<PAGE>
As filed with the Securities and Exchange Commission on July 7, 1995
Registration No. 33-
=============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------------
PRONET INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 4812 75-1832168
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
</TABLE>
600 DATA DRIVE, SUITE 100
PLANO, TEXAS 75075
(214) 964-9500
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
----------------------
JAN E. GAULDING
SENIOR VICE PRESIDENT AND
CHIEF FINANCIAL OFFICER
PRONET INC.
600 DATA DRIVE, SUITE 100
PLANO, TEXAS 75075
(214) 964-9500
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
----------------------
Copies to:
JEFFREY A. CHAPMAN MARK A. SOLLS
VINSON & ELKINS L.L.P. VICE PRESIDENT AND
3700 TRAMMELL CROW CENTER GENERAL COUNSEL
2001 ROSS AVENUE PRONET INC.
DALLAS, TEXAS 75201-2975 600 DATA DRIVE, SUITE 100
PLANO, TEXAS 75075
----------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the effective date of this Registration Statement
----------------------
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance
with General Instruction G, check the following box. / /
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
============================================================================================
PROPOSED
PROPOSED MAXIMUM
MAXIMUM AGGREGATE
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED PER NOTE (1) PRICE (1) REGISTRATION FEE
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
11 7/8% Senior Subordinated
Notes due 2005 $100,000,000 100% $100,000,000 $34,483
============================================================================================
<FN>
(1) Estimated solely for the purpose of calculating the registration fee.
</TABLE>
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE
REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION,
ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
=============================================================================
<PAGE>
PRONET INC.
CROSS REFERENCE SHEET
Pursuant to Item 501(b) of Regulation S-K
<TABLE>
<CAPTION>
FORM S-4 ITEM NUMBER AND HEADING LOCATION IN PROSPECTUS
-------------------------------- ----------------------
<S> <C> <C>
1. Forepart of Registration Statement
and Outside Front Cover Page of Prospectus... Cover Page of Registration Statement;
Outside Front Cover Page of Prospectus
2. Inside Front and Outside Back Cover Pages
of Prospectus................................ Inside Front and Outside Back Cover
Pages of Prospectus
3. Risk Factors, Ratio of Earnings to Fixed
Charges and Other Information................ Summary; Risk Factors
4. Terms of the Transaction...................... Front Cover Page of the Prospectus; The
Exchange Offer; Plan of Distribution
5. Pro Forma Financial Information............... Not Applicable
6. Material Contracts with the Company being
Acquired..................................... Not Applicable
7. Additional Information Required for
Reoffering by Persons and Parties Deemed to
be Underwriters.............................. Not Applicable
8. Interests of Named Experts and Counsel........ Not Applicable
9. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities.................................. Not Applicable
10. Information with Respect to S-3 Registrants... Summary; Risk Factors; Description of
Credit Facility
11. Incorporation of Certain Information by
Reference..................................... Incorporation of Certain Documents by
Reference
12. Information with Respect to S-2 or S-3
Registrants................................... Not Applicable
13. Incorporation of Certain Information by
Reference..................................... Not Applicable
14. Information with Respect to Registrants Other
Than S-3 or S-2 Registrants................... Not Applicable
15. Information with Respect to S-3 Companies...... Not Applicable
16. Information with Respect to S-2 or S-3
Companies..................................... Not Applicable
17. Information with Respect to Companies Other
Than S-3 or S-2 Companies..................... Not Applicable
18. Information if Proxies, Consents or
Authorizations are to be Solicited............ Not Applicable
19. Information if Proxies, Consents or
Authorizations are not to be Solicited or in
an Exchange Offer............................. Not Applicable
</TABLE>
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
SUBJECT TO COMPLETION, DATED JULY 7, 1995
PROSPECTUS
OFFER FOR ALL OUTSTANDING
11 7/8% SENIOR SUBORDINATED NOTES DUE 2005
IN EXCHANGE FOR
11 7/8% SENIOR SUBORDINATED NOTES DUE 2005
OF
PRONET INC.
