications services network allows for coverage in most areas of
Puerto Rico using its established base of 120 wireless antenna sites and
digital technology to transmit its calls.
. Wireless Services. Our subsidiary in Puerto Rico offers both
personal communications services and wireless local telephone
service to its customers.
. Personal Communications Services. Personal communication services
refer to the series of two-way communication licenses recently
awarded by the FCC which are expected to use digital wireless
technologies. Our personal communications services business
currently covers approximately 85% of the total population on the
island of Puerto Rico and targets high volume users. We began
offering personal communication services in December 1996. As of
February 28, 1999, we had approximately 99,600 subscribers, an
increase of 83% over our approximately 54,500 subscribers at
February 28, 1998. Our total average revenue per personal
communications services customer was approximately $89 during the
nine months ended February 28, 1999, compared to approximately $46
for the average U.S. wireless customer for the nine months ended
September 30, 1998, according to data from the Cellular Telephone
Industry Association.
. Wireless local telephone services. Centennial de Puerto Rico began
offering wireless telephone service to business and residential
customers in August 1997. Our total average revenue per wireless
telephone customer was $94 during the nine months ended February 28,
1999. This service uses our fully digital network in Puerto Rico and
had over 17,800 subscribers as of February 28, 1999.
. Traditional Telephone Services. Competitive local exchange carrier
license authorizes us to connect customers to the local telephone
network and to provide local telephone service. Lambda Operations,
Inc. provides local, long distance and data services, including
internet-related services, to business and government customers
48
<PAGE>
over our fiber optic network. We believe that our targeted customers
have sophisticated communications service requirements, including
the need for a reliable network providing data access and private
line services and high quality customer service. Lambda has grown
rapidly since its inception in September 1997, primarily due to its
ability to offer a broad range of products as well as responsive and
reliable service in an underserved market. Lambda provided
approximately 56.9 million minutes of use to its customers in
February 1999, an increase of 155% over the minutes of use provided
in May 1998.
Since operations commenced in December 1996, our subsidiary in Puerto
Rico has achieved significant growth in subscribers, revenue and Adjusted
EBITDA, which we attribute to our premium service capabilities, experienced
local management team and limited competition in the region. Revenue for the
fiscal year ended May 31, 1998 was $54.6 million, compared to $5.9 million for
the year ended May 31, 1997. Adjusted EBITDA for the fiscal year ended May 31,
1998 was $12.5 million, compared to an Adjusted EBITDA deficit of $(8.4)
million for the prior period. Net loss for the year ended May 31, 1998 was
$30.8 million. Revenue for the nine months ended February 28, 1999 was $87.6
million. Adjusted EBITDA for the nine months ended February 28, 1999 was $38.8
million or $51.8 million on an annualized basis. Net loss for the nine months
ended February 28, 1999 was $10.5 million.
Additional Information
You can find more information about our business, competition,
regulation, employees, properties and legal proceedings in our
. Annual Report on Form 10-K for the fiscal year ended May 31, 1998,
. Quarterly Reports on Form 10-Q for the quarters ended August 31,
1998, November 30, 1998 and February 28, 1999, and
. Current Reports on Form 8-K filed on July 16, 1998, October 19,
1998, December 7, 1998 and January 22, 1999.
Each of these documents is incorporated by reference into this prospectus. You
can get copies of these documents by contacting us as indicated under "Where
You Can Find More Information" on page 2 of this prospectus.
49
<PAGE>
MANAGEMENT
Directors and Executive Officers
Centennial Cellular Operating
Centennial Cellular Operating is a member-managed limited liability
company organized under Delaware law. The sole member of Centennial Cellular
Operating is Centennial. The executive officers of Centennial Cellular
Operating are identical to and hold identical positions as the persons
identified below as directors and executive officers of Centennial.
Centennial
Executive officers of Centennial are elected annually by the Board of
Directors and serve until their successors are duly elected and qualified.
Centennial has 7 directors. Each director is elected annually and serves until
their successors are duly elected and qualified.
On January 7, 1999, upon the consummation of the merger, the directors
identified below were designated by Welsh Carson VIII and Blackstone and
elected to the Board of Directors. There are no arrangements or understandings
between any officer and any other person pursuant to which the officer was
selected, and there are no family relationships between any executive officers
or any directors of Centennial. The names, ages and positions of the executive
officers and directors of Centennial are listed below along with their business
experience during at least the past five years.
<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<S> <C> <C>
Michael J. Small................. 41 President and Chief Executive Officer
(Centennial) and Director
Rudy J. Graf..................... 50 President and Chief Executive Officer
(Centennial de Puerto Rico) and Director
Peter W. Chehayl................. 51 Senior Vice President, Treasurer and Chief
Financial Officer
Phillip H. Mayberry.............. 46 President--Domestic Operations
Kari L. Jordan................... 45 President--Caribbean Operations
Thomas R. Cogar, Jr. ............ 42 Senior Vice President--Engineering
Michael Marrero.................. 37 Senior Vice President--Engineering (Puerto
Rico)
Thomas E. Bucks.................. 42 Senior Vice President--Controller
John H. Casey, III............... 42 Senior Vice President--Administration
Thomas E. McInerney.............. 57 Chairman, Board of Directors
Anthony J. de Nicola............. 34 Director
Rudolph E. Rupert................ 33 Director
Mark T. Gallogly................. 42 Director
Lawrence H. Guffey............... 30 Director
</TABLE>
In addition to the persons named above, the stockholders of Centennial
will elect two outside directors, who have not yet been designated.
Our directors are elected under a stockholders agreement that is
described in detail under "Certain Relationships and Related Transactions--
Agreements between Centennial Cellular Corp. and Its Stockholders--Stockholders
Agreement" beginning on page 61.
50
<PAGE>
Michael J. Small is President and Chief Executive Officer of Centennial.
Upon the consummation of the merger he became Chief Executive Officer and a
director of Centennial. Prior to joining Centennial, Mr. Small served as
Executive Vice President and Chief Financial Officer of 360(degrees)
Communications Company since 1995. 360(degrees) Communications is now a
subsidiary of ALLTEL Corporation. Before 1995, he served as President of Lynch
Corporation, a diversified acquisition-oriented company with operations in
telecommunications, manufacturing and transportation services.
Rudy J. Graf is President and Chief Executive Officer of Centennial de
Puerto Rico and a director of Centennial. He had been Chief Operating Officer
of Centennial since August 1991, and was Vice President, Operations of
Centennial from November 1990 to August 1991. Before joining Centennial, Mr.
Graf served in various executive capacities, including Regional Vice President
from December 1987 to July 1990 and as Vice President and General Manager from
December 1985 to November 1987 of Metromedia Company, a cellular telephone
company.
Peter W. Chehayl became Senior Vice President, Treasurer and Chief
Financial Officer of Centennial upon the consummation of the Merger. Before
joining Centennial, Mr. Chehayl was the Vice President and Treasurer of
360(degrees) Communications Company (now a subsidiary of ALLTEL Corporation)
since 1996. From 1991 to 1996, he served as Vice President--Capital Markets at
Sprint Corporation.
Phillip H. Mayberry has been President--Domestic Operations of Centennial
since January 1999 and was Senior Vice President--Operations since December
1994. He served as Vice President, Operations of Centennial from April 1990 to
December 1994. From March 1989 to April 1990, Mr. Mayberry was a Vice President
and General Manager of Metro Mobile CTS, Inc., a cellular telephone company.
Kari L. Jordan has been President--Caribbean Operations of Centennial
since January 1999. She joined Centennial in January 1998 as Senior Vice
President of International Operations from PrimeCo where she was responsible
for the operations of the North Texas MTA. From 1990 to January 1997, Ms.
Jordan worked at US Cellular as Vice President of Business Development. During
her tenure at US Cellular, Ms. Jordan also served as Vice President of National
Operations and Regional General Manager.
Thomas R. Cogar, Jr. joined Centennial in September 1990 as Director of
Engineering and has been Senior Vice President, Engineering of Centennial since
August 1991. From May 1987 to September 1990, Mr. Cogar was employed by Metro
Mobile CTS, Inc. in various technical capacities, most recently as Northeast
Manager of Technical Operations.
Michael Marrero has been Senior Vice President--Engineering (Puerto Rico)
of Centennial since April 1997, and was Director of Technical Operations from
April 1995 to April 1997. Prior to joining Centennial, Mr. Marrero served as
the Manager of Strategic Planning for the PRTC from May 1988 to April 1995.
Before 1987, Mr. Marrero served in various capacities at Bell Corp.
Thomas E. Bucks has been Senior Vice President--Controller of Centennial
since March 1995. Before joining Centennial, Mr. Bucks was employed by
Southwestern Bell Corporation in various financial capacities, most recently as
District Manager--Financial Analysis and Planning.
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<PAGE>
John H. Casey, III has been Senior Vice President--Administration of
Centennial since July 1997 and served as Vice President--Operations from
January 1995 to June 1997. He was a regional manager of Centennial from January
1991 until December 1994. From August 1989 to December 1990, Mr. Casey was
employed by McCaw Cellular One as a district general manager.
Thomas E. McInerney is a director of Centennial Cellular Operating and
the Chairman of the board of directors of Centennial. He has served as a
managing member or general partner of the respective sole general partners of
Welsh Carson VIII and other associated investment partnerships since 1986. He
is a director of The Cerplex Group, Inc., The BISYS Group, Inc., MedE America
Corporation and several private companies.
Anthony J. de Nicola is a director of Centennial Cellular Operating and
of Centennial. He has served as a managing member or general partner of the
respective sole general partners of Welsh Carson VIII and other associated
investment partnerships since 1994. Previously he worked for William Blair &
Co. for four years financing middle market buyouts. He is a director of MedE
America Corporation and several private companies.
Rudolph E. Rupert is a director of Centennial Cellular Operating and
Centennial. In April, 1999, he became a managing member or general partner at
the respective sole general partners of Welsh Carson VIII and other associated
investment partnerships. He was a Vice President of the investment adviser to
Welsh Carson VIII and other associated investment partnerships from 1997 to
April, 1999. From 1994 to 1997, he worked for three years at General Atlantic
Partners where he was involved in the information technology industry. From
1987 to 1992, he worked for Lazard Freres and Company, initially in the Mergers
and Acquisitions Department and then with Lazard's European leveraged buyout
fund. Mr. Rupert is a director of several private companies.
Mark T. Gallogly is a member of the limited liability company that acts
as the general partner of Blackstone Capital Partners, L.P. and its affiliates.
He is a Senior Managing Director of The Blackstone Group L.P. and has been with
Blackstone since 1989. Mr. Gallogly is a member of the boards of directors of
InterMedia Partners VI, L.P., CommNet Cellular Inc. and TWFanch-One Co.
Lawrence H. Guffey is a Vice President of The Blackstone Group, L.P.,
with which he has been associated since 1991. He is a member of the board of
directors of CommNet Cellular Inc. and TWFanch-One Co.
Committees of the Board
The current members of our board's compensation committee are Thomas E.
McInerney, Anthony J. de Nicola and Mark T. Gallogly. Our compensation
committee makes recommendations to our board of directors concerning the salary
and cash bonus compensation for our chief executive officer and determines the
salary and cash bonus compensation for our other executive officers and senior
management. Our board's compensation committee also administers our employee
stock option plan, other than our 1993 Management Equity Investment Plan. Our
1993 Management Equity Investment Plan is administered by a separate committee
of our board whose membership is the same as our stock option committee. Our
stock option committee makes recommendations to our board of directors, which
determines:
. the recipients of awards under this plan, including the number of shares
awarded and,
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<PAGE>
. subject to the terms of the plan, the duration of restrictions. Our
compensation committee determines the participants and selects the
recipients of awards or units under our 1991 Employee Stock Purchase
Plan and our 1991 Stock Equivalent Plan and the amount and terms of
compensation granted under each plan. The compensation committee met
once during the fiscal year ended May 31, 1998.
Our board of directors determines the recipients of options under our
1991 Employee Stock Option Plan and the provisions of options granted under
such plan, including the option price, term and number of shares subject to
option. Our employee stock option committee, administers our 1991 Employee
Stock Option Plan subject to the authority and responsibility of the board of
directors. Our employee stock option committee met twice during the fiscal year
ended May 31, 1998.
Our board's audit committee consists of Anthony J. de Nicola, Rudolph E.
Rupert and Lawrence H. Guffey. The audit committee recommends our independent
auditors to our board of directors and reviews the following matters with the
independent auditors:
. scope and results of the independent audits;
. corporate accounting;
. internal accounting control procedures;
. adequacy and appropriateness of financial reporting to shareholders; and
. such other related matters as the audit committee considers to be
appropriate. The audit committee met once during the fiscal year ended
May 31, 1998.
Compensation Committee Interlocks and Insider Participation in Compensation
Decisions
During the fiscal year ended May 31, 1998, the members of our board's
compensation committee were William M. Kraus and David Z. Rosensweig. Mr.
Rosensweig also served as Secretary of Centennial and Century Communications.
Mr. Rosensweig is a member of Leavy Rosensweig & Hyman, which provides legal
services to Centennial. During fiscal 1998, Centennial paid a total of
approximately $426,000 for legal services and disbursements to Leavy Rosensweig
& Hyman.
The current members of our board's compensation committee are Thomas P.
McInerney, Anthony J. de Nicola and Mark T. Gallogly. Messrs. McInerney and de
Nicola are managing members of the sole general partner of Welsh Carson VIII.
Mr. Gallogly is a member of the limited liability company that acts as the
general partner of Blackstone Capital Partners, L.P. and its affiliates and is
a Senior Managing Director of The Blackstone Group L.P. Because of these
affiliations, Messrs. McInerney, de Nicola and Gallogly may be deemed to have a
material interest in the matters described under "Certain Relationships and
Related Transactions--Agreements Between Centennial Corp. and its
Stockholders."
Employment Agreements
In connection with the merger, we entered into an employment agreement
with Michael Small, our President and Chief Executive Officer. Mr. Small's base
salary is $250,000 per annum, plus an annual bonus of up to $225,000 subject to
achievement of specified performance targets for fiscal 1999. The initial term
of Mr. Small's employment agreement expires on September 30, 2002,
53
<PAGE>
but will automatically renew for subsequent one-year terms unless either we or
Mr. Small give notice of non-renewal at least 90 days before the expiration of
the renewal term. If we terminate Mr. Small's employment for other than as a
result of his failing to comply with the terms of the employment agreement, or
if Mr. Small terminates his employment with us because we failed to comply with
the agreement, he is entitled to continue to receive his base salary, any bonus
payable with respect to the one-year period following such termination and
other benefits. Mr. Small also received incentive stock options and non-
qualified stock options to purchase an aggregate 405,000 Centennial common
shares, vesting over four years beginning with the fiscal year ended May 31,
1999 if we attain certain Adjusted EBITDA targets. If the performance targets
are not met, Mr. Small's stock options will vest over four years commencing
January 7, 2006. These stock options are subject to accelerated vesting if Mr.
Small's employment is terminated other than as a result of his failing to
comply with the terms of the employment agreement or if he quits other than
because we failed to comply with the agreement following a change of control of
our company. During the employment term and for a period of one year following
the termination of his employment, except if he quits other than because we
failed to comply with the agreement, Mr. Small is subject to non-competition
and non-solicitation provisions.
In connection with the merger, we entered into an employment agreement
with Rudy J. Graf, the President and Chief Executive Officer of our Puerto
Rican subsidiary. Mr. Graf's base salary is $226,800 per annum, plus an annual
bonus of up to $200,000 subject to achievement of specified performance targets
for fiscal 1999. The term of Mr. Graf's employment agreement expired on May 31,
1999. If we terminate Mr. Graf's employment for other than as a result of his
failing to comply with the terms of the employment agreement, he is entitled to
receive his base salary for the remainder of the employment term and any bonus
payable for the 1999 fiscal year. On January 7, 2006, Mr. Graf will receive
51,726 Centennial common shares subject to the terms of a restricted stock
purchase agreement. Mr. Graf will also receive incentive stock options and non-
qualified stock options to purchase an aggregate 390,000 Centennial common
shares, vesting over four years beginning with the fiscal year ended May 31,
1999 if Centennial attains specified Adjusted EBITDA targets. If such targets
are not met, the stock options will vest over four years commencing on January
7, 2006. During the employment term and for a period of two years following the
termination of his employment, Mr. Graf is subject to non-competition and non-
solicitation provisions.
Peter Chehayl is employed by us as our Senior Vice President and Chief
Financial Officer. Mr. Chehayl's base salary is $165,000 per annum, plus an
annual bonus of up to $90,000. He is also eligible for options to purchase
75,000 Centennial common shares.
Director Compensation
Centennial Cellular Operating. None of the directors of Centennial
Cellular Operating will receive any remuneration from Centennial Cellular
Operating for their attendance at board and committee meetings during 1999.
Centennial. During the fiscal year ended May 31, 1998, each of our
directors who was not also an employee of our company received quarterly
retainers of $3,000 plus a uniform fee of $750 for each board and committee
meeting attended. In addition, options for 1,000 shares of Centennial common
shares were automatically granted under our 1993 Non-Employee/Officer
Directors' Stock Option Plan to each director who was not an employee on the
date of each annual meeting of our
54
<PAGE>
shareholders. During such period, our directors who were also employees of our
company received no remuneration for attendance at board and committee
meetings.
Our directors who are not employees receive compensation that is in
accordance with the Welsh Carson and Blackstone's customary practices and
consistent with compensation paid to directors in comparable public companies.
Additional Information
You can find more information about our executive compensation and
various benefit plans in our
. Annual Report on Form 10-K for the fiscal year ended May 31, 1998,
. Quarterly Reports on Form 10-Q for the quarters ended August 31,
1998, November 30, 1998 and February 28, 1999,
. Proxy Statement for the Annual Meeting of Stockholders filed on
November 28, 1998,
. Information Statement filed on December 8, 1998, and
. Current Reports on Form 8-K filed on July 16, 1998, October 19,
1998, December 7, 1998 and January 22, 1999.
Each of these documents is incorporated by reference into this prospectus. You
can get copies of these documents by contacting us as indicated under "Where
You Can Find More Information" on page 2 of this prospectus.
55
<PAGE>
PRINCIPAL STOCKHOLDERS
After the merger and related transactions, all of the issued and
outstanding capital stock of Centennial Cellular Operating is owned by
Centennial. The table below contains information regarding the beneficial
ownership of Centennial's common shares as of January 7, 1999 by
. each stockholder who owns beneficially five percent or more of
Centennial's common shares,
. each director of Centennial,
. each executive officer and
. all directors and officers as a group.
The number of shares beneficially owned by each stockholder, director or
officer is determined according to the rules of the SEC, and the information is
not necessarily indicative of beneficial ownership for any other purpose. Under
current rules, beneficial ownership includes any shares as to which the
individual or entity has sole or shared voting power or investment power. As a
consequence, several persons may be deemed to be the "beneficial owners" of the
same shares. Unless otherwise noted in the footnotes to this table, each of the
stockholders named in this table has sole voting and investment power with
respect to the Centennial common shares shown as beneficially owned. The
percentage ownership of each stockholder is calculated based on 31,125,579
common shares outstanding, after giving effect to a three-for-one stock split
effected on January 8, 1999.
<TABLE>
<CAPTION>
Beneficial Ownership
Immediately After Merger
------------------------------
Name and Address Amount Percentage
---------------- --------------- --------------
<S> <C> <C>
Welsh, Carson, Anderson & Stowe VIII,
L.P.(1)..................................... 17,249,026 55.4%
WCAS Capital Partners III, L.P.(1)........... 1,626,507 5.2
Blackstone Investors(2)...................... 9,390,681 30.2
Thomas E. McInerney(3)....................... 18,875,533 60.6
Anthony J. de Nicola(4)...................... 18,875,533 60.6
Rudolph E. Rupert(5)......................... 18,875,533 60.6
Michael J. Small............................. 30,000 *
Rudy J. Graf................................. 16,842 *
Peter Chehayl................................ 7,500 *
Phillip Mayberry............................. 8,718 *
Thomas Cogar................................. 5,676 *
Thomas E. Bucks.............................. 1,860 *
John Casey................................... -- --
Mark T. Gallogly(6).......................... 9,390,681 30.2
Lawrence H. Guffey(6)........................ 9,390,681 30.2
All directors and executive officers as a
group (12 individuals)...................... 28,336,810 91.0
</TABLE>
- --------
* Less than one percent.
(1) The address for Welsh, Carson, Anderson & Stowe VIII, L.P. and WCAS Capital
Partners III, L.P. is 320 Park Avenue, Suite 2500, New York, New York
10022. Certain of the shares reflected as owned by Welsh, Carson, Anderson
& Stowe VIII, L.P. are owned beneficially and of record by Welsh, Carson,
Anderson & Stowe VII, L.P. (1,944,351), WCAS Information Partners, L.P.
(68,223) and WCA Management Corporation (170,556), limited partnerships and
corporations affiliated with Welsh, Carson, Anderson & Stowe VIII, L.P. Up
to an aggregate 862,452 shares included as beneficially owned by Welsh,
Carson, Anderson & Stowe VIII, L.P.
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<PAGE>
are owned beneficially and of record by individuals who are members of the
limited liability company that serves as its sole general partner, including
Messrs. McInerney and de Nicola, and individuals employed by its investment
advisor, including Mr. Rupert. Messrs. McInerney, de Nicola and Rupert may
be deemed to share beneficial ownership of the shares owned by Welsh,
Carson, Anderson & Stowe VIII, L.P., and disclaim beneficial ownership of
such shares except to the extent owned of record by them.
(2) The total number of shares beneficially owned by Blackstone Investors are
owned by Blackstone CCC Capital Partners L.P. (7,471,074), Blackstone CCC
Offshore Capital Partners L.P. (1,356,165) and Blackstone Family Investment
Partnership III L.P. (563,442). Blackstone Management Association III
L.L.C. ("BMA") is the general partner of each of these partnerships, and
Messrs. Peter G. Peterson and Stephen A. Schwarzman, as the founding
members of BMA, may be deemed to share, together with BMA, beneficial
ownership of such shares. The address of the Blackstone Investors, BMA and
Messrs. Peterson and Schwarzman is c/o The Blackstone Group, 345 Park
Avenue, New York, New York 10154. Mr. Gallogly, who is a member of BMA, and
Mr. Guffey, who is an employee of certain affiliates of BMA, disclaim
beneficial ownership of such shares.
(3) Mr. McInerney owns of record 155,328 shares of Centennial common stock.
Partnerships and individuals affiliated with Mr. McInerney own the
remaining shares of Centennial common stock. Mr. McInerney disclaims
beneficial ownership of such shares except to the extent owned of record by
him.
(4) Mr. de Nicola owns of record 13,644 shares of Centennial common stock.
Partnerships and individuals affiliated with Mr. de Nicola own the
remaining shares of Centennial common stock. Mr. de Nicola disclaims
beneficial ownership of such shares except to the extent owned of record by
him.
(5) Mr. Rupert owns of record 13,644 shares of Centennial common stock.
Partnerships and individuals affiliated with Mr. Rupert own the remaining
shares of Centennial common stock. Mr. Rupert disclaims beneficial
ownership of such shares except to the extent owned of record by him.
(6) Messrs. Gallogly and Guffey do not own of record any shares of Centennial
common stock. Partnerships affiliated with Messrs. Gallogly and Guffey own
all of the shares of Centennial common stock. Messrs. Gallogly and Guffey
disclaim beneficial ownership of such shares except to the extent owned of
record by either of them.
57
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Agreements Between Centennial Cellular Corp. and Its Stockholders
Securities Purchase Agreement. On December 29, 1998, CCW Acquisition
Corp. entered into a securities purchase agreement with a group of investors
lead by Welsh, Carson, Anderson & Stowe and The Blackstone Group. This
investor group included Messrs. Michael J. Small, Peter W. Chehayl and Edward
G. Owen, three of our current officers, and an individual retirement account
for the benefit of Michael J. Small. The securities purchase agreement
outlined the terms of our principal stockholders' initial investment in our
company.
On January 7, 1999, immediately before the merger was completed, each of
the following transactions took place:
(1) a group of investors consisting of
.Welsh, Carson, Anderson and Stowe VIII, L.P.,
.Welsh, Carson, Anderson and Stowe VII, L.P.,
.WCAS Information Partners, L.P.,
.WCA Management Corporation,
. thirteen investment professionals employed by WCA
Management Corporation, and
. three trusts for the benefit of family members of one of
these investment professionals
purchased a total of $255.3 million of Class A common shares
from CCW Acquisition Corp. at a price of $14.6578 per share,
(2) three investment funds controlled by The Blackstone Group
purchased a total of $137.6 million of Class A common shares from
CCW Acquisition Corp. at a price of $43.9735 per share,
(3) Michael J. Small and an individual retirement account for his
benefit purchased a total of approximately $440,000 of Class A
common shares from CCW Acquisition Corp. at a price of $14.6578 per
share,
(4) Peter W. Chehayl purchased approximately $110,000 of Class A
common shares from CCW Acquisition Corp. at a price of $14.6578 per
share,
(6) Edward G. Owen purchased approximately $220,000 of Class A
common shares from CCW Acquisition Corp. at a price of $14.6578 per
share,
(7) WCAS Capital Partners III, L.P. purchased from our company for
$180 million, a senior subordinated note due 2009 with a face value
of $180 million and 542,169 shares of our Class A common shares, and
(8) CCW Acquisition Corp. and the principal stockholders of our
company entered into the stockholders and registration rights
agreements described below.
In addition, on January 7, 1999, as required by the securities purchase
agreement,
(1) we paid a consummation fee of approximately $10.7 million to
WCA Management Corporation,
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<PAGE>
(2) we paid a consummation fee of approximately $3.3 million to
Blackstone Management Partners III, L.L.C., and
(3) in connection with
. the due diligence investigation conducted by and on behalf
of the stockholders of CCW Acquisition Corp. prior to the
merger, and
. the negotiation and preparation of the merger agreement,
the agreements related to the financing of the merger, the
securities purchase agreement, stockholders agreement and
registration rights agreement,
we paid approximately
. $400,000 to the Welsh Carson investors and $200,000 to The
Blackstone Group investors as reimbursement for their out-
of-pocket expenses, and
. $13.9 million to various law firms, accountants and
investment banks on behalf of the Welsh Carson investors
and The Blackstone Group investors.
When CCW Acquisition Corp. was merged with our company on January 7, 1999, we
succeeded to all of the rights and obligations of CCW Acquisition Corp. under
the securities purchase agreement.
Stockholders's Agreements. On January 7, 1999 each of the stockholders of
CCW Acquisition Corp. who purchased shares under the securities purchase
agreement and CCW Acquisition Corp. entered into a stockholders agreement. The
stockholders agreement became our obligation when we merged with CCW
Acquisition Corp. on January 7, 1999. The original stockholders agreement was
superceded by a first amended and restated stockholders agreement on January
20, 1999 in connection with the transfer by WCA Management Corporation of its
equity interest in our company to another investment fund.
Under the amended and restated stockholders agreement, our principal
stockholders have agreed to establish and maintain for our company a board of
directors consisting of nine members. Our directors are elected as described
below.
. So long as the Welsh Carson investors own 25% of the Class A common
shares purchased by them on January 7, 1999, they can elect three
directors. Currently Thomas E. McInerney, Anthony J. de Nicola and
Rudolph E. Rupert serve as the Welsh, Carson investors' board
representatives. The chairman of our board of directors, who is
currently Thomas E. McInerney, is selected by the Welsh Carson
investors.
. So long as The Blackstone Group investors own 25% of the Class A
common shares purchased by them on January 7, 1999, they can elect
two directors. Currently Mark T. Gallogly and Lawrence H. Guffey
serve as The Blackstone Group investors' board representatives.
. Our Chief Executive Officer (Centennial), who is currently Michael J.
Small, serves on our board of directors.
. Our Chief Executive Officer (Centennial de Puerto Rico), who is
currently Rudy Graf, serves on our board of directors.
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<PAGE>
. The remaining two directors are elected by all of our stockholders,
including our principal stockholders. These outside directors must be
qualified as outside directors under NASDAQ rules and cannot be
members of our management or affiliated with any of our stockholders
who are party to the amended and restated stockholders agreement.
The amended and restated stockholders agreement calls for the creation of
the following board committees:
. A compensation committee consisting of three directors. Two of the
committee members are selected by the Welsh Carson investors and one
is selected by The Blackstone Group investors.
. An audit committee consisting of three directors. One audit committee
member is selected by the Welsh Carson investors, one is selected by
The Blackstone Group investors and one is required to be an outside
director.
The amended and restated stockholders agreement requires that each other
committee of our board of directors consist of at least two members, one of
whom is selected by the Welsh Carson investors and one of whom is selected by
The Blackstone Group investors.
The amended and restated stockholders agreement places restrictions on
the ability of Messrs. Small, Chehayl and Owen to transfer shares of Class A
common stock owned in their names or on their behalf without the consent of the
Welsh Carson investors. Exceptions have been made for transfers in registered
public offerings or to their spouses or children or to family trusts. In
addition, the amended and restated stockholders agreement allows the Welsh
Carson investors to repurchase at fair market value any shares owned by any of
these management investors at the time of the termination of their employment
with our company.
The amended and restated stockholders agreement grants The Blackstone
Group investors, Messrs. Small, Chehayl and Owen, Signal/Centennial Partners,
L.L.C. and Guayacan Private Equity Fund, L.P. the right to participate in any
sale of Class A common shares by any of the Welsh Carson investors. These co-
sale provisions do not apply to transfers by Welsh Carson investors to
affiliates, transfers by any of the Welsh Carson investors that are limited
partnerships to their limited partners and transfers by Welsh Carson investors
that are individuals to their spouses or children or to family trusts.
The amended and restated stockholders agreement grants the Welsh Carson
investors the right to require
. The Blackstone Group investors,
. Messrs. Small, Chehayl and Owen, and
. Signal/Centennial Partners, L.L.C. and Guayacan Private Equity Fund,
L.P.
to sell their shares of Class A common stock to a third party who offers to buy
at least 80% of the capital stock of the company. The sale of the company must
be for cash or marketable securities and must require that we pay the fees and
expenses of the selling stockholders. This right will terminate if and when The
Blackstone Group investors own more shares of Class A common stock than the
Welsh Carson investors.
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We have granted preemptive rights to purchase shares of our common stock
in proportion to the ownership of the stockholder in the situations described
below to
. the Welsh Carson investors,
. The Blackstone Group investors,
. Messrs. Small, Chehayl and Owen, and
. Signal/Centennial Partners, L.L.C. and Guayacan Private Equity Fund,
L.P.
These preemptive rights apply to any sale by us of common shares or securities
convertible into or exchangeable for common shares such as convertible debt,
options or warrants. Issuances of employee stock options and registered public
offerings are excluded from the preemptive rights provisions of the amended and
restated stockholders agreement.
The amended and restated stockholders agreement grants to the Welsh
Carson investors a right of first offer that applies to sales of Class A common
shares by The Blackstone Group investors. In other words, if any of The
Blackstone Group investors wishes to sell it shares, it must first allow the
Welsh Carson investors to make an offer to purchase the shares. If an offer is
made by any of the Welsh Carson investors, The Blackstone Group investors
cannot sell the shares to a third party on material terms which are the same
as, or more favorable, in the aggregate, to, the terms offered by the Welsh,
Carson investors for the shares. This right of first offer does not apply to
sales by The Blackstone Group investors to their affiliates, sales pursuant to
registered public offerings or sales in compliance with the Securities Act or
distributions by any of The Blackstone Group investors which are limited
partnerships to their limited partners.
Our company has agreed not to take any of the following actions without
the approval of the Welsh Carson investors and The Blackstone Group investors
until the amended and restated stockholders agreement is terminated:
(1) amend, alter or repeal our certificate of incorporation or our by-
laws in any manner that adversely affects
.the rights of the holders of out Class A common stock generally, or
. the rights of the stockholders party to the amended and restated
stockholders agreement,
(2) enter into, or permit any of our subsidiaries to enter into, any
transaction, other than
. normal employment arrangements, benefit programs and employee
incentive option programs on reasonable terms,
. any transaction with a director that is approved by our board of
directors in accordance with Delaware law,
. customer transactions in the ordinary course of business, and
. the transactions contemplated by the amended and restated
registration rights agreement described below.
with
. any of our subsidiaries's officers, directors or employees,
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. any person related by blood or marriage to any of our
subsidiaries's officers, directors or employees,
. any entity in which any of our subsidiaries's officers, directors
or employees owns any beneficial interest,
. any stockholder of our company that owns, directly or indirectly,
at least 25% of our outstanding capital stock or any affiliate of
any 25% stockholder of our company.
Under the amended and restated stockholders agreement, each of
. Welsh Carson investors,
. The Blackstone Group investors,
. Messrs. Small, Chehayl and Owen, and
. Signal/Centennial Partners, L.L.C. and Guayacan Private Equity
Fund, L.P.
have agreed not to, and agreed to cause their affiliates not to, directly or
indirectly, alone or in concert with others, without the prior written consent
of the Welsh Carson investors, take any of the following actions:
(1) effect, seek, offer, engage in, propose or participate in:
.any acquisition of beneficial ownership of our equity or debt
securities other than
(a) pursuant to the preemptive rights granted under the
amended and restated stockholders agreement,
(b) acquisitions from other stockholders who have signed the
amended and restated stockholders agreement or
(c) any stock dividend, stock reclassification or other
distribution or dividends to the holders of our Class A
common stock generally,
. any extraordinary transaction such as a merger or tender offer
involving our company or any material portion of our business,
. any solicitation of proxies with respect to our company or any
action resulting in any stockholder party to the amended and
restated stockholders agreement or any of its affiliates
becoming a participant in any board of director election
contest with respect to our company,
. propose any matter for submission to a vote of stockholders of
our company,
. seek to remove or appoint directors of our company outside of
the provisions of the amended and restated stockholders
agreement, or
. form, join or in any way participate in or assist in the
formation of a group of two or more persons for the purposes
of acquiring, holding, voting, or disposing of equity
securities of our company, other than any group consisting
exclusively of stockholders who have signed the amended and
restated stockholders agreement and their affiliates.
Under the amended and restated stockholders agreement we are required to
pay WCA Management Corporation an annual monitoring fee of $450,000 plus
reasonable expenses and
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Blackstone Management Partners III, L.L.C. an annual monitoring fee of $300,000
plus reasonable expenses. We are no longer required to pay these management
fees if either the Welsh Carson investors or The Blackstone Group investors
sells 75% of the shares purchased by them on January 7, 1999.
All of the provisions of the amended and restated stockholders agreement
that are described above, other than the provisions governing the election of
our board of directors and the composition of its committees, will terminate
upon the earlier to occur of
. the completion of a registered public offering of common stock
raising not less than $50 million for our company, and
. the transfer by either the Welsh Carson investors or The
Blackstone Group investors of 50% or more of the shares of
Class A common stock purchased by them on January 7, 1999.
The provisions of the amended and restated stockholders agreement
governing the election of our board of directors and the composition of its
committees, will terminate upon the earlier to occur of
. the completion of a registered public offering of common stock
raising not less than $50 million for our company, and
. the transfer by both the Welsh, Carson investors or The
Blackstone Group investors of 50% or more of the shares of
Class A common stock purchased by them on January 7, 1999.
Registration Rights Agreements. On January 7, 1999 each of the
stockholders of CCW Acquisition Corp. who purchased shares under the securities
purchase agreement and CCW Acquisition Corp. entered into a registration rights
agreement. The registration rights agreement became our obligation when we
merged with CCW Acquisition Corp. on January 7, 1999. The original registration
rights agreement was superceded by a first amended and restated registration
rights agreement on January 20, 1999 in connection with the transfer by WCA
Management Corporation of its equity interest in our company to another
investment fund.
The amended and restated registration rights agreement grants the Welsh
Carson investors and The Blackstone Group investors the right to require our
company to register their shares of Class A common stock under the Securities
Act at any time on or after January 7, 2002. The amended and restated
registration rights agreement grants each of the following persons the right to
include, at their request, shares of Class A common stock owned by them in
registrations under the Securities Act by our company
.each of the Welsh Carson investors,
.each of The Blackstone Group investors,
.Messrs. Small, Chehayl and Graf, and
.Signal/Centennial Partners, L.L.C. and Guayacan Private Equity Fund,
L.P.
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Former Indebtedness of Certain Executive Officers
During fiscal 1998, Thomas R. Cogar, Senior Vice President of Engineering
of Centennial received a relocation loan from Centennial of approximately
$65,000 and John H. Casey, Senior Vice President--Administration of Centennial
received a relocation and temporary housing loan of approximately $200,000. The
loans bore interest at the rate of 5.0 % annually and have been repaid in full.
Arrangements with Former Controlling Stockholder
At the time of the merger, Century Communications Corp., the controlling
stockholder of Centennial before the merger, entered into a non-compete
agreement with Centennial, in which Century agreed that, until January 7, 2002,
it will not engage in, or acquire a controlling interest in, any business that
competes with any of Centennial's current operations in Puerto Rico. This
agreement does not extend to the activities of Century's existing joint venture
in Puerto Rico, Century-ML.
Century owned a controlling interest in Centennial prior to the merger.
Before the merger Centennial and Century maintained combined workers
compensation and general insurance policies. The premiums were allocated
between Centennial and Century based upon the actual cost of each respective
company's coverage. Centennial believes that the amounts payable by Centennial
under this arrangement were more favorable than the premiums Centennial would
have paid if it had obtained coverage under a separate policy. Centennial's
cost of such insurance was approximately $0.6 million, $0.7 million and $1.7
million for the fiscal years ended May 31, 1998, 1997 and 1996, respectively.
All of these costs were paid in full during the current fiscal year. In fiscal
1996, Centennial and Century also maintained combined group health, life and
casualty coverage. Under the merger agreement, Centennial has covenanted to
maintain employee benefits and incentive compensation that are no less
favorable than its existing arrangements at least until January 2002.
Centennial and Century entered into a services agreement, effective
August 30, 1996, pursuant to which Century, through its personnel, provides
design, construction, management, operational, technical and maintenance for
the wireless telephone, paging and related systems owned and operated by
Centennial. Such services also include providing all the services necessary for
the monitoring, to the extent possible, of the activities of the partnerships
in which Centennial has minority equity interests, in such manner as to protect
the interests of Centennial. Such services have historically been provided to
Centennial by Century. As consideration for the services rendered under the
services agreement, Centennial paid Century the annual sum of $1.0 million and
reimbursed Century for all costs incurred by Century or its affiliates,
excluding Centennial and its subsidiaries, that were directly attributable to
the design, construction, management, operation and maintenance of the wireless
telephone, paging and related systems of Centennial or to the performance by
Century of its other duties under the services agreement. For the years ended
May 31, 1998 and 1997, Centennial recorded expenses of $1.0 million and $0.8
million, respectively, under the services agreement. At May 31, 1998 and 1997,
$0.3 million and $0.8 million, respectively, of such amounts were recorded
within Payable to Affiliate on Centennial's consolidated balance sheet. As of
the effective time of the merger, Century and Centennial terminated the
services agreement.
Centennial leases space for the mobile telephone switching office serving
the southwestern cluster and space on an antenna tower in the southwestern
cluster from Century for an aggregate current annual rent of approximately
$1,000 pursuant to an oral month-to-month lease agreement.
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Further, Centennial leases certain warehouse space in Puerto Rico to Century-ML
for a current annual rent of approximately $23,000 pursuant to a written lease
agreement. Centennial leases and shares capacity on the fiber optic cable
television facility and network of Century-ML fiber network for the purposes of
operating as a competitive access provider. Centennial shares the cost of
construction, operation and maintenance of the Century-ML fiber network on a
pro rata basis based on the percentage of the number of fibers of the network
used by or reserved for Centennial.
During fiscal 1997, Centennial recorded a deferred asset and related
payable to an affiliate in its consolidated balance sheet in the amount of $6.0
million to reflect certain costs incurred by Centennial to secure the use of
the fiber optic network as required by the facilities agreement. This amount,
which was paid by Centennial during fiscal 1998, represents Centennial's share
of the costs of constructing Century-ML's fiber optic network.
Leavy Rosensweig & Hyman, of which David Z. Rosensweig, a director and
Secretary of Centennial prior to the merger, is a member, provides legal
services to Centennial.
The Merger and Subordinate Note Financing
Welsh, Carson, Anderson & Stowe VIII, L.P. and its affiliates and The
Blackstone Group controlled CCW Acquisition Corp. prior to the merger. Messrs.
McInerney, de Nicola and Rupert, who are members of the general partner of
Welsh, Carson, Anderson & Stowe VIII, L.P., may be deemed to have controlled
CCW Acquisition Corp. prior to the merger. Messrs. Gallogly and Guffey, who are
affiliated with The Blackstone Group, may be deemed to have controlled CCW
Acquisition Corp. prior to the merger. For a description of the merger see "The
Merger."
