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Centennial Communications DEF 14A 2006 Documents found in this filing:Table of Contents
CENTENNIAL COMMUNICATIONS CORP.
3349 Route 138
Wall, New Jersey 07719
To Be Held On September 28, 2006
The 2006 Annual Meeting of Stockholders of Centennial
Communications Corp. (the “Company” or
“Centennial”) will be held at The Waldorf-Astoria
Hotel, 301 Park Avenue, New York, NY 10022, on Thursday,
September 28, 2006, at 11:00 a.m., local time. The
purposes of the meeting are:
We cordially invite all stockholders to attend. If you attend
the Annual Meeting, you may vote in person if you wish, even if
you have previously returned your proxy. The Board of Directors
has set August 15, 2006 as the record date for the Annual
Meeting. This means that owners of common stock at the close of
business on that date are entitled to receive notice of and vote
at the Annual Meeting.
We enclose with this Notice the Company’s Proxy Statement
for the Annual Meeting and the Company’s 2006 Annual Report
to Stockholders.
By Order of the Board of Directors
Tony L. Wolk
Senior Vice President, General Counsel and Secretary
August 25, 2006
Whether or not you expect to attend the Annual Meeting,
please read the accompanying Proxy Statement and promptly
complete, date and sign the enclosed proxy card and return it in
the enclosed envelope, which requires no postage if mailed
within the United States, or vote by phone or via the Internet.
The proxy, or any vote by phone or the Internet, is revocable by
you at any time prior to its use at the Annual Meeting. If you
receive more than one proxy card because your shares are
registered in different names or addresses, each proxy card
should be signed and returned, or voted by phone or the
Internet, to assure that all your shares will be voted at the
Annual Meeting.
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CENTENNIAL COMMUNICATIONS CORP.
3349 Route 138
Wall, New Jersey 07719
The Board of Directors of Centennial Communications Corp.
(“Centennial,” the “Company,” “we”
or “us”) is furnishing you this Proxy Statement to
solicit proxies on its behalf to be voted at our 2006 Annual
Meeting of Stockholders to be held at The Waldorf-Astoria Hotel,
301 Park Avenue, New York, NY 10022, on Thursday,
September 28, 2006 at 11:00 a.m., local time, and at
any adjournment or adjournments of the Annual Meeting. This
Proxy Statement and the enclosed proxy are first being sent to
stockholders on or about August 28, 2006.
At the Annual Meeting, stockholders of the Company will be asked
to:
Stockholders may also consider and act upon such other matters
as may properly come before the Annual Meeting or any
adjournment or adjournments thereof.
The close of business on August 15, 2006 has been selected
as the record date for determining the holders of outstanding
shares of our common stock entitled to receive notice of and
vote at the Annual Meeting. On August 1, 2006, there were
105,283,751 shares of common stock outstanding. Holders of
common stock are entitled to one vote per share. All shares of
common stock will vote together as one class on all questions
that come before the Annual Meeting.
To carry on the business of the Annual Meeting, we must have a
quorum. This means that at least a majority of the outstanding
shares eligible to vote must be present at the Annual Meeting,
either by proxy or in person. Shares of common stock represented
by a properly signed and returned proxy are considered present
at the Annual Meeting for purposes of determining a quorum.
Abstentions and broker non-votes are counted as present at the
Annual Meeting for determining whether we have a quorum. A
broker non-vote occurs when a broker returns a proxy but does
not vote on a particular proposal because the broker does not
have discretionary voting power for that particular item and has
not received voting instructions from the beneficial owner.
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Directors will be elected by a plurality vote of the combined
voting power of all shares of common stock present in person or
by proxy and voting at the Annual Meeting. Accordingly, votes
“withheld” from director-nominee(s) will not count
against the election of such nominee(s).
Approval of the other proposals described in this Proxy
Statement, or any other matter that may come before the Annual
Meeting, will be determined by the vote of a majority of the
shares of common stock present in person or by proxy at the
Annual Meeting and voting on such matters. Abstentions and
broker non-votes as to particular matters will not count as
votes cast for or against such matters and will not be included
in calculating the number of votes necessary for approval of
such matters.
You can elect to view future Proxy Statements and Annual Reports
over the Internet instead of receiving paper copies in the mail.
If you are a stockholder of record you can choose this option
and save us the cost of producing and mailing these documents.
To do so, please mark the designated box on the proxy card or
follow the instructions if you vote by telephone or over the
Internet. If you own common shares through a bank, broker or
other holder of record, the holder of record may send you
instructions on how to view future Proxy Statements and Annual
Reports over the Internet. If you have not received these
instructions and you would like to view these materials over the
Internet, please contact the holder of record. If you choose to
view the materials online, next year you will receive a proxy
card or voting instructions with the Internet address where you
can find the materials. Please be aware that you may have to pay
for certain costs in connection with online viewing, such as
Internet access and telephone charges. Your election to view our
Proxy Statements and Annual Reports over the Internet will save
the cost of producing and mailing these documents.
Your vote is important. We encourage you to vote promptly, which
may save us the expense of a second mailing. You may vote in one
of the following ways:
By Telephone. If you are located in the U.S.,
you can vote your shares by calling the toll-free telephone
number on your proxy card. You may vote by telephone
24 hours a day through 11:59 p.m., Eastern time, on
Wednesday, September 27, 2006. The telephone voting system
has
easy-to-follow
instructions and allows you to confirm that the system has
properly recorded your votes. If you vote by telephone, you do
not need to return your proxy card. If you are an owner in
street name, please follow the instructions that accompany your
proxy materials.
Over the Internet. You can also vote your
shares over the Internet. Your proxy card indicates the web site
you may access for Internet voting. You may vote over the
Internet 24 hours a day through 11:59 p.m., Eastern
time, on Wednesday, September 27, 2006. As with telephone
voting, you will be able to confirm that the system has properly
recorded your vote. If you are an owner in street name, please
follow the instructions that accompany your proxy materials. You
may incur costs such as telephone and Internet access charges if
you vote over the Internet.
By Mail. If you are a holder of record, you
can vote by marking, dating and signing your proxy card and
returning it by mail in the enclosed postage-paid envelope. If
you hold your shares in street name, please complete and mail
the voting instruction card.
At the Annual Meeting. The way you vote your
shares now will not limit your right to change your vote at the
Annual Meeting if you attend in person. If you hold your shares
in street name, you must obtain a proxy, executed in your favor,
from the holder of record if you wish to vote these shares at
the Annual Meeting.
All shares that have been properly voted and not revoked will be
voted at the Annual Meeting. If you sign and return your proxy
card without any voting instructions, your shares will be voted
as our Board of Directors
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recommends, namely (1) FOR the election of the nine persons
named under “Election of Directors,” (2) FOR the
approval of the amendment to the Company’s 1999 Stock
Option and Restricted Stock Purchase Plan to increase the shares
issuable thereunder by 3,000,000 shares, and (3) FOR
ratification of the appointment of Deloitte & Touche
LLP as our independent auditors for the fiscal year ending
May 31, 2007. The Board of Directors does not anticipate
that any other matters will be brought before the Annual
Meeting. If, however, other matters are properly presented, the
persons named in the proxy will have discretion, to the extent
allowed by Delaware law, to vote in accordance with their own
judgment on such matters.
Revocation of Proxies. You can revoke your
proxy at any time before your shares are voted if you
(1) submit a written revocation to our General Counsel,
Tony L. Wolk, at Centennial Communications Corp., 3349 Route
138, Wall, New Jersey 07719, (2) submit a later-dated proxy
(or voting instructions if you hold shares in street name),
(3) provide subsequent telephone or Internet voting
instructions or (4) vote in person at the Annual Meeting.
We will pay all costs of soliciting the enclosed proxies. In
addition to solicitation by mail, our officers and regular
employees may solicit proxies by telephone or facsimile or in
person. We also will request persons who hold shares in their
names for others to forward copies of this proxy soliciting
material to them and to request authority to execute proxies in
the accompanying form, and we will reimburse such persons for
their
out-of-pocket
and reasonable clerical expenses in doing this.
The table below contains information regarding the beneficial
ownership of our common stock as of August 1, 2006 by each
stockholder who owns beneficially 5% or more of our common stock.
As used throughout this Proxy Statement, “beneficial
ownership” means the sole or shared power to vote, or to
direct the voting of, a security, or the sole or shared
investment power with respect to a security (i.e., the power to
dispose of, or to direct the disposition of, a security). In
addition, a person is deemed, as of any date, to have
“beneficial ownership” of any security that such
person has the right to acquire within 60 days after such
date. The number of shares beneficially owned by each
stockholder is determined according to the rules of the
Securities and Exchange Commission (“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 common stock shown as
beneficially owned. The percentage ownership of each stockholder
is calculated based on 105,283,751 shares of common stock
outstanding on August 1, 2006.
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Certain of our principal stockholders are parties to a
stockholders agreement that is described in detail under
“Certain Relationships and Related Transactions” below.
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Nine persons have been nominated for election as directors to
serve until the 2007 Annual Meeting of Stockholders and until
their successors are elected and qualified. All of the nominees
are currently directors.
The Board of Directors recommends a vote FOR each of the
below-named nominees.
Under the amended and restated stockholders agreement described
in detail under “Certain Relationships and Related
Transactions,” our principal stockholders have agreed to
establish and maintain a Board of Directors consisting of nine
members. The parties entered into the amended and restated
stockholders agreement in connection with the January 1999
merger in which these stockholders acquired a controlling
ownership interest (then 92.9%) in the Company. Pursuant to the
amended and restated stockholders agreement as currently in
effect, our principal stockholders have agreed to vote for the
election of our directors as described below:
For more information about the amended and restated stockholders
agreement, see “Certain Relationships and Related
Transactions — Stockholders Agreement.”
The parties to the amended and restated stockholders agreement
will vote for the election of the nominees named below unless,
by reason of death or other unexpected occurrence, one or more
of such nominees is not available for election. If a nominee is
unavailable to serve, the parties to the stockholders agreement,
and in the absence of instructions to the contrary the proxy
holders named in the accompanying proxy, will vote for a
substitute nominee or nominees designated by the Board of
Directors or the respective party to the stockholders agreement,
or, if no substitute nominee or nominees are so designated, the
membership of the Board of Directors will be reduced. The Board
of Directors has no reason to believe that any of the nominees
listed below will not be available to serve.
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The following table sets forth certain information concerning
the nominees for director and their ownership of common stock as
of August 1, 2006.
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Board of
Directors and Corporate Governance
Our Board of Directors oversees the activities of our management
in the handling of the business and affairs of our company. As
part of the Board’s oversight responsibility, it monitors
developments in the area of corporate governance, including new
SEC and Nasdaq requirements, and periodically reviews and
amends, as appropriate, our governance policies and procedures.
In November 2003, the Nasdaq Stock Market, Inc. adopted
Marketplace Rules with respect to certain corporate governance
matters, including requirements for a board consisting of a
majority of independent directors, executive sessions of
independent directors and independent compensation and
nominating committees, among others. Under such Marketplace
Rules, a company of which more than 50% of the voting power is
held by an individual, group or another company, referred to as
a “controlled company,” is exempt from these
requirements (other than the requirement for executive sessions
of independent directors). We are a controlled company under the
Nasdaq Marketplace Rules, because, as of August 1, 2006,
the Welsh Carson investors held over 50% of the voting power of
our stock. On this basis, we are relying on the exemption from
the Nasdaq Marketplace Rules. Nevertheless, our Board of
Directors has determined that each of the members of our Board
of Directors, except Michael J. Small, our Chief Executive
Officer, is independent, as defined under applicable Nasdaq
rules. In making this determination, the Board considered
relevant facts and circumstances, including the number of shares
beneficially owned by each of the directors. Centennial’s
independent directors meet in executive sessions throughout the
year.