----------
INTEREST PAYABLE JUNE 15 AND DECEMBER 15
------------------------
ProNet Inc. (the "Company") is offering upon the terms and subject to the
conditions set forth in this Prospectus and the accompanying letter of
transmittal (the "Letter of Transmittal") (which together constitute the
"Exchange Offer") to exchange $1,000 principal amount of its registered 11 7/8%
Senior Subordinated Notes due 2005 (the "New Notes") for each $1,000 principal
amount of its unregistered 11 7/8% Senior Subordinated Notes due 2005 (the "Old
Notes") of which an aggregate principal amount of $100,000,000 is outstanding.
The form and terms of the New Notes are identical to the form and terms of the
Old Notes except that the New Notes have been registered under the Securities
Act of 1933, as amended (the "Securities Act"), and will not bear any legends
restricting their transfer. The New Notes will evidence the same debt as the Old
Notes and will be issued pursuant to, and entitled to the benefits of, the
Indenture governing the Old Notes. The Exchange Offer is being made in order to
satisfy certain contractual obligations of the Company. See "The Exchange Offer"
and "Description of New Notes."
Interest on the New Notes will be payable semi-annually on June 15 and
December 15 of each year commencing December 15, 1995. The New Notes will be
redeemable at the option of the Company, in whole or in part, at any time on or
after June 15, 2000, at the redemption prices set forth herein, plus accrued and
unpaid interest, if any, to the date of redemption. The New Notes will not be
subject to any mandatory sinking fund. In the event of a Change of Control (as
herein defined), each holder of the New Notes will have the right, at the
holder's option, to require the Company to purchase such holder's New Notes at a
purchase price equal to 101% of the principal amount thereof, plus accrued and
unpaid interest, if any, to the date of purchase.
The New Notes will be general unsecured obligations of the Company
subordinated in right of payment to all existing and future Senior Debt (as
herein defined) of the Company. As of March 31, 1995, after giving PRO FORMA
effect to certain acquisitions and the offering of the Old Notes and the
application of the net proceeds therefrom, the Company would have had
approximately $21.3 million of Senior Debt outstanding. See "Use of Proceeds"
and "Capitalization."
The interest rate on the Old Notes and the New Notes is subject to increase
and such Additional Interest (as herein defined) will be payable on the payment
dates set forth above, in certain circumstances, if the New Notes are not
registered with the Securities and Exchange Commission (the "Commission") within
prescribed time periods. See "Description of New Notes -- Exchange Offer;
Registration Rights Agreement."
The Exchange Offer will expire at 5:00 p.m., New York City time, ,
1995, or such later date and time to which it is extended (the "Expiration
Date").
The Old Notes are designated for trading in the Private Offerings, Resales
and Trading through Automated Linkages ("PORTAL") market. To the extent Old
Notes are tendered and accepted in the Exchange Offer, the principal amount of
outstanding Old Notes will decrease with a resulting decrease in the liquidity
in the market therefor. Following the consummation of the Exchange Offer,
holders of Old Notes who were eligible to participate in the Exchange Offer but
who did not tender their Old Notes will not be entitled to certain rights under
the Registration Rights Agreement (as herein defined) and such Old Notes will
continue to be subject to certain restrictions on transfer. Accordingly, the
liquidity in the market for the Old Notes could be adversely affected. No
assurance can be given as to the liquidity of the trading market for either the
Old Notes or the New Notes.
FOR A DISCUSSION OF CERTAIN FACTORS TO BE CONSIDERED IN CONNECTION WITH AN
INVESTMENT IN THE NEW NOTES, SEE "RISK FACTORS" ON PAGE 13.