In addition, WCAS Capital Partners III, L.P., an investment partnership
affiliated with Welsh, Carson, Anderson & Stowe VIII, L.P. bought subordinated
notes of Centennial for $180 million at the time of the merger. Messrs.
McInerney, de Nicola and Rupert, who are members of the general partner of WCAS
Capital Partners III, L.P., may be deemed to control WCAS Capital Partners III,
L.P. See "The Merger."
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DESCRIPTION OF CERTAIN INDEBTEDNESS
The Credit Facility
Centennial and some of its subsidiaries entered into the credit facility
with Merrill Lynch Capital Corporation, NationsBank, N.A., The Chase Manhattan
Bank, The Bank of Nova Scotia and Morgan Stanley Senior Funding, Inc. and other
financial institutions, pursuant to which those lenders provided credit
facilities to certain of Centennial's subsidiaries. The following is a summary
of the terms and conditions of each credit facility.
The Borrowers. The borrowers under our credit facility are Centennial
Cellular Operating, a wholly owned direct subsidiary of Centennial, and
Centennial de Puerto Rico, a wholly owned direct subsidiary of Centennial
Cellular Operating.
The Facility. Our credit facility consists of three term loans in
aggregate principal amount of $900.0 million and
.a revolving credit facility in an aggregate principal amount of up to
$150.0 million.
The borrowers under these facilities are
.Centennial Cellular Operating and
.for $125.0 million of the term loans and up to $60.0 million of the
revolving credit facility, Centennial de Puerto Rico, our
subsidiary in Puerto Rico.
On January 7, 1999, our subsidiary in Puerto Rico borrowed $36.0 million
under the credit facility.
Use of Credit Facility Proceeds. The proceeds of our credit facility were
used, together with other proceeds of the financings related to the merger, to
.fund payment of cash consideration in the merger,
.repay Centennial's indebtedness, including the purchase of the tendered
notes in the debt tender offers,
.pay the related fees and expenses and purchase the pledged securities.
In addition, the revolving credit facility is available subject to the
conditions in the credit facility to
.finance future working capital needs,
.capital expenditures,
.permitted acquisitions, and
.for general corporate purposes.
Under certain circumstances, the credit facility may be increased by up
to $150 million in aggregate principal amount, upon terms and conditions no
more onerous than those contained in the credit facility.
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Availability of Loans. The revolving credit loans are available in a
principal amount not to exceed $65 million on a revolving basis until 30 days
prior to the maturity of the revolving credit loans. Up to $25 million of the
revolving credit facility is available for the issuance of letters of credit
and up to $30 million of the revolving credit facility is available for swing
loans.
Maturity of Loans. The revolving credit commitments will be reduced
quarterly beginning on February 28, 2002 in amounts to amortize the commitments
until the revolving credit facility matures on January 7, 2008. The term loans
consist of four tranches and amortize over eight years for tranche A term
loans, eight years for tranche A term loans to our subsidiary in Puerto Rico
eight and one-half years for tranche B term loans and nine years for tranche C
term loans.
Prepayments. Borrowings and commitments under our credit facility are
subject to mandatory prepayment and reduction in an amount equal to
. 100% of the net proceeds of asset dispositions, including insurance
proceeds resulting from casualty to assets, subject to the borrower's
ability to reinvest such proceeds under certain circumstances,
. 75% of excess cash flow, reduced to 50% with respect to any fiscal
year if the ratio of total debt to operating cash flow is less than
6.0:1.0,
. 100% of the net proceeds of the issuance or incurrence of debt or of
any sale and lease-back, and
. 50% of the net proceeds of any issuance of equity securities.
Voluntary prepayment of the loans will be permitted in whole or in
part with prior notice.
The revolving credit loans and the tranche A and tranche A loans to our
subsidiary in Puerto Rico are subject to prepayment without premium or penalty,
other than funding losses, subject to limitations as to minimum amounts. The
tranche B and tranche C loans are subject to prepayment
. on or prior to the first anniversary of the closing of the credit
facility, with a premium of 2% of the aggregate principal amount of
loans prepaid,
. after the first anniversary of the closing of the credit facility and
on or prior to the second anniversary of the closing of the credit
facility, with a premium of 1% of the aggregate principal amount of
loans prepaid and
. thereafter, without premium or penalty, other than funding losses,
subject to limitations as to minimum amounts.
Interest Rates. Borrowings under our credit facility bear interest at a
rate per annum of, at the borrowers' option, either
(a) the higher of (1) the announced prime rate of NationsBank, and (2)
the federal funds rate, plus 0.50%, plus an amount for
. the tranche A loans, tranche A loans to our subsidiary in Puerto Rico
and the revolving credit loans that is 2.00%
. the tranche B loans that is 2.50%, and
. the tranche C loans that is 2.75% or
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(b) a LIBOR rate plus an amount for
. the tranche A loans, tranche A loans to our subsidiary in Puerto Rico
and the revolving credit loans that is 3.00%,
. the tranche B loans that is 3.50%, and
.the tranche C loans that is 3.75%.
Based upon Centennial Cellular Operating's leverage ratio after the
delivery of certain financial statements after July 7, 1999, the additional
amount for tranche A loans, tranche A loans to our subsidiary in Puerto Rico
and revolving credit loans may be reduced by up to 1.250% for our loans. The
default rate under our credit facility is 2.00% above the otherwise applicable
rate.
Fees and Expenses. Our credit facility requires the borrower to pay
. commitment fees to the Lenders in an amount equal to 0.50% or 0.375%
per annum on the unused commitment under the revolving credit
facility, depending on Centennial Cellular Operating's leverage
ratio, and
. an annual administrative agent's fee of $150,000 on January 7 of each
year beginning on January 7, 2000. Additionally, the borrowers paid
various fees and costs in connection with the credit facility,
including commitment fees and underwriting fees to Merrill Lynch
Capital, NationsBank, Chase, Nova Scotia, and Morgan Stanley.
Guarantees. Centennial and each of Centennial Cellular Operating's direct
and indirect existing and future subsidiaries, other than foreign subsidiaries,
will be required to guarantee Centennial Cellular Operating's obligations under
the credit facility, and Centennial Cellular Operating and Centennial de Puerto
Rico's direct and indirect existing and future subsidiaries were required to
guarantee Centennial de Puerto Rico's obligations under our credit facility.
Security. The obligations of Centennial Cellular Operating under our
credit facility are secured by substantially all of the assets of Centennial
and each of its direct and indirect existing and future subsidiaries, other
than foreign subsidiaries, including the capital stock of such subsidiaries,
and the obligations of Centennial de Puerto Rico under the credit facility are
secured by substantially all of the assets of Centennial de Puerto Rico and
each of its direct and indirect existing and future subsidiaries, including the
capital stock of such subsidiaries.
In addition, Centennial guaranteed our credit facility and pledged as
security for Centennial Cellular Operating's obligations the capital stock of
Centennial Cellular Operating to the Lenders under the credit facility. The
pledge of that capital stock of Centennial Cellular Operating could impair
Centennial Cellular Operating's ability to obtain future financing on favorable
terms, if at all. Further, in the event Centennial Cellular Operating were to
default on its obligations under the credit facility and the lenders were to
foreclose upon such pledged capital stock of Centennial Cellular Operating,
Centennial, as the holding company of Centennial Cellular Operating, would
likely be unable to service or repay its indebtedness, including the notes.
Representations and Warranties. Our credit facility contains
representations and warranties customarily found in loan agreements for similar
financings.
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Affirmative Covenants. Our credit facility contains affirmative
covenants customarily found in loan agreements for similar financings.
Centennial Cellular Operating is required to enter into interest rate hedging
agreements with respect to 50% of the indebtedness under the credit facility
for a period of time satisfactory to the lenders.
Negative Covenants. Our credit facility contains customary restrictive
covenants, including covenants that limit, subject to certain exceptions the
ability of the Centennial Cellular Operating and its subsidiaries to:
. incur indebtedness or contingent obligations, issue guarantees or
enter into operating leases,
. grant liens or negative pledges,
. make investments or enter into joint ventures,
. make certain restricted payments,
. make fundamental changes in their business, corporate structure or
capital structure,
. sell assets or receivables,
. make capital expenditures,
. enter into transactions with affiliates,
. amend documents relating to other existing indebtedness and other
material documents, or
. prepay other indebtedness.
Financial Covenants. Our credit facility contains financial covenants
relating to:
. minimum interest coverage ratio,
. minimum fixed charge coverage ratio,
. maximum ratio of total debt to operating cash flow,
. maximum ratio of senior debt to operating cash flow,
. minimum pro forma debt service coverage ratio, and
. limitation on capital expenditures.
Events of Default. Our credit facility includes standard events of
default, including, subject to certain exceptions, those related to:
. default in the payment of principal and interest,
. cross-default in payment of other indebtedness of more than $10.0
million,
. materially incorrect representations and warranties,
. default in the observance or performance of any of the affirmative
or negative covenants included in the credit facility documentation
or in the related security and pledge documents,
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. the failure to or admission in writing of an inability to pay debts
when such debts become due,
. certain events of bankruptcy,
. certain judgments or decrees involving more than $10.0 million,
. certain ERISA events,
. a change of control,
. the failure of the applicable credit facility documents or any
material provision thereof, the guarantees, security documents or
any related documents to be in full force and effect,
. certain non-monetary judgments or decrees which might have a
material effect,
. the termination, revocation or nonrenewal of one or more cellular
licenses if such termination, revocation or nonrenewal will have a
material effect, and
. the failure of the merger to be consummated substantially concurrent
with the extension of credit under the credit facilities.
Subordinated Debt
As part of the financing of the merger, WCAS Capital Partners III, L.P.,
an investment partnership affiliated with Welsh Carson VII, purchased at the
time of the consummation of the merger, a Senior Subordinated Note of
Centennial due 2009 in the original principal amount of $180 million, as well
as 1,626,504 Centennial common shares, for an aggregate cash purchase price of
$180 million. The Senior Subordinated Note bears cash interest at a rate of 10%
or pay-in-kind interest at a rate of 13% per annum. Centennial Cellular
Operating is restricted from making cash payments to Centennial to service the
debt under certain circumstances under the notes and the credit facility. See
"Description of the New Notes--Covenants--Limitation on Restricted Payments."
The senior subordinated note is prepayable at Centennial's option and
must, subject to the terms of the indenture for the notes and the credit
facility be prepaid in the event of a "Change in Control," defined as:
. the acquisition by a person or group acting together, other than the
equity investors and their affiliates of either at least 50% of the
voting stock of Centennial or sufficient voting power to elect a
majority of the board of directors,
. a merger or consolidation of Centennial as a result of which the
stockholders of Centennial do not continue to hold a majority of the
voting capital stock of the resulting entity, or
. the sale by Centennial of substantially all of its assets.
The senior subordinated note contains certain affirmative and negative
covenants typically found in subordinated notes. The senior subordinated note
may not be transferred without the consent of the Lenders under the credit
facility or, during the period ending 180 days after the closing of the
offering of the notes, without the consent of Merrill Lynch on behalf of the
initial purchasers of the notes.
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The senior subordinated note is subordinate in right of payment to the
notes to the extent set forth in the senior subordinated note. Under the senior
subordinated note, Centennial may not make any payments thereon if there is a
default under any senior indebtedness which is defined to include the notes. If
an event of default occurs under the senior subordinated note, except in
connection with certain bankruptcy events, the holder of the senior
subordinated note may not accelerate such debt unless the indebtedness under
the notes and the credit facility have been accelerated for at least 90 days.
The senior subordinated note is also subordinate to the credit facility to the
same extent.
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DESCRIPTION OF THE NEW NOTES
Introduction to the Indenture
The new notes like the old notes will be, issued under the indenture
dated December 14, 1998 among Centennial Cellular Operating Co. LLC, as
Centennial Cellular Operating, Centennial Cellular Corp., as a co-obligor, and
Norwest Bank Minnesota, National Association, as trustee, paying agent and
registrar.
The new notes are the same as the old notes except that the new notes:
. will have a new CUSIP number,
. will not bear legends restricting their transfer, and
. will not contain certain terms providing for an increase in the
interest rate under the circumstances described in the registration
rights agreement.
The following description is a summary of the material provisions of the
indenture. It does not restate that agreement in its entirety. We urge you to
read the indenture because it, and not this description, define your rights as
holders of these notes.
In this description of notes, the term "Centennial Cellular Operating"
refers to Centennial Cellular Operating Co. LLC and does not include its
subsidiaries and the term "Centennial" refers to Centennial Cellular Corp. and
does not include its subsidiaries. We also use other terms in this section that
are defined under "--Certain Definitions" beginning on page 105.
General Terms of the Notes
The new notes:
. will be our senior subordinated obligations,
. will be limited to $370 million aggregate principal amount,
. will mature on December 15, 2008, and
. will bear interest at the rate 10 3/4% per annum.
Interest will be paid semi-annually on June 15 and December 15 of each
year, beginning on December 15, 1999 to the holder at the close of business on
the preceding December 1.
Interest will be computed on the basis of a 360-day year of twelve 30-day
months.
Methods of Receiving Payments on the Notes
If a holder has given wire transfer instructions to us, we will make all
principal, premium and interest payments on the holder's notes in accordance
with those instructions. All other payments on the notes will be made at our
office or agency within the City and State of New York unless we elect to make
interest payments by check mailed to the holders at their address in the
register of holders.
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Ranking
The payment of the principal of any premium and interest on, the new
notes will be subordinated to the prior payment in full of all of our Senior
Indebtedness. The new notes will be senior subordinated indebtedness of
Centennial Cellular Operating ranking at the same level with all other senior
subordinated indebtedness of Centennial Cellular Operating and senior to all
Subordinated Indebtedness of Centennial Cellular Operating.
The holders of Senior Indebtedness will be entitled to receive payment in
full of all amounts due in respect of Senior Indebtedness before the holders
of new notes will be entitled to receive any payment with respect to the new
notes in the event of any distribution to our creditors in any bankruptcy,
insolvency or liquidation proceeding with respect to Centennial Cellular
Operating. Holders of new notes may still receive payments made from the trust
described under the caption "--Legal Defeasance and Covenant Defeasance" even
in the event of bankruptcy, insolvency or liquidation.
Upon any bankruptcy, insolvency or liquidation proceeding, any payment or
distribution of Centennial Cellular Operating's assets of any kind will be
paid by Centennial Cellular Operating or by any receiver, trustee or other
person making such payment or distribution, or by the holders of the new notes
or by the trustee if received by them, directly to the holders of Senior
Indebtedness or their representative or representatives for the payment of the
Senior Indebtedness until all the Senior Indebtedness has been paid in full in
cash.
Centennial Cellular Operating also may not make any payment in respect of
the new notes if:
. a payment default on Designated Senior Indebtedness occurs and is
continuing; or
. the trustee receives a notice from the agent bank under the credit
facility or the holders or the representative of any Designated
Senior Indebtedness indicating that a default has occurred that
permits the holders of that Indebtedness to accelerate its maturity.
Payments on the new notes may and will be resumed:
. in the case of a payment default, upon the date on which such default
is cured or waived; and
. in case of a nonpayment default, the earlier of
(1) the date on which such nonpayment default is cured or waived,
(2) 179 days after the date on which the applicable notice is
received, or
(3) the date on which the trustee receives written notice from the
agent bank or the representative for such Designated Senior
Indebtedness, as the case may be, rescinding the applicable
notice, unless the maturity of any Designated Senior Indebtedness
has been accelerated.
No new notice may be delivered as described above unless and until 186
days have elapsed since the effectiveness of the immediately prior notice.
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No event of default that existed or was continuing on the date of
delivery of any such notice to the trustee will be the basis for a subsequent
notice unless such default has been cured or waived for a period of not less
than 90 days.
As a result of the subordination provisions described above, in the event
of a bankruptcy, liquidation or reorganization of Centennial Cellular
Operating, holders of the new notes may recover less than creditors of
Centennial Cellular Operating who are holders of Senior Indebtedness. See "Risk
Factors--Risks Relating to the Notes." Centennial Cellular Operating and its
Restricted Subsidiaries will be subject to financial tests limiting the amount
of additional Indebtedness, including Senior Indebtedness, that Centennial
Cellular Operating and its Restricted Subsidiaries can incur. See "--
Covenants--Limitation on Incurrence of Additional Indebtedness."
Optional Redemption
General. After December 15, 2003, we may redeem all or a part of the new
notes, upon not less than 30 nor more than 60 days' notice, at the redemption
prices, expressed as percentages of principal amount, set forth below plus any
accrued and unpaid interest, to the applicable redemption date, if redeemed
during the twelve-month period beginning on December 15 of the years indicated
below:
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
2003........................................ 105.375%
2004........................................ 103.583%
2005........................................ 101.792%
</TABLE>
After December 15, 2005, we may redeem all or part of the new notes at 100% of
their principal amount plus any accrued and unpaid interest.
Upon Equity Offerings. At any time before December 15, 2001, we may on
one or more occasions redeem up to 35% of the aggregate principal amount of new
notes issued under the indenture at a redemption price of 110.750% of the
principal amount of those notes, plus any accrued and unpaid interest to the
redemption date, with the net cash proceeds of one or more Public Equity
Offerings or Strategic Equity Offerings; provided that:
. at least 65% of the aggregate principal amount of new notes remains
outstanding immediately after the occurrence of such redemption,
. any redemption because of a Strategic Equity Offering is not in
connection with or after a Change of Control,
. any proceeds received must be contributed to issuer prior to such
redemption, and
. the redemption must occur within 60 days of the date of the closing
of such Equity Offering.
Except under the preceding paragraphs, the new notes will not be
redeemable at our option before December 15, 2003.
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Upon a Change of Control. At any time before December 15, 2001, we may
redeem all or part of the new notes upon a Change of Control. Such redemption
must be made within 60 days after a Change of Control at the redemption price
of:
. 100% of the principal amount, plus
. any accrued and unpaid interest to the redemption date, plus
. any Applicable Premium.
Despite the above, the redemption price will not be less than 105.375% of
the principal amount of new notes plus any accrued and unpaid interest to the
redemption date.
Selection and Notice. If less than all of the new notes are to be
redeemed at any time, the trustee will select the new notes for redemption as
follows:
. if the new notes are listed, in compliance with the requirements of
the principal national securities exchange on which the new notes
are listed; or
. if the new notes are not so listed, on a pro rata basis, by lot or
by such method as the trustee deems fair and appropriate.
Despite the above, any redemption relating to a Public Equity Offering or
a Strategic Equity Offering will be on a pro rata basis, or as near as possible
to a pro rata basis.
No new notes of $1,000 or less shall be redeemed in part. Notices of
redemption will be mailed by first class mail at least 30 but not more than 60
days before the redemption date to each holder of new notes to be redeemed at
its registered address. Notices of redemption may not be conditional.
If any new note is to be redeemed in part only, the notice of redemption
that relates to that new note shall state the portion of the principal amount
of that note to be redeemed. A new note in principal amount equal to the
unredeemed portion of the original note will be issued in the name of the
holder of the note when the original note is cancelled. Notes called for
redemption become due on the date fixed for redemption. On and after the
redemption date, interest ceases to accrue on new notes or portions of them
called for redemption.
Repurchase at the Option of Holders
Change of Control. If a Change of Control occurs, each holder of new
notes will have the right to require us to repurchase all or any part, in parts
of $1,000 or an integral multiples of $1,000, of that holder's new notes
pursuant to the Change of Control Offer. In the Change of Control Offer, we
will offer a purchase price in cash equal to 101% of the aggregate principal
amount of new notes repurchased plus any accrued and unpaid interest on the new
notes to the date of purchase. Within 30 days following any Change of Control,
we will mail a notice to each holder describing the transaction or transactions
that constitute the Change of Control and offering to repurchase new notes
within 45 days after the Change of Control, under the procedures required by
the indenture and described in the notice. We will comply with the requirements
of the Exchange Act and any other securities laws and regulations to the extent
such laws and regulations apply to the repurchase of the new notes as a result
of a Change of Control.
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On the date of payment for the redemption describe above, we will, to the
extent allowed by law:
. accept for payment all new notes or portions of new notes properly
tendered pursuant to the Change of Control Offer,
. deposit with Norwest Bank Minnesota, National Association, as paying
agent, an amount equal to the purchase price for all new notes or
portions of new notes so tendered, and
. deliver or cause to be delivered to the trustee the new notes so
accepted together with an officers' certificate stating the
aggregate principal amount of new notes or portions of new notes
being purchased by us.
Norwest Bank Minnesota, National Association, will promptly mail to each
holder of new notes so tendered the purchase price for new notes tendered, and
will promptly authenticate and mail, or cause to be transferred by book entry,
to each holder a new note equal in principal amount to any unpurchased portion
of new notes surrendered; provided that each new note will be in a principal
amount of $1,000 or an integral multiple thereof.
Before complying with any of the provisions of this "--Repurchase at the
Option of Holders--Change of Control" covenant, we will either repay all
outstanding Senior Indebtedness or obtain any requisite consents under all
agreements governing outstanding Senior Indebtedness to permit the repurchase
of notes required by this covenant. We will publicly announce the results of
the Change of Control Offer on or as soon as practicable after it is completed.
The provisions described above that require us to make a Change of
Control Offer following a Change of Control will be applicable regardless of
whether or not any other provisions of the indenture are applicable. Except as
described above with respect to a Change of Control, the indenture does not
contain provisions that permit the holders of the new notes to require that we
repurchase or redeem the new notes in the event of a takeover, recapitalization
or similar transaction.
Our outstanding Senior Indebtedness currently prohibits us from
purchasing any new notes, and also provides that certain change of control
events with respect to us would constitute a default under the agreements
governing the Senior Indebtedness. Any future credit agreements or other
agreements relating to Senior Indebtedness to which we become a party may
contain similar restrictions and provisions. In the event a Change of Control
when we are prohibited from purchasing new notes, we could seek the consent of
its senior lenders to the purchase of new notes or could attempt to refinance
the borrowings that contain such prohibition. If we do not obtain such consent
or repay such borrowings, we will remain prohibited from purchasing new notes.
In such case, our failure to purchase tendered new notes would be an Event of
Default under the indenture which would, in turn, be a default under our Senior
Indebtedness. In those circumstances, the subordination provisions in the
indenture would likely restrict payments to the holders of new notes.
The definition of Change of Control includes a phrase relating to the
sale, lease, transfer, conveyance or other disposition of "all or substantially
all" of our assets and our Subsidiaries taken as a whole. Although there is a
limited body of case law interpreting the phrase "substantially all," there is
no precise established definition of the phrase under applicable law.
Accordingly, the ability of a holder of new notes to require us to repurchase
new notes as a result of a sale, lease, transfer, conveyance or other
disposition of less than all of our assets and our Subsidiaries taken as a
whole to another person or group may be uncertain.
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Sinking Fund
The new notes will not have the benefit of a sinking fund.
Security
When the merger was completed, the trustee purchased for the benefit of
the holders of the notes the Pledged Securities in an amount sufficient to
provide for payment of the first three scheduled interest payments due on the
notes. This amount does not include any additional interest that we are
required to pay because the registration statement of which this exchange
offer is a part failed to be declared effective on a timely basis.
We used about $60 million to purchase Pledged Securities at the time of
the merger. The Pledged Securities are Government Securities maturing on
different dates corresponding to the dates that we have to make the first
three interest payments. The first interest payment of approximately $19
million was made on June 15 out of the Pledged Securities. The next two
interest payments will be funded from the Pledged Securities unless we give
the trustee other funds to make those two interest payments. In that case, the
trustee would be allowed to release the funds in the collateral account that
would have been used to make any of those payments to us.
Interest earned on the Pledged Securities will be held in a cash
collateral account by the trustee. After we have made the first three interest
payments or, if an internationally recognized independent accounting firm or
investment banking firm determines that the amount of funds in the account
exceed the amount necessary to make the first three interest payments, any
excess in the collateral account will be returned to us.
The new notes will be secured by a first priority security interest in
the Pledged Securities and the cash collateral account. We may replace the
Government Securities originally pledged as collateral with Marketable U.S.
Securities, if they have a value at least equal to 125.0% of the amount of
unpaid first three interest payments.
After we have made the next two interest payments any remaining Pledged
Securities will be returned to us. After that time, the new notes will no
longer be secured.
Covenants
In the indenture, we agreed to some restrictions that limit our and our
Restricted Subsidiaries' ability to:
. incur additional debt,
. pay dividends, acquire shares of our Capital Stock or that of our
Restricted Subsidiaries, redeem our Indebtedness or that of our
Restricted Subsidiaries that is subordinate to the notes or make
Investments,
. restrict our Subsidiaries' abilities to pay dividends to us or other
Restricted Subsidiaries,
. enter into transactions with Affiliates or Related Persons,
. issue Guarantees,
. sell assets or Capital Stock of Subsidiaries,
. create liens,
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. engage in a merger, sale or consolidation,
. enter into new lines of business, and
. designate Subsidiaries as Unrestricted Subsidiaries.
Limitation on Incurrence of Additional Indebtedness. Centennial Cellular
Operating will not, and will not permit any of its Restricted Subsidiaries to
Incur any Indebtedness, including any Acquired Indebtedness. Neither the
accrual of interest, including the issuance of "pay in kind" securities or
similar instruments in respect of such accrued interest, pursuant to the terms
of Indebtedness Incurred in compliance with this covenant, nor the accretion of
original issue discount, nor the mere extension of the maturity of any
Indebtedness will be deemed to be an Incurrence of Indebtedness.
Despite the above, Centennial Cellular Operating and any Guarantor may
Incur Indebtedness, including Acquired Indebtedness, and any Restricted
Subsidiary may Incur Acquired Indebtedness if the Centennial Cellular
Operating's Annual Operating Cash Flow Ratio, after giving effect to the
Incurrence of such Indebtedness and the application of the proceeds therefrom,
would have been less than 8.25 to 1.0 at any time prior to December 31, 2000
and 7.5 to 1.0 after December 31, 2000.
The above will not prohibit the Incurrence of the following:
(1) Indebtedness of Centennial Cellular Operating, any Guarantor or our
subsidiary in Puerto Rico under the credit facility not exceeding
$1.05 billion, reduced by permanent reductions in commitments in
satisfaction of the Net Cash Proceeds application requirement set
forth in "--Limitation on Asset Sales and Sales of Subsidiary
Stock," provided, that the amount of Indebtedness of Centennial de
Puerto Rico under this clause (1) does not exceed 25% of the amount
which may be borrowed under this clause (1),
(2) Indebtedness of Centennial Cellular Operating (a) pursuant to the
old notes or new notes or (b) existing on December 15, 1998, other
than under the credit facility,
(3) Indebtedness between Centennial Cellular Operating and any
Restricted Subsidiary of Centennial Cellular Operating or between
Restricted Subsidiaries of Centennial Cellular Operating, provided
that, in the case of Indebtedness of Centennial Cellular Operating,
such obligations are unsecured and subordinated in all respects to
the holders' rights under the new notes; provided, further, that
with respect to any Indebtedness in excess of $250,000, any such
Indebtedness is made pursuant to an intercompany note in the form
attached to the indenture; provided, further, that
. any disposition, pledge or transfer of any such Indebtedness to a
Person, other than a disposition, pledge or transfer to
Centennial Cellular Operating or a Restricted Subsidiary, will be
deemed to be an Incurrence of such Indebtedness not permitted by
this clause (3), and
. any transaction pursuant to which any Restricted Subsidiary,
which has Indebtedness owing to Centennial Cellular Operating or
any other Restricted Subsidiary, ceases to be a Restricted
Subsidiary will be deemed to be the Incurrence of Indebtedness by
such Restricted Subsidiary that is not permitted by this clause
(3),
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(4) Capitalized Lease Obligations and Purchase Money Indebtedness of
Centennial Cellular Operating and any Restricted Subsidiary in an
aggregate amount or aggregate principal amount, as the case may be,
outstanding not exceeding the greater of
. $25 million and
. 5% of Centennial Cellular Operating's Total Assets; provided that
in the case of Purchase Money Indebtedness, such Indebtedness
will not be more than 100% of the cost determined in accordance
with GAAP to Centennial Cellular Operating or such Restricted
Subsidiary of the property purchased or leased with the proceeds,
(5) Indebtedness of Centennial Cellular Operating or any Restricted
Subsidiary from agreements providing for
. indemnification,
. adjustment of purchase price, or
. similar obligations, or
. from related guarantees
each Incurred in connection with the disposition of any business,
assets or Restricted Subsidiary of Centennial Cellular Operating to
the extent they to not result in the obligation to repay borrowed
money by any person,
(6) any guarantee by any Restricted Subsidiary of the credit facility
or any other Indebtedness made in accordance with the provisions of
"--Limitation on Issuances of Guarantees,"
(7) Indebtedness incurred by Centennial Cellular Operating or any of
its Restricted Subsidiaries in connection with the acquisition of a
new Restricted Subsidiary, the majority of whose revenues for the
most recent twelve months for which audited or unaudited financial
statements are available are from a Related Business, or of
property, businesses or assets which, or Capital Stock of a Person
all or substantially all of whose assets, are of a type generally
used in a Related Business; provided, that the principal amount or
accreted value, as applicable, of such Indebtedness, together with
any other outstanding Indebtedness incurred under this clause (7),
does not exceed $40 million in the aggregate at any one time
outstanding; and provided, further, that the principal amount of
Indebtedness that may be incurred under this clause (7) and clause
(11) by any individual Restricted Subsidiary that is not a
Guarantor will not exceed $25 million in the aggregate,
(8) Indebtedness of Centennial Cellular Operating or any Restricted
Subsidiary under standby letters of credit or reimbursement
obligations with respect to standby letters of credit issued in the
ordinary course of business and consistent with industry practices;
provided that upon the drawing of such letters of credit or the
incurrence of such Indebtedness, such obligations are reimbursed
within 30 days following such drawing or incurrence,
(9) Interest Rate Protection Obligations relating to
. Indebtedness of Centennial Cellular Operating or any Restricted
Subsidiary, which Indebtedness is otherwise permitted to be
incurred under this covenant, or
. Indebtedness for which a lender has provided a commitment in an
amount reasonably anticipated to be incurred by Centennial
Cellular Operating or any Restricted Subsidiary in the 12 months
after such Interest Rate Protection Obligations have been
incurred; provided, however, that the notional principal
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amount of such Interest Rate Protection Obligations does not
exceed the principal amount of the Indebtedness, including
Indebtedness subject to commitments, to which such Interest Rate
Protection Obligations relate,
(10) Currency Hedging Agreements relating to
. Indebtedness of Centennial Cellular Operating or any Restricted
Subsidiary and/or
. obligations to purchase or sell assets or properties, in each
case, incurred in the ordinary course of business of Centennial
Cellular Operating or any Restricted Subsidiary; provided,
however, that such Currency Hedging Agreements do not increase
the Indebtedness or other obligations of Centennial Cellular
Operating or any Restricted Subsidiary outstanding other than as
a result of the fluctuations in foreign currency exchange rates
or by reason of fees, indemnities and compensation payable under
the Currency Hedging Agreements,
(11) Indebtedness of Centennial Cellular Operating or any Guarantor,
other than as otherwise permitted pursuant to this covenant, not to
exceed $100 million in the aggregate; provided, that
. Centennial Cellular Operating's Restricted Subsidiaries that are
not Guarantors may incur up to $50 million in the aggregate of
the $100 million of Indebtedness which may be incurred under this
clause (11); and
. the principal amount of Indebtedness that may be incurred under
this clause (11) and clause (7) by any individual Restricted
Subsidiary that is not a Guarantor will not exceed $25 million in
the aggregate at any one time outstanding,
(12) Refinancing Indebtedness incurred to extend, renew, replace or
refund Indebtedness permitted under the second paragraph of this
covenant or clause (2) of this paragraph, plus the lesser of
. the stated amount of any premium or other payment we are required
to pay in connection with such a refinancing under the terms of
the Indebtedness being refinanced or
. the amount of premium or other payment actually paid at that time
to refinance the Indebtedness, plus, in either case, the amount
of reasonable expenses of Centennial Cellular Operating in
connection with such refinancing, and
(13) other Indebtedness of Centennial Cellular Operating or a Guarantor
not greater than the aggregate amount of cash contributions made to
the capital of Centennial Cellular Operating, other than in
exchange for Disqualified Capital Stock; provided that the amount
of such cash contributions are designated in an officer's
certificate as excluded cash contributions and will not be included
in the computation of the amount of Restricted Payments which
Centennial Cellular Operating can make under "--Limitation on
Restricted Payments."
For purposes of determining compliance with this covenant, if an item of
Indebtedness meets the criteria of more than one of the categories described
in clauses (1) through (8) above or is entitled to be incurred under the
second paragraph of this covenant, Centennial Cellular Operating may, in its
sole discretion, classify such item of Indebtedness on the date it is incurred
in any manner that complies with this covenant and such item of Indebtedness
will be treated as having been incurred under only one of these clauses or
under the second paragraph of this covenant.
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Limitation on Restricted Payments. Centennial Cellular Operating will
not, and will not permit any of its Restricted Subsidiaries to, directly or
indirectly, make any Restricted Payment, if, immediately before or after
giving effect to the Restricted Payment
(a) a Default or an Event of Default would exist,
(b) Centennial Cellular Operating would not be permitted to incur at
least $1.00 of additional Indebtedness pursuant to the Annual Operating Cash
Flow Ratio provision set forth in the second paragraph of "--Limitation on
Incurrence of Additional Indebtedness," or
(c) the aggregate amount of all Restricted Payments made by Centennial
Cellular Operating and its Restricted Subsidiaries, including such proposed
Restricted Payment if not made in cash, then the fair market value of any
property used, from and after December 15, 1998 and on or before the date of
such Restricted Payment, will exceed the sum of
. the amount determined by subtracting (x) 1.75 times the aggregate
Consolidated Interest Expense of Centennial Cellular Operating for
the Computation Period from (y) Operating Cash Flow of Centennial
Cellular Operating for the Computation Period, plus
. the aggregate Net Proceeds received by Centennial Cellular Operating
from the sale, other than to a Subsidiary of Centennial Cellular
Operating, of its Qualified Capital Stock after December 15, 1998 and
on or before the date of such Restricted Payment, other than any such
Net Proceeds received by Centennial Cellular Operating in connection
with the financing of the merger and in any case other than Excluded
Contributions, Excluded Cash Contributions and Investment Equity,
plus
. 100% of the aggregate amount of non-recourse contributions to the
capital of Centennial Cellular Operating since the December 15, 1998,
in any case other than Excluded Contributions, Excluded Cash
Contributions and Investment Equity, plus
. to the extent not otherwise included in the first three bullets
above, an amount equal to the net reduction in Investments in
Unrestricted Subsidiaries from payments of dividends, repayment of
loans or advances, or other transfers of assets, in each case, to
Centennial Cellular Operating or any Restricted Subsidiary from
Unrestricted Subsidiaries, or from redesignations of Unrestricted
Subsidiaries as Restricted Subsidiaries.
Despite the above, the provisions in clauses (b) or (c) of the
immediately preceding paragraphs will not prohibit, and the provision in
clause (a) of the immediately preceding paragraphs will not prohibit the
payment described in the first bullet of this paragraph (c), the following:
(1) the payment of any dividend within 60 days after the date of
its declaration if such dividend could have been made on the
date of its declaration in compliance with the above
provisions,
(2).the redemption,
.defeasance,
.repurchase or
.other acquisition or retirement
of any Indebtedness or Capital Stock of Centennial Cellular
Operating or its Restricted Subsidiaries either in exchange for
or out of the Net Proceeds of the substantially concurrent sale,
other than to a Subsidiary of Centennial Cellular Operating, of
Qualified Capital Stock
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(3) .loans
.advances,
.dividends or
.distributions
by Centennial Cellular Operating to Centennial in order to fund the
payment of the management or other similar fees to equity investors
or their Affiliates in Centennial permitted by the covenant "--
Limitation on Transactions with Related Persons,"
(4) .the purchase,
.redemption, or
.other acquisition or retirement for value of Capital Stock of
Centennial, or
.loans,
.advances,
.dividends,
.or distributions
by Centennial Cellular Operating to Centennial to fund the above,
from
.employees,
.former employees,
.directors,
.former directors,
.consultants, and
.former consultants
of Centennial or any of its Subsidiaries pursuant to the terms of
the agreements under which such Capital Stock was acquired in an
amount not to exceed $2.5 million in the aggregate in any calendar
year with unused amounts in any calendar year being carreeding
calendar years;
provided, that such amount in any calendar year may be increased by
an amount not to exceed
. the cash proceeds from the sale of Capital Stock to members of
management, directors or consultants that occurs after December
15, 1998 plus
. the cash proceeds of key man life insurance policies received by
Centennial Cellular Operating and its Restricted Subsidiaries
after December 15, 1998,
(5) repurchases of Capital Stock of Centennial Cellular Operating
deemed to occur upon exercise of stock options if such Capital
Stock represents a portion of the exercise price of such options,
(6) .loans,
.advances,
.dividends, or
.distributions
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by Centennial Cellular Operating to Centennial to fund the acquisition,
repurchase or other repayment in respect of
. Centennial's common shares,
. Class B Shares,
. Convertible Preferred Stock, par value $.01 per share,
. Second Series Convertible Preferred Stock, par value $.01 per
share,
. or options or warrants to purchase any of the foregoing,
. in each case pursuant to the merger agreement,
(7).loans,
. advances,
. dividends or
. distributions
by Centennial Cellular Operating to Centennial not exceeding an amount
necessary to allow Centennial to pay
. its costs, including all professional fees and expenses, incurred
to comply with its reporting obligations under federal or state
laws or under the indenture,
. its other operational expenses, other than taxes incurred in the
ordinary course of business and not exceeding $1 million in any
fiscal year with unused amounts in any fiscal year being carried
over to the next two succeeding fiscal years, and
. its then currently due taxes attributable solely on account of
Centennial Cellular Operating and its subsidiaries, as a
consolidated filing group or on account of the income of
Centennial related to its investment in Centennial Cellular
Operating and its subsidiaries payable under a tax sharing
agreement between Centennial and Centennial Cellular Operating and
its subsidiaries and the reasonable expenses of preparing returns
reflecting such taxes not to exceed in any event the amount of tax
that Centennial Cellular Operating and the Restricted Subsidiaries
would pay if they were not part of such filing group, provided
that Centennial agrees to be obligated to contribute to Centennial
Cellular Operating any refund Centennial receives relating to any
such taxes,
(8) a refinancing through the substantially concurrent issuance of new
Subordinated Indebtedness of Centennial Cellular Operating,
provided that any such new Subordinated Indebtedness
(a) will not exceed the principal amount refinanced, or, if
such Subordinated Indebtedness provides for an amount less
than the principal amount to be due and payable upon a
declaration of acceleration, then such lesser amount as of
the date of determination, plus the lesser of
. the stated amount of any premium or other payment we are
required to pay with such a refinancing under to the
terms of the Indebtedness being refinanced or
. the amount of premium or other payment actually paid to
refinance the Indebtedness,
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plus, in either case, the amount of expenses of Centennial Cellular
Operating incurred with such refinancing;
(b) has a final maturity date later than the final maturity date
of, and has a Weighted Average Life equal to or greater than
the Weighted Average Life of, the Indebtedness to be
refinanced; and
(c) is expressly subordinated in right of payment to the new notes
at least to the same extent as the Subordinated Indebtedness
to be refinanced,
(9) .loans,
. advances,
. dividends, or
. distributions
by Centennial Cellular Operating to Centennial no greater than the
quarterly interest payments then due on our subordinated debt as in
effect on December 15, 1998; provided that in no event will that
amount exceed the aggregate amount of Cash from Minority Cellular
Investment Interests received by Centennial Cellular Operating net
of all taxes; and provided further that with respect to any
.loans,
.advances,
.dividends, or
.distributions
after December 15, 1999 and after giving effect to that transaction,
Centennial Cellular Operating would be permitted to incur at least
$1.00 of additional Indebtedness under to the Annual Operating Cash
Flow Ratio test contained in the second paragraph of "--Limitation
on Incurrence of Additional Indebtedness,"
(10) the declaration and payment of dividends or distributions to
holders of any class or series of Disqualified Capital Stock of
Centennial Cellular Operating or any Preferred Stock of its
Restricted Subsidiaries issued or incurred under the covenant "--
Limitation on Incurrence of Additional Indebtedness,"
(11) the payment of dividends on Centennial Cellular Operating's common
stock following the first initial public offering of Centennial's
or Centennial Cellular Operating's common stock after December 15,
1998, of up to 6% per annum of the net cash proceeds received by
Centennial Cellular Operating in such public offering or
contributed by Centennial to Centennial Cellular Operating from the
net cash proceeds of an equity offering by Centennial,
(12) .loans,
. advances,
. dividends, or
. distribution
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by Centennial Cellular Operating to Centennial to fund the
.repurchase,
.retirement, or
.other acquisition for value
of Capital Stock of Centennial in existence on December 15, 1998
Date after January 7, 1999, which will not exceed 7.1% of the
outstanding Capital Stock of Centennial prior to January 7, 1999,
and which are not held by Welsh Carson, Blackstone or their
respective Affiliates or any members of management of Centennial or
Centennial Cellular Operating or any of their Subsidiaries,
including any Capital Stock issued in respect of such Capital Stock
as a result of a
.stock split,
.recapitalization,
.merger,
.combination,
.consolidation or
.otherwise,
provided that
(A) the amount per share paid under this clause (12) will
not exceed $13.83 per share, as such amount will be
adjusted as determined in good faith by the board of
directors of Centennial Cellular Operating for
. stock splits,
. stock dividends,
. recapitalizations,
. stock recombinations,
. mergers,
. reverse stock splits,
. consolidations, or
. similar transactions, and
(B) after giving effect thereto, Centennial Cellular
Operating would be permitted to incur at least $1.00
of additional Indebtedness under the Annual Operating
Cash Flow Ratio test contained in the second paragraph
of "--Limitation on Incurrence of Additional
Indebtedness",
(13) Investments made with Excluded Contributions, and
(14) other Restricted Payments in an aggregate amount not to exceed $2
million.