The Board of Directors met fifteen times during the fiscal year
ended May 31, 2006. Each incumbent director attended at
least 75% of the total number of meetings of the Board of
Directors and the committees of which said director was a member
that were held during the period he was a director or member.
All members of our Board of Directors attended our 2005 annual
meeting of stockholders. We encourage our directors to attend
the annual meeting of stockholders.
We have not designated a nominating committee or other committee
performing a similar function. Such matters, to the extent not
dealt with in the amended and restated stockholders agreement,
are discussed by our Board
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of Directors as a whole. Under the amended and restated
stockholders agreement described in detail under “Certain
Relationships and Related Transactions,” our principal
stockholders have agreed to establish and maintain a Board of
Directors consisting of nine members. The amended and restated
stockholders agreement further provides that the principal
stockholders will vote for the election as director of five
persons designated by our principal stockholders, as well as our
chief executive officer.
In selecting directors who are not designated in accordance with
the amended and restated stockholders agreement, the Board will
consider candidates that possess qualifications and expertise
that will enhance the composition of the Board, including the
considerations set forth below. The considerations set forth
below are not meant as minimum qualifications, but rather as
guidelines in weighing all of a candidate’s qualifications
and expertise.
We are of the view that the continuing service of qualified
incumbents promotes stability and continuity in the board room,
contributing to the Board’s ability to work as a collective
body, while giving us the benefit of the familiarity and insight
into our affairs that our directors accumulate during their
tenure. Accordingly, the process of the Board for identifying
nominees for directors who are not designated in accordance with
the amended and restated stockholders agreement will reflect our
practice of generally re-nominating incumbent directors who
continue to satisfy the Board’s criteria for membership on
the Board, whom the Board believes continue to make important
contributions and who consent to continue their service on the
Board. If the Board determines that an incumbent director
consenting to re-nomination continues to be qualified and has
satisfactorily performed his or her duties as director during
the preceding term, and that there exist no reasons, including
considerations relating to the composition and functional needs
of the Board as a whole, why in the Board’s view the
incumbent should not be re-nominated, the Board will, absent
special circumstances, generally propose the incumbent director
for re-election.
If the incumbent directors are not nominated for re-election or
if there is otherwise a vacancy on the Board, the Board will
solicit recommendations for nominees from persons that the Board
believes are likely to be familiar with qualified candidates,
including from members of the Board and management. The Board
may also determine to engage a professional search firm to
assist in identifying qualified candidates. The Board will also
consider candidates suggested by our stockholders, provided that
the recommendations are made in accordance with the procedures
required by Centennial’s By-Laws. Each stockholder
recommendation should include at a minimum the
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director candidate’s name, biographical information and
qualifications, and the director candidate’s
acknowledgement that such person is willing to be nominated for
directorship and serve as director if elected. The Board will
consider stockholder recommendations regarding potential
nominees for next year’s annual stockholders meeting,
consistent with the policy described above, if we receive such
recommendations prior to the deadline for stockholder proposal
submissions, set forth below in “Stockholder
Proposals.” Stockholder nominations that comply with these
procedures and that meet the criteria outlined above will
receive the same consideration that other candidates receive.
Depending on its level of familiarity with the candidates, the
Board may choose to interview certain of such candidates that it
believes may possess qualifications and expertise required for
membership on the Board. It may also gather such other
information it deems appropriate to develop a well-rounded view
of the candidate. Based on reports from those interviews or from
Board members with personal knowledge and experience with a
candidate, and on all other available information and relevant
considerations, the Board will select and nominate candidates
who, in its view, are most suited for membership on the Board.
All selections by the Board of director nominees (including
re-nominations of incumbent directors) who are not designated in
accordance with the amended and restated stockholders agreement
shall be approved by a majority of the independent directors (as
defined by all applicable rules and regulations).
The Board of Directors has a Compensation Committee and an Audit
Committee.
Our Compensation Committee consists of Thomas E. McInerney
(chairman), Anthony J. de Nicola and Robert D. Reid. The
Compensation Committee determines the compensation for our chief
executive officer and other senior management. Our Compensation
Committee, to the extent not otherwise approved by the full
Board of Directors, also administers, determines the
participants under and selects the recipients of awards under
our 1999 Stock Option and Restricted Stock Purchase Plan (the
“Stock Plan”). The Compensation Committee met three
times during the fiscal year ended May 31, 2006.
Our Audit Committee consists of James P. Pellow (chairman), J.
Stephen Vanderwoude and Raymond A. Ranelli. We have adopted a
written charter for our Audit Committee, which describes the
primary responsibilities of the Audit Committee. Our audit
committee charter is attached to this Proxy Statement as
Appendix A and is also available on the Investor Relations
section of our website at www.centennialwireless.com. The
functions of the Audit Committee and its activities during the
past fiscal year are described under the heading “Audit
Committee Report.” The Board of Directors has determined
that each member of the Audit Committee is
“independent” within the definition contained in the
Nasdaq Marketplace Rules. In making this determination with
respect to Mr. Pellow, the Board of Directors considered
that Mr. Pellow is the executive vice president and chief
operating officer of St. John’s University and that
Mr. McInerney, our Chairman and a managing member or
general partner of the respective sole general partners of
Welsh, Carson, Anderson & Stowe VIII, L.P. and
associated investment partnerships, is a member of the Board of
Trustees of St. John’s University and has made significant
charitable contributions to St. John’s University in his
individual capacity over the last several years. The Board of
Directors determined, after considering
Mr. McInerney’s relationship with St. John’s
University, including the size of his contributions relative to
the size of St. John’s University’s revenues and the
fact that the contributions were made by Mr. McInerney
personally and not by the Company or by Welsh, Carson,
Anderson & Stowe VIII, L.P. or its associated entities,
that these relationships with St. John’s University would
not interfere with Mr. Pellow’s exercise of
independent judgment in carrying out his responsibilities as a
director. Furthermore, the Board of Directors has determined
that Mr. Pellow is an “audit committee financial
expert” as defined in Section 407 of the
Sarbanes-Oxley Act. The Audit Committee met twelve times during
the fiscal year ended May 31, 2006.
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Stockholders may send written communications to the Board,
committees of the Board and individual directors (or groups of
directors) by mailing those communications to Centennial
Communications Corp., 3349 Route 138, Wall, New Jersey
07719, Attn.: General Counsel, who will forward such
communications to the relevant addressee. We will generally not
forward to the directors shareholder communications that merely
request general information about us.
We have adopted a written code of conduct applicable to
directors, officers and employees. Our code of conduct is
available on the Investor Relations section of our website at
www.centennialwireless.com. If we make any substantive changes
to our code of conduct, or grant any waiver from a provision of
the code of conduct that applies to our principal executive
officer, principal financial officer, principal accounting
officer or controller, we intend to disclose such events on our
website.
Section 16(a) of the Securities Exchange Act of 1934, as
amended (“Exchange Act”), requires our executive
officers, directors and persons who own more than 10% of our
common stock to file reports of ownership and changes in
ownership with the SEC. The SEC rules also require such
reporting persons to furnish us with a copy of all
Section 16(a) forms they file. As a matter of practice, the
Company typically files the Section 16(a) forms on behalf
of its executive officers and directors, other than the Welsh
Carson and Blackstone directors. We believe that during the
fiscal year ended May 31, 2006, all Section 16(a)
filing requirements applicable to our reporting persons were met.
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EXECUTIVE
COMPENSATION AND OTHER INFORMATION
The following table sets forth certain information for each of
our last three fiscal years with respect to compensation awarded
to, earned by or paid to our Chief Executive Officer and each of
our other four most highly compensated executive officers (based
on amounts reported as salary and bonus for fiscal 2006)
(collectively, the “Named Executives”).
Summary
Compensation Table
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1. Michael J. Small — Chief Executive
Officer. In January 1999, we entered into an
employment agreement with Michael J. Small, our Chief Executive
Officer. The Compensation Committee has determined that
Mr. Small’s base salary for fiscal 2007 will be
$425,000 and his target bonus for fiscal 2007 will be $500,000.
The term of Mr. Small’s employment agreement expires
on September 30, 2007 (as a result of an automatic
renewal), but will automatically renew for subsequent one-year
terms unless we or Mr. Small give notice of non-renewal at
least 90 days before the expiration of any renewal term.
Mr. Small’s agreement provides for certain severance
benefits in the event of his termination of employment under
specified circumstances. Pursuant to the agreement, if we
terminate Mr. Small’s employment 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 with respect to
the one-year period following such termination, a pro rata
portion of any bonus payable for the fiscal year in which such
termination occurs, and certain other fringe benefits. Upon hire
in January 1999, Mr. Small received incentive stock options
and non-qualified stock options to purchase
1,215,000 shares of our common stock with an exercise price
of $4.61 per share, vesting on July 31 of each year
beginning with the fiscal year ended May 31, 1999 if we
attain certain EBITDA targets. All of these stock options have
vested. During the employment term and for a period of one year
following the termination of his employment, except if he quits
because we failed to comply with the agreement, Mr. Small
is subject to certain non-competition and non-solicitation
provisions contained in his employment agreement.
2. Thomas J. Fitzpatrick — Executive Vice
President and Chief Financial Officer. We entered
into an employment agreement with Thomas J. Fitzpatrick in July
2002. Upon hire, Mr. Fitzpatrick was granted incentive
stock options and non-qualified stock options to purchase
375,000 shares of our common stock with an exercise price
of $2.89 per share and received a $100,000 signing bonus.
The Compensation Committee has determined that
Mr. Fitzpatrick’s base salary for fiscal 2007 will be
$325,000 and his target bonus for fiscal 2007 will be $250,000.
The term of his employment agreement expires on August 19,
2007 (as a result of automatic renewal) but will automatically
renew for subsequent one-year terms unless we or
Mr. Fitzpatrick give notice of non-renewal at least
90 days before the expiration of any renewal term.
Mr. Fitzpatrick’s agreement provides for certain
severance benefits in the event of his termination of employment
under specified circumstances. Pursuant to the agreement, if we
terminate Mr. Fitzpatrick’s employment other than for
“Cause”, death or disability or he terminates the
agreement for “Good Reason” (in each case as defined
in his employment agreement), Mr. Fitzpatrick will be
entitled to continue to receive his base salary with respect to
the one-year period following such termination, a pro rata
portion of any bonus payable for the fiscal year in which such
termination occurs, and certain other fringe benefits. During
the employment term and for a period of one year following the
termination of his employment, Mr. Fitzpatrick is subject
to certain non-competition and non-solicitation provisions
contained in his employment agreement.
3. Tony L. Wolk — Senior Vice President,
General Counsel and Secretary. We entered into an
employment agreement with Tony L. Wolk in September 1999 that
was amended and restated on August 27, 2003. The
Compensation Committee has determined that Mr. Wolk’s
base salary for fiscal 2007 will be $245,000 and his target
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bonus for fiscal 2007 will be $125,000. The term of
Mr. Wolk’s employment agreement expires on
August 27, 2007 (as a result of automatic renewal), but
will automatically renew for subsequent one-year terms unless
Mr. Wolk or we give notice of non-renewal at least
90 days before the expiration of the initial or any renewal
term. Mr. Wolk’s agreement provides for certain
severance benefits in the event of his termination of employment
under specified circumstances. Pursuant to the agreement, if we
terminate Mr. Wolk’s employment other than for
“Cause” (as defined in his employment agreement),
death or disability, Mr. Wolk will be entitled to continue
to receive his base salary with respect to the one-year period
following such termination. During the employment term and for a
period of one year following the termination of his employment,
Mr. Wolk is subject to the non-competition and
non-solicitation provisions contained in his employment contract.