--------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
--------------------------
, 1995
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in
accordance therewith, files reports, proxy statements and other information
with the Commission. Reports, proxy statements and other information filed by
the Company with the Commission pursuant to the informational requirements of
the Exchange Act may be inspected and copied at the public reference
facilities maintained by the Commission at Judiciary Plaza, Room 1924, 450
Fifth Street, N.W., Washington, D.C. 20549, and at its regional offices at 7
World Trade Center, New York, New York 10048 and Northwestern Atrium Center,
500 West Madison Street, Suite 1400, Chicago, Illinois 60621-2511. The
Company's Common Stock is quoted on The Nasdaq Stock Market and such reports,
proxy statements and other information concerning the Company may be
inspected and copied at the offices of The Nasdaq Stock Market located at
1735 K Street, NW, Washington, D.C. 20006-1500.
The Company is a Delaware corporation. The Company's principal executive
offices are located at 600 Data Drive, Suite 100, Plano, Texas 75075, and the
Company's telephone number at that location is (214) 964-9500.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, which have been filed with the Commission by
the Company, are incorporated herein by reference and made a part hereof:
(i) Annual Report on Form 10-K for the fiscal year ended December
31, 1994;
(ii) Annual Report on Form 10-K/A for the fiscal year ended December
31, 1994;
(iii) Annual Report on Form 10-K/A-2 for the fiscal year ended
December 31, 1994;
(iv) Current Report on Form 8-K filed March 16, 1995;
(v) Quarterly Report on Form 10-Q for the quarterly period ended
March 31, 1995;
(vi) Current Report on Form 8-K filed April 17, 1995;
(vii) Current Report on Form 8-K/A filed May 12, 1995;
(viii) Current Report on Form 8-K filed May 18,
1995;
(ix) Current Report on Form 8-K filed May 19, 1995;
(x) Current Report on Form 8-K/A filed June 2, 1995;
(xi) Current Report on Form 8-K filed June 2, 1995;
(xii) Current Report on Form 8-K filed July 5, 1995; and
(xiii) Current Report on Form 8-K filed July 7, 1995.
In addition, all documents filed pursuant to Sections 13(a), 13(c), 14
or 15(d) of the Exchange Act subsequent to the date of this Prospectus and
prior to the termination of the offering of New Notes made hereby shall be
deemed to be incorporated by reference into this Prospectus and to be a part
hereof from the date of filing of such documents. Any statement contained
herein or in a document incorporated or deemed to be incorporated by
reference herein shall be deemed to be modified or superseded for purposes of
this Prospectus to the extent that a statement contained herein or in any
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or
superseded, to constitute a part of this Prospectus.
2
<PAGE>
THIS PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT
PRESENTED HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS ARE AVAILABLE UPON
REQUEST FROM THE COMPANY'S PRINCIPAL OFFICE: PRONET INC., 600 DATA DRIVE,
SUITE 100, PLANO, TEXAS 75075, ATTENTION: JAN E. GAULDING, SENIOR VICE
PRESIDENT AND CHIEF FINANCIAL OFFICER (TELEPHONE: (214) 964-9500). IN ORDER
TO ENSURE TIMELY DELIVERY OF THE DOCUMENTS, ANY REQUEST SHOULD BE MADE BY
, 1995.
3
<PAGE>
SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED
INFORMATION AND FINANCIAL STATEMENTS AND NOTES THERETO APPEARING ELSEWHERE OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS. UNLESS THE CONTEXT OTHERWISE
REQUIRES, REFERENCES IN THIS PROSPECTUS TO "PRONET" AND THE "COMPANY" REFER
TO PRONET INC. AND ITS CONSOLIDATED SUBSIDIARIES.
THE COMPANY
ProNet is one of the fastest growing wireless messaging providers in the
United States. The Company focuses its activities in five geographic regions
or communication "SuperCenters" centered around major metropolitan markets
and population corridors, which generally have the demographics, market size,
travel patterns and types of businesses that indicate significant potential
demand for the Company's products and services. The Company is a leading
provider of paging services in 12 major metropolitan markets in the United
States, including New York, Chicago, Dallas/Fort Worth, Houston, Charlotte
and Los Angeles. As of March 31, 1995, the Company had approximately 404,700
pagers in service. Upon completion of the acquisitions described herein, the
Company will have approximately 736,400 paging subscribers, making it one
of the five largest publicly traded paging companies in the United States.