100% of the amounts expended under clauses (1), (2) to the extent the Net
Proceeds from the concurrent sale of Qualified Capital Stock has been added to
the aggregate Net Proceeds calculation
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pursuant to clause (b) of the first paragraph of this covenant, (4), (5), (10),
(11) and (12) of the immediately preceding paragraph will be deducted from the
calculation of aggregate Restricted Payments.
Limitation on Restricting Subsidiary Dividends. Centennial Cellular
Operating will not, and will not permit any of its Restricted Subsidiaries to,
directly or indirectly, have any consensual encumbrance or restriction on the
ability of any Restricted Subsidiary of Centennial Cellular Operating to:
. pay dividends or make other distributions on the Capital Stock of any
Restricted Subsidiary of Centennial Cellular Operating,
. pay or satisfy any obligation to Centennial Cellular Operating or any
of its Restricted Subsidiaries, or
. otherwise transfer assets or make or pay loans or advances to
Centennial Cellular Operating or any of its Restricted Subsidiaries.
However, the preceding restrictions will not apply to encumbrances or
restrictions existing under or by reason of:
(1) any applicable law or any governmental or administrative regulation
or order,
(2) Refinancing Indebtedness permitted under the indenture, provided
that the restrictions contained in the instruments governing such
Refinancing Indebtedness are no more restrictive in the aggregate
than those contained in the instruments governing the Indebtedness
being refinanced immediately before such refinancing,
(3) restrictions with respect solely to a Restricted Subsidiary of
Centennial Cellular Operating imposed under a binding agreement
which has been entered into for the sale or disposition of all or
substantially all of the Capital Stock or assets of such Restricted
Subsidiary, provided that such restrictions apply solely to the
Capital Stock or assets being sold of such Restricted Subsidiary,
(4) restrictions contained in any agreement relating to a person or
real or tangible personal property acquired after December 15, 1998
which are not applicable to any person or property, other than the
person or property so acquired and which were not put in place in
connection with, or in contemplation of, such acquisition,
(5) any agreement, other than those referred to in clause (4), of a
person acquired by Centennial Cellular Operating or a Restricted
Subsidiary of Centennial Cellular Operating, which restrictions
existed at the time of acquisition,
(6) contractual encumbrances or restrictions in effect on December 15,
1999 and customary encumbrances and restrictions contained in the
security agreements related to the credit facility and encumbrances
and restrictions which will be contained in the credit facility on
January 7, 1999, provided that such encumbrances or restrictions if
amended are no more restrictive in the aggregate than those
contained in the security agreements and the credit facility in
effect on January 7, 1999,
(7) the indenture and the old notes or new notes,
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(8) Purchase Money Indebtedness for property acquired in the ordinary
course of business to the extent such encumbrance or restriction
relates to the property underlying the Purchase Money Indebtedness,
(9) Indebtedness of Restricted Subsidiaries otherwise permitted to be
incurred under the covenants "--Limitation on Incurrence of
Additional Indebtedness" and "--Limitation on Liens," which
encumbrances or restrictions in the aggregate with all such
previous encumbrances or restrictions do not restrict greater than
10% of Centennial Cellular Operating's Annual Operating Cash Flow
on the date of incurrence of the Indebtedness,
(10) restrictions on cash or other deposits or net worth imposed by
customers under contracts entered into in the ordinary course of
business,
(11) customary provisions in joint venture agreements and other similar
agreements entered into in the ordinary course of business to the
extent such encumbrance and restriction relates to the activities
and assets of such joint venture or similar entity and provided
that the Annual Operating Cash Flow determined as of the date of
execution of any such joint venture or similar agreement in all
such joint ventures or similar entities which are subject to such
encumbrances or restrictions do not exceed 10% of Centennial
Cellular Operating's Annual Operating Cash Flow on the date of
execution of such joint venture or similar agreement, or
(12) customary provisions restricting subletting or assignment of any
lease entered into the ordinary course of business.
Limitation on Transactions with Related Persons. Centennial Cellular
Operating will not, and will not permit any of its Restricted Subsidiaries to
engage in an Affiliate Transaction involving in one or a series of related
transactions an aggregate consideration in excess of $5.0 million, unless
(a) such Affiliate Transaction is on terms that are not materially
less favorable to Centennial Cellular Operating or the relevant
Restricted Subsidiary than those that would have been obtained in a
comparable transaction by Centennial Cellular Operating or such
Restricted Subsidiary with an unrelated person and Centennial Cellular
Operating delivers an officer's certificate to the trustee certifying
that such Affiliate Transaction complies with this clause (a) and
(b) with respect to any Affiliate Transaction or series of related
Affiliate Transactions involving aggregate consideration in excess of
$10.0 million, Centennial Cellular Operating delivers to the trustee a
resolution adopted by the majority of the Disinterested Directors
approving such Affiliate Transaction and set forth in an officer's
certificate certifying that such Affiliate Transaction complies with
clause (a) above.
The foregoing provisions will not apply to the following:
(1) transactions between or among Centennial Cellular Operating and/or
any of its Restricted Subsidiaries,
(2) Restricted Payments permitted by the provisions of the indenture
described above under the covenant "--Limitation on Restricted
Payments,"
(3) the payment of annual management, consulting, monitoring and
advisory fees and related expenses to Welsh Carson, Blackstone and
their respective Affiliates in an amount in any calendar year not
to exceed the greater of
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. $1 million, or
. 1% of Annual Operating Cash Flow,
(4) the payment of reasonable and customary fees paid to, and indemnity
provided on behalf of,
. officers,
. directors,
. employees, or
. consultants
of Centennial Cellular Operating or any Restricted Subsidiary,
(5) payments by Centennial Cellular Operating or any of its Restricted
Subsidiaries to
. Welsh Carson,
. Blackstone, and
. their respective Affiliates
made for any
. financial advisory,
. financing,
. underwriting,
. placement services, or
. in respect of other investment banking activities, including,
without limitation, in connection with acquisitions or
divestitures which payments are approved by a majority of the
Board of Directors of Centennial Cellular Operating in good
faith,
(6) transactions with respect to which Centennial Cellular Operating or
any of its Restricted Subsidiaries, as the case may be, delivers to
the trustee a letter from an investment banking firm of national
standing stating that such transaction is fair to Centennial
Cellular Operating or such Restricted Subsidiary from a financial
point of view,
(7) payments or loans to employees or consultants which are approved by
a majority of the Board of Directors of Centennial Cellular
Operating in good faith,
(8) any agreement as in effect on December 15, 1998, so long as any
amendment to those agreements is not disadvantageous to the holders
of the notes in any material respect, or any transaction
contemplated by any of those agreements,
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(9) the existence of, or the performance by Centennial Cellular
Operating or any of its Restricted Subsidiaries of its obligations
under the terms of, the Recapitalization Documents, including any
registration rights agreement or purchase agreement related
thereto, to which it is a party on December 15, 1998 and any
similar agreements which it may enter into after December 15, 1998;
provided, however, that the existence of, or the performance by
Centennial Cellular Operating or any of its Restricted Subsidiaries
of obligations under any future amendment to any such existing
agreement or under any similar agreement entered into after
December 15, 1998 will only be permitted by this clause,
(10) to the extent that the terms of any amendment or new agreement are
not otherwise disadvantageous to the holders of the new notes in
any material respect,
(11) the payment of all fees, expenses, bonuses and awards related to
the Recapitalization including fees to Welsh Carson and Blackstone,
and
(12) any payment under to a tax sharing agreement between Centennial
Cellular Operating and any other Person with which Centennial
Cellular Operating is required or permitted to file a consolidated
tax return or with which Centennial Cellular Operating is or could
be part of a consolidated group for tax purposes, which payments
are not in excess of the tax liabilities attributable solely to
Centennial Cellular Operating and its Restricted Subsidiaries as a
consolidated group.
Limitation on Issuances of Guarantees. (a) Centennial Cellular Operating
will not cause or permit any Restricted Subsidiary, which is not a Guarantor,
directly or indirectly, to guarantee, assume or in any other manner become
liable with respect to any Indebtedness of Centennial Cellular Operating or any
Restricted Subsidiary, other than under the credit facility, unless such
Restricted Subsidiary simultaneously executes and delivers a supplemental
indenture to the indenture and becomes a Guarantor except that
(A) such guarantee need not be secured unless required under "--
Limitation on Liens,"
(B) if such Indebtedness is by its terms Senior Indebtedness, any such
assumption, guarantee or other liability of such Restricted
Subsidiary with respect to such Indebtedness will be senior to such
Restricted Subsidiary's Guarantee of the notes to the same extent as
such Senior Indebtedness is senior to the new notes, and
(C) if such Indebtedness is by its terms expressly subordinated to the
new notes, any such assumption, guarantee or other liability of such
Restricted Subsidiary with respect to such Indebtedness will be
subordinated to such Restricted Subsidiary's Guarantee of the notes
at least to the same extent as such Indebtedness is subordinated to
the notes.
(b) Despite the above, any Guarantee by a Restricted Subsidiary of the
new notes will provide by its terms that it and all Liens securing the same
will be automatically and unconditionally released and discharged upon
(1) any sale, exchange or transfer, to any person not an Affiliate of
Centennial Cellular Operating, of all of Centennial Cellular
Operating's Capital Stock in, or all or substantially all the assets
of, such Restricted Subsidiary, which transaction is in compliance
with the terms of the indenture and such Restricted Subsidiary is
released
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from any guarantees, by it or other Indebtedness of Centennial
Cellular Operating or any Restricted Subsidiaries, or
(2) the release by the holders of the Indebtedness of Centennial
Cellular Operating described in clause (a) above or their guarantee
by such Restricted Subsidiary, including any deemed release upon
payment in full of all obligations under such Indebtedness, which
resulted in the notes being guaranteed by such Restricted
Subsidiary, at such time as
. no other Indebtedness of Centennial Cellular Operating has been
guaranteed by such Restricted Subsidiary or
. the holders of all such other Indebtedness which is guaranteed by
such Restricted Subsidiary also release their guarantee by such
Restricted Subsidiary, including any deemed release upon payment
in full of all obligations under such Indebtedness.
Limitation on Asset Sales and Sales of Subsidiary Stock. Centennial
Cellular Operating will not, and will not permit any of its Restricted
Subsidiaries to, consummate an Asset Sale, unless
(1) with respect to any transaction or related series of transactions of
securities, property or assets with an aggregate fair market value
in excess of $2,500,000, at least 75% of the value of consideration
for the assets disposed of in such Asset Sale consists of cash or
Cash Equivalents, provided that any cash or Cash Equivalents
received within 12 months following any such Asset Sale upon
conversion of any property or assets, other than in the form of cash
or Cash Equivalents, received in consideration of such Asset Sale
shall be applied promptly in the manner required of Net Cash
Proceeds of any such Asset Sale as set forth above; provided further
that Centennial Cellular Operating and its Restricted Subsidiaries
will not be required to receive any cash in connection with the
transfer or contribution of assets to a joint venture, excluding
. Senior Indebtedness under a bank credit facility, and any
Refinancing Indebtedness issued to refinance any such
Indebtedness, or any Indebtedness of a Restricted Subsidiary in
each case that is assumed by a transferee which assumption
permanently reduces the amount of Indebtedness outstanding on
December 15, 1998 and permitted to have been Incurred under the
covenant "--Limitation on Incurrence of Additional Indebtedness",
including that in the case of a revolver or similar arrangement,
such commitment is permanently reduced by such amount,
. Purchase Money Indebtedness secured exclusively by the assets
subject to such Asset Sale which is assumed by a transferee, and
. marketable securities that are promptly converted into cash or
Cash Equivalents, and
(2) the board of directors of Centennial Cellular Operating determines
in good faith that Centennial Cellular Operating or such Restricted
Subsidiary, as applicable, would receive fair market value in
consideration of such Asset Sale.
Despite the above:
(1) Centennial Cellular Operating and its Restricted Subsidiaries may,
in the ordinary course of business dispose of assets acquired and
held for resale in the ordinary course of business,
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(2) Centennial Cellular Operating and its Restricted Subsidiaries may
dispose of assets under and in accordance with the "--Limitation on
Mergers, Sales or Consolidations" covenant,
(3) Centennial Cellular Operating and its Restricted Subsidiaries may
dispose of damaged, worn out or other obsolete property in the
ordinary course of business so long as it is no longer necessary for
the proper conduct of the business of Centennial Cellular Operating
or such Restricted Subsidiary, as applicable,
(4) Centennial Cellular Operating and its Restricted Subsidiaries may
dispose of assets to Centennial Cellular Operating or any of its
Restricted Subsidiaries in accordance with the terms of the
indenture, and
(5) Centennial Cellular Operating and its Restricted Subsidiaries may,
in the ordinary course of business exchange all or a portion of its
property, businesses or assets for property, businesses or assets
which, or Capital Stock of a Person all or substantially all of
whose assets, are of a type used in the business of Centennial
Cellular Operating on December 14, 1998 or a Related Business;
provided that such Person will initially be designated a Restricted
Subsidiary if such Person becomes a Subsidiary of Centennial
Cellular Operating by virtue of such Asset Sale, or a combination of
any such property, businesses or assets, or Capital Stock of such a
Person and cash or Cash Equivalents, provided that
. if otherwise than in the ordinary course of business, in the case
of exchanges in excess of $15 million upon receipt of a favorable
written opinion by an independent financial advisor of national
reputation as to the fairness from a financial point of view to
Centennial Cellular Operating or such Restricted Subsidiary of the
proposed transaction,
. a majority of the Disinterested Directors of the board of
directors of Centennial Cellular Operating approve a resolution of
the board of directors that such exchange is fair to Centennial
Cellular Operating or such Restricted Subsidiary, as the case may
be,
. any cash or Cash Equivalents received pursuant to any such
exchange will be applied in the manner applicable to Net Cash
Proceeds from an Asset Sale as set forth under "--Repurchase at
the Option of Holders--Asset Sales."
. any Capital Stock of a Person received in an Asset Sale pursuant
to this clause (5) will be owned directly by Centennial Cellular
Operating or a Restricted Subsidiary and, when combined with the
Capital Stock of such Person already owned by Centennial Cellular
Operating and its Restricted Subsidiaries, will constitute a
majority of the voting power and Capital Stock of such Person.
Restricted Payments that are made in compliance with "--Limitation on
Restricted Payments" shall not be deemed to be Asset Sales.
Within one year after the receipt of any Net Cash Proceeds from an Asset
Sale, we or any Restricted Subsidiary may apply such Net Cash Proceeds, at its
option:
. to repay or repurchase our or any Restricted Subsidiary's Senior
Indebtedness; or
. to acquire assets of a Related Business, or the Capital Stock of a
Person, all or substantially all of whose assets and property are
used in a Related Business.
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Any Net Cash Proceeds from Asset Sales that are not applied or invested
as provided in the preceding paragraph will constitute "Excess Proceeds".
Within one year after an Asset Sale when the aggregate amount of Excess
Proceeds exceeds $15 million, we will be required to make an Asset Offer Sale.
The offer price in any Asset Sale Offer will be equal to 100% of principal
amount plus any accrued and unpaid interest to the date of purchase, and will
be payable in cash. If the aggregate principal amount of new notes tendered
into such Asset Sale Offer exceeds the amount of Excess Proceeds, the trustee
will select the new notes to be purchased on a pro rata basis.
Limitation on Liens. Centennial Cellular Operating will not, and will not
cause or permit any Restricted Subsidiary to, directly or indirectly, create,
incur or affirm any Lien of any kind securing any Pari Passu Indebtedness or
Subordinated Indebtedness, including any assumption, guarantee or other
liability with respect to any such Lien by any Restricted Subsidiary upon any
property or assets of Centennial Cellular Operating or any Restricted
Subsidiary, or any income or profits of Centennial Cellular Operating or any
Restricted Subsidiary, unless the new notes are directly secured equally and
ratably with or, in the case of Subordinated Indebtedness, prior or senior to
the new notes, with the same relative priority as the new notes will have with
respect to such Subordinated Indebtedness the obligation or liability secured
by such Lien except for Liens
(A) securing any Indebtedness which became Indebtedness pursuant to a
transaction permitted under "--Limitation on Merger, Sale or
Consolidation" or securing Acquired Indebtedness which was created
prior to and not created in connection with, or in contemplation of
the incurrence of such Pari Passu Indebtedness or Subordinated
Indebtedness, including any liability by any Restricted Subsidiary,
and which Indebtedness is permitted under the provisions of "--
Limitation on Incurrence of Additional Indebtedness," or
(B) securing any Indebtedness incurred in connection with any
refinancing of any such Indebtedness described in clause (A), so
long as the aggregate principal amount of Indebtedness represented
by such Indebtedness, or, if such Indebtedness provides for an
amount less than the principal amount of such Indebtedness to be due
and payable upon a declaration of acceleration of the maturity of
such Indebtedness, the original issue price of such Indebtedness
plus any accreted value attributable of such Indebtedness since the
original issuance of such Indebtedness, is not increased by such
refinancing by an amount greater than the lesser of
. the stated amount of any premium or other payment required to be
paid in connection with such a refinancing pursuant to the terms
of the Indebtedness being refinanced, or
. the amount of premium or other payment actually paid at such time
to refinance the Indebtedness, plus, in either case, the amount of
expenses of Centennial Cellular Operating incurred in connection
with such refinancing; provided, however, that in the case of
clauses (A) and (B), any such Lien only extends to the assets that
were subject to such Lien securing such Indebtedness prior to the
related acquisition by Centennial Cellular Operating or its
Restricted Subsidiaries.
Despite the above, any Lien securing the new notes granted under this
covenant will be automatically and unconditionally released and discharged upon
the release by the holders of the Pari Passu Indebtedness or Subordinated
Indebtedness described above of their Lien on the property or
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assets of Centennial Cellular Operating or any Restricted Subsidiary,
including any deemed release upon payment in full of all obligations under
such Indebtedness, at such time as the holders of all such Pari Passu
Indebtedness or Subordinated Indebtedness also release their Lien on the
property or assets of Centennial Cellular Operating or such Restricted
Subsidiary, or upon any sale, exchange or transfer to any Person not an
Affiliate of Centennial Cellular Operating of the property or assets secured
by such Lien, or of all of the Capital Stock held by Centennial Cellular
Operating or any Restricted Subsidiary in, or all or substantially all the
assets of, any Restricted Subsidiary creating such Lien.
Limitation on Merger, Sale or Consolidation. Centennial Cellular
Operating will not
. consolidate with or
. merge with or into another Person, or
. sell,
. lease,
. convey,
. transfer, or
. otherwise dispose of
all or substantially all of its properties and assets computed on a
consolidated basis, whether in a single transaction or a series of related
transactions, to another Person or group of affiliated Persons, and Centennial
Cellular Operating will not permit any Restricted Subsidiary to enter into any
such transaction or series of transactions which would result in a sale,
lease, conveyance, transfer or other disposition of all or substantially all
of the properties and assets of Centennial Cellular Operating on a
consolidated basis, unless
(1) either
. Centennial Cellular Operating is the continuing entity or
. the resulting, surviving or transferee entity is an entity
organized under the laws of the United States, any state of the
United States or the District of Columbia and expressly assumes by
supplemental indenture all of the obligations of Centennial
Cellular Operating in connection with the new notes, the
indenture, as the case may be, and the new notes, the indenture
will remain in full force and effect as so supplemented and any
Guarantee shall be confirmed as applied to the surviving entity's
obligations,
(2) no Default or Event of Default will exist or will occur immediately
after giving effect, and treating any Indebtedness not previously an
obligation of Centennial Cellular Operating or any of its Restricted
Subsidiaries which becomes the obligation of Centennial Cellular
Operating or any of its Restricted Subsidiaries as a result of such
transaction as having been incurred at the time of such transaction,
to such transaction,
(3) immediately before and immediately after giving effect to such
transaction, on the assumption that the transaction occurred on the
first day of the four-quarter period for which financial statements
are available ending immediately prior to the consummation of such
transaction with the appropriate adjustments with respect to the
transaction being
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included in such pro forma calculation, either Centennial Cellular
Operating or resulting surviving or transferee entity would
immediately thereafter be permitted to incur at least $1.00 of
additional Indebtedness under the Annual Operating Cash Flow Ratio
provision set forth in the second paragraph of the "--Limitation on
Incurrence of Additional Indebtedness" covenant or such Annual
Operating Cash Flow Ratio would be lower than such ratio immediately
prior to such transaction,
(4) at the time of the transaction either of us, unless it is the other
party to the transaction described above, will have by supplemental
indenture confirmed that it remains a co-obligor under the indenture
and the new notes,
(5) at the time of the transaction any Guarantor unless it is the other
party to the transaction described above, will have by supplemental
indenture confirmed that its Guarantee will apply to such Person's
obligations under the indenture and the new notes, and
(6) at the time of the transaction Centennial Cellular Operating or the
resulting surviving or transferee entity will have delivered, or
caused to be delivered, to the trustee, in form and substance
reasonably satisfactory to the trustee, an officers' certificate and
an opinion of counsel, each to the effect that such
. consolidation,
. merger,
. transfer,
. sale,
. assignment,
. conveyance,
. transfer,
. lease or
. other transaction, and
. the supplemental indenture in respect of the other entity
comply with the indenture and that all conditions precedent in the indenture
provided for relating to such transaction have been complied with.
Despite the above, any Restricted Subsidiary may merge with and into any
other Restricted Subsidiary or Centennial Cellular Operating.
Centennial will not, in a single transaction or through a series of
related transactions,
. consolidate with or
. merge with or into any other Person, other than Centennial
Cellular Operating or any Guarantor or
. sell,
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. assign,
. convey,
. transfer,
. lease, or
. otherwise dispose of
all or substantially all of its properties and assets to any person or group of
persons, other than Centennial Cellular Operating or any Guarantor, unless at
the time and after giving effect to that transaction:
(1) either
(a) Centennial will be the continuing corporation or
(b) the person, if other than Centennial,
. formed by such consolidation or
. into which Centennial is merged or
. the Person which acquires all or substantially all of the
properties and assets of Centennial on a Consolidated basis
will be a corporation duly organized and validly existing under the laws of the
United States of America, any state of the United States or the District of
Columbia and such Person expressly assumes, by a supplemental indenture, in a
form reasonably satisfactory to the Trustee, all the obligations of Centennial
under the new notes and the indenture and such new note and indenture will
remain in full force and effect,
(2) immediately before and immediately after giving effect to such
transaction on a pro forma basis, no Default or Event of Default
will have occurred and be continuing, and
(3) at the time of the transaction Centennial or the surviving entity
will have delivered, or caused to be delivered, to the trustee, in
form and substance reasonably satisfactory to the trustee, an
officers' certificate and an opinion of counsel, each to the effect
that such
. consolidation,
. merger,
. transfer,
. sale,
. assignment,
. conveyance,
. lease or
. other transaction, and
. the supplemental indenture in respect of the other entity
comply with the indenture and that all conditions precedent therein provided
for relating to such transaction have been complied with.
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In the event that Centennial merges or consolidates with or into
Centennial Cellular Operating, the provisions of the first paragraph of this
Section are also required to be satisfied.
Upon any transaction in accordance with the above, the successor
corporation formed by such consolidation or into which Centennial Cellular
Operating or Centennial, as the case may be, is merged or to which such
transfer is made, will succeed to, and be substituted for, and may exercise
every right and power of, Centennial Cellular Operating or Centennial, as the
case may be, under the indenture with the same effect as if the successor
entity had been named in the indenture as Centennial Cellular Operating or
Centennial, as the case may be, and Centennial Cellular Operating or
Centennial, as the case may be, except in connection with a transfer that
results in the transfer of assets constituting or accounting for less than 95%
of the consolidated assets will as of the last balance sheet available,
revenues, or Annual Operating Cash Flow of Centennial Cellular Operating or
Centennial, as the case may be, as of the last twelve month period for which
financial statements are available, will be released from the obligations under
the new notes and the indenture.
Limitation on Lines of Business. Neither Centennial Cellular Operating
nor any of its Restricted Subsidiaries will directly or indirectly engage in
any line or lines of business activity other than a Related Business.
Limitation on Senior Subordinated Indebtedness. We will not, and will not
permit or cause any Guarantor to, incur any Indebtedness that is subordinate in
right of payment to any of our Indebtedness or such Guarantor, as the case may
be, unless such Indebtedness is also equal in right of payment with the new
notes or the Guarantee of such Guarantor or subordinated in right of payment to
the new notes or such Guarantee at least to the same extent as the notes or
such Guarantee are subordinated in right of payment to Senior Indebtedness or
Senior Indebtedness of such Guarantor, as the case may be, as set forth in the
indenture.
Limitation on Unrestricted Subsidiaries. All of our subsidiaries are
currently Restricted Subsidiaries. Centennial Cellular Operating may make
designate a Subsidiary as an Unrestricted Subsidiary only if:
(a) no Default shall have occurred and be continuing at the time of or
after giving effect to such designation,
(b) Centennial Cellular Operating would be permitted to make an
Investment at the time of Designation, assuming the effectiveness of
such designation, under "--Limitation on Restricted Payments" above
the greater of the net book value or fair market value of our
interest in that Subsidiary,
(c) such Unrestricted Subsidiary does not own any Capital Stock in any
Restricted Subsidiary of Centennial Cellular Operating which is not
simultaneously being designated an Unrestricted Subsidiary,
(d) such Unrestricted Subsidiary is not liable, directly or indirectly,
with respect to any Indebtedness other than Unrestricted Subsidiary
Indebtedness, provided that an Unrestricted Subsidiary may provide a
Guarantee for the new notes, and
(e) such Unrestricted Subsidiary is not a party to any agreement,
contract, arrangement or understanding at such time with Centennial
Cellular Operating or any Restricted Subsidiary unless the terms of
any such
. agreement,
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. contract,
. arrangement, or
. understanding
are no less favorable to Centennial Cellular Operating or such Restricted
Subsidiary than those that might be obtained at the time from persons who are
not Affiliates of Centennial Cellular Operating or, in the event such condition
is not satisfied, the value of such agreement, contract, arrangement or
understanding to such Unrestricted Subsidiary will be considered a Restricted
Payment.
In the event of any such designation, Centennial Cellular Operating will
be deemed to have made an Investment constituting a Restricted Payment pursuant
to the covenant "--Limitation on Restricted Payments" for all purposes of the
indenture.
Centennial Cellular Operating will not and will not cause or permit any
Restricted Subsidiary to at any time
. provide credit support for; provided that operational contracts in
the ordinary course of business will be deemed credit support, or
subject any of its property or assets, other than the Capital Stock
of any Unrestricted Subsidiary, to the satisfaction of, any
Indebtedness of any Unrestricted Subsidiary, including any
. undertaking,
. agreement or
. instrument
constituting such Indebtedness, other than Permitted Investments in
Unrestricted Subsidiaries, or
. be directly or indirectly liable for any Indebtedness of any
Unrestricted Subsidiary.
For purposes of the above, the designation of a Subsidiary of Centennial
Cellular Operating as an Unrestricted Subsidiary will be deemed to be the
designation of all of the Subsidiaries of such Subsidiary as Unrestricted
Subsidiaries.
Centennial Cellular Operating may make a revoke of the designation of any
Subsidiary as an Unrestricted Subsidiary if:
(a) no Default will have occurred and be continuing at the time of and
after giving effect to such revocation,
(b) all Liens and Indebtedness of such Unrestricted Subsidiary
outstanding immediately following such revocation would, if incurred
at such time, have been permitted to be incurred for all purposes of
the indenture, and
(c) unless such redesignated Subsidiary shall not have any Indebtedness
outstanding, other than Indebtedness that would be Permitted
Indebtedness, immediately after giving effect to such revocation,
and after giving pro forma effect to the incurrence of any such
Indebtedness of such redesignated Subsidiary as if such Indebtedness
was incurred on the date of the revocation, Centennial Cellular
Operating could incur $1.00 of additional Indebtedness, other than
Permitted Indebtedness, under the covenant described under "--
Limitation on Incurrence of Additional Indebtedness."
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All designations and revocations must be evidenced by a resolution of the
board of directors of Centennial Cellular Operating delivered to the trustee
certifying compliance with the foregoing provisions.
Provision of Financial Statements. Whether or not Centennial Cellular
Operating is subject to the reporting requirement of the Exchange Act, so long
as any new notes are outstanding, Centennial Cellular Operating will, to the
extent permitted under the Exchange Act, file with the SEC the annual reports,
quarterly reports and other documents which Centennial Cellular Operating would
have been required to file with the SEC if it were subject to the reporting
requirements of the Exchange Act such documents to be filed with the SEC on or
prior to the date such document would be required to be filed with the SEC
. within 15 days of each required filing date, whether or not prior to
the 120th calendar day following January 7, 1999) (1) transmit by
mail to all holders, as their names and addresses appear in the
security register, without cost to such holders and (2) file with
the trustee copies of the annual reports, quarterly reports and
other documents which Centennial Cellular Operating would have been
required to file with the SEC if Centennial Cellular Operating were
subject to the reporting requirements of the Exchange Act, and
. if filing such documents by Centennial Cellular Operating with the
SEC is not permitted under the Exchange Act, promptly upon written
request and payment of the reasonable cost of duplication and
delivery, supply copies of such documents to any prospective
purchaser of notes at Centennial Cellular Operating's cost.
So long as any of the new notes remain outstanding, Centennial Cellular
Operating will make new notes available to any prospective purchaser of new
notes or beneficial owner of notes in connection with any sale of the
information required by the Securities Act, until such time as Centennial
Cellular Operating has either exchanged the notes for securities identical in
all material respects which have been registered under the Securities Act or
until such time as the holders of the new notes have disposed of such new notes
pursuant to an effective registration statement under the Securities Act.
Centennial Cellular Operating will be deemed to have satisfied the requirements
set forth above if
. Centennial prepares, files, mails and supplies reports and other
documents prepared on a consolidated basis of the types required
above, in each case within the applicable time periods,
. Centennial Cellular Operating is not required to file such reports
and other documents separately under the applicable rules and
regulations of the SEC, after giving effect to any exemptive relief,
because of the filings made by Centennial,
. Centennial does not own assets in excess of $10 million other than
the Capital Stock of Centennial Cellular Operating, and
. Centennial does not have outstanding Indebtedness in excess of $10
million, other than indebtedness under our subordinated debt and
Indebtedness as to which Centennial Cellular Operating is also
liable.
Amendments to Subordinated Debt. Centennial will not amend the terms of
our subordinated debt in a manner adverse to the holders of new notes.
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Additional Covenants. The indenture also contains covenants with respect
to the following matters:
. payment of principal, premium and interest,
. maintenance of an office or agency in The City of New York,
. arrangements regarding the handling of money held in trust,
. maintenance of corporate existence,
. payment of taxes and other claims,
. maintenance of properties, and
. maintenance of insurance.
Events of Default and Remedies
The Indenture defines an Event of Default as:
(1) the failure by us to pay any installment of interest on the notes
when it becomes due and payable and the continuance of such failure
for 30 days,
(2) the failure by us to pay all or any part of the principal, or any
premium on the notes when it becomes due and payable at
. maturity,
. redemption,
. by acceleration or
. otherwise, including, without limitation, payment of the Change of
Control Purchase Price or the Asset Sale Offer Price,
(3) the failure by us to observe or perform any other covenant or
agreement contained in the notes or the indenture and, subject to
certain exceptions, the continuance of such failure for a period of
30 days after written notice is given to Centennial Cellular
Operating by the trustee or to Centennial Cellular Operating and the
trustee by the holders of at least 25% in aggregate principal amount
of the notes outstanding,
(4) certain events of bankruptcy, insolvency, or liquidation affecting
us or any of our Significant Restricted Subsidiaries,
(5) any Guarantee of a Significant Restricted Subsidiary will for any
reason cease to be in full force and effect and enforceable in
accordance with its terms or Centennial will for any reason cease to
be, or will for any reason be asserted in writing not to be, a
co-obligor pursuant to the notes,
(6) one or more defaults in any Indebtedness for money borrowed by us or
any of our Restricted Subsidiaries, or the payment of which is
guaranteed by us or any of our Restricted Subsidiaries or which
default
. results from the failure to pay Indebtedness at its final maturity
date or
. results in the acceleration of such Indebtedness before its
express maturity
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. and, in each case, the principal amount of any such Indebtedness,
together with the principal amount of any other such Indebtedness
which was not paid at its final maturity date or the maturity of
which has been so accelerated, aggregates $20,000,000 or more, and
(7) final unsatisfied judgments, orders or decrees in excess of
$20,000,000, exclusive of any portion of any such payment covered by
insurance, at any one time against us or any of our Restricted
Subsidiaries and not stayed, bonded or discharged within 60 days.
The indenture provides that, if a Default occurs and is continuing,
the trustee must, within 90 days after the occurrence of such
Default, give to the holders notice of such Default.
If an Event of Default occurs and is continuing, other than an Event of
Default specified in clause (4) above relating to us or any Significant
Restricted Subsidiary, then in every such case, unless the principal of all of
the notes has already become due and payable, either the trustee or the holders
of not less than 25% in aggregate principal amount of the notes then
outstanding, by notice in writing to Centennial Cellular Operating, and to the
trustee if given by holders, may declare all principal of the notes, or the
Change in Control Purchase Price if the Event of Default includes failure to
pay the Change in Control Purchase Price or the Special Redemption Price in
connection with any Special Mandatory Redemption if applicable, determined as
set forth below, including in each case accrued interest on the notes to be due
and payable immediately; provided that so long as the credit facility shall be
in full force and effect, if an Event of Default shall have occurred and be
continuing, other than as specified in clause (4) with respect to us or any
Significant Restricted Subsidiary, any such acceleration will not be effective
until the earlier to occur of
. five business days following delivery of a written notice of such
acceleration of the notes to the agent under the credit facility and
. the acceleration of any Indebtedness under the credit facility. If
an Event of Default specified in clause (4) above relating to us or
any Restricted Subsidiary occurs, all principal and accrued interest
on the notes will be immediately due and payable on all outstanding
notes without any declaration or other act on the part of trustee or
the holders. The holders of a majority in aggregate principal amount
of notes generally are authorized to rescind such acceleration if
all existing Events of Default, other than the non-payment of the
principal of any premium and interest on the notes which have become
due solely by such acceleration, have been cured or waived.
The holders of a majority in aggregate principal amount of the notes at
the time outstanding may waive on behalf of all the holders any Default, except
a Default in the payment of principal of or interest on any note not yet cured,
or a Default with respect to any covenant or provision which cannot be modified
or amended without the consent of the holder of each outstanding note affected.
Subject to the provisions of the Indenture relating to the duties of the
trustee, the trustee will be under no obligation to exercise any of its rights
or powers under the Indenture at the request, order or direction of any of the
holders, unless such holders have offered to the trustee reasonable security or
indemnity. Subject to all provisions of the indenture and applicable law, the
holders of a majority in aggregate principal amount of the notes at the time
outstanding will have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the trustee, or
exercising any trust or power conferred on the trustee.
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No holder of any of the new notes has any right to institute any
proceedings with respect to the indenture or any remedy under the indenture,
unless
. the holders of at least 25% in aggregate principal amount of the
outstanding notes have made written request, and offered reasonable
indemnity, to the trustee to institute such proceeding as trustee
under the notes and the indenture, and
. the trustee has failed to institute such proceeding within 15 days
after receipt of such notice and the trustee, within such 15-day
period, has not received directions inconsistent with such written
request by holders of a majority in aggregate principal amount of
the outstanding notes.
Such limitations do not, however, apply to a suit instituted by a holder
of a new note for the enforcement of the payment of the principal of, any
premium or interest on such note on or after the respective due dates expressed
in such note.
We must notify the trustee within five business days after any Default.
We must deliver to the trustee, not more than 120 days after the end of each
fiscal year, a written statement as to compliance with the indenture, including
whether or not any Default has occurred.
The Trust Indenture Act contains limitations on the rights of the
trustee, should it become a creditor of us or any Guarantor to obtain payment
of claims in certain cases or to realize on certain property received by it in
respect of any such claims, as security or otherwise. The trustee is permitted
to engage in other transactions, provided that if it acquires any conflicting
interest it must eliminate such conflict upon the occurrence of an Event of
Default or else resign.
Legal Defeasance and Covenant Defeasance
Centennial Cellular Operating may, at its option and at any time, elect
to have completely defease the new notes. Such complete defeasance means that
we, any such Guarantor and any other obligor under the indenture will be deemed
to have paid and discharged the entire indebtedness represented, and the
indenture will cease to be of further effect as to all outstanding notes,
except as to
(1) rights of Holders to receive payments on such notes when such
payments are due from the trust funds,
(2) our obligations with respect to such notes concerning issuing
temporary notes, registration of notes, mutilated, destroyed, lost
or stolen notes, and the maintenance of an office or agency for
payment and money for security payments held in trust,
(3) the rights, powers, trust, duties, and immunities of the trustee,
and Centennial Cellular Operating's obligations in connection with
the indenture, and
(4) the legal defeasance provisions of the indenture.
In addition, Centennial Cellular Operating may, at its option and at any
time, elect to defease a covenant under the indenture and after that defeasance
any omission to comply with such obligations will not constitute a Default or
Event of Default with respect to the notes. In the event a covenant is
defeased, certain events will no longer constitute an Event of Default with
respect to the new notes.
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In order to exercise a defeasance,
(1) Centennial Cellular Operating must irrevocably deposit with the
trustee, in trust, for the benefit of the holders, U.S. Legal
Tender, non-callable government securities or a combination thereof,
in such amounts as will be sufficient, in the opinion of a
nationally recognized firm of independent public accountants, to pay
the principal of, any premium and interest on such notes on the
stated date for payment or on any redemption date on such notes, and
the holders of notes must have a valid, perfected, exclusive
security interest in such trust,
(2) in the case of a complete, Centennial Cellular Operating will have
delivered to the trustee an opinion of counsel in the United States
reasonably acceptable to the trustee confirming that the holders of
new notes will not recognize any gain or loss for Federal income tax
purposes from the defeasance and will still be subject to the same
amount of Federal income tax as if the defeasance had not occurred,
(3) no Default or Event of Default will have occurred and be continuing
on the date of such deposit or insofar as Events of Default from
bankruptcy or insolvency events are concerned, at any time in the
period ending 91 days after deposit, other than a Default which
results from the borrowing of amounts to finance the defeasance and
which borrowing does not result in a breach or violation of, or
constitute a default under, any other material agreement or
instrument to which we or any Restricted Subsidiary is a party or to
which it is bound,
(4) we will have delivered to the trustee an opinion of counsel
reasonably acceptable to the trustee to the effect that, subject to
certain assumptions, after the 91st day following the deposit, the
trust funds will not be subject to the effect of any applicable
bankruptcy, insolvency, reorganization or similar laws affecting
creditors rights generally,
(5) such defeasance will not cause the trustee to have a conflicting
interest for purposes of the Trust Indenture Act with respect to any
securities of Centennial Cellular Operating or any Guarantor,
(6) such defeasance will not result in a breach or violation of, or
constitute a default under the indenture or any other material
agreement or instrument to which we or any of our Subsidiaries is a
party or by which we or any of our Subsidiaries is bound,
(7) we will have delivered to the trustee an officers' certificate
stating that the deposit was not made by Centennial Cellular
Operating with the intent of preferring the holders of such notes
over any other creditors of Centennial Cellular Operating or with
the intent of defeating, hindering, delaying or defrauding any other
creditors of Centennial Cellular Operating or others, and
(8) Centennial Cellular Operating will have delivered to the trustee an
officers' certificate and opinion of counsel each stating that all
conditions precedent provided for or relating to the defeasance have
been complied with.