The table below contains information concerning options granted
to each of the Named Executives in the fiscal year ended
May 31, 2006.
Option/SAR
Grants in Last Fiscal Year
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The table below summarizes the exercise of stock options during
fiscal 2006 by the Named Executives and provides information as
to the unexercised stock options held by them at the end of the
2006 fiscal year on May 31, 2006.
Each non-employee director (other than the Welsh Carson
directors and Robert Reid (a Blackstone director)) receives a
$15,000 annual retainer, $1,500 for each Board meeting or
committee meeting attended in person or telephonically, an
annual award of an option to purchase 10,000 shares of our
common stock and reimbursement of expenses incurred in
connection with attending meetings. During fiscal 2006, the
Welsh Carson directors and Robert Reid (a Blackstone director)
received no compensation for serving as directors.
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The current members of our Board’s Compensation Committee
are Thomas E. McInerney, Anthony J. de Nicola and Robert D.
Reid. Messrs. McInerney and de Nicola are managing members
of affiliates of Welsh Carson, which beneficially owns
approximately 53% of our outstanding common stock. Mr. Reid
is a Principal of The Blackstone Group L.P., which beneficially
owns approximately 24% of our common stock. Because of these
affiliations, Messrs. McInerney, de Nicola and Reid may be
deemed to have a material interest in the matters described
under “Certain Relationships and Related Transactions.”
The Compensation Committee establishes, approves, and
administers the executive compensation policies and practices of
the Company and the compensation levels of executive officers
and senior management. The Compensation Committee also, to the
extent not otherwise approved by the full Board of Directors,
administers the Company’s stock option plan.
Compensation Philosophy. Centennial’s
executive compensation consists of (1) base salary,
(2) annual bonus based on achievement of operating results
and personal objectives and (3) long-term equity incentives
under our stock option and restricted stock purchase plan. The
Compensation Committee is mindful of the Company’s vision
to being the premier regional provider of telecommunications
services, by tailoring the ultimate customer experience, in the
markets we serve. To realize these objectives, the
Company’s compensation levels must be such as to motivate
and retain these individuals as well as to attract new talent,
as necessary. The Compensation Committee believes it is
important to provide our senior management with stock-based
incentive compensation that increases in value in direct
correlation with improvement in the performance of our common
stock. This aligns management’s interests with those of our
stockholders. The fundamental philosophy is to link the amount
of compensation for an executive to his or her contribution to
the Company’s success in achieving financial and other
objectives. We generally grant stock options to officers and
other key employees upon commencement of their employment with
us and periodically thereafter. The option awards are generally
granted at an exercise price equal to the average of the high
and low price of our common stock on the grant date.
Special Cash Dividend. On December 21,
2005, Centennial issued $550 million in aggregate principal
amount of senior unsecured notes due 2013. The net proceeds from
the notes offering, together with a portion of our available
cash, were used to pay a special cash dividend of $5.52 per
share to Centennial’s common stockholders. As a result of
the special cash dividend, Centennial’s common stock began
trading ex-dividend on January 6, 2006. To compensate
holders of Centennial’s outstanding stock options for the
loss in economic value of the options resulting from payment of
the special cash dividend, the Compensation Committee approved
(i) an adjustment, pursuant to our Stock Plan, to the
exercise price and number of options (the
“Adjustment”) held by holders of outstanding stock
options under the Stock Plan and (ii) the making of cash
payments (the “Cash Payments”) to holders of vested
stock options with an exercise price less than $13.22. The
aggregate amount of the Cash Payments paid to holders of
outstanding options was approximately $13 million. This
amount represented the actual dividend that such holders would
have received had they exercised all vested options on a
cashless basis immediately before our common stock began trading
ex-dividend on January 6, 2006 assuming a stock price of
$13.22. The effect of the Adjustment and the Cash Payments,
taken together, was to provide each holder of outstanding stock
options with the same economic value immediately after the time
our common stock began trading ex-dividend as such holder had
immediately prior to such time. The Cash Payments were paid in
January 2006.
Compensation of Senior Management. In
determining the compensation level of our senior management
other than Mr. Small, the Compensation Committee relies
upon the recommendation of Mr. Small, Chief Executive
Officer of the Company, as the person in the best position to
judge the respective performances of said individuals. In this
regard, the Compensation Committee takes into consideration
Mr. Small’s evaluation of the potential
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contributions of these individuals toward (i) increasing
revenues, (ii) increasing the number of subscribers,
(iii) increasing cash flow, (iv) meeting budgetary
objectives, (v) the development of the Company’s
telecommunications systems businesses, (vi) the successful
completion of certain acquisitions, dispositions and financings
and (vii) the successful achievement of certain
individualized goals and objectives. Bonus compensation for
senior management is determined by reference to a formula that
ties a target bonus objective to the achievement of certain
pre-defined financial benchmarks. The financial benchmarks
established by the Compensation Committee were revenue and
adjusted operating income, but vary slightly with respect to
certain officers that perform services directly for one of the
Company’s individual business units. Under this formula,
the Company’s officers’ actual bonus amounts could be
greater or less than the target bonus based on the
Company’s actual financial performance. In addition, an
officers’ individual bonus award may be adjusted up or down
by up to 15% based on the achievement of certain personal
objectives. The maximum bonus for any officer is 250% of target.
Compensation of Chief Executive
Officer. Mr. Small’s compensation is
based on similar factors as those outlined above. In fiscal
2006, Mr. Small received a base salary of $425,000 and was
awarded a cash bonus of $424,141. The bonus was tied to the
Company’s achievement of certain pre-defined financial
objectives. On June 1, 2005, Mr. Small was granted
non-qualified stock options to purchase 175,000 shares of
our common stock at an exercise price of $13.22 and on
May 25, 2006, Mr. Small was granted non-qualified
stock options to purchase 75,000 shares of our common stock
at an exercise price of $5.82. For fiscal 2007, Mr. Small
will receive a base salary and target bonus of $425,000 and
$500,000, respectively.
The Compensation Committee
Thomas E. McInerney
Anthony J. de Nicola
Robert D. Reid
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The Company’s Board of Directors adopted a written Audit
Committee charter which sets forth the key responsibilities of
the Audit Committee. The charter can be accessed on the investor
relations section of the Company’s website at
www.centennialwireless.com. All members of our Audit
Committee qualify as “independent” directors under the
current listing standards of the Nasdaq Stock Market.
Management is responsible for the Company’s financial
reporting process, including its system of internal controls,
and for the preparation of consolidated financial statements in
accordance with generally accepted accounting principles. The
Company’s independent auditors are responsible for auditing
those financial statements. The principal purpose of the Audit
Committee is to monitor and review these processes. It is not
our duty or our responsibility to conduct auditing or accounting
reviews or procedures.
The Audit Committee has reviewed and discussed with management
and Deloitte & Touche LLP, the Company’s
independent auditors, the audited financial statements contained
in the Company’s Annual Report on
Form 10-K
for the year ended May 31, 2006. The Audit Committee has
also discussed with the independent auditors the matters
required to be discussed by Statement on Auditing Standards
No. 61, as amended, (Communication With Audit Committees),
relating to auditors’ judgment about the quality of the
Company’s accounting principles, judgments and estimates,
as applied in its financial reporting.
The Audit Committee has received the written disclosures and
letter from the independent auditors required by the
Independence Standards Board Standard No. 1 (Independence
Discussions with Audit Committees) that relates to the
auditors’ independence from the Company and has discussed
with the independent auditors its independence. In addition, the
Audit Committee also discussed with Deloitte & Touche
LLP the overall scope and plans for its audit. To this end, the
Audit Committee met with the independent auditors, with and
without management present, to discuss the results of its audit,
the evaluations of Centennial’s internal controls, and the
overall quality of Centennial’s financial reporting.
Based on the reviews and discussions referred to above, the
Audit Committee recommended to the Board of Directors that the
Company’s audited consolidated financial statements be
included in the Company’s Annual Report on
Form 10-K
for the year ended May 31, 2006, for filing with the SEC.
The Audit Committee has also appointed, subject to stockholder
ratification, Deloitte & Touche LLP as the
Company’s independent auditors for fiscal 2007.
Audit Committee
James P. Pellow
Raymond A. Ranelli J. Stephen Vanderwoude
Deloitte & Touche LLP are our independent auditors. The
Audit Committee of our Board of Directors has considered whether
the provision of non-audit services is compatible with
maintaining Deloitte & Touche’s independence.
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The following table shows the aggregate fees billed by
Deloitte & Touche LLP, our independent auditors, for
the fiscal years ended May 31, 2005 and 2006.
The Audit Committee has adopted a policy for the pre-approval of
services provided by the independent auditors. The purpose of
this policy is to help ensure that the independent auditor
maintains the highest level of independence from Centennial, in
both appearance and fact. The Audit Committee will pre-approve
all audit services and permissible non-audit services to be
provided to us by our independent auditors. The Audit Committee
will approve each year those non-audit engagements it deems
appropriate and necessary, including the costs to us for such
services up to certain dollar threshold amounts. Additional
non-audit services, or provision of non-audit services in excess
of the threshold amounts, will require separate pre-approval.
The Audit Committee has delegated to each of its members the
authority to grant certain pre-approvals between meetings in
accordance with our policy. The relevant member of the Audit
Committee will report its pre-approval decision to the Audit
Committee at the next meeting.
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The following graph compares the total returns (assuming
reinvestment of dividends) on our common stock, the Nasdaq Stock
Market — US Index (which includes Centennial) and the
Nasdaq Telecommunications Index (which includes Centennial). The
graph assumes $100 invested in our common stock or in each of
the indices on May 31, 2001, including the reinvestment of
dividends, if any.
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The following table sets forth, as of August 1, 2006,
certain information with respect to the beneficial ownership of
shares of common stock by the Named Executives of the Company
and all directors and executive officers as a group.
Certain
Relationships and Related Transactions
On January 7, 1999, each of the stockholders of CCW
Acquisition Corp. who purchased shares of CCW Acquisition Corp.
under the securities purchase agreement, dated December 29,
1998, 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 superseded by a first
amended and restated stockholders agreement dated as of
January 20, 1999, in connection with the transfer by WCA
Management Corporation of its equity interest in Centennial to
another investment fund, and the first amended and restated
stockholders agreement was amended on July 24, 2006. We
refer to the first amended and restated stockholders agreement,
as so amended, as the amended and restated stockholders
agreement. The parties to the amended and restated stockholders
agreement include Welsh Carson and its affiliates, The
Blackstone Group and its affiliates, Michael J. Small (our Chief
Executive Officer), each of whom are our stockholders, and us.
Under the amended and restated stockholders agreement, our
principal stockholders have agreed to establish and maintain for
the Company a Board of Directors in the manner described under
“Election of Directors.” The amended and restated
stockholders agreement calls for the creation of a Compensation
Committee consisting of three directors, two of whom will be
designated by the Welsh Carson investors and one of whom will be
designated by The Blackstone Group investors. The amended and
restated stockholders agreement provides for an audit
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committee consisting of at least three directors, all of whom
will be directors who qualify under the rules of the Nasdaq
Global Select Market applicable to audit committee members. The
amended and restated stockholders agreement requires that each
other committee of our Board of Directors consist of at least
three members, at least two of whom are selected by the Welsh
Carson investors and at least one of whom is selected by The
Blackstone Group investors.
The amended and restated stockholders agreement places
restrictions on the ability of Mr. Small to transfer shares
of common stock owned in his name or on his behalf without the
consent of the Welsh Carson investors. There are exceptions for
transfers in registered public offerings or to his spouse 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
him at the time of the termination of his employment.