Satisfaction and Discharge
The indenture will be discharged and will cease to be of further effect,
except as to surviving rights of registration of transfer or exchange of the
notes as expressly provided for in the indenture, as to all outstanding notes
under the indenture when
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(a) either
. all notes authenticated and delivered, except lost, stolen or
destroyed notes which have been replaced or paid or notes whose
payment has been deposited in trust or segregated and held in
trust by Centennial Cellular Operating and thereafter repaid to
Centennial Cellular Operating or discharged from such trust as
provided for in the indenture, have been delivered to the trustee
for cancellation, or
. all notes not delivered to the trustee for cancellation (x) have
become due and payable, (y) will become due and payable at their
Stated Maturity within one year, or (z) are to be called for
redemption within one year under arrangements satisfactory to the
trustee for the giving of notice of redemption by the trustee in
the name, and at the expense, of Centennial Cellular Operating;
and we or any Guarantor has irrevocably deposited or caused to be
deposited with the trustee as trust funds in trust an amount in
United States dollars sufficient to pay and discharge the entire
indebtedness on the notes not theretofore delivered to the trustee
for cancellation, including principal of, any premium and accrued
interest at Maturity, Stated Maturity or redemption date,
(b) we or any Guarantor has paid or caused to be paid all other sums
payable under the indenture by us and any Guarantor, and
(c) we have delivered to the trustee an officers' certificate and an
opinion of independent counsel each stating that
. all conditions precedent under the indenture relating to the
satisfaction and discharge of such indenture have been complied
with and
. such satisfaction and discharge will not result in a breach or
violation of, or constitute a default under, the indenture or any
other material agreement or instrument to which we, any Guarantor
or any Subsidiary is a party or by which we, any Guarantor or any
Subsidiary is bound.
Amendments and Supplements
We and the trustee may enter into a supplemental indenture for certain
limited purposes without the consent of the holders. With the consent of the
holders of not less than a majority in aggregate principal amount of the notes
at the time outstanding, we, any Guarantor, and the trustee are permitted to
amend or supplement the indenture or any supplemental indenture or modify the
rights of the holders; provided that no such modification may, without the
consent of each holder affected thereby:
(1) change, for any note, the
. payment date,
. amount of payment,
. type of payment,
. place of payment,
. rate of payment
. or impair the right to institute suit for the enforcement of any
such payment when due
including, in each case, amending, changing or modifying any definitions
related to such provisions, but only to the extent such definitions
relate to such provisions, in a manner adverse to the holders,
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(2) reduce the percentage of the consent required for any such
amendment, supplemental indenture or waiver provided for in the
indenture,
(3) modify any of the waiver provisions, except to increase any required
percentage or to provide that certain other provisions of the
Indenture cannot be modified or waived without the consent of the
holder of each outstanding note affected thereby,
(4) except as otherwise permitted under "--Certain Covenants--Limitation
on Merger, Sale or Consolidation," consent to the assignment or
transfer by us or any Guarantor of any of its rights and obligations
under the indenture, or
(5) amend or modify any of the provisions of the indenture relating to
the subordination of the notes or any Guarantee in any manner
adverse to the holders of the notes or any Guarantee.
Despite the above, without the consent of any holders of the notes, we,
any Guarantor, any other obligor under the notes and the trustee may modify or
amend the indenture:
(a) to evidence the succession of another Person to Centennial,
Centennial Cellular Operating or a Guarantor, and the assumption by
any such successor of the covenants of Centennial, Centennial
Cellular Operating or such Guarantor in the indenture and in the
notes and in any Guarantee in accordance with "--Covenants--
Limitation on Merger, Sale or Consolidation,"
(b) to add to the covenants of Centennial, Centennial Cellular
Operating, any Guarantor or any other obligor upon the notes for the
benefit of the holders of the notes or to surrender any right or
power conferred upon Centennial, Centennial Cellular Operating or
any Guarantor or any other obligor upon the notes, as applicable, in
the indenture, in the notes or in any Guarantee,
(c) to cure any ambiguity, or to correct or supplement any provision in
the indenture, the notes or any Guarantee which may be defective or
inconsistent with any other provision in the indenture, the notes or
any Guarantee or make any other provisions with respect to matters
or questions arising under the indenture, the notes or any
Guarantee; provided that, in each case, such provisions shall not
adversely affect the interest of the holders of the notes,
(d) to comply with the requirements of the SEC in order to effect or
maintain the qualification of the indenture under the Trust
Indenture Act,
(e) to add a Guarantor under the indenture,
(f) to evidence and provide the acceptance of the appointment of a
successor trustee under the indenture, or
(g) to mortgage, pledge, hypothecate or grant a security interest in
favor of the trustee for the benefit of the holders of the notes as
additional security for the payment and performance of Centennial's,
Centennial Cellular Operating's and any Guarantor's obligations
under the indenture, in any property, or assets, including any of
which are required to be mortgaged, pledged or hypothecated, or in
which a security interest is required to be granted to the trustee
pursuant to the Indenture or otherwise.
The holders of a majority in aggregate principal amount of the notes
outstanding may waive compliance with certain restrictive covenants and
provisions of the indenture.
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No Personal Liability of Partners, Stockholders, Officers, Directors
No direct or indirect stockholder, or partner, limited liability company
member or employee of a stockholder, employee, officer or director, as such,
past, present or future of us or any successor entity or any Affiliate of us
will have any personal liability in respect of our obligations under the
indenture or the notes by reason of his or its status as such stockholder,
employee, officer or director.
Governing Law
The indenture, the notes and any Guarantee will be governed by, and
construed in accordance with, the laws of the State of New York to the extent
permitted by law.
Concerning the Trustee
The indenture contains certain limitations on the rights of the trustee,
should it become a creditor of Centennial or Centennial Cellular Operating, to
obtain payment of claims in certain cases, or to realize on certain property
received in respect of any such claim as security or otherwise. The trustee
will be permitted to engage in other transactions; however, if it acquires any
conflicting interest it must eliminate such conflict within 90 days, apply to
the SEC for permission to continue as trustee with such conflict or resign as
trustee.
The holders of a majority in principal amount of the then outstanding
notes will have the right to direct the time, method and place of conducting
any proceeding for exercising any remedy available to the trustee, subject to
certain exceptions. The indenture provides that in case an Event of Default
occurs, which has not been cured, the trustee will be required, in the
exercise of its power, to use the degree of care of a prudent man in the
conduct of his own affairs. Subject to such provisions, the trustee will be
under no obligation to exercise any of its rights or powers under the
indenture at the request of any holder of notes unless such holder shall have
offered to the trustee security and indemnity satisfactory to it against any
loss, liability or expense.
Certain Definitions
Set forth below is a description of some of the defined terms used in
the indenture. You should real the indenture for the full definition of all
such terms, as well as any other terms used for which no definition is
provided.
"Acquired Indebtedness" means Indebtedness of a Person
.existing at the time such Person becomes a Restricted Subsidiary or
.assumed in connection with the acquisition of assets from such Person,
in each case, other than Indebtedness incurred in connection with such Person
becoming a Restricted Subsidiary or such acquisition.
"Affiliate" means, with respect to any specified Person,
. any other Person directly or indirectly controlling or controlled by,
or under direct or indirect common control with, such specified
Person or
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.any officer, director, or controlling stockholder of such other Person.
As used in this definition, the term "control" means:
.the power to direct the management and policies of a Person, directly
or through one or more intermediaries, whether through the ownership of voting
securities, by contract, or otherwise, or
. the beneficial ownership of 10% or more of the voting power of the
voting common equity of such Person or of warrants or other rights to acquire
such equity, whether or not presently exercisable.
"Affiliate Transaction" means,
.any payment or transfer of assets to,
.purchase of any assets from,
.entering into or amending any transaction or agreement with or for the
benefit of any Affiliate.
"Annual Operating Cash Flow" on any date means, with respect to any
Person, the Operating Cash Flow for the Reference Period.
"Annual Operating Cash Flow Ratio" on any date means, with respect to
any Person and its Restricted Subsidiaries, the ratio of:
. consolidated Indebtedness of such Person and its Restricted
Subsidiaries on the transaction date after giving pro forma effect to
the Incurrence of such Indebtedness and without duplication of any
Indebtedness that may be the obligation of such Person and/or one or
more of its Subsidiaries divided by
. the aggregate amount of Annual Operating Cash Flow of such Person,
determined on a pro forma basis after giving effect to all
Investments in and acquisitions or dispositions of any company or any
business or any assets out of the ordinary course of business,
whether by merger, stock purchase or sale or asset purchase or sale,
made by such Person and its Subsidiaries from the beginning of the
reference period through the transaction date as if such Investment,
acquisition or disposition had occurred at the beginning of the
reference period;
provided that, in calculating Annual Operating Cash Flow and
consolidated Indebtedness,
. the transaction giving rise to the need to calculate the Annual
Operating Cash Flow Ratio will be assumed to have occurred, on a pro
forma basis, on the first day of the reference period;
. the incurrence of any Indebtedness during the reference period or
subsequent period and on or prior to the transaction date and the
application of the proceeds from the transaction to the extent used
to retire Indebtedness or to acquire businesses will be assumed to
have occurred, on a pro forma basis, on the first day of such
reference period;
. Consolidated Interest Expense attributable to any Indebtedness
bearing a floating interest rate shall be computed as if the rate in
effect on the transaction date had been the applicable rate for the
entire period; and
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. all members of the consolidated group of such Person on the transaction
date shall be deemed to be members of the consolidated group of such
Person for the entire reference period.
When the above definition is used in connection with Centennial Cellular
Operating and its Restricted Subsidiaries, references to a Person and its
Subsidiaries shall be deemed to refer to Centennial Cellular Operating and its
Restricted Subsidiaries. Any such pro forma calculation may include
adjustments for the pro forma effect of
. any cost savings accounted for on an annualized basis as a result of an
acquisition by Centennial Cellular Operating or a Restricted Subsidiary
which, in the good faith judgment of the board of directors of
Centennial Cellular Operating, will be eliminated or realized within
one year after the date of the transaction; provided that any such cost
savings are calculated in accordance with Regulation S-X under the
Securities Act or
. any direct quantifiable savings from the conversion of roaming expense
which Centennial Cellular Operating will obtain within one year of the
transaction in the good faith judgment of the board of directors of
Centennial Cellular Operating from the acquisition of a third party
which prior to such acquisition had a contract with Centennial Cellular
Operating or any Restricted Subsidiary for roaming services.
"Applicable Premium" means, with respect to a note at any redemption
date, the excess of,
(A) the present value at such time of
. the redemption price of such note at December 15, 2003 (such redemption
price being described under "--Optional Redemption"), plus
. all required interest payments (excluding accrued but unpaid interest)
due on the note through December 15, 2003, computed using a discount
rate equal to the Treasury Rate plus 50 basis points, over
(B) the then outstanding principal amount of the note.
Asset Sale" means, the transfer or disposal directly or indirectly, in
one or more transactions, any
.property,
.business or
.assets,
including by merger or consolidation or sale and leaseback transaction,
and including the sale or other transfer or issuance of any Capital Stock of
any Restricted Subsidiary of Centennial Cellular Operating, whether by
Centennial Cellular Operating or a Restricted Subsidiary.
"Asset Sale Offer" means an offer to all holders of new notes to purchase
the maximum principal amount of new notes that may be purchased out of the
Excess Proceeds.
"Capitalized Lease Obligations" means obligations under a lease that are
required to be capitalized for financial reporting purposes in accordance with
GAAP, and the amount of Indebtedness represented by such obligations shall be
the capitalized amount of such obligations, as determined in accordance with
GAAP.
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"Capital Stock" means, with respect to any Person, any capital stock of
such Person and shares, interests, participations or other ownership interests
of any Person and any
.rights, other than debt securities convertible into capital stock,
.warrants and
.options to purchase any of the foregoing,
including (without limitation) each class of common stock and preferred
stock of such Person if such Person is a corporation, each general and limited
partnership interest of such Person if such Person is a partnership and all
membership or other interests if such Person is a limited-liability company,
and any other interest or participation that confers on a Person the right to
receive a share of the profits and losses of, or distribution of assets of,
the issuing Person.
"Cash from Minority Cellular Investment Interests" means any dividends,
distributions, interest payments or other periodic payments of cash received
directly or indirectly by Centennial Cellular Operating from its Minority
Cellular Investment Interests;
provided, however, that "Cash from Minority Cellular Investment Interests"
will not include any proceeds received directly by Centennial Cellular
Operating from the disposition of any Minority Cellular Investment Interest,
except that Cash from Minority Cellular Investment Interests shall include in
every fiscal year ending after the sale of any Minority Cellular Investment
Interest an amount equal to the cash distributions received directly or
indirectly by Centennial Cellular Operating from such Minority Cellular
Investment Interest during the twelve months prior to such sale if either
. the proceeds of such sale are used to permanently reduce the amount
of Indebtedness which may be borrowed under the credit facility in
accordance with clause (i) of the third paragraph of "--Limitation on
Incurrence of Additional Indebtedness" or
. at the time of any Restricted Payment being made pursuant to clause
(ix) of the second paragraph of "--Limitation on Restricted
Payments," Centennial Cellular Operating would be permitted to incur
at least $1.00 of additional Indebtedness pursuant to the Annual
Operating Cash Flow Ratio provision set forth in the second paragraph
of "--Limitation on Incurrence of Additional Indebtedness" assuming
that Centennial Cellular Operating was the obligor of additional
Indebtedness in a principal amount equal to the net after-tax
proceeds received from such sale.
"Cash Equivalents" means
. securities issued or directly and fully guaranteed or insured by the
United States of America or any agency or instrumentality thereof,
provided that the full faith and credit of the United States of
America is pledged in support, in each case maturing within one year
after the date of acquisition,
. time deposits and certificates of deposit and commercial paper issued
by the parent corporation of any domestic commercial bank of
recognized standing having capital and surplus in excess of $500
million and commercial paper issued by others rated at least A-2 or
the equivalent thereof by Standard & Poor's Ratings Group or at least
P-2 or the equivalent thereof by Moody's Investors Service, Inc. and
in each case maturing within one year after the date of acquisition
and
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. investments in money market funds substantially all of whose assets
comprise securities of the types described in the first two points
above.
"Centennial de Puerto Rico" means a direct or indirect Restricted
Subsidiary of Centennial Cellular Operating which controls Centennial Cellular
Operating's Puerto Rico operations.
"Change of Control" means the occurrence of any of the following events:
(1) Centennial or Centennial Cellular Operating consolidates with or
merges with or into any Person or transfers or otherwise disposes of all
or substantially all of its assets to any Person, or any Person
consolidates with or merges into or with Centennial or Centennial
Cellular Operating, in any such event pursuant to a transaction in which
the outstanding Voting Stock of Centennial or Centennial Cellular
Operating is converted into or exchanged for cash, securities or other
property, other than any such transaction where
. the outstanding Voting Stock of Centennial or Centennial Cellular
Operating is changed into or exchanged for
(x) Voting Stock of the surviving corporation which is not
Disqualified Capital Stock or
(y) cash, securities and other property (other than Capital Stock
of the surviving corporation) in an amount which could be paid
by Centennial or Centennial Cellular Operating as a Restricted
Payment as described under "--Certain Covenants--Limitation on
Restricted Payments" (and such amount will be treated as a
Restricted Payment subject to the provisions in the indenture
described under "--Certain Covenants--Limitation on Restricted
Payments") and
. immediately after such transaction, no person or group, other
than Welsh Carson or Blackstone, is the beneficial owner directly
or indirectly, more than 50% of the total outstanding Voting
Stock of the surviving corporation,
(2) any person or group, other than Permitted Holders, is or becomes
the beneficial owner directly or indirectly, of Voting Stock
representing more than 50% of the voting power of the Voting Stock of
Centennial or Centennial Cellular Operating then outstanding normally
entitled to vote in elections of directors or
(3) during any period of 12 consecutive months, individuals who at
the beginning of any such 12-month period constituted the board of
directors of Centennial or Centennial Cellular Operating (together with
any new directors whose election to such board or whose nomination for
election by the shareholders of Centennial or Centennial Cellular
Operating was designated by the Welsh Carson or Blackstone or approved
by a vote of a majority of the directors then still in office who were
either directors at the beginning of such period or whose election or
nomination for election was previously so approved) cease for any reason
to constitute at least a majority of the board of directors of
Centennial or Centennial Cellular Operating then in office.
This definition shall also be deemed to apply to any Restricted
Subsidiary of Centennial which directly or indirectly controls Centennial
Cellular Operating.
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"Change of Control Offer" means an irrevocable and unconditional offer by
us to repurchase the outstanding notes if a Change of Control has occurred.
"Closing Price" on any Trading Day with respect to the per share price of
any shares of Capital Stock means the last reported sale price regular way or,
in case no such reported sale takes place on such day, the average of the
reported closing bid and asked prices regular way, in either case on
. the New York Stock Exchange or,
. if such shares of Capital Stock are not listed or admitted to trading
on such exchange, on the principal national securities exchange on
which such shares are listed or admitted to trading or,
. if not listed or admitted to trading on any national securities
exchange, on the Nasdaq National Market or,
. if such shares are not listed or admitted to trading on any national
securities exchange or quoted on Nasdaq National Market but
Centennial Cellular Operating is a foreign company and the principal
securities exchange on which such shares are listed or admitted to
trading is a designated offshore securities market, the average of
the reported closing bid and asked prices regular way on such
principal exchange, or, if such shares are not listed or admitted to
trading on any national securities exchange or quoted on the Nasdaq
National Market and Centennial Cellular Operating and principal
securities exchange do not meet such requirements, the average of the
closing bid and asked prices in the over-the-counter market as
furnished by any New York Stock Exchange member firm is selected from
time to time by Centennial Cellular Operating for that purpose and is
reasonably acceptable to the Trustee.
"Comparable Treasury Issue" means the United States Treasury security
selected by an Independent Investment Banker, having a maturity comparable to
the first redemption date of the notes, that would be utilized, at the time of
selection and in accordance with customary financial practice, in pricing new
issues of corporate debt securities of a comparable maturity to the first
redemption date of such notes. "Independent Investment Banker" means one of the
Reference Treasury Dealers appointed by the trustee after consultation with
Centennial Operating Cellular.
"Comparable Treasury Price" means, with respect to any Redemption Date,
. the average of the Reference Treasury Dealer Quotations for such
Redemption Date, after excluding the highest and lowest such
Reference Treasury Dealer Quotations, or
. if the trustee obtains fewer than four such Reference Treasury Dealer
Quotations, the average of all such quotations. "Reference Treasury
Dealer Quotations" means, with respect to each Reference Treasury
Dealer and any Redemption Date, the average, as determined by the
trustee, of the bid and asked prices for the Comparable Treasury
Issue (expressed in each case as a percentage of its principal
amount) quoted in writing to the trustee by such Reference Treasury
Dealer at 3:30 p.m., New York time, on the third business day
preceding such Redemption Date.
"Computation Period" means February 1, 1999 to the last day of the last
full fiscal quarter before the date of the proposed Restricted Payment.
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"Consolidated Interest Expense" of any Person means, for any period, the
sum of, without duplication and determined in each case in accordance with GAAP
(A) interest expensed or capitalized, paid, accrued, or scheduled to be
paid or accrued (including interest attributable to the Capitalized
Lease Obligations) of such Person and its consolidated Restricted
Subsidiaries during such period, including
.original issue discount and non-cash interest payments or accruals
on any Indebtedness,
.the interest portion of all deferred payment obligations,
. all commissions, discounts and other fees and charges owed with
respect to bankers' acceptances and letters of credit financings
and currency and Interest Rate Protection Obligations and Currency
Hedging Agreements and excluding the amortization of deferred
financing fees, in each case to the extent attributable to such
period and
(B) the amount of cash dividends accrued or payable by such Person or
any of its consolidated Restricted Subsidiaries in respect of
preferred stock (other than by Restricted Subsidiaries of such
Person to such Person or such Person's Restricted Subsidiaries).
For purposes of this definition,
. interest on a Capitalized Lease Obligation will be deemed to
accrue at an interest rate reasonably determined by Centennial
Cellular Operating to be the rate of interest implicit in such
Capitalized Lease Obligation in accordance with GAAP and
. interest expense attributable to any Indebtedness represented by
the guaranty by such Person or a Subsidiary of such Person of an
obligation of another Person shall be deemed to be the interest
expense attributable to the Indebtedness guaranteed to the extent
not otherwise included and whether or not paid by such Person or
Subsidiary.
When the above definition is used in connection with Centennial Cellular
Operating and its Restricted Subsidiaries, references to a Person and its
Subsidiaries in the foregoing definition shall be deemed to refer to Centennial
Cellular Operating and its Restricted Subsidiaries.
"Consolidated Net Income" of any Person, for any period, means the net
income (or loss) of such Person and its consolidated Restricted Subsidiaries
for such period, determined (on a consolidated basis) in accordance with GAAP,
adjusted to exclude, only to the extent included in computing such net income
(or loss) and without duplication,
. all extraordinary gains or losses and all gains and losses from the
sales or other dispositions of assets out of the ordinary course of
business for such period, net of taxes, fees and expenses relating to
the applicable transaction
. the net income, if positive, of any Person, that is not a Subsidiary,
in which such Person or any of its Subsidiaries has an interest
(other than a Minority Cellular Investment Interest), except to the
extent of the amount of dividends or distributions actually paid to
such Person or a Subsidiary of such Person,
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. except as provided in the definition of "Annual Operating Cash Flow
Ratio," the net income (or loss) of any Subsidiary acquired in a
pooling of interests transaction for any period prior to the date of
such acquisition,
. for purposes of the "Covenants-- Limitation on Restricted Payments"
covenant, the net income, if positive, of any Restricted Subsidiary
of such Person that is not a Guarantor to the extent that the
declaration or payment of dividends or similar distributions is not
at the time permitted by operation of the terms of its charter or any
agreement or instrument applicable to such Subsidiary except to the
extent of the amount of dividends or distributions actually paid to
such Person or a Subsidiary of such Person,
. any gain or loss, net of taxes, realized upon the termination of any
employee benefit plan,
. any restoration to net income of any contingency reserve, except to
the extent provision for such reserve was made out of income accrued
at any time following the date of the indenture,
. any net gain or loss arising from the acquisition of any securities
such Person,
. the cumulative effect of a change in accounting principles,
. the amount of any nonrecurring charges or income of Centennial
Cellular Operating or any Restricted Subsidiary (including any one-
time costs incurred in connection with acquisitions after December
15, 1999) certified as non-recurring in an officer's certificate and
deducted or included in such period in computing Consolidated Net
Income and
. any net income, if positive, resulting from Centennial Cellular
Operating's Minority Cellular Investment Interests.
When this definition is used in connection with Centennial Cellular
Operating and its Restricted Subsidiaries, references to a Person and its
Subsidiaries in the above definition shall be deemed to refer to Centennial
Cellular Operating and its Restricted Subsidiaries.
"Currency Hedging Agreements" means one or more of the following
agreements which shall be entered into by one or more financial institutions:
. foreign exchange contracts,
. currency swap agreements or
. other similar agreements or arrangements designed to protect against
the fluctuations in currency values.
"Default" means any event or condition that is, or after notice or
passage of time or both would be, an Event of Default.
"Designated Senior Indebtedness" means:
. all Senior Indebtedness under the credit facility, and
. any other Senior Indebtedness of at least $25 million and which is
specifically designated "Designated Senior Indebtedness" by
Centennial Cellular Operating.
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"Disinterested Director" means, with respect to any transaction or series
of related transactions, a member of the board of directors of Centennial
Cellular Operating who does not have any material direct or indirect financial
interest in or with respect to such transaction or series of related
transactions.
"Disqualified Capital Stock" means, with respect to any Person, Capital
Stock of such Person that, by its terms or by the terms of any security into
which it is convertible, exercisable or exchangeable, is, or upon the happening
of any event or the passage of time would be, required to be redeemed or
repurchased, including at the option of the holder thereof, by such Person or
any of its Subsidiaries, in whole or in part, on or prior to the Stated
Maturity of the notes; provided that
. Capital Stock will not be deemed to be Disqualified Capital Stock if
it may only be so redeemed or repurchased solely in consideration of
Qualified Capital Stock of Centennial Cellular Operating and
. any Capital Stock that would not constitute Disqualified Capital
Stock but for provisions of that Capital Stock giving holders thereof
the right to require such Person to repurchase or redeem such Capital
Stock upon the occurrence of an "asset sale" or "change of control"
occurring prior to the Stated Maturity of the notes shall not
constitute Disqualified Capital Stock if the "asset sale" or "change
of control" provisions applicable to such Capital Stock are no more
favorable to the holders of such Capital Stock than the provisions
contained in "Covenants--Limitation on Asset Sales and Sales of
Subsidiary Stock" and "Repurchase at the Option of the Holders--
Change of Control" covenants and such Capital Stock specifically
provides that such Person will not repurchase or redeem any such
Capital Stock pursuant to such provision prior to Centennial Cellular
Operating's repurchase of such notes as are required to be
repurchased pursuant to "Covenants--Limitation on Asset Sales and
Sales of Subsidiary Stock" and "Repurchase of Notes at the Option of
the Holders--Change of Control."
"Eligible Institution" means a commercial banking institution that has
combined capital and surplus of not less than $500 million or its equivalent in
foreign currency, whose debt is rated "A" or higher (or the equivalent rating
or higher), according to Moody's Investors Service, Inc., Standard & Poor's
Ratings Group or Duff & Phelps Credit Rating Co., or such similar equivalent
rating by at least one nationally recognized statistical rating organization at
the time as of which any investment or rollover therein is made.
"Excluded Cash Contributions" has the meaning given to such item in the
covenant "--Limitation on Incurrence of Additional Indebtedness."
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"Excluded Contributions" means the net cash proceeds received by
Centennial Cellular Operating after December 15, 1998 from:
.contributions to its common equity capital and
. the sale, other than to a Subsidiary or to any Centennial Cellular
Operating or Subsidiary management equity plan or stock option plan
or any other management or employee benefit plan or agreement, of
Capital Stock, other than Disqualified Capital Stock, of Centennial
Cellular Operating, in each case designated as Excluded Contributions
pursuant to an officer's certificate executed by an officer of
Centennial Cellular Operating, the cash proceeds of which are
excluded from the calculation set forth in the first paragraph of the
"Covenants--Limitation on Restricted Payments" and which may not also
be designated Excluded Cash Contributions.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board ("FASB") or, if FASB ceases to exist,
any successor thereto; provided, however, that for purposes of determining
compliance with covenants in the indenture other than those relating to
financial statement delivery, "GAAP" means such generally accepted accounting
principles as in effect as of the Issue Date.
"Government Securities" means direct obligations of, or obligations
guaranteed by, the United States of America for the payment of which
obligations or guarantee the full faith and credit of the United States is
pledged and which have a remaining weighted average life to maturity of not
more than one year from the date of Investment therein.
"Guarantee" means the guarantee by a Guarantor of our Indenture
Obligations.
"Guarantor" means any Restricted Subsidiary of Centennial Cellular
Operating which becomes a guarantor of Centennial Cellular Operating's
Indenture Obligations.
"Incur" or as appropriate "Incurrence" means to, directly or indirectly,
issue, create, incur, assume, guarantee or otherwise directly or indirectly
become liable for, or otherwise become responsible for, contingently or
otherwise.
"Indebtedness" of any Person means, without duplication,
(A) all liabilities and obligations, contingent or otherwise, of such
Person,
. in respect of borrowed money, whether or not the recourse of the
lender is to the whole of the assets of such Person or only to a
portion thereof,
. evidenced by bonds, notes, debentures or similar instruments,
. representing the balance deferred and unpaid of the purchase price
of any property or services except, other than accounts payable or
other obligations to trade creditors which have remained unpaid
for greater than 90 days past their original due date or to
financial institutions, which obligations are not being contested
in good faith and for which appropriate reserves have been
established, those incurred in the ordinary course of its business
that would constitute ordinarily a trade payable to trade
creditors,
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. evidenced by bankers' acceptances or similar instruments issued or
accepted by banks,
. for the payment of money relating to a Capitalized Lease
Obligation, or
. evidenced by a letter of credit or a reimbursement obligation of
such Person with respect to any letter of credit;
(B) all obligations of such Person under Interest Rate Protection
Obligations or Currency Hedging Agreements;
(C) all liabilities of others of the kind described in the preceding
clauses (A) or (B) that such Person has guaranteed or that is
otherwise its legal liability or which are secured by any assets or
property of such Person and all obligations to purchase, redeem or
acquire any Capital Stock;
(D) all Disqualified Capital Stock of such Person and all Preferred
Stock of such Person's Restricted Subsidiaries valued at the greater
of its voluntary or involuntary maximum fixed repurchase price plus
accrued and unpaid dividends; and
(E) any and all deferrals, renewals, extensions, refinancing and
refundings, whether direct or indirect, of, or amendments,
modifications or supplements to, any liability of the kind described
in any of the preceding clauses (A), (B), (C), (D) or this clause
(E), whether or not between or among the same parties; provided that
the outstanding principal amount at any date of any Indebtedness
issued with original issue discount is the face amount of such
Indebtedness less the remaining unamortized portion of the original
issue discount of such Indebtedness at such date.
The "maximum fixed repurchase price" of any Disqualified Capital Stock
which does not have a fixed repurchase price will be calculated in accordance
with the terms of such Disqualified Capital Stock as if such Disqualified
Capital Stock were purchased on any date on which Indebtedness will be required
to be determined pursuant to the indenture, and if such price is based upon, or
measured by, the fair market value of such Disqualified Capital Stock, such
fair market value to be determined in good faith by the board of directors of
Centennial Cellular Operating of such Disqualified Capital Stock.
"Interest Rate Protection Obligations" means, with respect to any Person,
the Obligations of such Person under
. interest rate swap agreements, interest rate cap agreements and
interest rate collar agreements and
. other agreements or arrangements designed to protect such Person
against fluctuations in interest rates.
For purposes of the indenture, the amount of such obligations shall be
the amount determined in respect of such obligation as of the end of the then
most recently ended fiscal quarter of such Person, based on the assumption that
such obligation had terminated at the end of such fiscal quarter, and in making
such determination, if any agreement relating to such obligation provides for
the netting of amounts payable by and to such Person under such obligation or
if any such agreement provides for the simultaneous payment of amounts by and
to such Person, then in each such case, the amount of such obligations shall be
the net amount so determined, plus any premium due upon default by such Person.
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"Investment" by any Person in any other Person means, without
duplication,
. the acquisition by such Person of capital stock or other ownership
interests or other securities of such other Person or any agreement
to make any such acquisition;
. the making by such Person of any loan or other extension of credit
to, such other Person, including the purchase of property from
another Person subject to an understanding or agreement to resell
such property to such other Person, or any commitment to make any
such loan or extension;
. the entering into by such Person of any guarantee of, or other
contingent obligation with respect to, Indebtedness or other
liability of such other Person;
. the making of any capital contribution by such Person to such other
Person; and
. the designation by the Board of Directors of Centennial Cellular
Operating of any Person to be an Unrestricted Subsidiary.
For purposes of the "--Limitation on Restricted Payments" covenant,
(1) "Investment" shall include and be valued at the fair market value of
the net assets of any Restricted Subsidiary at the time that such
Restricted Subsidiary is designated an Unrestricted Subsidiary and
shall exclude the fair market value of the net assets of any
Unrestricted Subsidiary at the time that such Unrestricted Subsidiary
is designated a Restricted Subsidiary and
(2) the amount of any Investment shall be equal to the fair market value
of such Investment plus the fair market value of all additional
Investments by Centennial Cellular Operating or any of its Restricted
Subsidiaries at the time any such Investment is made;
provided that, for purposes of this sentence, the fair market value of net
assets shall be as determined in the reasonable judgment of the board of
directors of Centennial Cellular Operating.
"Investment Equity" has the meaning given to such term in the definition
of "Permitted Investment."
"Lien" means any pledge, charge or encumbrance of any kind, whether or
not recorded or perfected under applicable law with respect to property of any
kind, including any conditional sale, capital lease or other title retention
agreement and any lease deemed to constitute a security interest and any option
or other agreement to give any security interest.
"Marketable U.S. Securities" means:
. Government Securities;
. any time deposit account, money market deposit and certificate of
deposit maturing not more than 270 days after the date of acquisition
issued by, or time deposit of, an Eligible Institution;
. commercial paper maturing not more than 270 days after the date of
acquisition issued by a corporation (other than an Affiliate of
Centennial Cellular Operating) with a rating,
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at the time as of which any investment therein is made, of "P-1" or
higher according to Moody's Investors Service, Inc., "A-1" or higher
according to Standard & Poor's Ratings Group or "A-1" or higher
according to Duff & Phelps Credit Rating Co., or such similar
equivalent rating by at least one "nationally recognized statistical
rating organization," as defined in Rule 436 under the Securities
Act;
. any banker's acceptances or money market deposit accounts issued or
offered by an Eligible Institution;
. repurchase obligations with a term of not more than 7 days for
Government Securities entered into with an Eligible Institution; and
. any fund investing exclusively in investments of the types described
above.
"Maturity Date" means, when used with respect to any note, the date
specified on such note as the fixed date on which the final installment of
principal of such note is due and payable, in the absence of any acceleration
thereof pursuant to the provisions of the indenture regarding acceleration of
Indebtedness or any Change of Control Offer or Asset Sale Offer.
"Minority Cellular Investment Interests" means limited partnership or
other equity interests held directly or indirectly by Centennial Cellular
Operating in cellular telephony providers which are not Subsidiaries of or
otherwise controlled, directly or indirectly, by Centennial Cellular Operating
in existence on January 7, 1999.
"Net Cash Proceeds" means the aggregate amount of cash and Cash
Equivalents received by Centennial Cellular Operating and its Restricted
Subsidiaries in respect of an Asset Sale, including upon the conversion to
cash and Cash Equivalents of
(A) any note or installment receivable at any time, or
(B) any other property as and when any cash and Cash Equivalents are
received in respect of any property received in an Asset Sale but
only to the extent such cash and Cash Equivalents are received within
one year after such Asset Sale, less the sum of
. all out-of-pocket fees, commissions and other expenses incurred in
connection with such Asset Sale, including the amount estimated in
good faith by the board of directors of Centennial Cellular
Operating of income, franchise, sales and other applicable taxes
required to be paid by Centennial Cellular Operating or any
Restricted Subsidiary of Centennial Cellular Operating in
connection with such Asset Sale and
. the aggregate amount of cash so received which is used to retire
any existing Senior Indebtedness of Centennial Cellular Operating
or Indebtedness of its Restricted Subsidiaries, as the case may
be, which is required to be repaid in connection with such Asset
Sale or is secured by a Lien on the property or assets of
Centennial Cellular Operating or any of its Restricted
Subsidiaries.
"Net Proceeds" means the aggregate net proceeds, including the fair
market value of non-cash proceeds constituting equipment or other assets of a
type generally used in a Related Business an amount reasonably determined by
the board of directors of Centennial Cellular Operating for amounts under
$10,000,000 and by a financial advisor or appraiser of national reputation for
equal or greater amounts, received by a Person from the sale of Qualified
Capital Stock, other than to a
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Subsidiary of such Person, after payment of out-of-pocket expenses,
commissions and discounts incurred and net of taxes paid or payable in
connection therewith.
"Operating Cash Flow" of any Person means
(A), with respect to any period, the Consolidated Net Income of such
Person for such period, plus
(B) the sum, without duplication (and only to the extent such amounts are
deducted from net revenues in determining such Consolidated Net Income), of
. the provisions for income taxes for such period for such Person and
its consolidated Restricted Subsidiaries,
. depreciation, amortization and other non-cash charges of such Person
and its consolidated Restricted Subsidiaries and
. Consolidated Interest Expense of such Person for such period,
determined, in each case, on a consolidated basis for such Person and
its consolidated Restricted Subsidiaries in accordance with GAAP,
plus
(C) any fees, expenses or charges related to any equity offering,
Permitted Investment, acquisition or recapitalization or Indebtedness
permitted to be incurred by the indenture (in each case, whether or not
successful) and fees, expenses or charges related to the merger, related
transactions and the financings thereof, including fees to Welsh Carson and
Blackstone, less
(D) the amount of all cash payments made during such period by such
Person and its Restricted Subsidiaries to the extent such payments relate
to non-cash charges that were added back in determining Operating Cash Flow
for such period or for any prior period.
"Pari Passu Indebtedness" means
. with respect to Centennial Cellular Operating, any Indebtedness of
Centennial Cellular Operating that is pari passu in right of payment
to the notes
. with respect to Centennial, any Indebtedness of Centennial that is
pari passu in right of payment to the notes and
. with respect to any Guarantee, Indebtedness which ranks pari passu in
right of payment to such Guarantee.
"Permitted Investment" means
(1) Investments in Cash Equivalents;
(2) Investments in Centennial Cellular Operating or a Restricted
Subsidiary;
(3) Investments in a Person substantially all of whose assets are of
a type generally used in a Related Business if, as a result of such
Investments,
. the Acquired Person immediately thereupon becomes a Restricted
Subsidiary or
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. the Acquired Person immediately thereupon either (A) is merged or
consolidated with or into Centennial Cellular Operating or any of
its Restricted Subsidiaries and the surviving Person is Centennial
Cellular Operating or a Restricted Subsidiary or (A) transfers or
conveys all or substantially all of its assets to, or is
liquidated into, Centennial Cellular Operating or any of its
Restricted Subsidiaries;
(4) Investments in accounts and notes receivable acquired in the
ordinary course of business;
(5) any securities received in connection with an Asset Sale and any
Investment with the Net Cash Proceeds from any Asset Sale in Capital
Stock of a Person, all or substantially all of whose assets are of a
type used in a Related Business, that complies with the "--Limitation on
Asset Sales and Sales of Subsidiary Stock" covenant;
(6) any guarantee issued by a Restricted Subsidiary incurred in
compliance with the indenture;
(7) advances and prepayments for asset purchases in the ordinary
course of business in a Related Business of Centennial Cellular
Operating or a Restricted Subsidiary;
(8) customary loans or advances made in the ordinary course of
business to officers, directors or employees of Centennial Cellular
Operating or any of its Restricted Subsidiaries for travel,
entertainment, and moving and other relocation expenses,
(9) advances to employees not in excess of $1 million outstanding at
any one time, in the aggregate;
(10) any Investment acquired by Centennial Cellular Operating or any
of its Restricted Subsidiaries
. in exchange for any other Investment or accounts receivable held
by Centennial Cellular Operating or any such Restricted Subsidiary
in connection with or as a result of a bankruptcy, workout,
reorganization of such other Investment or accounts receivable or
. as a result of a foreclosure by Centennial Cellular Operating or
any of its Restricted Subsidiaries with respect to any secured
Investment or other transfer of title with respect to any secured
Investment in default;
(11) Interest Rate Protection Obligations or Currency Hedging
Agreements permitted under clauses (9) or (10) of the "--Limitation on
Incurrence of Additional Indebtedness" covenant;
(12) Investments the payment for which consists of Qualified Capital
Stock of Centennial Cellular Operating ("Investment Equity"); provided,
however, that the issuance of such Qualified Capital Stock equity
interests will not increase the amount available for Restricted Payments
under the "--Limitation on Restricted Payments" covenant;
(13) Investments in Permitted Joint Ventures which in the aggregate
at any one time outstanding do not exceed $10 million; and
(14) any Investment in a Related Business, including in an
Unrestricted Subsidiary, having an aggregate fair market value, taken
together with all other Investments made pursuant to this clause (14)
that are at that time outstanding, which does not exceed the
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greater of (x) $20 million or (y) 4% of Total Assets at the time of such
Investment with the fair market value of each Investment being measured
at the time made and without giving effect to subsequent changes in
value.
"Permitted Joint Venture" means, as applied to any Person, any other
Person engaged in a Related Business
. over which such Person is responsible (either directly or through a
services agreement) for day-to-day operations or otherwise has
operational and managerial control of such other Person or
. of which more than forty percent (40%) of the outstanding Voting
Stock (other than directors' qualifying shares) of such other Person
in the case of a corporation, or more than forty percent (40%) of the
outstanding ownership interests of such other Person, in the case of
an entity other than a corporation, is at the time owned directly or
indirectly by such Person.
"Person" means any
. corporation,
. individual,
. joint stock company,
. joint venture,
. partnership,
. unincorporated association,
. governmental regulatory entity,
. country,
. state or
. political subdivision,
. trust,
. municipality or
. other entity.
"Pledge and Escrow Agreement" means the Pledge and Escrow Agreement,
dated as of the date of the Indenture, among us, the Trustee and the collateral
agents named therein.
"Pledged Securities" means the securities purchased by Centennial
Cellular Operating with a portion of the net proceeds from the Offering to be
deposited in the Escrow and Pledge Account.
"Preferred Stock" means, with respect to any Person, any and all shares,
interests, participations or other equivalents however designated of such
Person's preferred or preference stock whether now outstanding, or issued after
December 15, 1999, and including, without limitation, all classes and series of
preferred or preference stock of such Person.
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"Public Equity Offering" means an underwritten offer and sale of common
stock, which is Qualified Capital Stock, of Centennial Cellular Operating or
Centennial with aggregate proceeds of at least $50 million pursuant to a
registration statement that has been declared effective by the SEC pursuant to
the Securities Act, other than a registration statement on Form S-8 or any
successor form covering substantially the same transactions, S-4 or any
successor form covering substantially the same transactions, or otherwise
relating to equity securities issuable under any employee benefit plan of such
corporate entity.
"Purchase Money Indebtedness" means any Indebtedness of Centennial
Cellular Operating or its Restricted Subsidiaries which is secured by a Lien on
assets related to the business of Centennial Cellular Operating or its
Restricted Subsidiaries and any additions and accessions thereto, which are
purchased by Centennial Cellular Operating or its Restricted Subsidiaries at
any time after the notes are issued; provided that
. the purchase money security agreement or conditional sales or other
title retention contract pursuant to which the Lien on such assets is
created will be entered into within 90 days after the purchase or
substantial completion of the construction of such assets and shall
at all times be confined solely to the assets so purchased without
further recourse to either Centennial Cellular Operating or any of
its Restricted Subsidiaries or acquired, any additions and accessions
thereto and any proceeds therefrom,
. at no time will the aggregate principal amount of the outstanding
Indebtedness secured by purchase money security agreements be
increased, except in connection with the purchase of additions and
accessions thereto and except in respect of fees and other
obligations in respect of such Indebtedness and
. (A) the aggregate outstanding principal amount of Indebtedness
secured by a purchase money security agreement determined on a per
asset basis in the case of any additions and accessions will not at
the time such purchase money security agreement is entered into
exceed 100% of the purchase price to Centennial Cellular Operating or
its Restricted Subsidiaries of the assets subject to such agreement
or (B) the Indebtedness secured by a purchase money security
agreement will be with recourse solely to the assets so purchased or
acquired, any additions and accessions thereto and any proceeds
therefrom.
"Qualified Capital Stock" means any Capital Stock of a Person that is not
Disqualified Capital Stock.
"Reference Period" with regard to any Person means the last four full
fiscal quarters of such Person for which financial information, which
Centennial Cellular Operating will use its best efforts to compile in a timely
manner, in respect of such Person is available ended on or immediately
preceding any date upon which any determination is to be made pursuant to the
terms of the notes or the indenture.
"Reference Treasury Dealer" means each of Merrill Lynch, Pierce, Fenner &
Smith Incorporated and three other primary U.S. Government securities dealers
in The City of New York to be selected by Centennial Cellular Operating and
their respective successors.
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"refinancing" means a
. repurchase ,
. redemption,
. defeasance,
. retirement,
. refinancing,
. acquisition for value or
. payment of principal of any Subordinated Indebtedness, other than
Disqualified Capital Stock.
"Refinancing Indebtedness" means any Indebtedness of Centennial Cellular
Operating or any of its Restricted Subsidiaries issued in exchange for, or the
net proceeds of which are used to extend, refinance, renew, replace, defease or
refund other Indebtedness of Centennial Cellular Operating or such Restricted
Subsidiary (other than intercompany Indebtedness); provided that:
. the principal amount (or accreted value, if applicable) of such
Refinancing Indebtedness does not exceed the principal amount of (or
accreted value, if applicable), plus accrued interest on, the
Indebtedness so extended, refinanced, renewed, replaced, defeased or
refunded (plus the amount of premium and reasonable expenses incurred
in connection therewith);
. such Refinancing Indebtedness has a final maturity date later than
the final maturity date of, and has a Weighted Average Life equal to
or greater than the Weighted Average Life of, the Indebtedness being
extended, refinanced, renewed, replaced, defeased or refunded;
. if the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded is subordinated in right of payment to the
notes, such Refinancing Indebtedness is subordinated in right of
payment to, the notes on terms at least as favorable to the holders
of notes as those contained in the documentation governing the
Indebtedness being extended, refinanced, renewed, replaced, defeased
or refunded; and
. such Indebtedness is incurred either by Centennial Cellular Operating
or by the Restricted Subsidiary who is the obligor on the
Indebtedness being extended, refinanced, renewed, replaced, defeased
or refunded.
"Related Business" means any business related to, or complementary to,
the ownership, development, operation or acquisition of communications systems
as determined by the board of directors of Centennial Cellular Operating.
"Related Person" means, with respect to any Person,
. any Affiliate of such Person or any spouse, immediate family member,
or other relative who has the same principal residence of any
Affiliate of such Person and
. any trust in which any Person described in the diamond point above,
has a beneficial interest.
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"Restricted Payment" means, with respect to any Person,
. any dividend or other distribution on shares of Capital Stock of such
Person or any Restricted Subsidiary of such Person,
. any payment on account of the purchase, redemption or other
acquisition or retirement for value in whole or in part, of any
shares of Capital Stock of such Person, any entity which controls
such Person or any Restricted Subsidiary of such Person, which
Capital Stock is held by Persons other than such Person or any of its
Restricted Subsidiaries, or options, warrants or other rights to
acquire such Capital Stock,
. any defeasance, redemption, repurchase or other acquisition or
retirement for value, in whole or in part, of any Indebtedness of
such Person other than the scheduled repayment thereof at maturity
and any mandatory redemption or mandatory repurchase, by such Person
or a Subsidiary of such Person that is subordinate in right of
payment to the notes other than in exchange for Refinancing
Indebtedness permitted to be Incurred under the indenture and except
for any such defeasance, redemption, repurchase, other acquisition or
payment in respect of Indebtedness held by any Restricted Subsidiary
and
. any Investment (other than a Permitted Investment);
provided, however, that the term "Restricted Payment" does not include
. any dividend, distribution or other payment on shares of Capital
Stock of Centennial Cellular Operating or any Restricted Subsidiary
solely in shares of Qualified Capital Stock or in options, warrants
or other rights to acquire such Qualified Capital Stock),
. any dividend, distribution or other payment to Centennial Cellular
Operating, or any dividend to any of its Restricted Subsidiaries, by
any of its Subsidiaries,
. any dividend, distribution or other payment by any Restricted
Subsidiary on shares of its Capital Stock that is paid pro rata to
all holders of such Capital Stock and
. the purchase, redemption or other acquisition or retirement for value
of shares of Capital Stock of any Restricted Subsidiary held by
Persons other than the Centennial Cellular Operating or any of its
Restricted Subsidiaries.
"Restricted Subsidiary" means any Subsidiary of Centennial Cellular
Operating that has not been designated by the board of directors of Centennial
Cellular Operating by board resolution delivered to the trustee as an
Unrestricted Subsidiary pursuant to and in compliance with "Covenants--
Limitation on Unrestricted Subsidiaries."
"Revocation" means a revocation of any Designation of a Subsidiary as an
Unrestricted Subsidiary.
"Senior Indebtedness" means the principal of, premium, if any, and
interest, including interest, to the extent allowable, accruing after the
filing of a petition initiating any proceeding under any state, federal or
foreign bankruptcy law, on any Indebtedness of Centennial Cellular Operating,
whether outstanding on December 14, 1998 or created, incurred or assumed, and
whether at any time
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owing, actually or contingent, unless, in the case of any particular
indebtedness, it expressly provides that such indebtedness will not be senior
in right of payment to the new notes. Despite the above, "Senior Indebtedness"
will not include:
(1) Indebtedness evidenced by the new notes,
(2) Indebtedness that is subordinate or junior in right of payment to
any Indebtedness of Centennial Cellular Operating,
(3) Indebtedness which when incurred and without respect to any election
under Section 1111(b) of Title 11 United States Code, is without
recourse to Centennial Cellular Operating,
(4) Indebtedness which is represented by Disqualified Capital Stock,
(5) any liability for foreign, federal, state, local or other taxes owed
or owing by Centennial Cellular Operating to the extent such
liability constitutes Indebtedness,
(6) Indebtedness of Centennial Cellular Operating to a Subsidiary or any
other Affiliate of Centennial Cellular Operating or any of such
Affiliate's Subsidiaries,
(7) to the extent it might constitute Indebtedness, amounts owing for
goods, materials or services purchased in the ordinary course of
business or consisting of trade accounts payable owed or owing by
Centennial Cellular Operating, and amounts owed by Centennial
Cellular Operating for compensation to employees or services
rendered to Centennial Cellular Operating,
(8) that portion of any Indebtedness which at the time of issuance is
issued in violation of the indenture, and
(9) Indebtedness evidenced by any guarantee of any Subordinated
Indebtedness or Pari Passu Indebtedness.
"Significant Restricted Subsidiary" means one or more Restricted
Subsidiaries having an aggregate net book value of assets in excess of 5% of
the net book value of the assets of Centennial Cellular Operating and its
Restricted Subsidiaries on a consolidated basis.
"Stated Maturity" means the date fixed for the payment of any principal
or premium pursuant to the Indenture and the notes, including the Maturity
Date, upon redemption, acceleration, Asset Sale Offer, Change of Control Offer
or otherwise.
"Strategic Equity Investor" means any Person which is, or a controlled
Affiliate of any Person which is, engaged in the
. ownership,
. development,
. operation or
. acquisition of communications systems
and which, as of the last available annual or quarterly financial statements,
has Total Common Equity of at least $1.0 billion.
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"Strategic Equity Offering" means an offer or sale of Common Stock or
Preferred Stock, other than Disqualified Capital Stock, of Centennial Cellular
Operating, with aggregate proceeds of at least $50.0 million to a Strategic
Equity Investor other than in connection with or after the occurrence of a
Change of Control.
"Subordinated Indebtedness" means Indebtedness of Centennial Cellular
Operating or a Guarantor subordinated in right of payment to the notes or a
Guarantee, as the case may be.
"Subsidiary" with respect to any Person, means
. a corporation at least 50% of whose Capital Stock with voting power,
under ordinary circumstances, to elect directors is at the time,
directly or indirectly, owned by such Person, by such Person and one
or more Subsidiaries of such Person or by one or more Subsidiaries of
such Person,
. a partnership in which such Person or a Subsidiary of such Person is,
at the time, a general partner of such partnership, or
. any Person in which such Person, one or more Subsidiaries of such
Person, or such Person and one or more Subsidiaries of such Person,
directly or indirectly, at the date of determination thereof has (x)
at least a fifty percent ownership interest or (y) the power to elect
or direct the election of the directors or other governing body of
such Person.
"Total Assets" means the total assets of Centennial Cellular Operating
and its Restricted Subsidiaries shown on the Consolidated balance sheet of
Centennial Cellular Operating and its Restricted Subsidiaries prepared in
accordance with GAAP as of the last day of the immediately preceding fiscal
quarter for which financial statements are available.
"Total Common Equity" of any Person means, as of any date of
determination, the product of
(1) the aggregate number of outstanding primary shares of Common
Stock of such Person on such day (which shall not include any options or
warrants on, or securities convertible or exchangeable into, shares of
Common Stock of such Person) and
(2) the average Closing Price of such Common Stock over the 20
consecutive Trading Days immediately preceding such day.
If no such Closing Price exists with respect to shares of any such class,
the value of such shares for purposes of clause (2) of the preceding sentence
will be determined by the board of directors of Centennial or Centennial
Cellular Operating in good faith and evidenced by a resolution of the board of
directors filed with the trustee.
"Trading Day," with respect to a securities exchange or automated
quotation system, means a day on which such exchange or system is open for a
full day of trading.
"Treasury Rate" means, with respect to any redemption date, the rate per
annum equal to the semiannual equivalent yield to maturity of the Comparable
Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed
as a percentage of its principal amount) equal to the Comparable Treasury Price
for such redemption date.
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"Unrestricted Subsidiary" means any Subsidiary of Centennial Cellular
Operating, other than a Guarantor designated as such pursuant to and in
compliance with "--Covenants--Limitation on Unrestricted Subsidiaries."
"Voting Stock" means, with respect to a Person, Capital Stock of such
Person having generally the right to vote in the election of a majority of the
directors of such Person or having generally the right to vote with respect to
the organizational matters of such Person.
"Weighted Average Life" means, when applied to any Indebtedness at any
date, the number of years obtained by dividing
(1) the sum of the products obtained by multiplying (A) the amount
of each then remaining installment, sinking fund, serial maturity or
other required payments of principal, including payment at final
maturity, in respect thereof, by (B) the number of years (calculated to
the nearest one-twelfth) that will elapse between such date and the
making of such payment, by
(2) the then outstanding principal amount of such Indebtedness.
Book-Entry Delivery And Form
The Global Note. The certificates representing the old notes were issued,
and the certificates representing the new notes will be issued, in fully
registered form, without coupons. The old notes are represented by one or more
permanent global certificates in definitive, fully registered form without
interest coupons in an aggregate amount of $370 million. Except as described in
the next paragraph, the new notes initially will be represented by one or more
permanent global certificates in definitive, fully registered form and will be
deposited with, or on behalf of, the DTC, and registered in the name of Cede &
Co., as the DTC's nominee or will remain in the custody of the trustee pursuant
to a FAST Balance Certificate Agreement between the DTC and the trustee. If
your interest in old notes is represented by the initial global note and you
fail to tender in the exchange offer, we may issue and deliver to you a
separate certificate representing your old notes in registered form without
interest coupons.
Certain Book-Entry Procedures for Global Notes. The descriptions of the
operations and procedures of DTC that follow are provided solely as a matter of
convenience. These operations and procedures are solely within the control of
the respective settlement systems and are subject to change by them from time
to time. Centennial Cellular Operating takes no responsibility for these
operations and procedures and urges investors to contact DTC or its
participants directly to discuss these matters.
DTC has advised Centennial Cellular Operating that: DTC is a limited
purpose trust company organized under the laws of the State of New York, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the Uniform Commercial Code and a "Clearing Agency" registered
pursuant to the provisions of the Exchange Act. DTC was created to hold
securities for its participants and facilitate the clearance and settlement of
securities transactions between participants through electronic book-entry
changes in accounts of its participants, eliminating the need for physical
transfer and delivery of certificates. Participants include securities brokers
and dealers, banks, trust companies and clearing corporations and may include
certain other organizations. Indirect access to the DTC system is available to
other entities such as banks, brokers,
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dealers and trust companies that clear through or maintain a custodial
relationship with a participant, either directly or indirectly.
Under procedures established by DTC,
(1) upon the issuance of the initial global certificate, DTC
credited, on its internal system, the respective principal amount of the
individual beneficial interests represented by such global notes to the
accounts with DTC of the participants through which such interests are
held and
(2) ownership of beneficial interest in the global notes are shown
on, and the transfer of that ownership is effected only through, records
maintained by DTC or its nominees, with respect to interest of
participants, and the records of participants and indirect participants,
with respect to interests of persons other than participants.
As long as DTC, or its nominee, is the registered holder of a global
note, DTC or such nominee, as the case may be, will be considered the sole
owner and holder of the notes represented by such global note for all purposes
under the indenture and the new notes. Except in the limited circumstances
described below, owners of beneficial interests in a global note will not be
entitled to have any portions of such global note registered in their names,
and will not receive or be entitled to receive physical delivery of notes in
definitive form and will not be considered the owners or Holders of the global
note, or any notes represented by the global note, under the indenture or the
notes.
The laws of some states require that certain persons take physical
delivery in definitive form of securities that they own. The ability to
transfer beneficial interests in a global note to such persons may be limited
to that extent. Because DTC can act only on behalf of its participants, which
in turn act on behalf of indirect participants and certain banks, the ability
of a person having beneficial interests in a global note to pledge such
interest to persons or entities that do not participate in the DTC system, or
otherwise take actions in respect of such interests, may be affected by the
lack of a physical certificate evidencing such interests.
Payments of the principal of, premium, if any, and interest on global
notes will be made to DTC or its nominee as the registered owner of the global
notes. Neither Centennial Cellular Operating, the trustee nor any of their
respective agents will have any responsibility or liability for any aspect of
the records relating to or payments made on account of beneficial ownership
interest in the global notes or for maintaining, supervising or reviewing any
records relating to such beneficial ownership interests.
Centennial Cellular Operating expects that DTC or its nominee, upon
receipt of any payment of principal premium or interest in respect of a global
note representing any notes held by it or its nominee, will credit
participants' accounts with payments in amounts proportionate to their
respective beneficial interests in the principal amount of such global note for
such notes as shown on the records of DTC or its nominee. Centennial Cellular
Operating also expects that payments by participants to owners of beneficial
interests in such global note held through such participants will be governed
by standing instructions and customary practices, as is now the case with
securities held for the accounts of customers registered in "street name." Such
payments will be the responsibility of such participants. None of Centennial
Cellular Operating or the trustee will be liable for any delay by DTC or any of
its participants in identifying the beneficial owners of the notes, and
Centennial
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Cellular Operating and the trustee may conclusively rely on and will be
protected in relying on instructions from DTC or its nominee as the registered
owner of the notes for all purposes.
Interests in the global notes will trade in DTC's Same-Day Funds
Settlement System and secondary market trading activity in such interests will
therefore settle in immediately available funds, subject in all cases to the
rules and procedures of DTC and its participants. Transfers between
participants in DTC will be effected in accordance with DTC's procedures, and
will be settled in same-day funds.
DTC has advised Centennial Cellular Operating that it will take any
action permitted to be taken by a holder of notes only at the direction of one
or more participants to whose accounts with DTC interests in the global notes
are credited and only in respect of such portion of the aggregate principal
amount of the notes as to which such participant or participants has or have
given such direction. However, if there is an Event of Default under the notes,
DTC reserves the right to exchange the global notes for notes in certificated
form, and to distribute such notes to its participants. See "--Certificated
Notes."
Although DTC has agreed to the foregoing procedures in order to
facilitate transfer of beneficial ownership interests in the global notes among
participants of DTC, it is under no obligation to perform or continue to
perform such procedures, and such procedures may be discontinued at any time.
None of Centennial Cellular Operating, the trustee nor any of their respective
agents will have any responsibility for the performance by DTC or its
participants or indirect participants of their respective obligations under the
rules and procedures governing its operations, including maintaining,
supervising or reviewing the records relating to or payments made on account
of, beneficial ownership interests in global notes.
Certificated Notes. An entire global note may be exchanged for definitive
notes in registered, certificated form without interest coupons if:
(1) DTC (x) notifies the company that it is unwilling or unable to
continue as depositary for the global notes and Centennial Cellular
Operating then fails to appoint a successor depositary within 90
days or (y), has ceased to be a clearing agency registered under the
Exchange Act,
(2) Centennial Cellular Operating, at its option, notifies the trustee
in writing that it elects to cause the issuance of certificated
notes, or
(3) there will have occurred and be continuing a Default or an Event of
Default with respect to notes. In any such case, Centennial Cellular
Operating will notify the trustee in writing that, upon surrender by
the direct and indirect participants of their interest in such
global note, certificated notes will be issued to each person that
such direct and indirect participants and the DTC identify as being
the beneficial owner of the related notes.
Beneficial interests in global notes held by any direct or indirect
participant may be exchanged for certificated notes upon request to DTC, by a
direct participant, for itself or on behalf of an indirect participant, to the
trustee in accordance with customary DTC procedures. Certificated notes
delivered in exchange for any beneficial interest in any global note will be
registered in the names, and issued in any approved denominations, requested by
DTC on behalf of such direct or indirect participant, in accordance with DTC's
customary procedures.
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CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The summary below describes the material United States federal income tax
consequences of the exchange of old notes for new notes as of the date of this
prospectus. The discussion below is based upon the provisions of the Internal
Revenue Code of 1986, as amended, and regulations, rulings and judicial
decisions thereunder as of the date hereof, and such authorities may be
repealed, revoked or modified so as to result in federal income tax
consequences different from those discussed below. You should consult your own
tax advisors concerning the federal income tax consequences in light of their
particular situations as well as any consequences arising under the laws of any
other taxing jurisdiction.
Exchange of Notes
The exchange of old notes for new notes pursuant to the exchange offer
should not be treated as an "exchange" for federal income tax purposes, because
the new notes should not be considered to differ materially in kind or extent
from the old notes. Rather, the new notes received by you should be treated as
a continuation of your old notes. As a result, there should be no federal
income tax consequences to you if you exchange notes for new notes pursuant to
the exchange offer.
PLAN OF DISTRIBUTION
Each broker-dealer that receives new notes for its own account pursuant
to the exchange offer must acknowledge that it will deliver a prospectus in
connection with any resale of such new notes. This prospectus, as it may be
amended or supplemented from time to time, may be used by a broker-dealer in
connection with resales of new notes received in exchange for old notes where
such old notes were acquired by such broker-dealer as a result of market-making
activities or other trading activities. We have agreed that, for a period of 90
days after the expiration date of the exchange offer, we will make this
prospectus available to any broker-dealer for use in connection with any such
resale. In addition, for a period of 90 days after the expiration date, all
dealers effecting transactions in the new notes may be required to deliver a
prospectus.
We will not receive any proceeds from any sale of new notes by broker-
dealers. New notes received by broker-dealers for their own account pursuant to
the exchange offer may be sold from time to time in one or more transactions in
the over-the-counter market, in negotiated transactions, through the writing of
options on the new notes or a combination of such methods of resale, at market
prices prevailing at the time of resale, at prices related to such prevailing
market prices or at negotiated prices. Any such resale may be made directly to
purchasers or to or through brokers or dealers who may receive compensation in
the form of commissions or concessions from any such broker-dealer and/or the
purchasers of any such new notes. Any broker-dealer that resells new notes that
were received by it for its own account pursuant to the exchange offer and any
broker or dealer that participates in a distribution of new notes may be deemed
to be an "underwriter" within the meaning of the Securities Act, and any profit
on any such resale of new notes and any commissions or concessions received by
any such person may be deemed to be underwriting compensation under the
Securities Act. The letter of transmittal states that a broker-dealer will not
be deemed to admit that it is an "underwriter" within the meaning of the
Securities Act by acknowledging that it will deliver and by delivering a
prospectus. We have no arrangement or understanding with any broker or dealer
to distribute the New Notes received in the exchange offer.
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For a period of 90 days after the expiration date we will promptly send
additional copies of this prospectus and any amendment or supplement to this
prospectus to any broker-dealer that requests such documents in the letter of
transmittal.
INCORPORATION OF MATERIAL DOCUMENT BY REFERENCE
The SEC allows us to "incorporate by reference" the information we file
with them, which means we can disclose important information to you by
referring you to those documents. The information included in the following
documents is incorporated by reference and is considered to be a part of this
prospectus. The most recent information that we file with the SEC automatically
updates and supersedes more dated information. We have previously filed the
following document with the SEC and are incorporating it by reference into this
prospectus:
. Annual Report on Form 10-K for the fiscal year ended May 31, 1998,
. Quarterly Reports on Form 10-Q for the quarters ended August 31, 1998,
November 30, 1998, and February 28, 1999,
. Proxy Statement for the Annual Meeting of Stockholders filed on
November 28, 1998,
. Information Statement filed on December 8, 1998, and
. Current Reports on Form 8-K filed on July 16, 1998, October 19, 1998,
December 7, 1998 and January 22, 1999.
We also incorporate by reference all documents subsequently filed by us
pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act until all of
the old notes are exchanged for new notes.
We will provide without charge to each person, including any person
having a control relationship with that person, to whom a prospectus is
delivered, a copy of any or all of the information that has been incorporated
by reference in this prospectus but not delivered with this prospectus. If you
would like to obtain this information from us, please direct your request,
either in writing or by telephone to Peter W. Chehayl, Senior Vice President,
Centennial Cellular Corp., 1305 Campus Parkway, Neptune, New Jersey 07753. In
order to insure timely delivery of the documents, any request should be made
five days before , 1999, which is when the exchange offer expires.
LEGAL MATTERS
The validity of the new notes will be passed upon for us by Reboul,
MacMurray, Hewitt, Maynard & Kristol, New York, New York.
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EXPERTS
The financial statements and the related financial statement schedules
incorporated in this prospectus by reference from Centennial's Annual Report on
Form 10-K for the year ended May 31, 1998 have been audited by Deloitte &
Touche LLP, independent auditors, as stated in their reports which are
incorporated by reference herein, and have been so incorporated in reliance
upon the reports of such firm given upon their authority as experts in
accounting and auditing.
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Dealer Prospectus Delivery Obligation
Until , 1999, all dealers that effect transactions in these
securities, whether or not participating in this Exchange Offer, may be
required to deliver a prospectus. This is in addition to the dealers'
obligation to deliver a prospectus when acting as underwriters and with respect
to their unsold allotments or subscriptions.
No person is authorized in connection with any offering made hereby to
give any information or to make any representation other than as contained in
this Prospectus or the accompanying Letter of Transmittal, and, if given or
made, such information or representation must not be relied upon as having been
authorized by the Company or Centennial Cellular Operating. Neither this
Prospectus nor the accompanying Letter of Transmittal or both together
constitute an offer to sell or a solicitation of an offer to buy any security
other than the New Notes offered hereby, nor does it constitute an offer to
sell or a solicitation of an offer to buy any securities offered hereby to any
person in any jurisdiction in which it is unlawful to make such offer or
solicitation to such person. Neither the delivery of this Prospectus or the
accompanying Letter of Transmittal or both together, nor any sale made
hereunder shall under any circumstances imply that the information contained
herein is correct as of any date subsequent to the date hereof.
[LOGO OF CENTENNIAL CELLULAR CORP. APPEARS HERE]
Centennial Cellular Corp.
Centennial Cellular Operating Co. LLC
Offer to Exchange Their
10 3/4% Senior Subordinated Notes due 2008, Series B,
for Any and All of Their Outstanding
10 3/4% Senior Subordinated Notes due 2008, Series A
----------------
PROSPECTUS
----------------
, 1999
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<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. Indemnification of Directors and Officers
Section 145 of the General Corporation Law of the State of Delaware
("DGCL") empowers a Delaware corporation to indemnify any person who was or is
a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative
or investigative (other than an action by or in the right of such corporation)
by reason of the fact that such person is or was a director, officer, employee
or agent of such corporation, or is or was serving at the request of such
corporation as a director, officer, employee or agent of another corporation or
enterprise. A corporation may indemnify such person against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by such person in connection with such action, suit or
proceeding if he acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the corporation, and, with
respect to any criminal action or proceeding, had no reasonable cause to
believe his conduct was unlawful. A Delaware corporation may indemnify officers
and directors in an action by or in the right of the corporation to procure a
judgment in its favor under the same conditions, except that no indemnification
is permitted without judicial approval if the officer or director is adjudged
to be liable to the corporation. Where an officer or director is successful on
the merits or otherwise in the defense of any action referred to above, the
corporation must indemnify him against the expenses (including attorneys' fees)
which he actually and reasonably incurred in connection therewith. The
indemnification provided is not deemed to be exclusive of any other rights to
which an officer or director may be entitled under any corporation's by-law,
agreement, vote or otherwise.
In accordance with Section 145 of the DGCL, Centennial Cellular Corp.
("Centennial") has adopted a by-law that provides that, to the fullest extent
permitted by DGCL, Centennial shall indemnify any person serving as a director
or officer of Centennial and every such director or officer serving at the
request of Centennial as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise for expenses
incurred in the defense of, or in connection with, any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative
or investigative. Under Section 145 of the DGCL and Centennial's by-laws, such
indemnification shall not be deemed exclusive of any other rights to which
those seeking indemnification may be entitled under any by-law, agreement, vote
of stockholders or disinterested directors or otherwise, both as to action in
his official capacity and as to action in another capacity while holding such
office, and shall continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such a person.
Section 18-108 of the Delaware Limited Liability Company Act (the "LLC
Act") empowers a Delaware limited liability company to indemnify and hold
harmless any member or manager or other person from and against any and all
claims and demands whatsoever. In accordance with such section, the limited
liability company agreement of Centennial Cellular Operating Co. LLC
("Centennial Cellular Operating") provides that, to the fullest extent
permitted by the LLC Act, Centennial Cellular Operating shall indemnify a
member, any affiliate of a member, any officers, directors, shareholders,
partners, employees, representatives or agents of a member, or their respective
affiliates, or any employee or agent of Centennial Cellular Operating or its
affiliates (each, a "Covered Person") for any loss, damage or claim incurred by
such Covered Person by reason of
II-1
<PAGE>
any act or omission performed or omitted by such Covered Person in good faith
on behalf of Centennial Cellular Operating and in a manner reasonably believed
to be within such Covered Person's scope of authority.
Each of Centennial and Centennial Cellular Operating has purchased and
maintains insurance to protect persons entitled to indemnification pursuant to
its by-laws or limited liability company agreement (as the case may be), the
DGCL or the LLC Act against expenses, judgments, fines and amounts paid in
settlement, to the fullest extent permitted by the DGCL or the LLC Act (as the
case may be).
Item 21. Exhibits and Financial Statement Schedules
<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<C> <S> <C>
3.1 Amended and Restated Certificate of Incorporation of Centennial
Cellular Corp. (incorporated by reference to Exhibit 3.1 to
Centennial Cellular Corp.'s Current Report on Form 8-K filed on
January 22, 1999)...............................................
3.2 Amended and Restated By-Laws of Centennial Cellular Corp.
(incorporated by reference to Exhibit 3.2 to Centennial Cellular
Corp.'s Current Report on Form 8-K filed on January 22, 1999)...
3.3 Certificate of Formation of Centennial Cellular Operating Co.
LLC*............................................................
3.4 Limited Liability Company Agreement of Centennial Cellular
Operating Co. LLC*..............................................
4.1 Indenture dated as of December 14, 1998 between Centennial
Cellular Operating Co. LLC and Centennial Finance Corp. and The
Chase Manhattan Bank, as trustee, relating to the 10 3/4% Senior
Subordinated Notes due 2008 (incorporated by reference to
Exhibit 4.4 to Centennial Cellular Corp.'s Current Report on
Form 8-K filed on January 22, 1999).............................
4.2 Assumption Agreement and Supplemental Indenture, dated as of
January 7, 1999, to the Indenture dated as of December 14, 1998
(incorporated by reference to Exhibit 4.5 to Centennial Cellular
Corp.'s Current Report on Form 8-K filed on January 22, 1999)...
4.3 Form of 10 3/4% Senior Subordinated Note due 2008, Series B of
the registrant (included in Exhibit 4.1)........................
4.4 Registration Rights Agreement, dated as of December 14, 1998,
among Centennial Cellular Operating Co. LLC, Centennial Finance
Corp. and Merrill Lynch, Pierce, Fenner & Smith Incorporated,
NationsBanc Montgomery Securities LLC, Morgan Stanley & Co.
Incorporated and Chase Securities Inc., as initial purchasers
(incorporated by reference to Exhibit 4.3 to Centennial Cellular
Corp.'s Current Report on Form 8-K filed on January 22, 1999)...
4.5 Pledge and Escrow Agreement, dated as of December 14, 1998, from
Centennial Cellular Operating Co. LLC and Centennial Finance
Corp., as Pledgors, to The Chase Manhattan Bank, as Trustee
(incorporated by reference to Exhibit 4.8 to Centennial Cellular
Corp.'s Current Report on Form 8-K filed on January 22, 1999)...
5.1 Opinion of Reboul, MacMurray, Hewitt, Maynard & Kristol as to
the legality of the securities being registered**...............
10.1 Purchase Agreement, dated December 9, 1998, among Centennial
Cellular Operating Co. LLC, Centennial Finance Corp., and
Merrill Lynch, Pierce, Fenner & Smith Incorporated, NationsBanc
Montgomery Securities LLC, Morgan Stanley & Co. Incorporated and
Chase Securities Inc., as initial purchasers, relating to the
issuance and sale of $370,000,000 aggregate principal amount of
the registrants' 10 3/4% Senior Subordinated Notes due 2008,
Series A*.......................................................
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<C> <S> <C>
10.2 Credit Agreement dated as of January 7, 1999 among Centennial
Cellular Operating Co. LLC, as Borrower; Centennial Wireless PCS
Operations Corp., as PR Borrower; Centennial Cellular Corp., as
a Guarantor; the other Guarantors party thereto; each of the
lenders named therein; Merrill Lynch & Co., Merrill Lynch,
Pierce, Fenner & Smith Incorporated, as lead arranging agent;
Nationsbank, N.A., as co-arranger and administrative agent; The
Chase Manhattan Bank, as co-arranger and co-documentation agent;
The Bank of Nova Scotia, as co-documentation agent; Merrill
Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated,
as syndication agent; and Morgan Stanley Senior Funding, Inc.,
as senior managing agent (incorporated by reference to Exhibit
10.1 to Centennial Cellular Corp.'s Current Report on Form 8-K
filed on January 22, 1999)......................................
10.3 Employment Agreement dated as of January 7, 1999 between
Centennial Cellular Corp. and Michael Small (incorporated by
reference to Exhibit 10.3 to Centennial Cellular Corp.'s Current
Report on Form 8-K filed on January 22, 1999)...................
10.4 Employment Agreement dated as of January 7, 1999 between
Centennial Cellular Corp. and Rudy J. Graf (incorporated by
reference to Exhibit 10.4 to Centennial Cellular Corp.'s Current
Report on Form 8-K filed on January 22, 1999)...................
10.5 Incentive Award Plan, as amended (incorporated by reference to
Exhibit 10.11 to Centennial Cellular Corp.'s Form S-1 filed on
September 27, 1991).............................................
10.6 1993 Management Equity Incentive Plan, (incorporated by
reference to Exhibit 10.9 to Centennial Cellular Corp.'s Annual
Report on Form 10-K for the fiscal year ended May 31, 1994).....
10.7 1993 Non-Employment/Officer Directors' Stock Option Plan,
(incorporated by reference to Exhibit 10.10 to Centennial
Cellular Corp.'s Annual Report on Form 10-K for the fiscal year
ended May 31, 1994).............................................
12.1 Statements re Computation of Ratios**...........................
23.1 Consent of Reboul, MacMurray, Hewitt, Maynard & Kristol
(included in their opinion filed as Exhibit 5.1)**..............
23.2 Consent of Deloitte & Touche LLP................................
24.1 Power of Attorney of the members of the Board of Directors of
the registrant (included in the signature pages of the
Registration Statement).........................................
24.2 Power of Attorney for Thomas E. Bucks*..........................
25.1 Statement on Form T-1 of Eligibility of Trustee*................
99.1 Form of Letter of Transmittal...................................
99.2 Form of Notice of Guaranteed Delivery...........................
99.3 First Amended and Restated Stockholders Agreement dated as of
January 20, 1999 among CCW Acquisition Corp. and the Purchasers
named in Schedules I, II, III and IV thereto....................
99.4 First Amended and Restated Registration Rights Agreement dated
as of January 20, 1999 among CCW Acquisition Corp. and the
Purchasers named in Schedules I, II, III and IV thereto.........
</TABLE>
- --------
*Previously filed.
**To be filed by amendment.
II-3
<PAGE>
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;
(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;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration
statement or any material change in such information in the
registration statement;
(2) That, for the purpose of determining any liability under the
Securities Act, 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 the time shall be deemed to be
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) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of 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 Act and
will be governed by the final adjudication of such issue.
(c) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the 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.
(d) 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, within one business day of receipt of
such request, and to send the incorporated documents by first
II-4
<PAGE>
class mail or other equally prompt means. This includes information contained
in documents filed subsequent to the effective date of the registration
statement through the date of responding to the request.
(e) 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.
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, each of the
registrants has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the city of Neptune,
state of New Jersey, on July 6, 1999.
Centennial Cellular Corp.
/s/ Michael J. Small
_____________________________________
Michael J. Small,
President, Chief Executive
Officer and Director
Centennial Cellular Operating Co.
LLC
By: Centennial Cellular Corp., its
sole member
/s/ Michael J. Small
_____________________________________
Michael J. Small,
Chief Executive Officer 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.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
* President, Chief Executive July 6, 1999
______________________________________ Officer and Director
Michael J. Small (Principal Executive
Officer)
* Senior Vice President, July 6, 1999
______________________________________ Treasurer and Chief
Peter W. Chehayl Financial Officer
(Principal Financial
Officer)
* Senior Vice President and July 6, 1999
______________________________________ Controller (Principal
Thomas E. Bucks Accounting Officer)
* President and Chief July 6, 1999
______________________________________ Executive Officer
Rudy J. Graf (Centennial de Puerto
Rico), Director
* Director July 6, 1999
______________________________________
Thomas E. McInerney
* Director July 6, 1999
______________________________________
Anthony J. de Nicola
* Director July 6, 1999
______________________________________
Rudolph E. Rupert
</TABLE>
II-6
<PAGE>
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
Director July 6, 1999
______________________________________
Mark T. Gallogly
* Director July 6, 1999
______________________________________
Lawrence H. Guffey
</TABLE>
- --------
* Pursuant to the Power of Attorney designated as Exhibit 24.1 hereto and
previously included in the S-4 and the Power of Attorney designated as
Exhibit 24.2 hereto:
/s/ Michael J. Small
By: _________________________________
Michael J. Small
Attorney-in-Fact
II-7
<PAGE>
Exhibit 23.2
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Amendment No. 3 to
Registration Statement No. 333-73435 of Centennial Cellular Corp. on Form S-4
of our reports dated July 17, 1998 appearing in the Annual Report on Form 10-K
of Centennial Cellular Corp. for the year ended May 31, 1998 and to the
reference to us under the heading "Experts" in the Prospectus, which is part of
this Registration Statement.
Deloitte & Touche LLP
Stamford, Connecticut
July 6, 1999
<PAGE>
EXHIBIT 99.1
LETTER OF TRANSMITTAL
TO TENDER FOR EXCHANGE
10 3/4% SENIOR SUBORDINATED NOTES DUE 2008, SERIES A
OF
CENTENNIAL CELLULAR CORP.
AND
CENTENNIAL CELLULAR OPERATING CO. LLC
PURSUANT TO THE PROSPECTUS DATED , 1999
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK
CITY TIME, ON , 1999 (THE "EXPIRATION DATE"), UNLESS THE EXCHANGE OFFER IS
EXTENDED BY CENTENNIAL CELLULAR CORP. AND CENTENNIAL CELLULAR OPERATING CO.
LLC IN THEIR SOLE DISCRETION, IN WHICH CASE THE TERM "EXPIRATION DATE" SHALL
MEAN THE LATEST DATE AND TIME TO WHICH THE EXCHANGE OFFER IS EXTENDED. TENDERS
MAY BE WITHDRAWN AT ANY TIME PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE
EXPIRATION DATE.
THE EXCHANGE AGENT IS:
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
<TABLE>
<S> <C> <C>
BY REGISTERED OR BY HAND DELIVERY OR
CERTIFIED MAIL: OVERNIGHT COURIER: IN PERSON:
Norwest Bank Minnesota Norwest Bank Minnesota, Norwest Bank Minnesota,
National Association National Association National Association
Corporate Trust Operations Corporate Trust Operations Norstar East Bldg.
P.O. Box 1517 Norwest Center 608 2nd Ave. S.
Minneapolis, MN 55480-1517 Sixth and Marquette 12th Floor
Minneapolis, MN 55479-0113 Corporate Trust Services
Minneapolis, MN 55479-0113
</TABLE>
BY FACSIMILE:
(612) 667-4927
CONFIRM BY TELEPHONE
(612) 667-9764
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR
TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER THAN THE ONE LISTED
ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. THE INSTRUCTIONS SET FORTH IN THIS
LETTER OF TRANSMITTAL SHOULD BE READ CAREFULLY BEFORE THIS LETTER OF
TRANSMITTAL IS COMPLETED.
<PAGE>
The undersigned acknowledges receipt of the Prospectus dated , 1999 (the
"Prospectus"), of Centennial Cellular Corp., a Delaware corporation
("Centennial"), and Centennial Cellular Operating Co. LLC, a Delaware limited
liability company (together with Centennial, the "Issuers"), and this Letter
of Transmittal (the "Letter of Transmittal"), which together with the
Prospectus constitutes the Issuers' offer (the "Exchange Offer") to exchange
$1,000 principal amount of their 10 3/4% Senior Subordinated Notes due 2008,
Series B (the "New Notes"), for each $1,000 principal amount of their
outstanding 10 3/4% Senior Subordinated Notes due 2008, Series A (the "Old
Notes"). Recipients of the Prospectus should read the requirements described
in such Prospectus with respect to eligibility to participate in the Exchange
Offer. Capitalized terms used but not defined herein have the meaning given to
them in the Prospectus.
The undersigned hereby tenders the Old Notes described under "Description of
Old Notes" below pursuant to the terms and conditions described in the
Prospectus and this Letter of Transmittal. The undersigned is the registered
owner of all the Old Notes.
This Letter of Transmittal is to be used by a holder of Old Notes (i) if
certificates representing Old Notes are to be forwarded herewith, (ii) if
delivery of Old Notes is to be made by book-entry transfer to the Exchange
Agent's account at The Depository Trust Company ("DTC"), pursuant to the
procedures set forth in the section of the Prospectus entitled "The Exchange
Offer," and an Agent's Message (as defined herein) is not delivered or (iii)
if a tender is made pursuant to the guaranteed delivery procedures in the
section of the Prospectus entitled "The Exchange Offer."