The amended and restated stockholders agreement grants The
Blackstone Group investors and Mr. Small the right to
participate in any sale of common stock 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 and Mr. Small to sell their shares of common
stock to a third party who offers to buy at least 80% of our
capital stock. 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
common stock than the Welsh Carson investors.
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, and Mr. Small. These
preemptive rights apply to any sale by us of common stock or
securities convertible into or exchangeable for common stock
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 common stock by The Blackstone Group investors. This
means that if any of The Blackstone Group investors wishes to
sell its 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 less 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 of 1933, as amended (the “Securities
Act”), or distributions by any of The Blackstone Group
investors which are limited partnerships to their limited
partners.
We have agreed not to take any of the following actions without
the approval of the Welsh Carson investors, The Blackstone Group
investors, and if disproportionately affected thereby, the other
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
respective rights, preferences or voting power of the holders of
our common stock, or the rights of the stockholders party to the
amended and restated stockholders agreement, or
(2) enter into, or permit any of our subsidiaries to enter
into, any transaction (other than with respect to normal
employment arrangements, benefit programs and employee incentive
option programs on reasonable terms, any transaction with a
director (or an affiliate of such director) that is approved by
a majority of the
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disinterested directors on our Board of Directors or a committee
of 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:
Under the amended and restated stockholders agreement, each of
the Welsh Carson investors, The Blackstone Group investors and
Mr. Small has agreed not to, and agreed to cause its
affiliates not to, directly or indirectly, alone or in concert
with others, without the prior written consent of holders of a
majority of the shares held by the Welsh Carson investors, take
any of the following actions:
(1) effect, seek, offer, engage in, propose or participate
in
(2) propose any matter for submission to a vote of
stockholders of the Company,
(3) seek to remove or appoint directors of the Company
outside of the provisions of the amended and restated
stockholders agreement, or
(4) 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 the Company, other than any group consisting exclusively of
stockholders who are parties to 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 affiliate of
Welsh, Carson, Anderson & Stowe VIII, L.P., an annual
monitoring fee of $450,000 plus reasonable expenses and
Blackstone Management Partners III, L.L.C. an annual
monitoring fee of $300,000 plus reasonable expenses. We will not
be required to pay these monitoring fees if either the Welsh
Carson investors or The Blackstone Group investors sells 75% of
the shares (adjusted for stock splits) owned by them on
January 20, 1999.
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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 (1) January 20, 2009, or (2) the
completion of a registered public offering of common stock
raising not less than $50 million for the Company and the
transfer by either the Welsh Carson investors or The Blackstone
Group investors of 50% or more of the shares of common stock
(adjusted for stock splits) owned by them on January 20,
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 (1) January 20, 2009, or
(2) 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 and
The Blackstone Group investors of 50% or more of the shares of
common stock (adjusted for stock splits) owned by them on
January 20, 1999.
On January 7, 1999 each of the stockholders of CCW
Acquisition Corp. who purchased shares of CCW Acquisition Corp.
under the securities purchase agreement and CCW Acquisition
Corp. entered into a registration rights agreement. The
registration rights agreement became the Company’s
obligation when we merged with CCW Acquisition Corp. on
January 7, 1999. The original registration rights agreement
was superseded 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
the Company to another investment fund, and the first amended
and restated registration rights agreement was superseded by a
second amended and restated registration rights agreement on
July 24, 2006. We refer to the second amended and restated
registration rights agreement as the amended and restated
registration rights agreement. The parties to the amended and
restated registration rights agreement include Welsh, Carson,
Anderson & Stowe VIII, L.P. and its affiliates, The
Blackstone Group and its affiliates and Michael J. Small, each
of whom are our stockholders, and us.
The amended and restated registration rights agreement grants
the Welsh Carson investors and The Blackstone Group investors
the right to require the Company to register their shares of
common stock under the Securities Act. The amended and restated
registration rights agreement also grants each of the Welsh
Carson investors, each of the Blackstone investors and
Mr. Small the right to include, at their request, shares of
common stock owned by them in registrations under the Securities
Act by the Company.
During the fiscal years ended May 31, 2003 and 2002, an
affiliate of Welsh Carson purchased in open market transactions
approximately $189.0 million principal amount of our
103/4% Senior
Subordinated Notes due 2008 (the “2008 Notes”). On
September 24, 2002, we entered into an indemnification
agreement with the Welsh Carson affiliate pursuant to which the
Welsh Carson affiliate agreed to indemnify us in respect of
taxes which may become payable by us as a result of these
purchases. In connection with these transactions, we recorded a
$15.9 million income tax payable included in accrued
expenses and other current liabilities, and a corresponding
amount due from the Welsh Carson affiliate that is included in
prepaid expenses and other current assets. This amount was
reduced by $3.5 million as a result of the expiration of
the statute of limitations for the fiscal year ended
May 31, 2002.
We have redeemed $225.0 million in aggregate principal
amount of the 2008 Notes, which included approximately
$114.5 million principal amount of 2008 Notes held by the
Welsh Carson affiliate. As of May 31, 2006, affiliates of
Welsh Carson held approximately $74.5 million principal
amount of our 2008 Notes, representing approximately 51% of the
outstanding principal amount.
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1999 STOCK OPTION AND RESTRICTED STOCK PURCHASE PLAN
In January 1999 we established the Stock Plan. The Stock Plan
was approved by our stockholders in October 1999. In 2001, our
Board of Directors proposed, and our stockholders approved, an
amendment to the Stock Plan to increase the maximum number of
shares issuable under the plan to 12,000,000 shares (not
including any adjustment related to the Company’s special
cash dividend paid on January 6, 2006). As of May 31,
2006, approximately 495,053 shares remain available for
future grants.
The purpose of the Stock Plan is to promote the interests of the
Company and its subsidiaries and the interests of our
stockholders by providing an opportunity to selected employees
and officers of the Company and its subsidiaries and to other
persons providing services to the Company and its subsidiaries
to purchase common stock of the Company. By encouraging such
stock ownership, we seek to attract, retain and motivate such
employees and other persons and to encourage such employees and
other persons to devote their best efforts to the business and
financial success of the Company. The Company and the Board of
Directors believes the Stock Plan has been successful in helping
us attract, retain and motivate employees.
To continue the Stock Plan, the Board of Directors proposes that
the Stock Plan be amended to increase the maximum number of
shares of common stock issuable under the plan by 3,000,000.
The following summary describes the principal features of the
Stock Plan and is qualified in its entirety by reference to the
specific provisions of the Stock Plan, a copy of which attached
to this Proxy Statement as Appendix B.
The Board of Directors recommends that stockholders
vote FOR the approval of the amendment to the Stock
Plan.
Shares and Options Subject to Plan. The Stock
Plan provides for the grant of options or awards to purchase an
aggregate 12,000,000 shares of common stock (not including
any adjustment related to the Company’s special cash
dividend paid on January 6, 2006, and subject to further
adjustment), either in the form of incentive stock options
(“ISOs”) intended to meet the requirements of
Section 422 of the Internal Revenue Code or non-qualified
stock options or restricted stock purchase awards. The Stock
Plan includes provisions for adjustment of the number of shares
of common stock available for grant or award thereunder and in
the number of shares of common stock underlying outstanding
options in the event of any stock splits, stock dividends or
other relevant changes in the capitalization of the Company.
Eligibility. Under the Stock Plan, employees,
including officers, are eligible to receive grants of either
ISOs structured to qualify under Section 422 of the Code,
or non-qualified stock options and restricted stock purchase
awards, both of which are not intended to meet the requirements
of Code Section 422. Consultants and non-employee directors
are eligible to be granted only nonqualified options and awards.
Administration. Administration of the Stock
Plan has been delegated to the compensation committee of the
Board of Directors, consisting entirely of “Non-Employee
Directors” within the meaning of
Rule 16b-3
promulgated under the Exchange Act, and “outside
directors” within the meaning of Treasury
regulation Section 1.162-27(e)(3)
of the Code. The Compensation Committee, within the parameters
of the Stock Plan, has authority to determine to whom options or
awards are granted, the number of options or awards granted, and
the
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terms of such options and awards. All questions of
interpretation or application of the Stock Plan are determined
by the Compensation Committee, whose decisions are final and
binding upon all participants.
Terms of Options and Awards. Each option or
award granted will be evidenced by a stock option or restricted
stock purchase agreement. The Compensation Committee will fix
the term and vesting provisions of all options granted pursuant
to the Stock Plan, provided, however, that the term of any
option granted may not exceed ten years from the date on which
the option is granted.
The exercise price of ISOs may not be less than 100% of the fair
market value of the shares of common stock, as determined by the
Board of Directors or the Compensation Committee, as the case
may be, on the date the option is granted. The exercise price of
non-qualified stock options may be equal to, less than or more
than the fair market value of the shares of common stock on the
date the option is granted. In addition, the aggregate fair
market value (determined as of the date an ISO is granted) of
the shares of stock with respect to which ISOs are exercisable
for the first time by an optionee during any calendar year shall
not exceed $100,000. In addition, no ISO shall be granted to an
optionee who owns more than 10% of the total combined voting
power of all classes of stock of the Company.
Restricted stock purchase awards granted under the Stock Plan
will be in such amounts and at such times as determined by the
Compensation Committee. The purchase price, as well as the
vesting provisions, of such awards shall be determined by the
Compensation Committee and the purchase price may be equal to,
less than or more than the fair market value of the shares of
common stock to be awarded.
Term of the Stock Plan. The Stock Plan is
effective as of January 7, 1999 and will continue in effect
until January 7, 2009 unless terminated prior to such date
by the Board of Directors.
The tax consequences of ISO’s, non-qualified stock options
and restricted stock purchase awards are quite complex.
Therefore, the description of tax consequences set forth below
is necessarily general in nature and does not purport to be
complete. Moreover, statutory provisions are subject to change,
as are their interpretations, and their application may vary in
individual circumstances. Finally, the tax consequences under
applicable state and local income tax laws may not be the same
as under the federal income tax laws.
ISOs granted pursuant to the Stock Plan are intended to qualify
as “incentive stock options” within the meaning of
Section 422 of the Code. If an optionee does not dispose of
the shares acquired pursuant to exercise of an ISO within one
year after the transfer of such shares to the optionee and
within two years from grant of the option (the “ISO holding
period requirements”), such optionee will recognize no
taxable income as a result of the grant or exercise of such
option. (However, for alternative minimum tax purposes the
optionee will recognize as an item of tax preference the
difference between the fair market value of the shares received
upon exercise and the exercise price.) Any gain or loss that is
subsequently recognized upon a sale or exchange of the shares
may be treated by the optionee as long-term capital gain or
loss, as the case may be. The Company will not be entitled to a
deduction for federal income tax purposes with respect to the
issuance of an ISO, the transfer of shares upon exercise of the
option or the ultimate disposition of such shares (provided the
ISO holding period requirements are satisfied).
If shares received upon exercise of an ISO are disposed of prior
to satisfaction of the ISO holding period requirements, the
optionee generally will recognize taxable ordinary income, in
the year in which such disqualifying disposition occurs, in an
amount equal to the lesser of (i) the excess of the fair
market value of the shares on the date of exercise over the
exercise price, and (ii) the gain recognized on such
disposition. Such amount will ordinarily be deductible by the
Company for federal income tax purposes in the same year,
provided that the Company satisfies certain federal income tax
information reporting requirements. In addition, the excess, if
any, of the amount realized by the optionee on such
disqualifying disposition over the fair market value of the
shares on the date of exercise of the ISO will be treated as
capital gain, long-term or short-term, depending on whether,
after
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exercise of the option, the shares were held for more than one
year (the applicable long-term capital gain holding period)
prior to such disposition.