Any beneficial owner whose Old Notes are registered in the name of a broker,
dealer, commercial bank, trust company or other nominee and who wishes to
tender should contact such registered holder of Old Notes promptly and
instruct such registered holder of Old Notes to tender on behalf of the
beneficial owner. If such beneficial owner wishes to tender on its own behalf,
such beneficial owner must, prior to completing and executing this Letter of
Transmittal and delivering its Old Notes, either make appropriate arrangements
to register ownership of the Old Notes in such beneficial owner's name or
obtain a properly completed bond power from the registered holder of Old
Notes. The transfer of record ownership may take considerable time.
In order to properly complete this Letter of Transmittal, a holder of Old
Notes must (i) complete the box entitled "Description of Old Notes," (ii) if
appropriate, check and complete the boxes relating to book-entry transfer,
guaranteed delivery, Special Issuance Instructions and Special Delivery
Instructions, (iii) sign the Letter of Transmittal by completing the box
entitled "Sign Here" and (iv) complete the Substitute Form W-9. Each holder of
Old Notes should carefully read the detailed instructions below prior to
completing the Letter of Transmittal.
Holders of Old Notes who desire to tender their Old Notes for exchange and
(i) whose Old Notes are not immediately available or (ii) who cannot deliver
their Old Notes, this Letter of Transmittal and all other documents required
hereby to the Exchange Agent on or prior to the Expiration Date, must tender
the Old Notes pursuant to the guaranteed delivery procedures set forth in the
section of the Prospectus entitled "The Exchange Offer." See Instruction 2.
Holders of Old Notes who wish to tender their Old Notes for exchange must
complete columns (1) through (3) in the box below entitled "Description of Old
Notes," complete the boxes entitled and sign the box below entitled "Sign
Here." If only those columns are completed, such holder of Old Notes will have
tendered for exchange all Old Notes listed in column (3) below. If the holder
of Old Notes wishes to tender for exchange less than all of such Old Notes,
column (4) must be completed in full. In such case, such holder of Old Notes
should refer to Instruction 5.
2
<PAGE>
DESCRIPTION OF OLD NOTES
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------
Name(s) and
Address(es) of
Registered Holder(s)
of
Old Note(s), Exactly
as Aggregate Principal
Name(s) Appear(s) on Amount Tendered for
Old Note(s) Exchange
Certificate(s) Certificate Number(s) Aggregate Principal Must be in Integral
(please fill in, if (attach signed list, Amount Represented by Multiples
blank): if necessary) Certificates(1) of $1,000(2)
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------
TOTAL PRINCIPAL AMOUNT OF NOTES TENDERED:
- ------------------------------------------------------------------------------------
</TABLE>
1. Unless indicated in the column "Aggregate Principal Amount Tendered For
Exchange," any tendering Holder of 10 3/4% Senior Subordinated Notes due
2008, Series A, will be deemed to have tendered the entire aggregate
principal amount represented by the column labeled "Aggregate Principal
Amount Represented by Certificate(s)."
2. The minimum permitted tender is $1,000 in principal amount of 10 3/4%
Senior Subordinated Notes due 2008, Series A. All other tenders must be in
integral multiples of $1,000.
----------------
[_]CHECK HERE IF TENDERED OLD NOTES ARE ENCLOSED HEREWITH.
[_]CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH DTC AND COMPLETE
THE FOLLOWING (FOR USE BY ELIGIBLE INSTITUTIONS (AS HEREINAFTER DEFINED)
ONLY):
Name of Tendering Institution: _____________________________________________
Account Number: ____________________________________________________________
Transaction Code Number: ___________________________________________________
[_]CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE
OF GUARANTEED DELIVERY ENCLOSED HEREWITH AND COMPLETE THE FOLLOWING (FOR
USE BY ELIGIBLE INSTITUTIONS ONLY):
Name of Registered Holder: ____________________________________________
Date of Execution of Notice of Guaranteed Delivery: ________________________
Name of Eligible Institution that Guaranteed Delivery: ________________
Account Number (if delivered by book-entry transfer): ______________________
[_]CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL
COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS
THERETO.
Name: ______________________________________________________________________
Address: ___________________________________________________________________
---------------------------------------------------------------------------
---------------------------------------------------------------------------
3
<PAGE>
SPECIAL ISSUANCE INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
(See Instructions 1, 6, 7 and 8) (See Instructions 1, 6, 7 and 8)
To be completed ONLY (i) if the To be completed ONLY if the New
New Notes issued in exchange for Old Notes issued in exchange for Old
Notes, or Old Notes (if any) not Notes, certificates for Old Notes in
tendered for exchange, are to be a principal amount not exchanged for
issued in the name of someone other New Notes, or Old Notes (if any) not
than the undersigned or (ii) if Old tendered for exchange, are to be
Notes tendered by book-entry mailed or delivered (i) to someone
transfer which are not exchanged are other than the undersigned or (ii)
to be returned by credit to an to the undersigned at an address
account maintained at DTC. other than the address shown below
the undersigned's signature.
Issue to: Mail or deliver to:
Name: _______________________________ Name: _______________________________
(Please Type or Print) (Please Type or Print)
Address: ____________________________ Address: ____________________________
------------------------------------- -------------------------------------
------------------------------------- -------------------------------------
(Include Zip Code) (Include Zip Code)
------------------------------------- -------------------------------------
(Tax Identification or Social (Tax Identification or Social
Security No.) Security No.)
Credit Old Notes not exchanged and
delivered by book-entry transfer to
DTC account set forth below:
-------------------------------------
(Account Number)
SIGNATURES MUST BE PROVIDED BELOW.
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY.
4
<PAGE>
Ladies and Gentlemen:
By executing this Letter of Transmittal and subject to and effective upon
acceptance for exchange of the Old Notes tendered for exchange herewith, the
undersigned will have irrevocably sold, assigned, transferred and exchanged,
to the Issuers, all right, title and interest in, to and under all of the Old
Notes tendered for exchange hereby, and hereby will have appointed the
Exchange Agent as the true and lawful agent and attorney-in-fact (with full
knowledge that the Exchange Agent also acts as agent of the Issuers) of such
holder of Old Notes with respect to such Old Notes, with full power of
substitution to (i) deliver certificates representing such Old Notes, or
transfer ownership of such Old Notes on the account books maintained by DTC
(together, in any such case, with all accompanying evidences of transfer and
authenticity), to the Issuers, (ii) present and deliver such Old Notes for
transfer on the books of the Issuers and (iii) receive all benefits and
otherwise exercise all rights and incidents of beneficial ownership with
respect to such Old Notes, in accordance with the terms of the Exchange Offer.
The power of attorney granted in this paragraph shall be deemed to be
irrevocable and complete with an interest.
The undersigned hereby represents and warrants that (i) the undersigned is
the owner; (ii) the undersigned has full power and authority to tender,
exchange, assign and transfer the Old Notes and (iii) that when such Old Notes
are accepted for exchange by the Issuers, the Issuers will acquire good and
marketable title thereto, free and clear of all liens, restrictions, charges
and encumbrances and not subject to any adverse claims. The undersigned will,
upon receipt, execute and deliver any additional documents deemed by the
Exchange Agent or the Issuers to be necessary or desirable to complete the
exchange, assignment and transfer of the Old Notes tendered for exchange
hereby.
By tendering, the undersigned hereby further represents to the Issuers that
(i) the New Notes to be acquired by the undersigned in exchange for the Old
Notes tendered hereby and any beneficial owner(s) of such Old Notes in
connection with the Exchange Offer will be acquired by the undersigned and
such beneficial owner(s) in the ordinary course of business of the
undersigned, (ii) the undersigned have no arrangement or understanding with
any person to participate in the distribution of the New Notes, (iii) the
undersigned and each beneficial owner acknowledge and agree that any person
who is a broker-dealer registered under the Exchange Act or is participating
in the Exchange Offer for the purpose of distributing the New Notes must
comply with the registration and prospectus delivery requirements of the
Securities Act in connection with a secondary resale transaction of the New
Notes acquired by such person and cannot rely on the position of the staff of
the Commission set forth in certain no-action letters, and (iv) neither the
undersigned nor any beneficial owner is an "affiliate," as defined under Rule
405 under the Securities Act, of the Issuers. If the undersigned is a broker-
dealer that will receive New Notes for its own account in exchange for Old
Notes that were acquired as a result of market-making activities or other
trading activities, it acknowledges that it will deliver a prospectus meeting
the requirements of the Securities Act in connection with any resale of such
New Notes; however, by so acknowledging and by delivering a prospectus, the
undersigned will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act.
For purposes of the Exchange Offer, the Issuers will be deemed to have
accepted for exchange, and to have exchanged, validly tendered Old Notes, if,
as and when the Issuers give oral or written notice thereof to the Exchange
Agent. Tenders of Old Notes for exchange may be withdrawn at any time prior to
5:00 p.m., New York City time, on the Expiration Date. See "The Exchange
Offer--Withdrawal of Tenders" in the Prospectus. Any Old Notes tendered by the
undersigned and not accepted for exchange will be returned to the undersigned
at the address set forth above unless otherwise indicated in the box above
entitled "Special Delivery Instructions" as promptly as practicable after the
Expiration Date.
The undersigned acknowledges that the Issuers' acceptance of Old Notes
validly tendered for exchange pursuant to any one of the procedures described
in the section of the Prospectus entitled "The Exchange Offer" and in the
instructions hereto will constitute a binding agreement among the undersigned
and the Issuers upon the terms and subject to the conditions of the Exchange
Offer.
5
<PAGE>
Unless otherwise indicated in the box entitled "Special Issuance
Instructions," please return any Old Notes not entered for exchange in the
name(s) of the undersigned. Similarly, unless otherwise indicated in the box
entitled "Special Delivery Instructions," please mail any certificates for Old
Notes not tendered or exchanged (and accompanying documents, as appropriate)
to the undersigned at the address shown below the undersigned's signature(s).
In the event that both "Special Issuance Instructions" and "Special Delivery
Instructions" are completed, please issue the certificates representing the
New Notes issued in exchange for the Old Notes accepted for exchange in the
name(s) of, and return any Old Notes not tendered for exchange or not
exchanged to, the person(s) so indicated. The undersigned recognizes that the
Issuers have no obligation pursuant to the "Special Issuance Instructions" and
"Special Delivery Instructions" to transfer any Old Notes from the name of the
holder thereof if the Issuers do not accept for exchange any of the Old Notes
so tendered for exchange or if such transfer would not be in compliance with
any transfer restrictions applicable to such Old Notes.
Except as stated in the Prospectus, all authority herein conferred or agreed
to be conferred shall survive the death, incapacity, or dissolution of the
undersigned, and any obligation of the undersigned hereunder shall be binding
upon the heirs, personal representatives, successors and assigns of the
undersigned. Except as otherwise stated in the Prospectus, this tender for
exchange of Old Notes is irrevocable.
6
<PAGE>
TENDERING HOLDERS SIGN HERE
---------------------------------------------------------------
Signature(s) of Owner(s)
Dated:_______________________
Must be signed by the registered holder(s) of Old Notes
exactly as name(s) appear(s) on certificate(s) representing
the Old Notes or on a security position listing or by
person(s) authorized to become registered Old Note holder(s)
by certificates and documents transmitted herewith. If
signature is by trustees, executors, administrators,
guardians, attorneys-in-fact, officers of corporations or
others acting in a fiduciary or representative capacity,
please provide the following information. (See Instruction 6).
Name(s):_______________________________________________________
---------------------------------------------------------------
(Please Print)
Capacity (full title):_________________________________________
Address:_______________________________________________________
---------------------------------------------------------------
(Include Zip Code)
Principal place of business (if different from address listed
above):________________________________________________________
---------------------------------------------------------------
(Include Zip Code)
Area Code and Telephone No.: ( ) ___________
Tax Identification or Social Security Nos.: ________
PLEASE COMPLETE SUBSTITUTE FORM W-9
GUARANTEE OF SIGNATURE(S)
(Signature(s) must be guaranteed if required by instruction 1)
Authorized Signature: _________________________________________
Dated: ________________________________________________________
Name and Title: _______________________________________________
(Please Print)
Name and Title: _______________________________________________
7
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER
1. Guarantee of Signatures. Except as otherwise provided below, all
signatures on this Letter of Transmittal must be guaranteed by an institution
(an "Eligible Institution") that is (1) a member firm of a registered national
securities exchange or of the National Association of Securities Dealers,
Inc., (2) a commercial bank or trust company having an office or correspondent
in the United States, or (3) an "eligible guarantor institution" within the
meaning of Rule 17Ad-15 under the Securities Exchange Act of 1934 which is a
member of one of the following recognized Signature Guarantee Programs:
a.The Securities Transfer Agents Medallion Program (STAMP)
b.The Stock Exchange Medallion Program (SEMP)
Signatures on this Letter of Transmittal need not be guaranteed (i) if this
Letter of Transmittal is signed by the registered holder(s) of the Old Notes
tendered herewith and such registered holder(s) have not completed the box
entitled "Special Issuance Instructions" or the box entitled "Special Delivery
Instructions" on this Letter of Transmittal or (ii) if such Old Notes are
tendered for the account of an Eligible Institution. IN ALL OTHER CASES, ALL
SIGNATURES MUST BE GUARANTEED BY AN ELIGIBLE INSTITUTION.
2. Delivery of this Letter of Transmittal and Old Notes; Guaranteed Delivery
Procedures. This Letter of Transmittal is to be completed by holders of Old
Notes (i) if certificates are to be forwarded herewith or (ii) if tenders are
to be made pursuant to the procedures for tender by book-entry transfer and an
Agent's Message is not delivered or (iii) if a tender is made pursuant to the
guaranteed delivery procedures set forth in the section of the Prospectus
entitled "The Exchange Offer." Certificates for all physically tendered Old
Notes or any timely confirmation of a book-entry transfer (a "Book-Entry
Confirmation"), as well as a properly completed and duly executed copy of this
Letter of Transmittal or facsimile hereof, and an other documents required by
this Letter of Transmittal, or, if applicable, or Agent's Message in lieu of
the Letter of Transmittal must be received by the Exchange Agent at its
address set forth on the cover of this Letter of Transmittal prior to 5:00
p.m., New York City time, on the Expiration Date. The term "Agent's Message"
means a message transmitted by DTC, received by the Exchange Agent and forming
part of the Book-Entry Confirmation, which states that DTC has received an
express acknowledgement from a participant in DTC that is tendering Old Notes
that are the subject of such Book-Entry Confirmation, that each participant
has received and agrees to be bound by the terms of this Letter of
Transmittal, and that the Issuer's may enforce such agreement against the
participant. Holders of Old Notes who elect to tender Old Notes and (i) whose
Old Notes are not immediately available, (ii) who cannot complete the
procedure for book-entry transfer on a timely basis or (iii) who cannot
deliver the Old Notes, this Letter of Transmittal or other required documents
to the Exchange Agent prior to 5:00 p.m., New York City time, on the
Expiration Date, must tender their Old Notes according to the guaranteed
delivery of procedures set forth in the Prospectus. Holders may have such
tender elected if: (a) such tender is made through an Eligible Institution;
(b) prior to 5:00 p.m., New York City time, on the Expiration Date, the
Exchange Agent has received from such Eligible Institution a properly
completed and duly executed Notice of Guaranteed Delivery, setting forth the
name and address of the holder of such Old Notes, the certificate numbers(s)
of such Old Notes and the principal amount of Old Notes tendered for exchange,
stating that tender is being made thereby and guaranteeing that, within five
New York Stock Exchange trading days after the Expiration Date, this Letter of
Transmittal (or a facsimile thereof, together with the certificates)
representing such Old Notes (or a Book-Entry Confirmation), in proper form for
transfer, and any other documents required by this Letter of Transmittal, will
be deposited by such Eligible Institution with the Exchange Agent; and (c) a
properly executed Letter of Transmittal (or a facsimile hereof), as well as
the certificates for all tendered Old Notes in proper form for transfer or a
Book-Entry Confirmation, together with any other documents required by this
Letter of Transmittal, are received by the Exchange Agent within five New York
Stock Exchange trading days after the Expiration Date.
THE METHOD OF DELIVERY OF OLD NOTES, THIS LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND RISK OF
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THE HOLDER. EXCEPT AS OTHERWISE PROVIDED BELOW, THE DELIVERY WILL BE DEEMED
MADE ONLY WHEN ACTUALLY RECEIVED OR CONFIRMED BY THE EXCHANGE AGENT. INSTEAD
OF DELIVERY BY MAIL, IT IS RECOMMENDED THAT HOLDERS USE AN OVERNIGHT OR HAND
DELIVERY SERVICE, PROPERLY INSURED. IN ALL CASES, SUFFICIENT TIME SHOULD BE
ALLOWED TO ASSURE DELIVERY TO THE EXCHANGE AGENT BEFORE THE EXPIRATION DATE.
NEITHER THIS LETTER OF TRANSMITTAL NOR ANY OLD NOTES SHOULD BE SENT TO THE
ISSUERS. HOLDERS MAY REQUEST THEIR RESPECTIVE BROKERS, DEALERS, COMMERCIAL
BANKS, TRUST COMPANIES OR NOMINEES TO EFFECT THE ABOVE TRANSACTIONS FOR SUCH
HOLDERS.
No alternative, conditional or contingent tenders will be accepted. All
tendering holders of Old Notes, by execution of this Letter of Transmittal (or
facsimile hereof, if applicable), waive any right to receive notice of the
acceptance of their Old Notes for exchange.
3. Inadequate Space. If the space provided in the box entitled "Description
of Old Notes" above is inadequate, the certificate numbers and principal
amounts of the Old Notes being tendered should be listed on a separate signed
schedule affixed hereto.
4. Withdrawals. A tender of Old Notes may be withdrawn at any time prior to
5:00 p.m., New York City time, on the Expiration Date by written notice of
withdrawal to the Exchange Agent at the address set forth on the cover of this
Letter of Transmittal via telegram, telex, facsimile transmission or letter.
To be effective, a notice of withdrawal of Old Notes must (i) specify the name
of the person who tendered the Old Notes to be withdrawn (the "Depositor"),
(ii) identify the Old Notes to be withdrawn (including the certificate number
or numbers and aggregate principal amount of such Old Notes) or, in the case
of Old Notes transferred by book-entry transfers, the name and number of the
account at DTC to be credited, (iii) be signed by the holder of Old Notes in
the same manner as the original signature on the Letter of Transmittal by
which such Old Notes were tendered (including any required signature
guarantees) and (iv) specify the name in which any such Old Notes are to be
registered, if different from that of the Depositor. All questions as to the
validity, form and eligibility (including time of receipt) of such notices
will be determined by the Issuers, whose determination shall be final and
binding on all parties. Any Old Notes so withdrawn will thereafter be deemed
not validly tendered for purposes of the Exchange Offer and no New Notes will
be issued with respect thereto unless the Old Notes so withdrawn are validly
retendered. Properly withdrawn Old Notes may be retendered by following one of
the procedures described in the section of the Prospectus entitled "The
Exchange Offer -- Procedures for Tendering" at any time prior to 5:00 p.m.,
New York City time, on the Expiration Date.
5. Partial Tenders. Tenders of Old Notes will be accepted only in integral
multiples of $1,000 principal amount. If a tender for exchange is to be made
with respect to less than the entire principal amount of an Old Notes, fill in
the principal amount of Old Notes which are tendered for exchange in column
(4) of the box entitled "Description of Old Notes," as more fully described in
the footnotes thereto. In case of a partial tender for exchange, a new
certificate, in fully registered form, for the remainder of the principal
amount of the Old Notes, will be sent to the holders of Old Notes unless
otherwise indicated in the appropriate box on this Letter of Transmittal as
promptly as practicable after the expiration or termination of the Exchange
Offer.
6. Signatures on this Letter of Transmittal, Assignment and Endorsements.
(a) The signature(s) of the holder of Old Notes on this Letter of
Transmittal must correspond with the name(s) as written on the face of the Old
Notes without alteration, enlargement or any change whatsoever.
(b) If tendered Old Notes are owned of record by two or more joint owners,
all such owners must sign this Letter of Transmittal.
(c) If any tendered Old Notes are registered in different names on several
certificates, it will be necessary to complete, sign and submit as many
separate copies of this Letter of Transmittal and any necessary or required
documents as there are different registrations or certificates.
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(d) When this Letter of Transmittal is signed by the holder of the Old Notes
listed and transmitted hereby, no endorsements of Old Notes or bond powers are
required. If, however, Old Notes not tendered or not accepted are to be issued
or returned in the name of a person other than the holder of Old Notes, then
the Old Notes transmitted hereby must be endorsed or accompanied by a properly
completed bond power, in a form satisfactory to the Issuers, in either case
signed exactly as the name(s) of the holder of Old Notes appear(s) on the Old
Notes. Signatures on such Old Notes or bond powers must be guaranteed by an
Eligible Institution (unless signed by an Eligible Institution).
(e) If this Letter of Transmittal or Old Notes or bond powers are signed by
trustees, executors, administrators, guardians, attorneys-in-fact, officers of
corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and unless waived by the Issuers,
evidence satisfactory to the Issuers of their authority to so act must be
submitted with this Letter of Transmittal.
(f) If this Letter of Transmittal is signed by a person other than the
registered holder of Old Notes listed, the Old Notes must be endorsed or
accompanied by a properly completed bond power, in either case signed by such
registered holder exactly as the name(s) of the registered holder of Old Notes
appear(s) on the certificates. Signatures on such Old Notes or bond powers
must be guaranteed by an Eligible Institution (unless signed by an Eligible
Institution).
7. Transfer Taxes. Except as set forth in this Instruction 7, the Issuers
will pay all transfer taxes, if any, applicable to the exchange of Old Notes
pursuant to the Exchange Offer. If, however, a transfer tax is imposed for any
reason other than the exchange of the Old Notes pursuant to the Exchange
Offer, then the amount of any such transfer taxes (whether imposed on the
registered holder or any other persons) will be payable by the tendering
holder. If satisfactory evidence of payment of such taxes or exemptions
therefrom is not submitted with this Letter of Transmittal, the amount of such
transfer taxes will be billed directly to such tendering holder.
8. Special Issuance and Delivery Instructions. If the New Notes are to be
issued, or if any Old Notes not tendered for exchange are to be issued or sent
to someone other than the holder of Old Notes or to an address other than that
shown above, the appropriate boxes on this Letter of Transmittal should be
completed. Holders of Old Notes tendering Old Notes by book-entry transfer may
request that Old Notes not accepted be credited to such account maintained at
DTC as such holder of Old Notes may designate.
9. Irregularities. All questions as to the validity, form, eligibility
(including time of receipt), compliance with conditions, acceptance and
withdrawal of tendered Old Notes will be determined by the Issuers in its sole
discretion, which determination will be final and binding. The Issuers reserve
the absolute right to reject any and all Old Notes not properly tendered or
any Old Notes the Issuers' acceptance of which would, in the opinion of
counsel for the Issuers, be unlawful. The Issuers also reserve the right to
waive any defects or irregularities as to particular Old Notes. The Issuers'
interpretation of the terms and conditions of the Exchange Offer (including
the instructions in the Letter of Transmittal) will be final and binding on
all parties. Unless waived, any defects or irregularities in connection with
tenders of Old Notes must be cured within such time as the Issuers shall
determine. Although the Issuers intend to notify holders of defects or
irregularities with respect to tenders of Old Notes, neither the Issuers, the
Exchange Agent nor any other person shall incur any liability for failure to
give such notification. Tenders of Old Notes will not be deemed to have been
made until such defects or irregularities have been cured or waived. Any Old
Notes received by the Exchange Agent that are not properly tendered and as to
which the defects or irregularities have not been cured or waived will be
returned by the Exchange Agent to the tendering holders, unless otherwise
provided in this Letter of Transmittal, as soon as practicable following the
Expiration Date.
10. Waiver of Conditions. The Issuers reserve the right to waive, amend or
modify certain of the specified conditions as described under "The Exchange
Offer -- Conditions" in the Prospectus in the case of any Old Notes tendered
in the Issuers' reasonable discretion (except as otherwise provided in the
Prospectus).
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11. Requests for Information or Additional Copies. Requests for information
or for additional copies of the Prospectus and this Letter of Transmittal may
be directed to the Exchange Agent at the address or telephone number set forth
on the cover of this Letter of Transmittal.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR A FACSIMILE THEREOF, IF
APPLICABLE) TOGETHER WITH CERTIFICATES, OR CONFIRMATION OF BOOK-ENTRY OR THE
NOTICE OF GUARANTEED DELIVERY, AND ALL OTHER REQUIRED DOCUMENTS MUST BE
RECEIVED BY THE EXCHANGE AGENT PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE
EXPIRATION DATE.
IMPORTANT TAX INFORMATION
Under current federal income tax law, a holder of Old Notes whose tendered
Old Notes are accepted for exchange may be subject to backup withholding
unless the holder provides the Issuers (as payor), through the Exchange Agent,
with either (i) such holder's correct taxpayer identification number ("TIN")
on Substitute Form W-9 attached hereto, certifying that the TIN provided on
Substitute Form W-9 is correct (or that such holder of Old Notes is awaiting a
TIN) and that (A) the holder of Old Notes has not been notified by the
Internal Revenue Service that he or she is subject to backup withholding as a
result of a failure to report all interest or dividends or (B) the Internal
Revenue Service has notified the holder of Old Notes that he or she is no
longer subject to backup withholding; or (ii) an adequate basis for exemption
from backup withholding. If such holder of Old Notes is an individual, the TIN
is such holder's social security number. If the Exchange Agent is not provided
with the correct taxpayer identification number, the holder of Old Notes may
be subject to certain penalties imposed by the Internal Revenue Service.
Certain holders of Old Notes (including, among others, all corporations and
certain foreign individuals) are not subject to these backup withholding and
reporting requirements. Exempt holders of Old Notes should indicate their
exempt status on Substitute Form W-9. A foreign individual may qualify as an
exempt recipient by submitting to the Exchange Agent a properly completed
Internal Revenue Service Form W-8 (which the Exchange Agent will provide upon
request) signed under penalty of perjury, attesting to the holder's exempt
status. See the enclosed Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9 (the "Guidelines") for additional
instructions.
If backup withholding applies, the Issuers are required to withhold 31% of
any payment made to the holder of Old Notes or other payee. Backup withholding
is not an additional federal income tax. Rather, the federal income tax
liability of persons subject to backup withholding will be reduced by the
amount of tax withheld. If withholding results in an overpayment of taxes, a
refund may be obtained from the Internal Revenue Service.
The holder of Old Notes is required to give the Exchange Agent the TIN
(e.g., social security number or employer identification number) of the record
owner of the Old Notes. If the Old Notes are held in more than one name or are
not held in the name of the actual owner, consult the enclosed Guidelines for
additional guidance regarding which number to report.
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PAYER'S NAME:
- -------------------------------------------------------------------------------
SUBSTITUTE FORM W-9 PART I-- Social Security Number
PLEASE PROVIDE YOUR TIN
IN THE BOX AT RIGHT AND
CERTIFY BY SIGNING AND
DATING BELOW.
DEPARTMENT OF THE
TREASURY OR
Employer Identification
INTERNAL REVENUE SERVICE Number
PAYER'S REQUEST FOR
TAXPAYER IDENTIFICATION
NUMBER (TIN)
PART II--CERTIFICATIONS--Under penalties of perjury, I certify that:
(1) The number shown on this form is my current taxpayer identification number
(or I am waiting for a number to be issued to me) and
(2) I am not subject to backup withholding either because I have not been
notified by the Internal Revenue Service (the "IRS") that I am subject to
backup withholding as a result of a failure to report all interest or
dividends, or the IRS has notified me that I am no longer subject to
backup withholding.
CERTIFICATION INSTRUCTION--You must cross out item (2) in Part 2 above if you
have been notified by the IRS that you are subject to backup withholding
because of underreporting interest or dividends on your tax return. However,
if after being notified y the IRS that you are subject to backup withholding
you receive another notification from the IRS stating that you are no longer
subject to backup withholding, do not cross out item (2).
PART III--Awaiting TIN [_]
Name:__________________________________________________________________________
(Please Print)
Address: ______________________________________________________________________
- -------------------------------------------------------------------------------
(Including Zip Code)
Signature _________________________________________________________Date
- -------------------------------------------------------------------------------
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NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP
WITHHOLDING OF 31% OF ANY PAYMENT MADE TO YOU PURSUANT TO THE EXCHANGE OFFER.
PLEASE REVIEW THE ENCLOSED "GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9" FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU
CHECK THE BOX IN PART 3 OF SUBSTITUTE FORM W-9
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a Taxpayer
Identification Number has not been issued to me, and either
(a) I have mailed or delivered an application to receive a
Taxpayer Identification Number to the appropriate Internal
Revenue Service Center or Social Security Administration
Office or (b) I intend to mail or deliver such an application
in the near future. I understand that if I do not provide a
Taxpayer Identification Number by the time of payment, 31% of
all reportable payments made to me thereafter will be withheld
until I provide such a number.
Signature _________________________________________Date
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EXHIBIT 99.2
NOTICE OF GUARANTEED DELIVERY
WITH RESPECT TO
10 3/4% SENIOR SUBORDINATED NOTES DUE 2008, SERIES A
OF
CENTENNIAL CELLULAR CORP.
AND CENTENNIAL CELLULAR OPERATING CO. LLC
THIS FORM, OR ONE SUBSTANTIALLY EQUIVALENT HERETO, MUST BE USED BY ANY HOLDER
OF 10 3/4% SENIOR SUBORDINATED NOTES DUE 2008, SERIES A (THE "OLD NOTES"), OF
CENTENNIAL CELLULAR CORP., A DELAWARE CORPORATION ("CENTENNIAL"), AND
CENTENNIAL CELLULAR OPERATING CO. LLC, A DELAWARE LIMITED LIABILITY COMPANY
(TOGETHER WITH CENTENNIAL, THE "ISSUERS"), WHO WISHES TO TENDER OLD NOTES
PURSUANT TO THE EXCHANGE OFFER (AS DEFINED IN THE PROSPECTUS DATED , 1999
(THE "PROSPECTUS")) OF THE ISSUERS AND (I) WHOSE OLD NOTES ARE NOT IMMEDIATELY
AVAILABLE OR (II) WHO CANNOT DELIVER SUCH OLD NOTES OR ANY OTHER DOCUMENTS
REQUIRED BY THE LETTER OF TRANSMITTAL ON OR BEFORE THE EXPIRATION DATE (AS
DEFINED IN THE PROSPECTUS) OR (III) WHO CANNOT COMPLY WITH THE BOOK-ENTRY
TRANSFER PROCEDURE ON A TIMELY BASIS. SUCH FORM MAY BE DELIVERED BY FACSIMILE
TRANSMISSION, MAIL OR HAND DELIVERY TO THE EXCHANGE AGENT. SEE "THE EXCHANGE
OFFER" IN THE PROSPECTUS.
CENTENNIAL CELLULAR CORP.
CENTENNIAL CELLULAR OPERATING CO. LLC
NOTICE OF GUARANTEED DELIVERY
THE EXCHANGE AGENT IS:
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
<TABLE>
<S> <C> <C>
BY REGISTERED OR BY HAND DELIVERY OR
CERTIFIED MAIL: OVERNIGHT COURIER: IN PERSON:
Norwest Bank Minnesota Norwest Bank Minnesota, Norwest Bank Minnesota,
National Association National Association National Association
Corporate Trust Operations Corporate Trust Operations Norstar East Bldg.
P.O. Box 1517 Norwest Center 608 2nd Ave. S.
Minneapolis, MN 55480-1517 Sixth and Marquette 12th Floor
Minneapolis, MN 55479-0113 Corporate Trust Services
Minneapolis, MN 55479-0113
</TABLE>
BY FACSIMILE:
(612) 667-4927
CONFIRM BY TELEPHONE
(612) 667-9764
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE OR TRANSMISSION VIA A FACSIMILE NUMBER OTHER THAN AS SET FORTH
ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to the Issuers upon the terms and subject to
the conditions set forth in the Prospectus and the related Letter of
Transmittal, receipt of which is hereby acknowledged, the principal amount of
Old Notes specified below pursuant to the guaranteed delivery procedures set
forth under "The Exchange Offer" in the Prospectus. By so tendering, the
undersigned does hereby make, at and as of the date hereof, the
representations and warranties of a tendering Holder of Old Notes set forth in
the Letter or Transmittal. The undersigned hereby tenders the Old Notes listed
below:
<TABLE>
<S> <C>
Certificate Numbers (If Available) Principal Amount Tendered
</TABLE>
- -------------------------------------------------------------------------------
----------------------------------- -----------------------------------
All authority herein conferred or agreed to be conferred shall survive
the death, incapacity, or dissolution of the undersigned, and every
obligation of the undersigned hereunder shall be binding upon the heirs,
personal representatives, successors and assigns of the undersigned.
If Old Notes will be tendered by
book-entry transfer:
Sign Here
Name of Tendering Institution:
---------------------------------
----------------------------------- Signature(s)
The Depository Trust Company ---------------------------------
Account No.: Name (Please Print)
----------------------------------- ---------------------------------
Date: _____________________________ ---------------------------------
Address (Include Zip Code)
---------------------------------
Area Code and Telpephone No.
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GUARANTEE
(Not to be Use for Signature Guarantee)
The undersigned, a participant in a recognized Signature Guarantee Medallion
Program, guarantees deposit with the Exchange Agent of the Letter of
Transmittal (or facsimile thereof), together with the Old Notes tendered
hereby in proper form for transfer, or confirmation of the book-entry transfer
of such Old Notes into the Exchange Agent's account at the Depository Trust
Company, pursuant to the procedure for book-entry transfer set forth in the
Prospectus, and any other required documents, all by 5:00 p.m., New York City
time, on the fifth New York Stock Exchange trading day following the
Expiration Date (as defined in the Prospectus).
Name of Firm: Sign Here
- ------------------------------------- -------------------------------------
Authorized Signature
-------------------------------------
Name (Please Print)
-------------------------------------
-------------------------------------
Address (include Zip code)
Date: _______________________________ _____________________________________
Area Code and Telephone No.
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Exhibit 99.3
FIRST AMENDED AND RESTATED STOCKHOLDERS AGREEMENT
FIRST AMENDED AND RESTATED STOCKHOLDERS AGREEMENT, dated as of January
20, 1999, by and among CENTENNIAL CELLULAR CORP., a Delaware corporation and the
successor by merger to CCW Acquisition Corp. (the "Company"), the several
persons named in Schedule I hereto (each a "WCAS Purchaser" and collectively the
"WCAS Purchasers"), the several persons named in Schedule II hereto (each a
"Blackstone Purchaser" and collectively the "Blackstone Purchasers"), the
several persons named in Schedule III hereto (each a "Signal Purchaser" and
collectively the "Signal Purchasers"), the several persons named in Schedule IV
hereto (each a "Management Purchaser" and collectively the "Management
Purchasers") and the several persons named in Schedule V hereto (each a
"Guayacan Purchaser" and collectively the "Guayacan Purchasers"). The WCAS
Purchasers, the Blackstone Purchasers, the Signal Purchasers, the Management
Purchasers and the Guayacan Purchasers are herein sometimes referred to
collectively as the "Stockholders."
WHEREAS, CCW Acquisition Corp. ("CCW") and the Stockholders other than
the Guayacan Purchasers entered into a Securities Purchase Agreement, dated as
of December 29, 1998 (the "Purchase Agreement"), pursuant to which (i) CCW sold
to the Stockholders an aggregate 28,915,662 shares of Class A Common Stock, $.01
par value ("Common Stock"), of the Company, and (ii) the Company issued to one
of the Stockholders a Senior Subordinated Note of the Company due 2009, in the
principal amount of $180,000,000 (the "Note");
WHEREAS, in connection therewith, on January 7, 1999 the Company and
each of the Stockholders other than the Guayacan Purchasers executed and
delivered a Stockholders Agreement (the "Original Stockholders Agreement")
setting forth certain arrangements among themselves with respect to the
governance of the Company and the other matters set forth therein;
WHEREAS, upon the merger of CCW with and into the Company on January
7, 1999, the Company succeeded to all the rights and obligations of CCW under
the Purchase Agreement and the Original Stockholders Agreement; and
WHEREAS, the Company and the Stockholders desire to amend and restate
such Original Stockholders Agreement in its entirety, as more particularly set
forth herein;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements herein contained, the parties hereto hereby agree as
follows:
SECTION 1. Voting Agreement.
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(a) From and after the Closing Date (as defined in the Purchase
Agreement), at each annual or special stockholders meeting called for the
election of directors, and whenever the stockholders of the Company act by
written consent with respect to the election of directors, each Stockholder
agrees to vote or otherwise give such Stockholder's consent in respect of all
shares of capital stock of the Company (whether now or hereafter acquired) owned
by such Stockholder, and take all other appropriate action, and the Company
shall take all necessary and desirable actions within its control, in order to
cause:
(i) the authorized number of directors on the Board of Directors of
the Company (the "Board") to be established at nine;
(ii) the election to the Board of:
a) three directors designated by the holders of a majority of
the Common Stock then held by all WCAS Purchasers (the "WCAS
Designees") so long as the WCAS Purchasers own (in the aggregate) not
less than 25% of the shares of Common Stock owned by them on the date
hereof, which directors will initially be Thomas E. McInerney, Anthony
J. de Nicola and Rudolph E. Rupert;
b) two directors designated by the holders of a majority of
the Common Stock then held by all Blackstone Purchasers (the
"Blackstone Designees") so long as the Blackstone Purchasers own (in
the aggregate) not less than 25% of the shares of Common Stock owned
by them on the date hereof, which directors will initially be Mark T.
Gallogly and Lawrence H. Guffey; and
c) the Chief Executive Officer and the Chief Operation Officer
of the Company (initially Michael J. Small and Rudy J. Graf,
respectively);
all of which persons shall hold office, subject to their earlier removal in
accordance with clause (iii) below, the By-laws of the Company and
applicable corporate law, until their respective successors shall have been
elected and shall have qualified;
(iii) the removal from the Board (with or without cause) of any
director elected in accordance with subpart a) or b) of clause (ii) above
upon the written request of the Stockholders that designated such director;
(iv) upon any vacancy in the Board as a result of any individual
designated as provided in clause (ii) above ceasing to be a member of the
Board, whether by resignation or otherwise, the election to the Board as
promptly as possible of an individual designated by the Stockholders that
designated such individual (or, in the case of a director specified in
subpart c) of clause (ii) above, an individual meeting such
qualifications); and
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(v) their respective designees to the Board of Directors of the
Company to elect Thomas E. McInerney (or such other person as may be
designated by the WCAS Purchasers) as Chairman of the Board of Directors.
(b) The two directors not designated pursuant to clause (ii) of
paragraph (a) above shall be directors (the "Outside Directors") that shall be
elected by the stockholders of the Company. In any such election, the
Stockholders shall vote their shares only for persons that (x) are not employees
or officers of (i) the Company or any of its subsidiaries or (ii) the
Stockholders or their respective stockholders, members or partners and (y)
otherwise qualify as "independent directors" under the rules applicable to
Nasdaq National Market companies as in effect on the date hereof and satisfy any
other requirements under applicable law or the rules of any exchange or
quotation system on which the Common Stock is then listed or traded.
(c) Each Stockholder agrees to use its best efforts to cause its
designees to the Board to vote or otherwise give such Director's consent to the
creation and maintenance of:
(i) a Compensation Committee of the Board consisting of three
directors, two of whom shall be WCAS Designees, if any then exist, and the
third of whom shall be a Blackstone Designee, if any then exist, which
Compensation Committee shall approve all grants of stock options to
employees of the Company, all increases in compensation of officers of the
Company, all annual bonuses granted to officers of the Company and all
other employee benefits (including, without limitation, vacation policy,
benefit plans, company automobiles and insurance) granted to officers of
the Company, and shall have such other duties and responsibilities as the
Board of Directors may from time to time determine;
(ii) an Audit Committee of the Board of Directors, consisting of
three directors, one of whom shall be a WCAS Designee, if any then exist,
one of whom shall be a Blackstone Designee, if any then exist, and one of
whom shall be an Outside Director, which Audit Committee shall review and
approve the financial statements of the Company as audited by the Company's
independent certified public accountants, and shall have such other duties
and responsibilities as the Board of Directors may from time to time
determine; and
(iii) such other committees as the Board shall from time to time deem
appropriate, consisting of at least two directors, at least one of whom
shall be a WCAS Designee, if any then exist, and at least one of whom shall
be a Blackstone Designee, if any then exist, which committees shall have
such duties and responsibilities as the Board may from time to time
determine.
To the extent there are no WCAS Designees or Blackstone Designees, the
committee seats allocated to them above shall be filled as the Board shall
determine.
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(d) No Stockholder shall grant any proxy or enter into or agree to
be bound by any voting trust with respect to Common Stock held by it, nor shall
any Stockholder enter into any stockholder agreement or arrangement of any kind
with respect to Common Stock held by it, which conflicts or is inconsistent in
any manner with the provisions of this Agreement.
SECTION 2. Restrictions on Transfers by Management Purchasers. In
--------------------------------------------------
addition to the other restrictions set forth herein, each Management Purchaser
hereby agrees that such Management Purchaser shall not sell or in any other way,
directly or indirectly, transfer, assign, distribute or otherwise dispose of any
shares of capital stock (whether now owned or hereafter acquired) then held by
such Management Purchaser except:
(i) any transfer made with the prior written consent of the holders
of a majority in interest of the shares of Common Stock then held by the
WCAS Purchasers;
(ii) any transfer by such Management Purchaser to the spouse or
lineal descendants of such Management Purchaser, including without
limitation any transfer by bequest or devise, or to a trust or trusts for
the benefit of such Management Purchaser or any of the foregoing;
(iii) any transfer of shares of capital stock that are the subject of
an effective registration statement under the Securities Act of 1933, as
amended (the "Securities Act"); or
(iv) any transfer of shares of capital stock pursuant to Section 3
or 4 hereof;
provided, in the case of a transfer pursuant to clause (i) or (ii) above, that
- --------
any such transferee that is not already a party to this Agreement shall agree in
writing to be bound by, and to comply with, all provisions of this Agreement as
though such transferee were a Management Purchaser.
SECTION 3. Tag-Along Rights.
----------------
(a) Subject to the provisions of paragraph (d) below, if a WCAS
Purchaser or group of WCAS Purchasers (for purposes of this Section 3, a
"Selling Stockholder") wishes to directly or indirectly sell, transfer or
otherwise dispose of all or any portion of the Common Stock held by him, her or
it at any time, then such Selling Stockholder shall promptly deliver a notice
(an "Offering Notice") to the Company in writing of the proposed transfer,
specifying the number of such shares of Common Stock to be transferred by such
Selling Stockholder (such specified shares, the "Offered Shares"), the name of
the proposed purchaser or purchasers, the proposed purchase price per share, the
proposed date of transfer, the payment terms and all other material terms and
conditions thereof. In the event that the terms and/or conditions set forth in
the Offering Notice are thereafter amended in any respect, the Selling
Stockholder shall also give written notice (an "Amended Notice") of the amended
terms and conditions of the proposed transaction to the Company. Upon its
receipt of any Offering Notice or Amended Notice, the
4
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Company shall promptly, but in all events within three (3) business days of its
receipt thereof, forward copies thereof to each of the Blackstone Purchasers,
Signal Purchasers, Management Purchasers and Guayacan Purchasers (collectively,
the "Other Stockholders"). The Selling Stockholder shall provide such additional
information with respect to the proposed transfer as may be reasonably requested
by the Company or the Other Stockholders.
(b) Each Other Stockholder shall have the right and option,
exercisable upon written notice to the Company and the Selling Stockholder
within 15 days after receipt by such Other Stockholder of the Offering Notice,
or, if later, within 7 days after receipt by such Other Stockholder of the most
recent Amended Notice, to participate in the proposed transfer of shares by the
Selling Stockholder to the proposed purchaser on the same terms and conditions
as the Selling Stockholder (such participation right being hereinafter referred
to as a "tag-along" right); provided that no Other Stockholder shall be required
--------
to make any representations or warranties or covenants, or bear any liability,
with respect to any other Stockholder or with respect to the Company or the
Company's business other than such Other Stockholder's pro rata share (based on
the number of shares of Common Stock to be transferred) of any indemnity
obligations for representations and warranties regarding the Company or its
business. Each Other Stockholder may participate in such transfer with respect
to all or any part of that number of shares of Common Stock which is equal to
the product obtained by multiplying (i) the number of Offered Shares by (ii) a
fraction, the numerator of which is the number of shares of Common Stock at the
time owned by such Other Stockholder and the denominator of which is the
aggregate number of shares of Common Stock then owned by the Stockholders. Any
Other Stockholders that have not notified the Selling Stockholder and the
Company of their intent to exercise their tag-along rights within 7 days after
receipt of an Amended Notice shall be deemed to have elected not to exercise
such rights with respect to the transaction contemplated by such Amended Notice
(regardless of their election pursuant to the Offering Notice or any prior
Amended Notice relating to such transaction), but only if such Amended Notice
sets forth the provisions of this sentence.
(c) Any Other Stockholder participating in the proposed disposition
shall deliver to the Company, as agent for such Other Stockholder, for transfer
to the proposed acquiror one or more certificates, properly endorsed for
transfer and with all stock transfer taxes paid and stamps affixed, which
represent the number of shares of Common Stock that such Other Stockholder
elects to dispose of pursuant to paragraph (b) above. The consummation of such
proposed disposition shall be subject to the sole discretion of the Selling
Stockholder, who shall have no liability or obligation whatsoever to any Other
Stockholder participating therein other than to obtain for such Other
Stockholder the same terms and conditions as those set forth in the Offering
Notice (or most recent Amended Notice, as the case may be). Upon the
consummation of any such sale, the Company (i) shall transfer to the acquiror a
stock certificate or certificates representing the number of shares of Common
Stock to be disposed of by any Other Stockholders and (ii) shall promptly
thereafter remit to each Other Stockholder (i) that portion of the proceeds of
the disposition to which such Other Stockholder is entitled by reason of such
participation and (ii) a stock certificate representing any balance of shares of
Common Stock that were not so
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<PAGE>
disposed of (or all shares of Common Stock, in the event the proposed
disposition is not consummated).
(d) Anything to the contrary herein notwithstanding, the provisions of
this Section 3 shall not apply to (i) any transfer by a WCAS Purchaser to any
other WCAS Purchasers or affiliates thereof, (ii) any distribution or transfer
by any WCAS Purchaser that is a limited partnership to its limited partners or
(iii) in the case of a WCAS Purchaser who is an individual, transfer by such
WCAS Purchaser to the spouse or lineal descendants of such WCAS Purchaser,
including, without limitation, transfer by bequest or devise, or to a trust or
trusts for the benefit of such WCAS Purchaser or any of the foregoing; provided
that in the case of a transfer pursuant to clause (i) or (iii) above, such
transferee agrees in writing to be bound by this Agreement as though such
transferee were a WCAS Purchaser.
(e) Each WCAS Purchaser, severally and not jointly, represents and
warrants to the Signal Purchasers and the Guayacan Purchasers that as of the
date hereof there is no contract, commitment or understanding between such
person and any Blackstone Purchaser with respect to "tag-along" or similar
rights relating to shares of capital stock of the Company, other than this
Agreement. Each Blackstone Purchaser, severally and not jointly, represents and
warrants to the Signal Purchasers and the Guayacan Purchasers that as of the
date hereof there is no contract, commitment or understanding between such
person and any WCAS Purchaser with respect to "tag-along" or similar rights
relating to shares of capital stock of the Company, other than this Agreement.
(f) Each Other Purchaser hereby waives its rights under this Section 3
with respect to the transfer on the date hereof of an aggregate 170,556 shares
of Common Stock from WCA Management Corporation to the Guayacan Purchasers.
SECTION 4. Drag-Along Rights. In the event that any of the WCAS
-----------------
Purchasers or the Company receives a bona fide offer from a third party not
affiliated with any WCAS Purchaser to purchase at least 80% of the outstanding
shares of capital stock of the Company and a majority in interest of the WCAS
Purchasers desires to accept such offer, and so long as the WCAS Purchasers
collectively own a greater number of outstanding shares of Common Stock than the
Blackstone Purchasers, such WCAS Purchasers shall have the right to require all
(but not less than all) of the Stockholders to sell all (or such lesser
percentage as may be necessary to achieve recapitalization accounting treatment,
but in no event less than 80%) of the shares of capital stock (together with any
options or warrants to acquire capital stock) then held by them (including all
or the same percent of all shares, options and warrants held by such WCAS
Purchasers) on the following terms:
(i) such sale shall only be a sale for cash or marketable securities
and all expenses of the transaction, including, without limitation, legal,
accounting and investment banking fees and expenses, shall be borne by the
Company (for purposes of this paragraph, "marketable securities" shall mean
securities which are debt or equity securities that are actively traded on
a national securities exchange located in the United States or on Nasdaq
6
<PAGE>
that are part of an issue with a public capitalization in excess of $100
million and that may be freely traded without limitation as to volume on
such exchange or Nasdaq immediately following receipt thereof or at any
time thereafter by each Stockholder);
(ii) the proceeds from such sale (and, in the case of a sale of less
than all of the outstanding shares of Common Stock of the Company, the
number of shares to be sold by each Stockholder) shall be allocated among
the Stockholders on a pro rata basis, based on the number of shares of
--- ----
Common Stock (treating all "in the money" options and warrants as the
number of shares of Common Stock issuable upon the exercise thereof, less
such number of shares of Common Stock the aggregate fair market value of
which (based on the value attributed in such sale) would be required to pay
the aggregate exercise price therefor, and treating any shares of
convertible preferred stock or debt of the Company on an "as-converted"
basis) then held by each Stockholder;
(iii) not less than 20 days prior to the closing date of such sale,
such WCAS Purchasers shall notify each of the other Stockholders in writing
of such sale, the terms thereof and the closing date thereof, and shall
provide additional written notification promptly upon any amendment or
modification to any thereof, all of which terms shall apply equally to all
Stockholders except that no Other Stockholder shall be required to make any
representations, warranties or covenants, or bear any liability, with
respect to the Company or the Company's business or with respect to any
other Stockholder;
(iv) at the closing of such sale, each of the Stockholders shall
deliver certificates evidencing the Common Stock, options and warrants then
held by it and to be sold in such sale, duly endorsed for transfer or
accompanied by stock powers executed in blank, against payment of the
purchase price therefor by wire transfer to the account or accounts
specified by such Stockholder; and
(v) the Other Stockholders shall not be obligated to participate in
such sale if all of the WCAS Purchasers shall not have concurrently sold
all or the same percentage of their shares of Common Stock, options and/or
warrants to be sold by them in connection with such sale.
SECTION 5. Preemptive Rights.
-----------------
(a) The Company hereby grants to each Stockholder the right to
purchase such Stockholder's Proportionate Percentage (as hereinafter defined) of
any future Eligible Offering (as hereinafter defined). For the purposes of this
Section 5, the following terms shall have the meanings set forth below:
"Proportionate Percentage" means, with respect to any Stockholder as
------------------------
of any date, the result (expressed as a percentage) obtained by dividing
(i) the number of shares of
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<PAGE>
Common Stock owned by such Stockholder as of such date by (ii) the total
number of shares of Common Stock outstanding as of such date.
"Eligible Offering" means an offer by the Company to sell to any
-----------------
person or persons (including any of the Stockholders) for cash, cash
equivalents or indebtedness any equity securities of the Company, or any
security convertible into or exchangeable for, or carrying rights or
options to purchase, equity securities of the Company, other than an
offering by the Company:
(i) of shares of Common Stock or options to purchase shares of
Common Stock in connection with or pursuant to any stock option or
stock purchase plan approved by the Board of Directors of the Company
to full-time employees, officers, directors, consultants and/or
advisors to the Company or its subsidiaries;
(ii) in a public offering (a "Public Offering") registered under
the Securities Act.
(b) The Company shall, before issuing any securities pursuant to an
Eligible Offering, give written notice thereof to each Stockholder. Such notice
shall specify the security or securities the Company proposes to issue, the
proposed date of issuance, the consideration that the Company intends to receive
therefor and all other material terms and conditions of such proposed issuance.
For a period of 15 days following the date of such notice, each Stockholder
shall be entitled, by written notice to the Company, to elect to purchase all or
any part of such Stockholder's Proportionate Percentage of the securities being
sold in the Eligible Offering; provided, however, that if two or more securities
-------- -------
shall be proposed to be sold as a "unit" in an Eligible Offering, any such
election must relate to such unit of securities. To the extent that elections
pursuant to this Section 5(b) shall not be made with respect to any securities
included in an Eligible Offering within such 15-day period, then the Company may
issue such securities, but only for consideration not less than, and otherwise
on no less favorable terms to the Company than, those set forth in the Company's
notice and only within 60 days after the end of such 15-day period. In the
event that any such offer is accepted by a Stockholder or Stockholders, the
Company shall sell to such Stockholder or Stockholders, and such Stockholder or
Stockholders shall purchase from the Company, for the consideration and on the
terms set forth in the notice as aforesaid, the securities that such Stockholder
or Stockholders shall have elected to purchase.
SECTION 6. Right of First Offer.
--------------------
(a) If any Blackstone Purchaser (for purposes of this Section 6, a
"Seller") desires to sell, exchange or in any other manner dispose of (other
than in a manner permitted by Section 6(d) hereof) any shares of capital stock
of the Company held by it, then such Seller shall give to the Company a written
notice (a "Notice of Desire to Sell") which shall set forth in reasonable detail
the class and number of shares of capital stock which it desires to sell
8
<PAGE>
and may, if the Seller so chooses to specify, set forth any other terms and
conditions of the desired disposition. The Company shall deliver such Notice of
Desire to Sell to each of the WCAS Purchasers promptly upon receipt thereof. A
Seller may deliver a Notice of Desire to Sell whether or not such Seller has
received an offer from a third party to purchase such shares of capital stock.
(b) The WCAS Purchasers shall have the right, exercisable upon
written notice to the Seller within 15 days after receipt of any Notice of
Desire to Sell (the "Offer Notice"), to offer to purchase any or all shares of
capital stock proposed to be sold by the Seller at a purchase price equal to the
proposed purchase price specified in the Notice of Desire to Sell if so
specified, or as proposed in the Offer Notice if not specified in the Notice of
Desire to Sell, and otherwise on the terms and conditions specified in the
Notice of Desire to Sell to the extent so specified and any additional terms and
conditions proposed in the Offer Notice (collectively, including with respect to
purchase price, the "Offer Terms"). Each Offer Notice shall state the number of
shares to be purchased by the WCAS Purchasers delivering such Offer Notice (the
"Purchasing Stockholders") and that the Purchasing Stockholders will purchase
such shares within 45 days thereafter (or such longer period as is necessary to
obtain any necessary consents or approvals or to otherwise comply with
applicable law). In the event that more than one WCAS Purchaser exercises its
right to offer to purchase pursuant to this paragraph (b), the allocation among
such WCAS Purchasers of any shares actually sold pursuant to this paragraph (b)
shall be as agreed by such WCAS Purchasers.
(c) If the WCAS Purchasers deliver, within the period specified in
paragraph (b) above, an Offer Notice with respect to capital stock that is the
subject of the Notice of Desire to Sell, the Seller shall be entitled to sell
such capital stock to such Purchasing Stockholders, on the Offer Terms within
the 45-day period specified in paragraph (b) above (or such longer period as is
necessary to obtain any necessary consents or approvals or to otherwise comply
with applicable law). Following the period specified in paragraph (b) above,
the Seller may (subject to any other applicable restrictions hereunder) transfer
such capital stock to any third party; provided that, if an Offer Notice with
--------
respect to all of such shares of capital stock was delivered within the 15 day
period specified in paragraph (b) above, the Seller may not sell such shares to
such third party on material terms which are the same as or more favorable, in
the aggregate, to such third party than the material terms set forth in the
Offer Terms. Any such sale with respect to which definitive documentation is
not entered into within 60 days after the expiration of the period specified in
paragraph (b) above, or which is not consummated within 60 days of the execution
of such definitive documentation (or such longer period as is necessary to
obtain any necessary consents or approvals or to otherwise comply with
applicable law) shall again be subject to the requirements of this Section 6.
(d) Anything herein to the contrary notwithstanding, and subject to
any other applicable restrictions hereunder, no right of first offer hereunder
shall apply with respect to (i) a transfer by a Blackstone Purchaser to an
affiliate of such Blackstone Purchaser; provided, however, that any such
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transferee that is not already a party to this Agreement shall agree in
9
<PAGE>
writing to be bound by, and to comply with, all provisions of this Agreement as
though such transferee were a Blackstone Purchaser, (ii) any distribution or
transfer by a Blackstone Purchaser that is a limited partnership to its limited
partners, (iii) any transfer by a Blackstone Purchaser to the public pursuant to
an offering registered under the Securities Act or sold in compliance with Rule
144 under the Securities Act and (iv) any transfer by a Blackstone Purchaser
pursuant to Section 3 or Section 4.
SECTION 7. Restrictions.
------------
(a) While this Agreement is in effect, in addition to any other vote
of stockholders that may be required by law or by the Certificate of
Incorporation of the Company, the Company shall not, without the consent of (i)
the holders of a majority of the Common Stock then held by all the WCAS
Purchasers and (ii) the holders of a majority of the Common Stock then held by
all the Blackstone Purchasers:
(i) amend, alter or repeal its Certificate of Incorporation or its
By-laws in any manner that adversely affects the respective rights,
preferences or voting power of the Common Stock, or the rights of the
Stockholders hereunder, it being understood that, in the event of any such
amendment or alteration that adversely affects only the Signal Purchasers,
the Management Purchasers and/or the Guayacan Purchasers, such amendment or
alteration shall also require the consent of a majority in interest of the
Signal Purchasers, the Management Purchasers and/or the Guayacan
Purchasers, as the case may be; or
(ii) enter into, or permit any of its subsidiaries to enter into, any
transaction with (w) any of its or any subsidiary's officers, directors or
employees; (x) any person related by blood or marriage to any such person;
(y) any entity in which any such person owns any beneficial interest; or
(z) any stockholder of the Company (or any affiliate of any such
stockholder) that owns, either individually or collectively with all
stockholders affiliated with such stockholder, at least 25% of the
outstanding capital stock of the Company; provided, however, that this
-------- -------
clause (ii) shall not apply to (A) normal employment arrangements, benefit
programs and employee incentive option programs on reasonable terms, (B)
any transaction with a director of the Company (or an affiliate of such
director) that is approved by the Board of Directors of the Company in
accordance with the provisions of Section 144(a)(1) of the Delaware General
Corporation Law, (C) customer transactions in the ordinary course of
business and (D) the transactions contemplated by the First Amended and
Restated Registration Rights Agreement, dated as of the date hereof among
the parties hereto.
(b) Except as expressly set forth in Section 1 hereof, each
Stockholder agrees not to, and agrees to cause its affiliates not to, directly
or indirectly, alone or in concert with others, without the prior written
consent of the holders of a majority of the shares of Common Stock held by the
WCAS Purchasers, take any of the following actions set forth below:
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<PAGE>
(i) effect, seek, offer, engage in, propose (whether publicly or
otherwise) or participate in:
a) any acquisition of beneficial ownership of equity or debt
securities of the Company or any of its subsidiaries other than (1)
pursuant to Section 5 hereof, (2) acquisitions from other Stockholders
or (3) any stock dividend, stock reclassification or other
distribution or dividends to the holders of Common Stock generally;
b) any tender or exchange offer, merger, consolidation, share
exchange, business combination, recapitalization, restructuring,
liquidation, dissolution or other extraordinary transaction involving
the Company or any material portion of its business or any purchase of
all or any substantial part of the assets of the Company or any
material portion of its business; or
c) any "solicitation" of "proxies" (as such terms are used in
the proxy rules of the Securities and Exchange Commission ("SEC"))
without regard to the exclusion set forth in Section 14a-1(1)(2)(iv)
under the Exchange Act from the definition of "solicitation") with
respect to the Company or any of its affiliates or any action
resulting in Stockholder or any of its affiliates becoming a
"participant" in any "election contest" (as such terms are used in the
proxy rules of the SEC) with respect to the Company or any of its
subsidiaries;
(ii) propose any matter for submission to a vote of stockholders of
the Company;
(iii) seek to place a representative on the Company Board, or seek
the removal of (other than for cause or in accordance with Section
1(a)(iii)) any director of the Company; or
(iv) form, join or in any way participate in or assist in the
formation of a group (within the meaning of Section 13(d)(3) of the
Exchange Act) with respect to any Common Stock, other than any such group
consisting exclusively of Stockholders and their affiliates.
SECTION 8. Right and Option to Repurchase Shares of Common Stock From
----------------------------------------------------------
Management Purchasers Upon Termination of Employment.
- ----------------------------------------------------
(a) In the event that any Management Purchaser ceases to be
employed by the Company or Centennial or any subsidiary thereof on a full-time
basis for any reason (including, without limitation, as a result of his death,
disability, incapacity, retirement, resignation or dismissal with or without
"cause" (as defined below)), the WCAS Purchasers shall have the right and
option, but not the obligation, to purchase from such Management Purchaser (or
in the case
11
<PAGE>
of his death, his legal representative), in such proportions as the WCAS
Purchasers shall agree, any or all of the shares of Common Stock purchased by
such Management Purchaser pursuant to the Purchase Agreement (the "Repurchase
Shares"). In the event that the WCAS Purchasers exercise such right and option,
the WCAS Purchasers shall pay to such Management Purchaser as the purchase price
for such Repurchase Shares (the "Purchase Price"), an amount per share equal to
the fair market value thereof as of the date such Management Purchaser ceased to
be so employed by the Company or Centennial or any subsidiary thereof, such fair
market value to be determined in good faith by the Board on a basis consistent
with the manner of determining the fair market value of the Common Stock for
purposes of offering of the Company's Common Stock to equity investors (the
"Fair Market Value").
(b) The WCAS Purchasers may exercise the right and option described in
Section 8(a) above by giving such Management Purchaser (or in the case of his
death, his legal representative) a written notice of election to purchase at any
time within 60 days after the date such employment ceases, which notice of
election shall specify the number of shares to be purchased by each electing
WCAS Purchaser and the Purchase Price for such shares. The closing for the
purchase by the WCAS Purchasers of Repurchase Shares pursuant to Section 8(a)
will take place at the offices of Welsh, Carson, Anderson & Stowe on the date
specified in the written notice of election with respect to such shares, which
date shall be a business day not later than 60 days (or such longer period as is
necessary to obtain any necessary consents or approvals or to otherwise comply
with applicable law) after the date such notice is given. At such closing, the
Management Purchaser (or in the case of his death, his legal representative)
will deliver such shares, duly endorsed for transfer, against payment in cash of
the Purchase Price thereof.
(c) In the event that the WCAS Purchasers choose not to exercise their
rights and options under Section 8(a) hereof within the 60 day period referred
to in Section 8(b), the Company shall have the right and option, but not the
obligation, to purchase from the Management Purchaser whose employment was
terminated (or in the case of his death, his legal representative) any or all of
the Repurchase Shares. In the event that the Company exercises such right and
option, the purchase price for such shares shall be the Purchase Price
determined in accordance with Section 8(a).
(d) The Company may exercise the right and option described in Section
8(c) above by giving such Management Purchaser (or in the case of his death, his
legal representative) a written notice of election to purchase at any time
within 30 days after the expiration of the 60 day period referred to in Section
8(b) above, which notice of election shall specify the number of Repurchase
Shares to be purchased and the Purchase Price for such shares. The closing for
the purchase by the Company of Repurchase Shares pursuant to Section 8(c) will
take place at the offices of the Company on the date specified in the written
notice of election with respect to such shares, which date shall be a business
day not later than 60 days (or such longer period as is necessary to obtain any
necessary consents or approvals or to otherwise comply with applicable law)
after the date such notice is given. At such closing, the Management Purchaser
(or in the
12
<PAGE>
case of his death, his legal representative) will deliver such shares, duly
endorsed for transfer, against payment in cash of the Purchase Price thereof.
SECTION 9. Financial and Other Information. For so long as any
-------------------------------
Stockholder holds at least 25% of the Common Stock held by it as of the date
hereof, the Company shall furnish to such Stockholder:
(i) within 90 days after the end of each fiscal year of the Company,
a consolidated balance sheet of the Company and its subsidiaries as of the
end of such fiscal year and the related consolidated statements of
operations, changes in stockholders' equity and changes in financial
position of the Company and its subsidiaries for the fiscal year then
ended, together with supporting notes thereto, certified without
qualification as to scope of audit by a firm of independent certified
public accountants of recognized national standing selected by the Board of
Directors of the Company;
(ii) within 45 days after the end of each quarter in each fiscal year
(other than the last quarter in each fiscal year), a consolidated balance
sheet of the Company and its subsidiaries and the related consolidated
statements of operations, changes in stockholders' equity and changes in
financial position of the Company and its subsidiaries for the quarter then
ended, unaudited but certified by the principal financial officer of the
Company, such balance sheet to be as of the end of such quarter and such
statements of operations, changes in stockholders' equity and changes in
financial position to be for such quarter and for the period from the
beginning of the fiscal year to the end of such quarter, in each case
subject to normal year-end adjustments;
(iii) within 30 days after the end of each month in each fiscal year,
a consolidated balance sheet of the Company and its subsidiaries and the
related consolidated statement of operations for the month then ended,
unaudited but certified by the principal financial officer of the Company,
such balance sheet to be as of the end of such month and such statement of
operations to be for such month and for the period from the beginning of
the fiscal year to the end of such month, in each case subject to normal
year-end adjustments;
(iv) promptly upon filing, copies of all registration statements,
prospectuses, periodic reports and other documents filed by the Company
with the SEC; and
(v) promptly, from time to time, such other information regarding
the operations, business, affairs and financial condition of the Company or
any subsidiary as such Stockholder may reasonably request, subject to such
confidentiality agreements as the Company may reasonably request.
13
<PAGE>
SECTION 10. Legend on Stock Certificates. Each certificate
----------------------------
representing shares of Common Stock owned by any Stockholder shall conspicuously
bear the following legend until such time as the shares represented thereby are
no longer subject to the provisions hereof:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE
TERMS AND CONDITIONS OF THE FIRST AMENDED AND RESTATED STOCKHOLDERS
AGREEMENT, DATED AS OF JANUARY 20, 1999, AMONG THE COMPANY AND THE
OTHER PARTIES THERETO. COPIES MAY BE OBTAINED AT NO COST BY WRITTEN
REQUEST MADE BY THE HOLDER OF RECORD OF THIS CERTIFICATE TO THE
COMPANY."
The Company covenants that it shall keep a copy of this Agreement on
file at the address listed in Section 19 for the purpose of furnishing copies to
the holders of record of shares of Common Stock.
SECTION 11. Duration of Agreement. (a) This Agreement (other than
---------------------
the provisions of Sections 1, 10, 11(b) and 15 through 25) shall terminate upon
the earlier to occur of (i) the tenth anniversary of the date hereof or (ii) the
consummation of (x) a Public Offering by the Company of Common Stock having an
aggregate offering price to the public of not less than $50,000,000, and (y) the
sale, transfer or other disposition (including a distribution by a limited
partnership to its partners) by either the WCAS Purchasers or the Blackstone
Purchasers to persons or entities not required to become parties hereto of at
least 50% of the shares of Common Stock held by the WCAS Purchasers or the
Blackstone Purchasers, as the case may be, on the date hereof.
(b) The provisions of Sections 1, 10, 11(b) and 15 through 25 shall
terminate upon the earlier to occur of (i) the tenth anniversary of the date
hereof or (ii) the consummation of (x) a Public Offering by the Company of
Common Stock having an aggregate offering price to the public of not less than
$50,000,000, and (y) the sale, transfer or other disposition (including a
distribution by a limited partnership to its partners) by both of the WCAS
Purchasers and the Blackstone Purchasers to persons or entities not required to
become parties hereto of at least 50% of the shares of Common Stock held by the
WCAS Purchasers or the Blackstone Purchasers, respectively, on the date hereof.
SECTION 12. Advisory and Monitoring Fee. On each anniversary of the
---------------------------
date of this Agreement, the Company shall pay advisory and monitoring fees of
(i) $450,000, plus reasonable expenses, to WCA Management Corporation, or
another entity or entities designated by the holders of a majority of the Common
Stock held by the WCAS Purchasers, for so long as the WCAS Purchasers hold at
least 25% of the shares of Common Stock held by the WCAS Purchasers on the date
hereof, and (ii) $300,000, plus reasonable expenses, to Blackstone Management
Partners III L.L.C., or another entity or entities designated by the holders of
a
14
<PAGE>
majority of the Common Stock held by the Blackstone Purchasers, for so long as
the Blackstone Purchasers hold at least 25% of the shares of Common Stock held
by the Blackstone Purchasers on the date hereof. To the extent that payment of
such monitoring fees is prohibited by any provision of any credit agreement or
other debt instrument, the Company shall use commercially reasonable efforts to
cause the lender or holder of such debt instrument to waive any such
prohibition. If, despite such efforts, such lender or holder is unwilling to
permit the Company to pay such monitoring fee, then any amounts not so paid
shall accrue and shall bear interest at the rate of 13% per annum until paid,
and the Company shall promptly pay such sums when no such prohibitions exist.
SECTION 13. Representations and Warranties by the Stockholders. Each
--------------------------------------------------
Stockholder, severally and not jointly, represents and warrants to the Company
and the other Stockholders as follows:
(a) The execution, delivery and performance of this Agreement by such
Stockholder will not violate any provision of applicable law, any order of any
court or other agency of government, or any provision of any indenture,
agreement or other instrument to which such Stockholder or any of his, her or
its properties or assets is bound, or conflict with, result in a breach of or
constitute (with due notice or lapse of time or both) a default under any such
indenture, agreement or other instrument.
(b) This Agreement has been duly executed and delivered by such
Stockholder, and when executed by the other parties hereto will constitute the
legal, valid and binding obligation of such Stockholder, enforceable in
accordance with its terms.
(c) The shares of Common Stock listed opposite the name of such
Stockholder on Schedule I, Schedule II, Schedule III, Schedule IV or Schedule V
hereof, as the case may be, constitute all the shares of Common Stock of the
Company owned by such Stockholder as of the date hereof.
SECTION 14. Representations and Warranties by the Company. The
---------------------------------------------
Company hereby incorporates by reference and makes the representations and
warranties set forth in the Purchase Agreement, to the extent applicable to this
Agreement or the transactions contemplated hereby, as of the date hereof.
SECTION 15. Headings. Headings of articles, sections and paragraphs
--------
of this Agreement are inserted for convenience of reference only and shall not
affect the interpretation or be deemed to constitute a part hereof.
SECTION 16. Severability. In the event that any one or more of the
------------
provisions contained in this Agreement or in any other instrument referred to
herein shall, for any reason, be held to be invalid, illegal or unenforceable,
such illegality, invalidity or unenforceability shall not affect any other
provisions of this Agreement.
15
<PAGE>
SECTION 17. Benefits of Agreement. Nothing expressed by or mentioned
---------------------
in this Agreement is intended or shall be construed to give any person other
than the parties hereto and their respective successors and permitted assigns
any legal or equitable right, remedy or claim under or in respect of this
Agreement or any provision herein contained, this Agreement and all conditions
and provisions hereof being intended to be and being for the sole and exclusive
benefit of the parties hereto and their respective successors and permitted
assigns. Notwithstanding anything in this Section 17 to the contrary, subject
to compliance with the terms of this Agreement, each Stockholder shall have the
right to assign its interests hereunder in whole or in part to any transferee of
the Common Stock held by such Stockholder in compliance with this Agreement;
provided, however, that such transferee shall agree in writing with the parties
- -------- -------
hereto to be bound by, and to comply with, all applicable provisions of this
Agreement and to be deemed to be a Stockholder for purposes of this Agreement
(it being understood that for purposes of this Agreement any successor to or
assigns of any (i) WCAS Purchaser shall be deemed to be a WCAS Purchaser, (ii)
Blackstone Purchaser shall be deemed to be a Blackstone Purchaser, (iii) Signal
Purchaser shall be deemed to be a Signal Purchaser, (iv) Management Purchaser
shall be deemed to be a Management Purchaser and (v) Guayacan Purchaser shall be
deemed to be a Guayacan Purchaser); provided, further, however, that whether or
-------- ------- -------
not such transferee is assigned any interest hereunder, any transferee of a
Stockholder shall agree in writing with the parties hereto to be bound by, and
to comply with, all applicable provisions of this Agreement and to be deemed to
be a Stockholder for purposes of this Agreement in the manner provided above so
long as such transferee is, with respect to the transferring Stockholder, a
transferee of the type specified in clause (i) or (iii) of Section 3(d). Any
Stockholder may assign to any of its affiliates which are also Stockholders all
or any part of its tag-along rights with respect to a particular proposed sale
pursuant to Section 3 or its rights to purchase securities pursuant to Section
5; provided the aggregate number of shares of Common Stock to which such rights
--------
apply with respect to all such affiliated Stockholders, taken as a whole, shall
not be increased thereby. Except as expressly permitted hereby, each party=s
rights and obligations under this Agreement shall not be subject to assignment
or delegation by any party hereto, and any attempted assignment or delegation in
violation hereof shall be null and void ab initio.
-- ------
SECTION 18. Notice of Transfer. To the extent that any Stockholder
------------------
shall transfer any shares of Common Stock, notice of which transfer is not
otherwise required to be delivered to the Stockholders hereunder, such
Stockholder shall, within three days following consummation of such transfer,
deliver notice thereof to the Company and the other Stockholders; provided,
--------
however, that no such notice shall be required to be delivered unless the
- -------
aggregate number of shares of Common Stock transferred by such Stockholder and
its affiliates since the date of the last notice delivered by such Stockholder
pursuant to this Section 17 exceeds 1% of the outstanding Common Stock.
SECTION 19. Notices. Any notice or other communications required or
-------
permitted hereunder shall be deemed to be sufficient and received if contained
in a written instrument delivered in person or by courier or duly sent by first
class certified mail, postage prepaid, or by facsimile addressed to such party
at the address or facsimile number set forth below:
16
<PAGE>
(1) if to the Company, to it at:
1305 Campus Parkway
Neptune, New Jersey 07753
Telecopy Number: (732) 919-1022
Attention: President
with a copy to:
Reboul, MacMurray, Hewitt, Maynard & Kristol
45 Rockefeller Plaza
New York, New York 10111
Telecopy Number: (212) 841-5725
Attention: Robert A. Schwed, Esq.
(2) if to any Stockholder, to the address of such Stockholder
appearing in Schedule I, Schedule II, Schedule III, Schedule IV or Schedule
V hereto;
or, in any case, at such other address or facsimile number as shall have been
furnished in writing by such party to the other parties hereto. All such
notices, requests, consents and other communications shall be deemed to have
been received (a) in the case of personal or courier delivery, on the date of
such delivery, (b) in the case of mailing, on the fifth business day following
the date of such mailing and (c) in the case of facsimile, when received.
SECTION 20. Entire Agreement; Modification. This Agreement
------------------------------
(including the Schedules hereto) constitutes the entire agreement of the parties
with respect to the subject matter hereof (without limiting the foregoing, the
Original Stockholders Agreement is hereby superseded in its entirety) and may
not be amended or modified except by an instrument in writing signed by the
Company and a majority in interest of (i) the WCAS Purchasers, (ii) the
Blackstone Purchasers and (iii) only in the case of any such modification
affecting their rights hereunder, the Signal Purchasers, the Management
Purchasers and/or the Guayacan Purchasers, as the case may be. Any waiver of
any provision of this Agreement must be in a writing signed by the party against
whom enforcement of such waiver is sought.
SECTION 21. Covenants Bind Successors and Assigns. All the
-------------------------------------
covenants, stipulations, promises and agreements in this Agreement contained by
or on behalf of any party shall bind its successors and permitted assigns,
whether so expressed or not.
SECTION 22. Counterparts. This Agreement may be executed in any
------------
number of counterparts, and each such counterpart hereof shall be deemed to be
an original instrument, but all such counterparts together shall constitute but
one agreement.
SECTION 23. Changes in Common Stock. If, and as often as, there are
-----------------------
any changes in the Common Stock by way of stock split, stock dividend,
combination or reclassifica-
17
<PAGE>
tion, or through merger, consolidation, reorganization or recapitalization, or
by any other means, appropriate adjustment shall be made in the provisions
hereof as may be required so that the rights and privileges granted hereby shall
continue with respect to the Common Stock as so changed.
SECTION 24. Specific Performance. Each party hereto agrees that a
--------------------
remedy at law for any breach or threatened breach by such party of this
Agreement would be inadequate and therefore agrees that any other party hereto
shall be entitled to specific performance of this Agreement in addition to any
other available rights and remedies in case of any such breach or threatened
breach.
SECTION 25. Governing Law. This Agreement shall be governed by,
-------------
enforceable under, and construed in accordance with the laws of the State of
Delaware.
18
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has executed this
Agreement as a sealed instrument, all as of the day and year first above
written.
CENTENNIAL CELLULAR CORP.
By /s/ Michael J. Small
----------------------------------
Name: Michael J. Small
Title: Chief Executive Officer
WELSH, CARSON, ANDERSON & STOWE VII, L.P.
By WCAS VII Partners, L.P., General Partner
By /s/ Laura VanBuren
----------------------------------
General Partner
WELSH, CARSON, ANDERSON & STOWE VIII, L.P.
By WCAS VIII Associates, L.L.C., General Partner
By /s/ Laura VanBuren
----------------------------------
Managing Member
WCAS CAPITAL PARTNERS III, L.P.
By WCAS CP III Associates, L.L.C., General Partner
By /s/ Laura VanBuren
----------------------------------
Managing Member
WCAS INFORMATION PARTNERS, L.P.
By /s/ Bruce K. Anderson
----------------------------------
General Partner
<PAGE>
Patrick J. Welsh
Russell L. Carson
Bruce K. Anderson
Andrew M. Paul
Thomas E. McInerney
Laura VanBuren
Robert A. Minicucci
Anthony J. de Nicola
Paul B. Queally
Lawrence B. Sorrel
Priscilla A. Newman
Rudolph E. Rupert
D. Scott Mackesy
By /s/ Laura VanBuren
----------------------------------
Laura M. VanBuren
Individually and
as Attorney-in-fact
KRISTIN M. ANDERSON TRUST
By: /s/ Patrick J. Welsh
---------------------------------
Trustee
MARK S. ANDERSON TRUST
By: /s/ Patrick J. Welsh
----------------------------------
Trustee
DANIEL B. ANDERSON TRUST
By: /s/ Patrick J. Welsh
----------------------------------
Trustee
<PAGE>
BLACKSTONE CCC CAPITAL PARTNERS L.P.
By: Blackstone Management Associates III L.L.C.,
Its general partner
By /s/ Mark T. Gallogly
-------------------------------------------
Name: Mark T. Gallogly
Title: Senior Managing Director
BLACKSTONE CCC OFFSHORE CAPITAL
PARTNERS L.P.
By: Blackstone Management Associates III L.L.C.,
Its general partner
By /s/ Mark T. Gallogly
-------------------------------------------
Name: Mark T. Gallogly
Title: Senior Managing Director
BLACKSTONE FAMILY INVESTMENT PARTNERSHIP III L.P.
By: Blackstone Management Associates III L.L.C.,
Its general partner
By /s/ Mark T. Gallogly
-------------------------------------------
Name: Mark T. Gallogly
Title: Senior Managing Director
<PAGE>
SIGNAL/CENTENNIAL PARTNERS, L.L.C.
By: Signal/Centennial Associates, L.L.C.
By: Signal Partners, L.L.C.
By /s/ Timothy P. Reilly
-------------------------------------------
Managing Member
ROBERT W. BAIRD & CO., INC., TRUSTEE F/B/O
MICHAEL J. SMALL ROLLOVER IRA
By: /s/ Michael J. Small
-------------------------------------------
Title:
/s/ Michael J. Small
-------------------------------------------
Michael J. Small
/s/ Peter W. Chehayl
-------------------------------------------
Peter W. Chehayl
/s/ Edward G. Owen
-------------------------------------------
Edward G. Owen
GUAYACAN PRIVATE EQUITY FUND, L.P.
By Advent-Morro Equity Partners, Inc., General Partner
By /s/ Cyril Meduna
-------------------------------------------
Name: Cyril Meduna
Title: President
<PAGE>
SCHEDULE I
WCAS Purchasers
---------------
Number of Shares
Name and Address of Purchaser of Common Stock
- ----------------------------- ---------------
Welsh, Carson, Anderson & Stowe VII, L.P. 1,944,351
Welsh, Carson, Anderson & Stowe VIII, L.P. 14,374,000
WCAS Information Partners, L.P. 68,223
WCAS Capital Partners III, L.P. 1,626,507
Patrick J. Welsh 155,328
Russell L. Carson 155,328
Bruce K. Anderson 145,092
Kristin M. Anderson Trust 3,411
Mark S. Anderson Trust 3,411
Daniel B. Anderson Trust 3,411
Thomas E. McInerney 155,328
Andrew M. Paul 118,344
Robert A. Minicucci 60,036
Anthony J. de Nicola 13,644
Paul B. Queally 12,621
Lawrence B. Sorrel 13,644
Rudolph E. Rupert 13,644
D. Scott Mackesy 3,411
Priscilla A. Newman 4,434
Laura M. VanBuren 1,365
----------
TOTAL: 18,875,533
c/o Welsh, Carson, Anderson & Stowe
320 Park Avenue, Suite 2500
New York, New York 10022
Telecopy: (212) 893-9575
Attention: Thomas E. McInerney
<PAGE>
SCHEDULE II
Blackstone Purchasers
---------------------
Number of Shares
Name and Address of Purchaser of Common Stock
- ----------------------------- ---------------
Blackstone CCC Capital Partners L.P. 7,471,074
Blackstone CCC Offshore Capital
Partners L.P. 1,356,165
Blackstone Family Investment
Partnership III L.P. 563,442
---------
TOTAL 9,390,681
c/o The Blackstone Group
345 Park Avenue
New York, New York 10154
Attn: Mark T. Gallogly
Telecopy: 212-754-8704
with a copy to:
Robert L. Friedman
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Telecopy: 212-455-2502
<PAGE>
SCHEDULE III
Signal Purchasers
-----------------
Number of Shares
Name and Address of Purchaser of Common Stock
- ----------------------------- ---------------
Signal/Centennial Partners, L.L.C. . 426,393
10 East 53rd Street
32nd Floor
New York, NY 10022
Telecopy: (212) 253-4235
Attention: Alfred J. Puchala
with a copy to:
O'Sullivan, Graev & Karabell, LLP
30 Rockefeller Plaza
New York, NY 10112
Telecopy: (212) 408-2420
Attention: Phyllis Schwartz, Esq.