Non-qualified stock options may be granted under the Stock Plan.
An optionee generally will not recognize any taxable income upon
grant of a non-qualified stock option. The optionee will
recognize taxable ordinary income, at the time of exercise of
such option, in an amount equal to the excess of the fair market
value of the shares on the date of exercise over the exercise
price. Such amount will ordinarily be deductible by the Company
in the same year, provided that the Company satisfies certain
federal income tax information reporting requirements. Any gain
or loss that is subsequently recognized by the optionee upon a
sale or exchange of the shares will be capital gain or loss,
long-term or short-term, depending on whether, after the
exercise of the option, the shares were held for more than one
year prior to such sale or exchange.
Restricted stock purchase awards may also be granted pursuant to
the Stock Plan. A recipient of a restricted stock purchase award
generally will not recognize taxable income upon the purchase of
shares of restricted stock, unless he or she makes a timely
election under Section 83(b) of the Code. Such a recipient,
however, would recognize taxable ordinary income (and the
holding period for such shares would commence) at the time that
such shares become vested, in an amount equal to the excess of
the fair market value of the shares at that time over the
purchase price paid for such shares. If, on the other hand, the
recipient makes a timely election under Section 83(b), he
or she would recognize taxable ordinary income (and the holding
period for such shares would commence) at the time of purchase,
in an amount equal to the excess of the fair market value of the
shares at that time (determined without regard to any transfer
restrictions imposed on the shares, vesting provisions or any
restrictions imposed by the securities laws) over the purchase
price paid for such shares. In either case, the Company should
be entitled to a deduction in an amount equal to the ordinary
income recognized by the recipient in the same year that the
recipient recognized such income, provided that the Company
satisfies certain federal income tax information reporting
requirements. Any gain or loss that is subsequently recognized
by the recipient upon a sale or exchange of the shares will be
capital gain or loss, long-term or short-term, depending on
whether the shares were held for more than one year prior to
such sale or exchange.
The American Jobs Creation Act of 2004 (the “Jobs
Act”) which became law in October 2004, imposes a 20%
penalty tax on compensation that is deferred after 2004 under a
deferred compensation plan unless the plan under which the
compensation is deferred meets certain requirements. The penalty
also includes interest on any underpayment, generally from the
year the compensation was first deferred. Under the Jobs Act and
initial, temporary guidance from the Internal Revenue Service,
“deferred compensation” includes certain forms of
equity based compensation awards, including stock options
granted at exercise prices below the market price of the
underlying common stock at the date of grant; certain stock
appreciation rights; stock units; and other similar grants.
“Deferred compensation” does not include options with
an exercise price at or above the grant date market price or
grants of restricted stock. The Department of the Treasury and
Internal Revenue Service are expected to issue additional
guidance on the application of the Jobs Act to equity
compensation, which may expand, extend or limit the types of
equity based compensation awards subject to the penalties under
the Jobs Act. Although the initial guidance indicates that any
expansion of the coverage of the Jobs Act would be applied on a
prospective basis only, there can be no assurance that any such
guidance or other tax legislation may not have an effect on
Benefits granted prior to the date of such guidance or
legislation.
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The following table provides information as of May 31, 2006
about our common stock that may be issued upon the exercise of
options, warrants and rights under our existing equity
compensation plan, the Centennial Communications Corp. and its
Subsidiaries 1999 Stock Option and Restricted Stock Purchase
Plan:
Our Audit Committee has selected the firm of Deloitte &
Touche LLP, independent auditors, to audit the accounts of the
Company and its subsidiaries for the fiscal year ending
May 31, 2007. In accordance with our policy of seeking
annual stockholder ratification of the selection of auditors, we
request that such selection be ratified by stockholders. We have
been advised by Deloitte & Touche LLP that neither that
firm nor any of its partners has any other relationship, direct
or indirect, with the Company or its subsidiaries that would
effect independence. We expect representatives of
Deloitte & Touche LLP to be present at the Annual
Meeting, and such representatives will have the opportunity to
make a statement if they desire to do so, and will be available
to respond to appropriate questions from stockholders.
The Board of Directors recommends that stockholders
vote FOR the proposal to ratify the appointment of
Deloitte & Touche LLP as independent auditors for the
Company for the fiscal year ending May 31, 2007.
If a stockholder wishes to submit a proposal for inclusion in
the proxy statement and form of proxy for the 2007 Annual
Meeting of Stockholders, such proposal must be received by the
Company at its principal executive offices not later than
April 30, 2007.
In accordance with
Rule 14a-4(c)(1)
of the Exchange Act, management proxy holders intend to use
their discretionary voting authority with respect to any
stockholder proposal raised at the Company’s Annual Meeting
in 2007 as to which the proponent fails to notify the Company on
or before July 14, 2007 (one year after 45 days prior
to the date on which this Proxy Statement was first mailed to
stockholders). Notifications must be addressed to the
Company’s General Counsel at 3349 Route 138, Wall, New
Jersey 07719.
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The Board of Directors does not intend to bring any other
matters before the Annual Meeting and does not know of any other
business which others intend to bring before the Annual Meeting.
However, if any other matter should properly come before the
Annual Meeting or any adjournment of the Annual Meeting, the
persons named in the accompanying proxy intend to vote on such
matters as they, in their discretion, may determine.
By Order of Board of Directors
Tony L. Wolk
Senior Vice President, General Counsel and Secretary
Dated: August 25, 2006
Please complete, date and sign the enclosed proxy and return
it promptly in the enclosed envelope, or vote by telephone or
via the Internet. On written request of any stockholder, a copy
of the Company’s Annual Report on
Form 10-K
for the fiscal year ended May 31, 2006, including the
financial statements and the schedules thereto, required to be
filed with the SEC pursuant to
Rule 13a-1
under the Exchange Act may be obtained without charge from Tony
L. Wolk, General Counsel, Centennial Communications Corp.,
3349 Route 138, Wall, New Jersey 07719.
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EXHIBIT A
CENTENNIAL
COMMUNICATIONS CORP.
AUDIT COMMITTEE CHARTER
The Audit Committee is established by the Board of Directors of
Centennial Communications Corp. (the “Company”)
for the primary purpose of assisting the Board of Directors in
its oversight role relating to:
Consistent with this function, the Audit Committee should
encourage continuous improvement of, and should foster adherence
to, the Company’s policies, procedures and practices at all
levels. The Audit Committee should also provide an open avenue
of communication among the independent auditors, financial and
senior management, the internal auditing function, and the Board
of Directors. All references in this Charter to the internal
auditing function shall include any external group acting in
such capacity.
The Audit Committee has the authority to obtain advice and
assistance from outside legal, accounting, or other advisors as
the Audit Committee deems appropriate to perform its duties and
responsibilities. The Company shall provide appropriate funding,
as determined by the Audit Committee, for compensation to the
independent auditor or any other accounting firm performing
other audit, review or attest services and to any advisers that
the Audit Committee chooses to engage.
The Audit Committee will primarily fulfill its responsibilities
by carrying out the activities enumerated in Section III of
this Charter. The Audit Committee will report regularly to the
Board of Directors regarding the execution of its duties and
responsibilities. Such report may take the form of an oral
report by the Chairman or any member of the Audit Committee.
The Audit Committee shall be comprised of three or more
directors as determined by the Board, each of whom shall be
“independent” directors (as defined by all applicable
rules and regulations), and who shall be free from any
relationship (including disallowed compensatory arrangements)
that, in the opinion of the Board, would interfere with the
exercise of his or her independent judgment as a member of the
Committee. All members of the Committee shall have a working
familiarity with basic finance and accounting practices
sufficient to satisfy all applicable rules and regulations. The
Board shall use its reasonable best efforts to ensure that at
least one member of the Committee shall be a “financial
expert” in compliance with the criteria established by the
SEC and other relevant regulations.
The members of the Committee shall be appointed by the Board.
Each member shall serve until such member’s successor is
duly elected and qualified or until such member’s earlier
resignation or removal. The members of the Audit Committee may
be removed, with or without cause, by a majority vote of the
Board of Directors. Unless a
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Chair is elected by the full Board, the members of the Committee
may designate a Chair by majority vote of the full Committee
membership.
The Committee shall meet at least four times annually, or more
frequently as circumstances dictate. As part of its job to
foster open communication, the Committee should meet
periodically with management, the director of the internal
auditing function and the independent auditors in separate
executive sessions to discuss any matters that the Committee or
each of these groups believe should be discussed privately. In
addition, the Committee should meet with the independent
auditors and management, and, to the extent the Committee
determines appropriate, outside counsel, to discuss the annual
audited financial statements and quarterly financial statements,
including the Company’s disclosure under
“Management’s Discussion and Analysis of Financial
Condition and Results of Operations”. Any member of the
Audit Committee may call a meeting of the Audit Committee and
meetings may be held in-person or telephonically at such times
and locations as the Audit Committee may determine. A majority
of the total number of members shall constitute a quorum of the
Committee. A majority of the members of the Committee shall be
empowered to act on behalf of the Committee, except as provided
otherwise in this Charter. Minutes shall be kept of each meeting
of the Committee.
The following functions shall serve only as a guide with the
understanding that the Audit Committee may carry out additional
functions and adopt additional policies and procedures as may be
appropriate in light of changing business, legislative,
regulatory, legal or other conditions.
The Audit Committee and its advisors shall be given full access
to the Company’s internal audit group, Board of Directors,
corporate executives, outside counsel and independent
accountants as necessary to carry out these responsibilities.
Notwithstanding the foregoing, the Audit Committee is not
responsible for certifying the Company’s financial
statements or guaranteeing the auditor’s report. The
fundamental responsibility for the Company’s financial
statements and disclosures rests with management. The
Company’s independent auditors are responsible for auditing
the financial statements.
To fulfill its responsibilities and duties, the Audit Committee
shall, to the extent determined appropriate and necessary:
1. Review this Charter at least annually and recommend to
the Board of Directors any necessary amendments as conditions
dictate.
2. Review and discuss with management prior to filing with
the SEC the Company’s annual financial statements and
quarterly financial statements. Review other relevant reports or
financial information submitted by the Company to the SEC or the
public, including management certifications as required by the
Sarbanes-Oxley Act of 2002 (Sections 302 and 906) and
relevant reports rendered by the independent auditors (or
summaries thereof).
3. Recommend to the Board whether the financial statements
should be included in the Annual Report on
Form 10-K.
4. Review earnings press releases with management,
including review of “non-GAAP financial measures” (as
defined in the rules of the SEC). Discuss with management, as
necessary, financial information and earnings guidance provided
to analysts and rating agencies. The Committee’s discussion
in this regard may be general in nature (i.e., discussion
of the types of information to be disclosed and the type of
presentation to be made) and need not take place in advance of
each earnings release or each instance in which the Company may
provide earnings guidance.
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5. Review the material internal reports (or summaries
thereof) to management prepared by the internal auditing
department and management’s responses, if any.
6. Appoint (subject to shareholder ratification, if
applicable), compensate, and oversee the work performed by the
independent auditor for the purpose of preparing or issuing an
audit report or related work. Review the performance of the
independent auditors and remove the independent auditors if
circumstances warrant. The independent auditors shall report
directly to the Audit Committee and the Audit Committee shall
oversee the resolution of disagreements between management and
the independent auditors in the event that they arise. Consider
whether the auditor’s performance of permissible nonaudit
services is compatible with the auditor’s independence.
7. Review the independent auditor’s attestation and
report on management’s internal controls report; and
hold timely discussions with the independent auditors regarding
the following:
8. At least annually, obtain and review a report by the
independent auditor describing:
9. Review and approve in advance the terms of and
compensations for both audit and nonaudit services (other than
“Prohibited Non-Audit Services”) to be provided by the
independent auditor (other than with respect to de minimis
exceptions permitted by the Sarbanes-Oxley Act of 2002).
This duty may be delegated to one or more designated members of
the Audit Committee with any such preapproval reported to the
audit committee at a subsequent meeting. Approval of nonaudit
services shall be disclosed in periodic reports required by
Section 13(a) of the Securities Exchange Act of 1934.
Prohibited Non-Audit Services shall be as set forth in the rules
promulgated by the SEC, including: (i) bookkeeping or other
services related to the accounting records or financial
statements of the audit client; (ii) financial information
systems design and implementation; (iii) appraisal or
valuation services, providing fairness opinions or preparing
contribution-in-kind
reports; (iv) actuarial services; (v) internal audit
outsourcing services; (vi) management functions or human
resources; (vii) broker or dealer, investment adviser or
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investment banking services; (viii) legal services and
expert services unrelated to the audit; and (ix) any other
service that the Public Company Accounting Oversight Board
prohibits through regulation.
10. Review the Company’s hiring policies for employees
or former employees of the independent auditor. At a minimum,
these policies must provide that any registered public
accounting firm may not provide audit services to the Company if
the CEO, controller, CFO, chief accounting officer or any person
serving in an equivalent capacity for the Company was employed
by the registered public accounting firm and participated in the
audit of the Company within one year of the initiation of the
current audit.
11. Confirm with any independent auditor retained to
provide audit services for any fiscal year that (a) both
the lead audit partner (having primary responsibility for the
audit), and the audit partner responsible for reviewing the
audit, have complied with the requirement that they rotate after
five years and are subject to a five-year “time-out”
period after rotation and (b) audit partners other than the
lead and concurring partner have complied with a seven-year
rotation requirement and a two-year time-out period, or any
other applicable rules.
12. To the extent deemed necessary, discuss with the
independent auditor’s national office any issues brought to
it by the Company’s audit team.
13. Discuss any other items that the relevant accounting
standards may require.
14. In consultation with the independent auditors and the
internal auditors (as deemed necessary), review the integrity of
the Company’s financial reporting processes (both internal
and external), and the internal control structure (including
disclosure controls).
15. Review with management major issues regarding
accounting principles and financial statement presentations,
including any significant changes in the Company’s
selection or application of accounting principles, and major
issues as to the adequacy of the Company’s internal
controls and any special audit steps adopted in light of
material control deficiencies.
16. Review analyses prepared by management (and the
independent auditor as noted in item 7 above) setting forth
significant financial reporting issues and judgments made in
connection with the preparation of the financial statements,
including analyses of the effects of alternative GAAP methods on
the financial statements.
17. Review with management the effect of regulatory and
accounting initiatives, as well as off-balance sheet structures,
on the financial statements of the Company.
18. Review and approve all related party transactions, to
the extent required by applicable rules and regulations.
19. Establish and maintain procedures for (i) the
receipt, retention, and treatment of complaints regarding
accounting, internal accounting controls, or auditing matters
and (ii) the confidential, anonymous submission by Company
employees regarding questionable accounting or auditing
matters.
20. Review the structure, responsibilities, plans, budget,
staffing, performance and development of the Company’s
internal audit function.
21. Review and advise on the appointment, promotion or
dismissal of the chief internal audit executive.
22. Review with the chief internal audit executive any
significant difficulties, disagreements with management, or
scope restrictions encountered in the course of performing the
function’s work.
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23. Review periodically the Company’s Code of Conduct
and compliance training program.
24. Review, with the Company’s General Counsel,
applicable laws and regulations and legal compliance matters
including corporate securities trading policies that could have
a significant impact on the Company’s financial statements.
25. Meet with management to discuss the Company’s
major financial risk exposures and steps management has taken to
monitor and control them.
26. Review with the independent auditors, the internal
auditing department and management the extent to which changes
or improvements in financial or accounting practices, as
approved by the Audit Committee, have been implemented. This
review should be conducted at an appropriate time subsequent to
implementation of changes or improvements, as decided by the
Committee.
27. Prepare the Audit Committee Report that the SEC
requires be included in the Company’s annual proxy
statement.
28. Annually, perform a self-assessment relative to the
Audit Committee’s purpose, duties and responsibilities
outlined herein.
29. Perform any other activities consistent with this
Charter, the Company’s certificate of incorporation and
by-laws and governing law, as the Audit Committee or the Board
deems necessary or appropriate.
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EXHIBIT B
CENTENNIAL
COMMUNICATIONS CORP. AND ITS SUBSIDIARIES
1999 STOCK OPTION AND RESTRICTED STOCK PURCHASE PLAN
Section 1. Purpose. The
purpose of the Centennial Communications Corp. and its
Subsidiaries 1999 Stock Option and Restricted Stock Purchase
Plan (the “Plan”) is to promote the interests of
Centennial Communications Corp., a Delaware corporation (the
“Company”), and any Subsidiary thereof and the
interests of the Company’s stockholders by providing an
opportunity to selected employees and officers of the Company or
any Subsidiary thereof as of the date of the adoption of the
Plan or at any time thereafter to purchase Common Stock of the
Company. By encouraging such stock ownership, the Company seeks
to attract, retain and motivate such employees and other persons
and to encourage such employees and other persons to devote
their best efforts to the business and financial success of the
Company. It is intended that this purpose will be effected by
the granting of “non-qualified stock options”
and/or
“incentive stock options” to acquire the Common Stock
of the Company
and/or by
the granting of rights to purchase the Common Stock of the
Company on a “restricted stock” basis. Under the Plan,
the Committee (as hereinafter defined) shall have the authority
(in its sole discretion) to grant “incentive stock
options” within the meaning of Section 422(b) of the
Code, “non-qualified stock options” as described in
Treasury
Regulation Section 1.83-7
or any successor regulation thereto, or “restricted
stock” awards.
No grant of “incentive stock options” shall be made
under this Plan unless such Plan is approved by the stockholders
of the Company within 12 months of the date of the adoption
of such Plan.
Section 2. Definitions. For
purposes of the Plan, the following terms used herein shall have
the following meanings, unless a different meaning is clearly
required by the context:
2.1 “Award” shall mean an award of the
right to purchase Common Stock granted under the provisions of
Section 7 of the Plan.
2.2. “Board of Directors” shall mean the
Board of Directors of the Company.
2.3. “Code” shall mean the Internal
Revenue Code of 1986, as amended.
2.4. “Committee” shall mean the
committee of the Board of Directors referred to in
Section 5 hereof; provided, that if no such committee is
appointed by the Board of Directors, the Board of Directors
shall have all of the authority and obligations of the Committee
under the Plan.
2.5. “Common Stock” shall mean the
Class A Common Stock, $.01 par value, of the Company.
2.6. “Employee” shall mean (i) with
respect to an ISO, any person, including, without limitation, an
officer of the Company, who, at the time an ISO is granted to
such person hereunder, is employed by the Company or any Parent
or Subsidiary of the Company, and (ii) with respect to a
Non-Qualified Option
and/or an
Award, any person employed by, or performing services for, the
Company or any Parent or Subsidiary of the Company, including,
without limitation, officers.
2.7. “ISO” shall mean an Option granted
to a Participant pursuant to the Plan that constitutes and shall
be treated as an “incentive stock option” as defined
in Section 422(b) of the Code.
2.8. “Non-Qualified Option” shall mean
an Option granted to a Participant pursuant to the Plan that is
intended to be, and qualifies as, a “non-qualified stock
option” as described in Treasury Regulation
Section 1.83-7
or any successor regulation thereto and that shall not
constitute or be treated as an ISO.
2.9. “Option” shall mean any ISO or
Non-Qualified Option granted to an Employee pursuant to the Plan.
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2.10. “Participant” shall mean any
Employee to whom an Award
and/or an
Option is granted under the Plan.
2.11. “Parent” of the Company shall have
the meaning set forth in Section 424(e) of the Code.
2.12. “Subsidiary” of the Company shall
have the meaning set forth in Section 424(f) of the Code.
Section 3. Eligibility. Awards
and/or
Options may be granted to any Employee. The Committee shall have
the sole authority to select the persons to whom Awards
and/or
Options are to be granted hereunder, and to determine whether a
person is to be granted a Non-Qualified Option, an ISO or an
Award or any combination thereof. No person shall have any right
to participate in the Plan. Any person selected by the Committee
for participation during any one period will not by virtue of
such participation have the right to be selected as a
Participant for any other period.
Section 4. Common
Stock Subject to the Plan.
4.1. Number of Shares. The
total number of shares of Common Stock for which Options
and/or
Awards may be granted under the Plan shall not exceed in the
aggregate twelve million (12,000,000) shares of Common Stock
(subject to adjustment as provided in Section 8 hereof).
4.2. Reissuance. The shares
of Common Stock that may be subject to Options
and/or
Awards granted under the Plan may be either authorized and
unissued shares or shares reacquired at any time and now or
hereafter held as treasury stock as the Committee may determine.
In the event that any outstanding Option expires or is
terminated for any reason, the shares allocable to the
unexercised portion of such Option may again be subject to an
Option and/or Award granted under the Plan. If any shares of
Common Stock issued or sold pursuant to an Award or the exercise
of an Option shall have been repurchased by the Company, then
such shares may again be subject to an Option
and/or Award
granted under the Plan.
4.3. Special ISO
Limitations.
(a) The aggregate fair market value (determined as of the
date an ISO is granted) of the shares of Common Stock with
respect to which ISOs are exercisable for the first time by an
Employee during any calendar year (under all incentive stock
option plans of the Company or any Parent or Subsidiary of the
Company) shall not exceed $100,000.
(b) No ISO shall be granted to an Employee who, at the time
the ISO is granted, owns (actually or constructively under the
provisions of Section 424(d) of the Code) stock possessing
more than 10% of the total combined voting power of all classes
of stock of the Company or any Parent or Subsidiary of the
Company, unless (i) the option price is at least 110% of
the fair market value (determined as of the time the ISO is
granted) of the shares of Common Stock subject to the ISO and
(ii) the ISO by its terms is not exercisable more than five
years from the date it is granted.
4.4. Limitations Not Applicable to
Non-Qualified Options or Awards.
Notwithstanding any other provision of the Plan, the provisions
of Sections 4.3(a) and (b) shall not apply, nor shall
be construed to apply, to any Non-Qualified Option or Award
granted under the Plan.
Section 5. Administration
of the Plan.
5.1. Administration. Subject
to the proviso in Section 2.4 hereof, the Plan shall be
administered by a committee of the Board of Directors (the
“Committee”) established by the Board of Directors and
consisting of no less than two persons. Each member of the
Committee shall be a “Non-Employee Director” within
the meaning of
Rule 16b-3
promulgated under the Securities Exchange Act of 1934, as
amended (the “Exchange Act”) and an
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“outside director” within the meaning of Treasury
regulation Section 1.162-27(e)(3).
The Committee shall be appointed from time to time by, and shall
serve at the pleasure of, the Board of Directors.
5.2. Grant of
Options/Awards.