<PAGE>
SCHEDULE IV
Management Purchasers
---------------------
Number of Shares
Name and Address of Purchaser of Common Stock
- ----------------------------- ---------------
Michael J. Small 18,000
Michael J. Small Rollover IRA 12,000
Peter W. Chehayl 7,500
Edward G. Owen 15,000
------
TOTAL: 52,500
c/o Centennial Cellular Corp.
1305 Campus Parkway
Neptune, NJ 07753
<PAGE>
SCHEDULE V
Guayacan Purchasers
-------------------
Number of Shares
Name and Address of Purchaser of Common Stock
- ----------------------------- ---------------
Guayacan Private Equity Fund, L.P. 170,556
c/o Advent-Morro Equity Partners, Inc.
206 Tetuan Street, Suite 903
San Juan, Puerto Rico
Telecopy: (787) 721-1735
Attention: Mr. Zoilo Mendez
<PAGE>
Exhibit 99.4
FIRST AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT
January 20, 1999
To the several persons named
at the foot hereof
Ladies and Gentlemen:
On January 7, 1999, CCW Acquisition Corp. ("CCW") executed and
delivered a Registration Rights Agreement (the "Original Registration Rights
Agreement") with the investors listed on Schedule I hereof (collectively, the
"WCAS Purchasers"), the investors listed on Schedule II hereof (collectively,
the ABlackstone Purchasers"), the investors listed on Schedule III hereof
(collectively, the "Signal Purchasers") and the investors listed on Schedule IV
hereof (the "Management Purchasers"), in connection with the sale and delivery
by CCW to such parties of an aggregate 28,915,662 shares of Class A Common
Stock, $.01 par value (the "Common Stock"), of CCW pursuant to the Securities
Purchase Agreement, dated as of December 29, 1998 (the "Purchase Agreement"),
among the Company and such parties. Upon the merger of CCW with and into
Centennial Cellular Corp. (the "Company") on January 7, 1999, the Company
succeeded to all the rights and obligations of CCW under the Original
Registration Rights Agreement. On the date hereof, WCA Management Corporation
("WCA Management") is transferring to the persons listed on Schedule V hereof
(collectively, the "Guayacan Purchasers," and collectively with the WCAS
Purchasers, the Blackstone Purchasers, the Signal Purchasers and the Management
Purchasers, the "Purchasers") an aggregate 170,556 shares of Common Stock and in
connection therewith is assigning to the Guayacan Purchasers certain rights
under the Original Registration Rights Agreement. For the foregoing reasons,
the parties hereto desire to amend and restate the Original Registration Rights
Agreement, as more fully set forth herein.
1. Certain Definitions. As used herein, the following terms shall
-------------------
have the following respective meanings:
"Commission" shall mean the Securities and Exchange Commission, or any
----------
other federal agency at the time administering the Securities Act.
"Common Stock" shall mean the Class A Common Stock, $.01 par value, of
------------
the Company, as constituted as of the date of this Agreement, subject to
adjustment pursuant to the provisions of Section 9 hereof.
<PAGE>
"Exchange Act" shall mean the Securities Exchange Act of 1934 or any
------------
similar federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"Registration Expenses" shall mean the expenses so described in
---------------------
Section 7 hereof.
"Restricted Stock" shall mean any shares of capital stock of the
----------------
Company, the certificates for which are required to bear the legend set
forth in Section 2 hereof, held by any party to this Agreement.
"Securities Act" shall mean the Securities Act of 1933 or any similar
--------------
federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"Selling Expenses" shall mean the expenses so described in Section 7
----------------
hereof.
2. Restrictive Legend. Each certificate representing the Common
------------------
Stock, other than Common Stock transferred in a public sale or as otherwise
permitted by Section 3 hereof, shall be stamped or otherwise imprinted with a
legend substantially in the following form:
"THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AND MAY NOT BE SOLD, TRANSFERRED OR
OTHERWISE DISPOSED OF UNLESS THEY HAVE BEEN REGISTERED UNDER THAT ACT
OR AN EXEMPTION FROM REGISTRATION IS AVAILABLE."
3. Notice of Proposed Transfer. In addition to any restrictions set
---------------------------
forth in the Stockholders Agreement, dated as of the date hereof among the
Company and the Purchasers, prior to any proposed transfer of any Restricted
Stock (other than under the circumstances described in Section 4 or 5 hereof),
the holder thereof shall give written notice to the Company of its intention to
effect such transfer. Each such notice shall describe the manner of the
proposed transfer and, if reasonably requested by the Company, shall be
accompanied by an opinion of counsel reasonably satisfactory to the Company to
the effect that the proposed transfer of the Restricted Stock may be effected
without registration under the Securities Act, whereupon the holder of such
Restricted Stock shall be entitled to transfer such Restricted Stock in
accordance with the terms of its notice; provided, however, that no such opinion
-------- -------
or other documentation shall be required if such notice shall cover a pro rata
distribution (without payment of additional consideration) by any Purchaser that
is a partnership or limited liability company to its partners or members, as the
case may be. Each certificate for Restricted Stock transferred as above
provided shall bear the legend set forth in Section 2, unless (i) such transfer
is in accordance with the provisions of Rule 144 (or any other rule permitting
public sale without registration under the Securities Act or is pursuant to an
effective registration under the Securities Act) or (ii) the
2
<PAGE>
opinion of counsel referred to above is to the further effect that (or, if no
opinion is required, the Company determines that) the transferee and any
subsequent transferee (other than an affiliate of the Company) would be entitled
to transfer such securities in a public sale without registration under the
Securities Act.
The foregoing restrictions on transferability of Restricted Stock
shall terminate as to any particular shares of Restricted Stock when such shares
shall have been effectively registered under the Securities Act and sold or
otherwise disposed of in accordance with the intended method of disposition by
the seller or sellers thereof set forth in the registration statement concerning
such shares. Whenever a holder of Restricted Stock is able to demonstrate to
the Company (and its counsel) that the provisions of Rule 144(k) of the
Securities Act are available to such holder without limitation, such holder of
Restricted Stock shall be entitled to receive from the Company, without expense,
a new certificate not bearing the restrictive legend set forth in Section 2.
4. Required Registration.
---------------------
(a) At any time after January 7, 2002, the holders of a majority of
the outstanding Restricted Stock then held by the WCAS Purchasers or the
Blackstone Purchasers may request the Company to register under the
Securities Act all or any portion of the Restricted Stock held by such
requesting holder or holders for sale in the manner specified in such
notice; provided, however, that neither the WCAS Purchasers nor the
-------- -------
Blackstone Purchasers may request registration pursuant to this Section 4
more than once every six months.
(b) Promptly following receipt of any notice under this Section 4, the
Company shall immediately notify any holders of Restricted Stock from whom
notice has not been received and shall use its best efforts to register as
soon as possible under the Securities Act, for public sale in accordance
with the method of disposition specified in such notice from the original
requesting holders, the number of shares of Restricted Stock specified in
such notice (and in any notices received from other holders of Restricted
Stock within 20 days after their receipt of such notice from the Company);
provided, however, that if the proposed method of disposition specified by
-------- -------
the original requesting holders shall be an underwritten public offering,
the number of shares of Restricted Stock to be included in such an offering
may be reduced (pro rata among the requesting holders of Restricted Stock
--- ----
based on the number of shares of Restricted Stock so requested to be
registered) if and to the extent that the managing underwriter shall be of
the opinion that such inclusion would adversely affect the marketing of the
Restricted Stock to be sold. In the event that the proposed method of
disposition specified by the original requesting holders shall be an
underwritten public offering, the original requesting holders may choose
the managing underwriter (which shall be a nationally recognized investment
banking firm), subject to the consent of the Company (which shall not be
unreasonably withheld). Notwithstanding anything to the contrary contained
herein, the obligation of
3
<PAGE>
the Company under this Section 4 shall be deemed satisfied only when a
registration statement covering all shares of Restricted Stock specified in
notices received as aforesaid (subject to any cutbacks as contemplated
hereinabove), for sale in accordance with the method of disposition
specified by the requesting holder, shall have become effective and, if
such method of disposition is a firm commitment underwritten public
offering, all such shares shall have been sold pursuant thereto.
(c) The Company shall be entitled to include in any registration
statement referred to in this Section 4, for sale in accordance with the
method of disposition specified by the requesting holders, shares of Common
Stock to be sold by the Company for its own account, except as and to the
extent that, in the opinion of the managing underwriter (if such method of
disposition shall be an underwritten public offering), such inclusion would
adversely affect the marketing of the Restricted Stock to be sold (and in
such event, such shares to be sold by the Company for its own account shall
be reduced or eliminated before any reduction in the number of shares to be
sold by requesting holders pursuant to Section 4(b)). Except as provided
in this paragraph (c), the Company will not effect any other registration
of its Common Stock, whether for its own account or that of other holders,
from the date of receipt of a notice from requesting holders pursuant to
this Section 4 until the completion of the period of distribution of the
registration contemplated thereby.
5. Incidental Registration. If the Company at any time (other than
-----------------------
pursuant to Section 4 hereof) proposes to register any of its Common Stock under
the Securities Act for sale to the public, whether for its own account or for
the account of other securityholders or both (except with respect to
registration statements on Form S-4 or S-8 or another form not available for
registering the Restricted Stock for sale to the public), it will give written
notice at such time to all holders of outstanding Restricted Stock of its
intention to do so. Upon the written request of any such holder, given within
20 days after receipt of any such notice by the Company, to register any of its
Restricted Stock (which request shall state the intended method of disposition
thereof), the Company will use its best efforts to cause the Restricted Stock,
as to which registration shall have been so requested, to be included in the
securities to be covered by the registration statement proposed to be filed by
the Company, all to the extent requisite to permit the sale or other disposition
by the holder (in accordance with its written request) of such Restricted Stock
so registered; provided that nothing herein shall prevent the Company from
--------
abandoning or delaying such registration at any time. In the event that any
registration pursuant to this Section 5 shall be, in whole or in part, an
underwritten public offering of Common Stock, any request by a holder pursuant
to this Section 5 to register Restricted Stock shall specify that either (i)
such Restricted Stock is to be included in the underwriting on the same terms
and conditions as the shares of Common Stock otherwise being sold through
underwriters under such registration or (ii) such Restricted Stock is to be sold
in the open market without any underwriting, on terms and conditions comparable
to those normally applicable to offerings of common stock in reasonably similar
circumstances. The number of shares of Restricted Stock to be included in such
an underwriting may be reduced (pro rata among the holders of Restricted
--- ----
4
<PAGE>
Stock requesting registration pursuant to this Section 5 based upon the number
of shares of Restricted Stock so requested to be registered) if and to the
extent that the managing underwriter shall be of the opinion that such inclusion
would adversely affect the marketing of the securities to be sold by the Company
therein; provided, however, that such number of shares of Restricted Stock shall
-------- -------
not be reduced if any shares are to be included in such underwriting for the
account of any person other than the Company and the holders of Restricted
Stock.
Notwithstanding anything to the contrary contained in Section 4 or 5
hereof, in the event that there is a firm commitment underwritten public
offering of securities of the Company pursuant to a registration covering
Restricted Stock and a holder of Restricted Stock does not elect to sell his
Restricted Stock to the underwriters of the Company's securities in connection
with such offering, such holder shall, to the extent required by such
underwriters with respect to all holders of Restricted Stock, refrain from
selling such Restricted Stock so registered pursuant to this Section 5 during
the period of distribution of the Company's securities by such underwriters and
the period in which the underwriting syndicate participates in the after market;
provided, however, that such holder shall, in any event, be entitled to sell its
- -------- -------
Restricted Stock commencing on the 120th day after the effective date of such
registration statement.
6. Registration Procedures and Expenses. If and whenever the Company
------------------------------------
is required by the provisions of Section 4 or 5 hereof to use its best efforts
to effect the registration of any of the Restricted Stock under the Securities
Act, the Company will, as expeditiously as possible:
(a) prepare (and afford counsel for the selling holders reasonable
opportunity to review and comment thereon) and file with the Commission a
registration statement (which, in the case of an underwritten public
offering pursuant to Section 4 hereof, shall be on Form S-1, S-3 or another
form of general applicability satisfactory to the managing underwriter
selected as therein provided) with respect to such securities and use its
best efforts to cause such registration statement to become and remain
effective for the period of the distribution contemplated thereby
(determined as hereinafter provided);
(b) prepare (and afford counsel for the selling holders reasonable
opportunity to review and comment thereon) and file with the Commission
such amendments and supplements to such registration statement and the
prospectus used in connection therewith and any documents incorporated by
reference therein and file such other documents as may be necessary to keep
such registration statement effective for the period specified in paragraph
(a) above and to comply with the provisions of the Securities Act with
respect to the disposition of all Restricted Stock covered by such
registration statement in accordance with the sellers' intended method of
disposition set forth in such registration statement for such period;
(c) furnish to each seller and to each underwriter such number of
copies of the registration statement and the prospectus included therein
(including each preliminary
5
<PAGE>
prospectus), and all amendments, supplements, and exhibits thereto, and
such other documents as such persons may reasonably request in order to
facilitate the public sale or other disposition of the Restricted Stock
covered by such registration statement (and the Company hereby consents to
the use of any such prospectus, together with such supplements and
amendments, by the sellers and underwriters, if any, in connection with the
offer and sale covered thereby);
(d) use its best efforts to register or qualify the Restricted Stock
covered by such registration statement under the securities or blue sky
laws of such jurisdictions as the sellers of Restricted Stock or, in the
case of an underwritten public offering, the managing underwriter, shall
reasonably request (provided that the Company will not be required to (i)
qualify generally to do business in any jurisdiction where it would not
otherwise be required to qualify but for this paragraph (d), (ii) subject
itself to taxation in any such jurisdiction or (iii) consent to general
service of process in any jurisdiction);
(e) immediately notify each seller under such registration statement
and each underwriter, (i) when such registration statement or any post-
effective amendment or supplement thereto becomes effective; (ii) of the
issuance by the SEC or any state securities authority of any stop order,
injunction or other order or requirement suspending the effectiveness of
such registration statement (and the Company shall use best efforts to
prevent the initiation of proceedings for, prevent the entry of and/or
remove such order or requirement); or (iii) of the happening of any event
as a result of which such registration statement, as then in effect, the
prospectus contained therein or any document incorporated by reference
therein includes an untrue statement of a material fact or omits to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing;
(f) use its best efforts to furnish, at the request of any seller, on
the date that Restricted Stock is delivered to the underwriters for sale
pursuant to such registration, if such securities are being sold through
underwriters, or on the date that the registration statement becomes
effective, if such securities are not being sold through underwriters: (i)
an opinion dated such date of counsel representing the Company for the
purposes of such registration, addressed to the underwriters, if any, and
to such seller, stating that such registration statement has become
effective under the Securities Act and that (A) to the best knowledge of
such counsel, no stop order suspending the effectiveness thereof has been
issued and no proceedings for that purpose have been instituted or are
pending or contemplated under the Securities Act, (B) the registration
statement, the related prospectus, and each amendment or supplement
thereof, comply as to form in all material respects with the requirements
of the Securities Act and the applicable rules and regulations of the
Commission thereunder (except that such counsel need express no opinion as
to financial statements, the notes thereto, and the financial schedules and
other financial and statistical data contained therein) and (C) to such
other effects as may reasonably be requested by counsel for the
underwriters or by such seller or its counsel,
6
<PAGE>
and (ii) a letter dated such date from the independent public accountants
retained by the Company, addressed to the underwriters, if any, and to such
sellers stating that they are independent public accountants within the
meaning of the Securities Act and that, in the opinion of such accountants,
the financial statements of the Company included in the registration
statement or the prospectus, or any amendment or supplement thereof, comply
as to form in all material respects with the applicable accounting
requirements of the Securities Act, and such letter shall additionally
cover such other financial matters (including information as to the period
ending no more than five business days prior to the date of such letter)
with respect to the registration in respect of which such letter is being
given as such underwriters or sellers may reasonably request;
(g) take such actions as may be necessary or appropriate to obtain a
CUSIP number (if none exists) for the Common Stock, and make all filings
and secure all approvals required pursuant to the regulations of the
National Association of Securities Dealers, Inc. in connection with such
registration;
(h) take such actions as may be necessary or appropriate to cause the
Restricted Stock so to be registered to be listed on the principal
securities exchange (or on the NASDAQ National Market System, as the case
may be) on which the Company's Common Stock is then traded (or, in the case
of an initial public offering, on such national securities exchange (or on
the NASDAQ National Market System) as the Company shall elect);
(i) use its best efforts to comply with all applicable rules and
regulations of the SEC, and make available to any holder of Restricted
Stock, as soon as reasonably practicable (but not more than 15 months)
after the effective date of the registration statement, an earnings
statement which shall satisfy the provisions of Section 11(a) of the
Securities Act and the rules and regulations promulgated thereunder; and
(j) make available for inspection by each seller, any underwriter
participating in any distribution pursuant to such registration statement,
and any attorney, accountant or other agent retained by such seller or
underwriter, all financial and other records, pertinent corporate documents
and properties of the Company, and cause the Company's officers, directors
and employees to supply all information reasonably requested by any such
seller, underwriter, attorney, accountant or agent in connection with such
registration statement and permit such seller, attorney, accountant or
agent to participate in the preparation of such registration statement.
For purposes of paragraphs (a) and (b) above and of Section 4(c) hereof, the
period of distribution of Restricted Stock in a firm commitment underwritten
public offering shall be deemed to extend until each underwriter has completed
the distribution of all securities purchased by it, and the period of
distribution of Restricted Stock in any other registration shall be deemed
7
<PAGE>
to extend until the earlier of the sale of all Restricted Stock covered thereby
or six months after the effective date thereof.
In connection with each registration hereunder, the selling holders of
Restricted Stock will furnish to the Company in writing such information with
respect to themselves and the proposed distribution by them as shall be
reasonably necessary in order to assure compliance with federal and applicable
state securities laws.
In connection with each registration pursuant to Sections 4 and 5
hereof covering an underwritten public offering, the Company agrees to enter
into a written agreement with the managing underwriter selected in the manner
herein provided in such form and containing such provisions as are customary in
the securities business for such an arrangement between major underwriters and
companies of the Company's size and investment stature; provided, however, that
-------- -------
such agreement shall not contain any such provision applicable to the Company
which is inconsistent with the provisions hereof and provided, further, however,
-------- ------- -------
that the time and place of the closing under said agreement shall be as mutually
agreed upon among the Company, such managing underwriter and the selling
holders of Restricted Stock.
7. Expenses. All expenses incurred by the Company in complying with
--------
Sections 4 and 5 hereof, including, without limitation, all registration,
listing and filing fees, printing expenses, fees and disbursements of counsel
and independent public accountants for the Company (including with respect to
any special audit or Acold comfort@ letters), fees of the National Association
of Securities Dealers, Inc., transfer taxes and fees of transfer agents and
registrars, as well as fees and expenses of counsel for the sellers of
Restricted Stock, but excluding any Selling Expenses, are herein called
"Registration Expenses." All underwriting discounts and selling commissions
applicable to the sale of Restricted Stock are herein called "Selling Expenses."
The Company will pay all Registration Expenses in connection with each
registration statement filed pursuant to Section 4 or 5 hereof. All Selling
Expenses in connection with any registration statement filed pursuant to Section
4 or 5 hereof shall be borne by the participating sellers in proportion to the
number of shares sold by each, or by such persons other than the Company (except
to the extent the Company shall be a seller) as they may agree.
8. Indemnification. In the event of a registration of any of the
---------------
Restricted Stock under the Securities Act pursuant to Section 4 or 5 hereof, the
Company will indemnify and hold harmless, to the fullest extent permitted by
law, each seller of such Restricted Stock thereunder, each underwriter of
Restricted Stock thereunder, each of their respective affiliates, each of their
and their affiliates' respective directors, officers, fiduciaries, agents,
employees, stockholders, general and limited partners and members, and each
other person, if any, who controls such seller or underwriter within the meaning
of the Securities Act, against any losses, claims, damages or liabilities, joint
or several, actions or proceedings (whether commenced or threatened) in respect
thereof (all of the foregoing, collectively, "Claims") and expenses (including
8
<PAGE>
fees and expenses of counsel, and amounts paid in any settlement effected with
the Company's consent, which consent shall not be unreasonably withheld or
delayed) to which such indemnified party may become subject under the Securities
Act or otherwise, insofar as such Claims or expenses arise out of or are based
upon any untrue statement or alleged untrue statement of any material fact
contained in any registration statement under which such Restricted Stock was
registered under the Securities Act pursuant to Section 4 or 5, any preliminary
prospectus, summary or final prospectus contained therein, or any amendment or
supplement of any thereof, or any documents incorporated by reference therein,
or arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, and will reimburse each such indemnified
party for any legal or other expenses incurred by them in connection with
investigating or defending any such Claim; provided, however, that the Company
-------- -------
will not be liable to any such indemnified party if and to the extent that any
such Claim or expense arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission so made in conformity
with information pertaining to such indemnified party furnished by such
indemnified party in writing specifically for use in such registration statement
or prospectus.
In the event of a registration of any of the Restricted Stock under
the Securities Act pursuant to Section 4 or 5 hereof, each seller of such
Restricted Stock thereunder, severally and not jointly, will indemnify and hold
harmless, to the fullest extent permitted by law, the Company and each person,
if any, who controls the Company within the meaning of the Securities Act, each
officer of the Company who signs the registration statement, each director of
the Company, each underwriter and each person who controls any underwriter
within the meaning of the Securities Act, each other stockholder selling
Restricted Stock under such registration statement and each affiliate, officer,
director, fiduciary, agent, employee, stockholder, general or limited partner or
member of such selling stockholder against all Claims and expenses (including
fees and expenses of counsel, and amounts paid in any settlement effected with
the Company's consent, which consent shall not be unreasonably withheld or
delayed) to which the Company or such officer or director or underwriter or
controlling person may become subject under the Securities Act or otherwise,
insofar as such Claims or expenses arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in the
registration statement under which such Restricted Stock was registered under
the Securities Act pursuant to Section 4 or 5, any preliminary prospectus,
summary or final prospectus contained therein, or any amendment or supplement of
any thereof, or any documents incorporated by reference therein, or arise out of
or are based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, and will reimburse the Company and each such indemnified party
for any legal or other expenses incurred by them in connection with
investigating or defending any such Claim; provided, however, that such seller
-------- -------
will be liable hereunder to any such indemnified party if and only to the extent
that any such Claim or expense arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission made in
reliance upon and in conformity with information pertaining to such seller, as
such, furnished in writing to the Company by such indemnified party specifically
for use in such registration statement or prospectus; provided,
--------
9
<PAGE>
further, however, that the liability of each seller hereunder shall be limited
- ------- -------
to the proceeds (net of underwriting discounts and commissions) received by such
seller from the sale of Restricted Stock covered by such registration statement.
Promptly after receipt by an indemnified party hereunder of notice of
the commencement of any action, such indemnified party shall, if a claim in
respect thereof is to be made against the indemnifying party hereunder, notify
the indemnifying party in writing thereof, but the omission so to notify the
indemnifying party shall not relieve it from any liability which it may have to
such indemnified party under this Section 8 except to the extent such
indemnifying party is materially prejudiced thereby, and in any event will not
relieve such indemnifying party from any liability which it may have to any
indemnified party other than under this Section 8. In case any such action
shall be brought against any indemnified party and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party shall be
entitled to participate in and, to the extent it shall wish, to assume and
undertake the defense thereof with counsel satisfactory to such indemnified
party, and, after notice from the indemnifying party to such indemnified party
of its election so to assume and undertake the defense thereof, the indemnifying
party shall not be liable to such indemnified party under this Section 8 for any
legal expenses subsequently incurred by such indemnified party in connection
with the defense thereof other than reasonable costs of investigation and of
liaison with counsel so selected; provided, however, that, if the defendants in
-------- -------
any such action include both the indemnified party and the indemnifying party
and the indemnified party shall have reasonably concluded that there may be
reasonable defenses available to it which are different from or additional to
those available to the indemnifying party, or if the interests of the
indemnified party reasonably may be deemed to conflict with the interests of the
indemnifying party, or if the indemnifying party shall not diligently continue
such defense in good faith, the indemnified party shall have the right to select
a separate counsel and to assume such legal defenses and otherwise to
participate in the defense of such action, with the expenses and fees of such
separate counsel and other expenses related to such participation to be
reimbursed by the indemnifying party as incurred.
Notwithstanding the foregoing, any indemnified party shall have the
right to retain its own counsel in any such action, but except as set forth
above the fees and disbursements of such counsel shall be at the expense of such
indemnified party unless (i) the indemnifying party shall have failed to retain
counsel for the indemnified person as aforesaid or (ii) the indemnifying party
and such indemnified party shall have mutually agreed to the retention of such
counsel. It is understood that the indemnifying party shall not, in connection
with any action or related actions in the same jurisdiction, be liable for the
fees and disbursements of more than one firm (together with local counsel) to
act as counsel for the indemnified party. The indemnifying party shall not be
liable for any settlement of any proceeding effected without its written consent
(which shall not be unreasonably withheld or delayed), but if settled with such
consent or if there be a final judgment for the plaintiff, the indemnifying
party agrees to indemnify the indemnified party from and against any loss or
liability by reason of such settlement or judgment. No indemnifying party
shall, without the written consent of the indemnified party (which shall not be
unreasonably withheld or delayed), effect the settlement or compromise of, or
consent to the entry of any
10
<PAGE>
judgment with respect to, any pending or threatened action in respect of which
indemnification may be sought hereunder (whether or not the indemnified party is
an actual or potential party to such action) unless such settlement, compromise
or judgment (i) includes an unconditional release of such indemnified party from
all liability arising out of such action and (ii) does not include a statement
as to or an admission of fault, culpability or a failure to act by or on behalf
of such indemnified party.
If for any reason the indemnification provided for in the first two
paragraphs of this Section 8 is unavailable or insufficient to hold harmless an
indemnified party under such paragraphs in respect of any Claims or expenses in
respect thereof referred to therein, then each indemnifying party shall in lieu
of indemnifying such indemnified party contribute to the amount paid or payable
by such indemnified party as a result of such Claims or expenses in such
proportion as appropriate to reflect the relative fault of the Company, on the
one hand, and the underwriters and the sellers of such Restricted Stock, on the
other, in connection with the statements or omissions which resulted in such
Claims or expenses as well as any other relevant equitable considerations,
including the failure to give any notice under the third paragraph of this
Section 8. The relative fault shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact
relates to information supplied by the indemnifying party, on the one hand, or
the indemnified party, on the other, and to the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Company and each of you agree that it would not be
just and equitable if contributions pursuant to this paragraph were determined
by pro rata allocation (even if all of the sellers of such Restricted Stock were
--- ----
treated as one entity for such purpose) or by any other method of allocation
which did not take account of the equitable considerations referred to above in
this paragraph. The amount paid or payable by an indemnified party as a result
of the Claims and expenses in respect thereof, referred to above in this
paragraph, shall be deemed to include any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating or defending
any such action or claim. Notwithstanding the provisions of this paragraph, no
seller of such Restricted Stock or related indemnified party shall be required
to contribute any amount in excess of the amount of proceeds (net of
underwriting discounts and commissions) received by such seller from the sale of
Restricted Stock covered by such registration statement. No person guilty of
fraudulent misrepresentations (within the meaning of Section 11(f) of the
Securities Act), shall be entitled to contribution from any person who is not
guilty of such fraudulent misrepresentation.
The indemnification of underwriters provided for in this Section 8
shall be on such other terms and conditions as are at the time customary and
reasonably required by such underwriters. In that event the indemnification of
the sellers of Restricted Stock in such underwriting shall at the sellers'
request be modified to conform to such terms and conditions.
The indemnification and contribution agreements contained herein shall
be in addition to any other rights to indemnification and contribution which any
indemnified party may have pursuant to law or contract or otherwise, shall
remain operative and in full force and effect
11
<PAGE>
regardless of any investigation made or omitted by or on behalf of any
indemnified party and shall survive the transfer of Restricted Stock by any such
party.
9. Changes in Common Stock. If, and as often as, there are any
-----------------------
changes in the Common Stock by way of stock split, stock dividend, combination
or reclassification, or through merger, consolidation, reorganization or
recapitalization, or by any other means, appropriate adjustment shall be made in
the provisions hereof, as may be required, so that the rights and privileges
granted hereby shall continue with respect to the Common Stock as so changed.
10. Representations and Warranties of the Company. The Company
---------------------------------------------
represents and warrants to you as follows:
(a) The execution, delivery and performance of this Agreement by the
Company have been duly authorized by all requisite corporate action and
will not violate any provision of law, any order of any court or other
agency of government, the Certificate of Incorporation or By-laws of the
Company, or any provision of any indenture, agreement or other instrument
to which it or any of its properties or assets is bound, or conflict with,
result in a breach of or constitute (with due notice or lapse of time or
both) a default under any such indenture, agreement or other instrument, or
result in the creation or imposition of any lien, charge or encumbrance of
any nature whatsoever upon any of the properties or assets of the Company.
(b) This Agreement has been duly executed and delivered by the
Company and constitutes the legal, valid and binding obligation of the
Company, enforceable in accordance with its terms, subject to
considerations of public policy in the case of the indemnification
provisions hereof.
(c) The Company hereby incorporates by reference and makes the
representations and warranties set forth in the Purchase Agreement, to the
extent applicable to this Agreement or the transactions contemplated
hereby, as of the date hereof.
11. Rule 144 Reporting. The Company agrees with you as follows:
------------------
(a) The Company shall make and keep public information available, as
those terms are understood and defined in Rule 144 under the Securities
Act, at all times as it is able to do so.
(b) The Company shall file with the Commission in a timely manner all
reports and other documents as the Commission may prescribe under Section
13(a) or 15(d) of the Exchange Act at any time that the Company is subject
to such reporting requirements of the Exchange Act.
12
<PAGE>
(c) The Company shall furnish to any holder of Restricted Stock
forthwith upon request (i) a written statement by the Company as to its
compliance with the reporting requirements of Rule 144, and of the
Securities Act and the Exchange Act, (ii) a copy of the most recent annual
or quarterly report of the Company, and (iii) such other reports and
documents so filed as a holder may reasonably request to avail itself of
any rule or regulation of the Commission allowing a holder of Restricted
Stock to sell any such securities without registration.
12. Miscellaneous.
-------------
(a) All covenants and agreements contained in this Agreement by or on
behalf of any of the parties hereto shall bind and inure to the benefit of
the respective successors and permitted assigns of the parties hereto
whether so expressed or not. Without limiting the generality of the
foregoing, any holder of Restricted Stock may assign its rights hereunder
with respect to any of its Restricted Stock to any transferee of such
Restricted Stock, provided that such transferee agrees in writing to become
--------
a party hereto and to be bound as a holder of Restricted Stock hereby, and
provided further that any WCAS Purchaser or Blackstone Purchaser shall
--------
specify in such assignment whether it is assigning rights under Section 4
hereof (in which case such transferee shall become entitled to the rights
and subject to the obligations hereunder as fully to the same extent as,
and shall deemed to be, a WCAS Purchaser or Blackstone Purchaser, as the
case may be, hereunder) and, if assigning such rights, shall be entitled in
such assignment to limit the ability of such transferee to further transfer
such rights (and such status as a WCAS Purchaser or Blackstone Purchaser,
as the case may be) to additional transferees.
(b) All notices, requests, consents and other communications
hereunder shall be in writing and shall be delivered personally, sent by
nationally recognized overnight courier services, transmitted by confirmed
telecopy or mailed by first class registered mail, postage prepaid,
addressed as follows:
if to the Company, to it at:
1305 Campus Parkway
Neptune, New Jersey 07753
Telecopy Number: (732) 919-1022
Attention: President;
with a copy to:
Reboul, MacMurray, Hewitt, Maynard & Kristol
45 Rockefeller Plaza
New York, New York 10111
Telecopy Number: (212) 841-5725
13
<PAGE>
Attention: Robert A. Schwed, Esq.;
if to any Purchaser, to it at its address set forth on Schedule I,
Schedule II, Schedule III, Schedule IV or Schedule V hereto, as the case
may be;
if to any subsequent holder of Restricted Stock, to it at such address
as may have been furnished to the Company in writing by such holder;
or, in any case, at such other address or addresses as shall have been
furnished in writing to the Company (in the case of a holder of Restricted
Stock) or to the holders of Restricted Stock (in the case of the Company).
(c) This Agreement shall be governed by and construed in accordance
with the laws of the State of Delaware.
(d) This Agreement constitutes the entire agreement of the parties
with respect to the subject matter hereof (without limiting the foregoing,
the Original Registration Rights Agreement is hereby superseded in its
entirety) and may not be modified or amended except in writing signed by,
and the Company will not grant any registration rights to any other person
without the consent of, the holders of a majority in interest of the
Restricted Stock held by each of (i) the WCAS Purchasers, (ii) the
Blackstone Purchaser and (iii) if adversely affected thereby, the other
holders of Restricted Stock. Any waiver of any provision of this Agreement
must be in a writing signed by the party against whom enforcement of such
waiver is sought.
(e) This Agreement may be executed in two or more counterparts, each
of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
(f) Headings and section reference numbers in this Agreement are for
reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.
(g) In the event that any one or more of the provisions set forth
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 provision of this Agreement.
(h) Except as specifically set forth in Section 8 hereof, this
Agreement is not intended to confer any rights or remedies upon any person
other than the parties hereto.
(i) Each party hereto agrees that a remedy at law for any breach or
threatened breach by such party of this Agreement would be inadequate and
therefore agrees that any
14
<PAGE>
other party hereto shall be entitled to specific performance of this
Agreement in addition to any other available rights and remedies in case of
any such breach or threatened breach.
15
<PAGE>
Please indicate your acceptance of the foregoing by signing and
returning the enclosed counterpart of this letter, whereupon this letter (herein
sometimes called "this Agreement") shall be a binding agreement between the
Company and you.
Very truly yours
CENTENNIAL CELLULAR CORP.
By /s/ Michael J. Small
---------------------------------------------
Name: Michael J. Small
Title: Chief Executive Officer
Accepted and agreed to:
WELSH, CARSON, ANDERSON & STOWE VII, L.P.
By WCAS VII Partners, L.P., General Partner
By /s/ Laura VanBuren
---------------------------------------------
General Partner
WELSH, CARSON, ANDERSON & STOWE VIII, L.P.
By WCAS VIII Associates, L.L.C., General Partner
By /s/ Laura VanBuren
---------------------------------------------
Managing Member
WCAS CAPITAL PARTNERS III, L.P.
By WCAS CP III Associates, L.L.C., General Partner
By /s/ Laura VanBuren
---------------------------------------------
Managing Member
WCAS INFORMATION PARTNERS, L.P.
By /s/ Bruce K. Anderson
---------------------------------------------
General Partner
<PAGE>
Patrick J. Welsh
Russell L. Carson
Bruce K. Anderson
Andrew M. Paul
Thomas E. McInerney
Laura M. VanBuren
Robert A. Minicucci
Anthony J. de Nicola
Paul B. Queally
Lawrence B. Sorrel
Priscilla A. Newman
Rudolph E. Rupert
D. Scott Mackesy
By /s/ Laura VanBuren
---------------------------------------------
Laura M. VanBuren
Individually and
as Attorney-in-fact
KRISTIN M. ANDERSON TRUST
By: /s/ Patrick J. Welsh
--------------------------------------------
Trustee
MARK S. ANDERSON TRUST
By: /s/ Patrick J. Welsh
---------------------------------------------
Trustee
DANIEL B. ANDERSON TRUST
By: /s/ Patrick J. Welsh
--------------------------------------------
Trustee
<PAGE>
BLACKSTONE CCC CAPITAL PARTNERS L.P.
By: Blackstone Management Associates III L.L.C.,
Its general partner
By /s/ Mark T. Gallogly
-------------------------------------------------
Name: Mark T. Gallogly
Title: Senior Managing Director
BLACKSTONE CCC OFFSHORE CAPITAL PARTNERS L.P.
By: Blackstone Management Associates III L.L.C.,
Its general partner
By /s/ Mark T. Gallogly
-------------------------------------------------
Name: Mark T. Gallogly
Title: Senior Managing Director
BLACKSTONE FAMILY INVESTMENT PARTNERSHIP III L.P.
By: Blackstone Management Associates III L.L.C.,
Its general partner
By /s/ Mark T. Gallogly
-------------------------------------------------
Name: Mark T. Gallogly
Title: Senior Managing Director
<PAGE>
SIGNAL/CENTENNIAL PARTNERS, L.L.C.
By: Signal/Centennial Associates, L.L.C.
By: SIGNAL PARTNERS L.L.C.
By /s/ Timothy P. Reilly
------------------------------------------------
Managing Member
ROBERT W. BAIRD & CO., INC., TRUSTEE F/B/O
MICHAEL J. SMALL ROLLOVER IRA
By: /s/ Michael J. Small
-----------------------------------------------
Title:
/s/ Michael J. Small
---------------------------------------------------
Michael J. Small
/s/ Peter W. Chehayl
---------------------------------------------------
Peter W. Chehayl
/s/ Edward G. Owen
---------------------------------------------------
Edward G. Owen
GUAYACAN PRIVATE EQUITY FUND, L.P.
By Advent-Morro Equity Partners, Inc., General
Partner
By /s/ Cyril Meduna
------------------------------------------------
Name: Cyril Meduna
Title: President
<PAGE>
SCHEDULE I
WCAS Purchasers
---------------
Name and Address of Purchaser
- -----------------------------
Welsh, Carson, Anderson
& Stowe VII, L.P.
Welsh, Carson, Anderson
& Stowe VIII, L.P.
WCAS Capital Partners III, L.P.
WCAS Information Partners, L.P.
Patrick J. Welsh
Russell L. Carson
Bruce K. Anderson
Andrew M. Paul
Thomas E. McInerney
Laura VanBuren
Robert A. Minicucci
Anthony J. de Nicola
Paul B. Queally
Priscilla A. Newman
Lawrence B. Sorrel
Rudolph E. Rupert
D. Scott Mackesy
c/o Welsh, Carson, Anderson & Stowe
320 Park Avenue, Suite 2500
New York, New York 10022
Telecopy: (212) 893-9575
Attention: Thomas E. McInerney
<PAGE>
SCHEDULE II
Blackstone Purchasers
---------------------
Name and Address of Purchaser
- -----------------------------
Blackstone CCC Capital Partners L.P.
Blackstone CCC Offshore Capital Partners L.P.
Blackstone Family Investment Partnership III L.P.
c/o The Blackstone Group
345 Park Avenue
New York, New York 10154
Telecopy: (212) 754-8704
Attention: Mr. Mark T. Gallogly
with a copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Telecopy: (212) 455-2502
Attention: Robert L. Friedman, Esq.
<PAGE>
SCHEDULE III
Signal Purchasers
-----------------
Name and Address of Purchaser
- -----------------------------
Signal/Centennial Partners, L.L.C.
10 East 53rd Street
32nd Floor
New York, NY 10022
Telecopy: (212) 253-4235
Attention: Alfred J. Puchala
with a copy to:
O'Sullivan, Graev & Karabell, LLP
30 Rockefeller Plaza
New York, New York 10112
Telecopy: (212) 408-2420
Attention: Phyllis Schwartz, Esq.
<PAGE>
SCHEDULE IV
Management Purchasers
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Name and Address of Purchaser
- -----------------------------
Michael J. Small
Michael J. Small Rollover IRA
Peter W. Chehayl
Edward G. Owen
c/o Centennial Cellular Corp.
1305 Campus Parkway
Neptune, NJ 07753
<PAGE>
SCHEDULE V
Guayacan Purchasers
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Name and Address of Purchaser
- -----------------------------
Guayacan Private Equity Fund, L.P.
c/o Advent-Morro Equity Partners, Inc.
206 Tetuan Street, Suite 903
San Juan, Puerto Rico
Telecopy: (787) 721-1735
Attention: Mr. Zoilo Mendez