(a) Options. The Committee shall
have the sole authority and discretion under the Plan
(i) to select the Employees who are to be granted Options
hereunder; (ii) to designate whether any Option to be
granted hereunder is to be an ISO or a Non-Qualified Option;
(iii) to establish the number of shares of Common Stock
that may be subject to each Option; (iv) to determine the
time and the conditions subject to which Options may be
exercised in whole or in part; (v) to determine the amount
(not less than the par value per share) and the form of the
consideration that may be used to purchase shares of Common
Stock upon exercise of any Option (including, without
limitation, the circumstances under which issued and outstanding
shares of Common Stock owned by a Participant may be used by the
Participant to exercise an Option); (vi) to impose
Restrictions
and/or
conditions with respect to shares of Common Stock acquired upon
exercise of an Option; (vii) to determine the circumstances
under which shares of Common Stock acquired upon exercise of any
Option may be subject to repurchase by the Company;
(viii) to determine the circumstances and conditions
subject to which shares acquired upon exercise of an Option may
be sold or otherwise transferred, including, without limitation,
the circumstances and conditions subject to which a proposed
sale of shares of Common Stock acquired upon exercise of an
Option may be subject to the Company’s right of first
refusal (as well as the terms and conditions of any such right
of first refusal); (ix) to establish a vesting provision
for any Option relating to the time when (or the circumstances
under which) the Option may be exercised by a Participant,
including, without limitation, vesting provisions that may be
contingent upon (A) the Company’s meeting specified
financial goals, (B) a change of control of the Company or
(C) the occurrence of other specified events; (x) to
accelerate the time when outstanding Options may be exercised,
provided, however, that any ISOs shall be deemed
“accelerated” within the meaning of
Section 424(h) of the Code; and (xi) to establish any
other terms, restrictions
and/or
conditions applicable to any Option not inconsistent with the
provisions of the Plan.
(b) Awards. The Committee shall
have the sole authority and discretion under the Plan
(i) to select the Employees who are to be granted Awards
hereunder; (ii) to determine the amount to be paid by a
Participant to acquire shares of Common Stock pursuant to an
Award, which amount may be equal to, more than, or less than
100% of the fair market value of such shares on the date the
Award is granted (but in no event less than the par value of
such shares); (iii) to determine the time or times and the
conditions subject to which Awards may be made; (iv) to
determine the time or times and the conditions subject to which
the shares of Common Stock subject to an Award are to become
vested and no longer subject to repurchase by the Company;
(v) to establish transfer restrictions and the terms and
conditions on which any such transfer restrictions with respect
to shares of Common Stock acquired pursuant to an Award shall
lapse; (vi) to establish vesting provisions with respect to
any shares of Common Stock subject to an Award, including,
without limitation, vesting provisions which may be contingent
upon (A) the Company’s meeting specified financial
goals, (B) a change of control of the Company or
(C) the occurrence of other specified events; (vii) to
determine the circumstances under which shares of Common Stock
acquired pursuant to an Award may be subject to repurchase by
the Company; (viii) to determine the circumstances and
conditions subject to which any shares of Common Stock acquired
pursuant to an Award may be sold or otherwise transferred,
including, without limitation, the circumstances and conditions
subject to which a proposed sale of shares of common Stock
acquired pursuant to an Award may be subject to the
Company’s right of first refusal (as well as the terms and
conditions of any such right of first refusal); (ix) to
determine the form of consideration that may be used to purchase
shares of Common Stock pursuant to an Award (including, without
limitation, the circumstances under which issued and outstanding
shares of Common Stock owned by a Participant may be used by the
Participant to purchase the Common Stock subject to an Award);
(x) to accelerate the time at which any or all restrictions
imposed with respect to any shares of Common Stock subject to an
Award will lapse; and (xi) to establish any other terms,
restrictions
and/or
conditions applicable to any Award not inconsistent with the
provisions of the Plan.
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5.3. Interpretation. The
Committee shall be authorized to interpret the Plan and may,
from time to time, adopt such rules and regulations, not
inconsistent with the provisions of the Plan, as it may deem
advisable to carry out the purposes of the Plan.
5.4. Finality. The
interpretation and construction by the Committee of any
provision of the Plan, any Option
and/or Award
granted hereunder or any agreement evidencing any such Option
and/or Award
shall be final and conclusive upon all parties.
5.5. Expenses, Etc. All
expenses and liabilities incurred by the Committee in the
administration of the Plan shall be borne by the Company. The
Committee may employ attorneys, consultants, accountants or
other persons in connection with the administration of the Plan.
The Company, and its officers and directors, shall be entitled
to rely upon the advice, opinions or valuations of any such
persons. No member of the Committee shall be liable for any
action, determination or interpretation taken or made in good
faith with respect to the Plan or any Option
and/or Award
granted hereunder.
Section 6. Terms
and Conditions of Options.
6.1. ISOs. The terms and
conditions of each ISO granted under the Plan shall be specified
by the Committee and shall be set forth in an ISO agreement
between the Company and the Participant in such form as the
Committee shall approve. The terms and conditions of each ISO
shall be such that each ISO issued hereunder shall constitute
and shall be treated as an “incentive stock option” as
defined in Section 422(b) of the Code. The terms and
conditions of any ISO granted hereunder need not be identical to
those of any other ISO granted hereunder.
The terms and conditions of each ISO shall include the following:
(a) The option price shall be fixed by the Committee but
shall in no event be less than 100% (or 110% in the case of an
Employee referred to in Section 4.3(b) hereof) of the fair
market value of the shares of Common Stock subject to the ISO on
the date the ISO is granted. For purposes of the Plan, the fair
market value per share of Common Stock as of any day shall mean
the average of the closing prices of sales of shares of Common
Stock on all national securities exchanges on which the Common
Stock may at the time be listed or, if there shall have been no
sales on any such day, the average of the highest bid and lowest
asked prices on all such exchanges at the end of such day, or,
if on any day the Common Stock shall not be so listed, the
average of the representative bid and asked prices quoted in the
NASDAQ system as of 3:30 p.m., New York time, on such day,
or, if on any day the Common Stock shall not be quoted in the
NASDAQ system, the average of the high and low bid and asked
prices on such day in the
over-the-counter
market as reported by National Quotation Bureau Incorporated, or
any similar successor organization. If at any time the Common
Stock is not listed on any national securities exchange or
quoted in the NASDAQ system or the
over-the-counter
market, the fair market value of the shares of Common Stock
subject to an Option on the date the ISO is granted shall be the
fair market value thereof determined in good faith by the Board
of Directors.
(b) ISOs, by their terms, shall not be transferable
otherwise than by will or the laws of descent and distribution,
and, during a Participant’s lifetime, an ISO shall be
exercisable only by the Participant.
(c) The Committee shall fix the term of all ISOs granted
pursuant to the Plan (including, without limitation, the date on
which such ISO shall expire and terminate); provided, however,
that such term shall in no event exceed ten years from the date
on which such ISO is granted (or, in the case of an ISO granted
to an Employee referred to in Section 4.3(b) hereof, such
term shall in no event exceed five years from the date on which
such ISO is granted).
Each ISO shall be exercisable in such amount or amounts, under
such conditions and at such times or intervals or in such
installments as shall be determined by the Committee in its sole
discretion.
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(d) To the extent that the Company or any Parent or
Subsidiary of the Company is required to withhold any Federal,
state or local taxes in respect of any compensation income
realized by any Participant as a result of any
“disqualifying disposition” of any shares of Common
Stock acquired upon exercise of an ISO granted hereunder, the
Company shall deduct from any payments of any kind otherwise due
to such Participant the aggregate amount of such Federal, state
or local taxes required to be so withheld or, if such payments
are insufficient to satisfy such Federal, state or local taxes,
such Participant will be required to pay to the Company, or make
other arrangements satisfactory to the Company regarding payment
to the Company of, the aggregate amount of any such taxes. All
matters with respect to the total amount of taxes to be withheld
in respect of any such compensation income shall be determined
by the Board of Directors, in its sole discretion.
(e) The terms and conditions of each ISO may include the
following provisions:
(i) In the event a Participant’s employment on a
full-time basis by the Company or any Parent or Subsidiary of
the Company shall be terminated for cause or shall be terminated
by the Participant for any reason whatsoever other than as a
result of the Participant’s death or “disability”
(within the meaning of Section 22(e)(3) of the Code), the
unexercised portion of any ISO held by such Participant at that
time may only be exercised within one month after the date on
which the Participant ceased to be so employed, and only to the
extent that the Participant could have otherwise exercised such
ISO as of the date on which he ceased to be so employed.
(ii) In the event a Participant’s employment on a
full-time basis by the Company or any Parent or Subsidiary of
the Company shall terminate for any reason other than (x) a
termination specified in clause (i) above or (y) by
reason of the Participant’s death or “disability”
(within the meaning of Section 22(e)(3) of the Code), the
unexercised portion of any ISO held by such Participant at that
time may only be exercised within three months after the date on
which the Participant ceased to be so employed, and only to the
extent that the Participant could have otherwise exercised such
ISO as of the date on which he ceased to be so employed.
(iii) In the event a Participant shall cease to be employed
by the Company or any Parent or Subsidiary of the Company on a
full-time basis by reason of his “disability” (within
the meaning of Section 22(e)(3) of the Code), the
unexercised portion of any ISO held by such Participant at that
time may only be exercised within one year after the date on
which the Participant ceased to be so employed, and only to the
extent that the Participant could have otherwise exercised such
ISO as of the date on which he ceased to be so employed.
(iv) In the event a Participant shall die while in the
employ of the Company or a Parent or Subsidiary of the Company
(or within a period of one month after ceasing to be an Employee
for any reason other than his “disability” (within the
meaning of Section 22(e)(3) of the Code) or within a period
of one year after ceasing to be an Employee by reason of such
“disability”), the unexercised portion of any ISO held
by such Participant at the time of his death may only be
exercised within one year after the date of such
Participant’s death, and only to the extent that the
Participant could have otherwise exercised such ISO at the time
of his death. In such event, such ISO may be exercised by the
executor or administrator of the Participant’s estate or by
any person or persons who shall have acquired the ISO directly
from the Participant by bequest or inheritance.
6.2. Non-Qualified
Options. The terms and conditions of each
Non-Qualified Option granted under the Plan shall be specified
by the Committee, in its sole discretion, and shall be set forth
in a written option agreement between the Company and the
Participant in such form as the Committee shall approve. The
terms and conditions of each Non-Qualified Option will be such
(and each Non-Qualified Option agreement shall expressly so
state) that each Non-Qualified Option issued hereunder shall not
constitute nor be treated as an “incentive stock
option” as defined in Section 422(b) of the Code, but
will be a “non-qualified stock option” for Federal,
state and local income
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tax purposes. The terms and conditions of any Non-Qualified
Option granted hereunder need not be identical to those of any
other Non-Qualified Option granted hereunder.
The terms and conditions of each Non-Qualified Option Agreement
shall include the following:
(a) The option (exercise) price shall be fixed by the
Committee and may be equal to, more than or less than 100% of
the fair market value of the shares of Common Stock subject to
the Non-Qualified Option on the date such Non-Qualified Option
is granted as determined in good faith by the Committee.
(b) The Committee shall fix the term of all Non-Qualified
Options granted pursuant to the Plan (including, without
limitation, the date on which such Non-Qualified Option shall
expire and terminate). Such term may be more than ten years from
the date on which such Non-Qualified Option is granted. Each
Non-Qualified Option shall be exercisable in such amount or
amounts, under such conditions (including, without limitation,
provisions governing the rights to exercise such Non-Qualified
Option), and at such times or intervals or in such installments
as shall be determined by the Committee in its sole discretion;
provided, however, that in no event shall any Non-Qualified
Option granted to any director or officer of the company who is
subject to Section 16 of the Exchange Act become
exercisable, in whole or in part, prior to the date that is six
months after the date such Non-Qualified Option is granted to
such director or officer.
(c) Non-Qualified Options shall not be transferable
otherwise than by will or the laws of descent and distribution,
and during a Participant’s lifetime a Non-Qualified Option
shall be exercisable only by the Participant, provided, however,
that subject to the prior approval of the Board of Directors,
any Participant may assign or transfer its Non-Qualified Options
to the Participant’s immediate family or to a trust for the
benefit of those individuals.
(d) The terms and conditions of each Non-Qualified Option
may include the following provisions:
(i) In the event a Participant’s employment on a
full-time basis by the Company or any Parent or Subsidiary of
the Company shall be terminated for cause or shall be terminated
by the Participant for any reason whatsoever other than as a
result of the Participant’s death or “disability”
(within the meaning of Section 22(e)(3) of the Code), the
unexercised portion of any Non-Qualified Option held by such
Participant at that time may only be exercised within one month
after the date on which the Participant ceased to be an
Employee, and only to the extent that the Participant could have
otherwise exercised such Non-Qualified Option as of the date on
which he ceased to be an Employee.
(ii) In the event a Participant’s employment on a
full-time basis by the Company or any Parent or Subsidiary of
the Company shall terminate for any reason other than (x) a
termination specified in clause (i) above or (y) by
reason of the Participant’s death or “disability”
(within the meaning of Section 22(e)(3) of the Code), the
unexercised portion of any Non-Qualified Option held by such
Participant at that time may only be exercised within three
months after the date on which the Participant ceased to be an
Employee, and only to the extent that the Participant could have
otherwise exercised such Non-Qualified Option as of the date on
which he ceased to be an Employee.
(iii) In the event a Participant shall cease to be an
Employee of the Company or any Parent or Subsidiary of the
Company on a full-time basis by reason of his
“disability” (within the meaning of
Section 22(e)(3) of the Code), the unexercised portion of
any Non Qualified Option held by such Participant at that time
may only be exercised within one year after the date on which
the Participant ceased to be an Employee, and only to the extent
that the Participant could have otherwise exercised such
Non-Qualified Option as of the date on which he ceased to be an
Employee.
(iv) In the event a Participant shall die while an Employee
of the Company or a Parent or Subsidiary of the Company (or
within a period of one month after ceasing to be an Employee for
any reason other
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than his “disability” (within the meaning of
Section 22(e)(3) of the Code) or within a period of one
year after ceasing to be an Employee by reason of such
“disability”), the unexercised portion of any
Non-Qualified Option held by such Participant at the time of his
death may only be exercised within one year after the date of
such Participant’s death, and only to the extent that the
Participant could have otherwise exercised such Non-Qualified
Option at the time of his death. In such event, such
Non-Qualified Option may be exercised by the executor or
administrator of the Participant’s estate or by any person
or persons who shall have acquired the Non-Qualified Option
directly from the Participant by bequest or inheritance.
(e) To the extent that the Company is required to withhold
any Federal, state or local taxes in respect of any compensation
income realized by any Participant in respect of a Non-Qualified
Option granted hereunder or in respect of any shares of Common
Stock acquired upon exercise of a Non-Qualified Option, the
Company shall deduct from any payments of any kind otherwise due
to such Participant the aggregate amount of such Federal, state
or local taxes required to be so withheld or, if such payments
are insufficient to satisfy such Federal, state or local taxes,
or if no such payments are due or to become due to such
Participant, then, such Participant will be required to pay to
the Company, or make other arrangements satisfactory to the
Company regarding payment to the Company of, the aggregate
amount of any such taxes. All matters with respect to the total
amount of taxes to be withheld in respect of any such
compensation income shall be determined by the Committee, in its
sole discretion.
7. Terms and Conditions of
Awards. The terms and conditions of each
Award granted under the Plan shall be specified by the
Committee, in its sole discretion, and shall be set forth in a
written agreement between the Participant and the Company, in
such form as the Committee shall approve. The terms and
provisions of any Award granted hereunder need not be identical
to those of any other Award granted hereunder.
The terms and conditions of each Award may include the following:
(a) The amount to be paid by a Participant to acquire the
shares of Common Stock pursuant to an Award shall be fixed by
the Committee and may be equal to, more than or less than 100%
of the fair market value of the shares of Common Stock subject
to the Award on the date the Award is granted (but in no event
less than the par value of such shares).
(b) Each Award shall contain such vesting provisions, such
transfer restrictions and such other restrictions and conditions
as the Committee, in its sole discretion, may determine,
including, without limitation, the circumstances under which the
Company shall have the right and option to repurchase shares of
Common Stock acquired pursuant to an Award.
(c) Stock certificates representing Common Stock acquired
pursuant to an Award shall bear a legend referring to any
restrictions imposed on such Stock and such other matters as the
Committee may determine.
(d) To the extent that the Company is required to withhold
any Federal, state or local taxes in respect of any compensation
income realized by the Participant in respect of an Award
granted hereunder, in respect of any shares acquired pursuant to
an Award, or in respect of the vesting of any such shares of
Common Stock, then the Company shall deduct from any payments of
any kind otherwise due to such Participant the aggregate amount
of such Federal, state or local taxes required to be so
withheld, or if such payments are insufficient to satisfy such
Federal, state or local taxes, or if no such payments are due or
to become due to such Participant, then such Participant will be
required to pay to the Company, or make other arrangements
satisfactory to the Company regarding payment to the Company of,
the aggregate amount of any such taxes. All matters with respect
to the total amount of taxes to be withheld in respect of any
such compensation income shall be determined by the Committee,
in its sole discretion.
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Section 8. Adjustments.
(a) In the event that, after the adoption of the Plan by
the Board of Directors, the outstanding shares of the
Company’s Common Stock shall be increased or decreased or
changed into or exchanged for a different number or kind of
shares of stock or other securities of the Company or of another
entity in each such case through reorganization, merger or
consolidation, recapitalization, reclassification, stock split,
split-up, combination or exchange of shares or declaration of
any dividends payable in Common Stock, the Committee in good
faith shall, subject to the provisions of Section 8(c)
below if the circumstances therein specified are applicable,
appropriately adjust (i) the number of shares of Common
Stock (and the option price per share) subject to the
unexercised portion of any outstanding Option (to the nearest
possible full share); provided, however, that the limitations of
Section 424 of the Code shall apply with respect to
adjustments made to ISOs, (ii) the number of shares of
Common Stock to be acquired pursuant to an Award which have not
become vested, and (iii) the number of shares of Common
Stock for which Options
and/or
Awards may be granted under the Plan, as set forth in
Section 4.1 hereof, and such adjustments shall be effective
and binding for all purposes of the Plan.
(b) If any capital reorganization or reclassification of
the capital stock of the Company or any consolidation or merger
of the Company with another entity, or the sale of all or
substantially all its assets to another entity, shall be
effected in such a way that holders of Common Stock shall be
entitled to receive stock, securities or assets with respect to
or in exchange for Common Stock, then, subject to the provisions
of Section 8(c) below if the circumstances therein
specified are applicable, each holder of an Option shall
thereafter have the right to purchase, upon the exercise of the
Option in accordance with the terms and conditions specified in
the option agreement governing such Option and in lieu of the
shares of Common Stock immediately theretofore receivable upon
the exercise of such Option, such shares of stock, securities or
assets (including, without limitation, cash) as may be issued or
payable with respect to or in exchange for a number of
outstanding shares of such Common Stock equal to the number of
shares of such Common Stock immediately theretofore so
receivable had such reorganization, reclassification,
consolidation, merger or sale not taken place.
(c) Notwithstanding Sections 8(a) and 8(b) hereof, in
the event of (i) any offer to holders of the Company’s
Common Stock generally relating to the acquisition of all or
substantially all of their shares, including, without
limitation, through purchase, merger or otherwise, or
(ii) any proposed transaction generally relating to the
acquisition of substantially all of the assets or business of
the Company (herein sometimes referred to as an
“Acquisition”), the Board of Directors may, in its
sole discretion, cancel any outstanding Options (provided,
however, that the limitations of Section 424 of the Code
shall apply with respect to adjustments made to ISO’s) and
pay or deliver, or cause to be paid or delivered, to the holder
thereof an amount in cash or securities having a value (as
determined by the Board of Directors acting in good faith) equal
to the product of (A) the number of shares of Common Stock
(the “Option Shares”) that, as of the date of the
consummation of such Acquisition, the holder of such Option had
become entitled to purchase (and had not purchased) multiplied
by (B) the amount, if any, by which (1) the formula or
fixed price per share paid to holders of shares of Common Stock
pursuant to such Acquisition exceeds (2) the option price
applicable to such Option Shares.
Section 9. Effect
of the Plan on Employment
Relationship. Neither the Plan nor any Option
and/or Award
granted hereunder to a Participant shall be construed as
conferring upon such Participant any right to continue in the
employ of (or otherwise provide services to) the Company or any
Subsidiary or Parent thereof, or limit in any respect the right
of the Company or any Subsidiary or Parent thereof to terminate
such Participant’s employment or other relationship with
the Company or any Subsidiary or Parent, as the case may be, at
any time.
Section 10. Amendment
of the Plan. The Board of Directors may amend
the Plan from time to time as it deems desirable; provided,
however, that, without the approval of the holders of a majority
of the outstanding capital stock of the Company entitled to vote
thereon or consent thereto, the Board of Directors may not amend
the Plan (i) to increase (except for increases due to
adjustments in accordance with Section 8 hereof) the
aggregate
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number of shares of Common Stock for which Options
and/or
Awards may be granted hereunder, (ii) to decrease the
minimum exercise price specified by the Plan in respect of ISOs
or (iii) to change the class of Employees eligible to
receive ISOs under the Plan.
Section 11. Termination
of the Plan. The Board of Directors may
terminate the Plan at any time. Unless the Plan shall
theretofore have been terminated by the Board of Directors, the
Plan shall terminate ten years after the date of its initial
adoption by the Board of Directors. No Option
and/or Award
may be granted hereunder after termination of the Plan. The
termination or amendment of the Plan shall not alter or impair
any rights or obligations under any Option
and/or Award
theretofore granted under the Plan.
Section 12. Effective
Date of the Plan. The Plan shall be effective
as of January 7, 1999, the date on which the Plan was
adopted by the Board of Directors, and shall be submitted to the
holders of the outstanding capital stock of the Company for
their approval.
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ANNUAL MEETING OF STOCKHOLDERS OF
CENTENNIAL COMMUNICATIONS CORP.
September 28, 2006
Please date, sign and mail
your proxy card in the envelope provided as soon as possible. â Please detach along perforated line and mail in the envelope provided. â
n
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ƨ n
CENTENNIAL COMMUNICATIONS CORP.
3349 ROUTE 138, BLDG A.
WALL, NJ 07719
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The
undersigned hereby appoints Thomas J. Fitzpatrick and Tony L. Wolk, and each of them, proxies of the undersigned, with full power of substitution, to vote all common stock of Centennial Communications Corp., a Delaware corporation (the “Company”), the undersigned is entitled to vote at the Annual Meeting of Stockholders of the Company to be held on Thursday, September 28, 2006, or at any adjournment or adjournments thereof, with all the power the undersigned would possess if personally present, on the following matters:
(Continued and to be signed on the reverse side)
n
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ANNUAL MEETING OF STOCKHOLDERS OF
CENTENNIAL COMMUNICATIONS CORP.
September 28, 2006
MAIL - Date, sign and mail your proxy card in the
envelope provided as soon as possible.
- OR -
TELEPHONE - Call toll-free 1-800-PROXIES
(1-800-776-9437) from any touch-tone telephone and follow the instructions. Have your proxy card available when you call. - OR -
INTERNET - Access “www.voteproxy.com” and follow
the on-screen instructions. Have your proxy card
available when you access the web page.
You may enter your voting instructions at 1-800-PROXIES or www.voteproxy.com up until 11:59 PM Eastern
Time the day before the cut-off or meeting date.
â Please
detach along perforated line and mail in the envelope provided
IF you are not voting via telephone or the internet. â
n
n
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