The Company was founded in 1982 with the purpose of providing paging
services to hospitals, doctors and other healthcare providers. The Company is
a solutions-oriented organization dedicated to customer service which has
concentrated on identifying market opportunities in the wireless
communications market where it can provide users with enhanced wireless
services. By utilizing proprietary technologies to manage the under-served
market of both the in-house and wide-area paging requirements of hospitals,
the Company quickly became the premier provider of customized, enhanced
wireless services to healthcare institutions in all of its major metropolitan
markets. In 1988, the Company began to apply advanced wireless technology to
the security business by marketing radio-activated electronic tracking
systems to financial institutions. As of March 31, 1995, the Company's
security systems consisted of 27,106 miniature radio transmitters, or
"TracPacs," in service and served approximately 400 customers.
In 1993, ProNet management recognized that the Company's operating
expertise combined with its presence in major metropolitan markets presented
an opportunity to capitalize on the growing demand for pagers among both
business users and the population at large. The Company believes that much of
the future growth in pagers in service will occur in large population centers
where demand from both business and individual subscribers will be primarily
for metropolitan and/or regional coverage. In 1994, the Company began to
market to these constituents through both direct and reseller distribution
channels and began to pursue acquisitions that complemented its existing
market presence.
The Company's strategy is to achieve rapid growth of its subscriber base
and expand service offerings while maintaining its low cost operating
structure. The Company believes that by further developing its SuperCenters,
it will continue to realize the benefits of operational consolidation while
maintaining the flexibility to react to regional market developments. Key
elements of the Company's operating strategy include:
GEOGRAPHIC CONCENTRATION. ProNet management believes that focusing
the Company's planned growth strategy around its SuperCenters allows the
Company to receive the greatest benefit for each dollar invested and will
most effectively address anticipated demand by new paging subscribers for
metropolitan and/or regional coverage. ProNet ultimately intends to offer
coverage to 60% of the United States population through its SuperCenters
encompassing the Northeast (anchored by New York City), Midwest (anchored
by Chicago), Southeast (anchored by Charlotte), South Central (anchored by
Houston) and West (anchored by Los Angeles).
4
<PAGE>
SELECTIVE ACQUISITIONS. The Company believes that a substantial
portion of its growth will be achieved through acquisitions of commercial
paging companies in its SuperCenter regions. ProNet carefully screens
and evaluates acquisition candidates according to their technical and
operational characteristics, spectrum resources, geographic coverage,
distribution capabilities and synergistic qualities within the SuperCenter
strategy. Through technical, operational and financial field teams, each
new acquisition is quickly and thoroughly integrated into the existing
SuperCenter operations to maximize cost savings and operating efficiencies.
Since January 1, 1994, the Company has completed nine acquisitions and
signed definitive agreements or letters of intent with respect to five
additional acquisitions that are expected to close in 1995.
INCREASE MARKET PENETRATION. ProNet intends to become a market leader
in both its current and future markets by utilizing a variety of existing
distribution channels and by continually exploring new channels. The
Company uses its highly trained direct sales force to target businesses,
medical institutions and individual customers. The Company also sells
paging services through resellers or agents and through local and regional
retailers. Emphasis on any one channel in a particular region is dictated
by market characteristics and business opportunities. ProNet's emphasis
on customer service and system reliability is intended to enable the
Company to continue to have one of the lowest disconnect ("churn") rates
in the industry and thereby further strengthen its market share within
its SuperCenters.
COST EFFICIENT PROVIDER. The Company operates efficiently through
consolidation of key operating functions in one location per SuperCenter
and through the elimination of redundant operations in acquired companies.
The Company believes that subscriber volume, automation and shared overhead
will allow each SuperCenter to be one of the most cost efficient providers
in its marketplace.
ENHANCED WIRELESS SERVICES AND PRODUCTS. ProNet currently offers a
number of enhanced wireless products and services. The Company's
proprietary Intelligent Processing Terminal ("IPT") system for large
corporate accounts is a multi-tasking wide-area communications system
capable of managing a company's in-house and wide-area paging
requirements within a single system. The Company also offers value-added
paging services such as voice-mail, simultaneous group paging, news and
sports highlights, stock quotes, remote alpha entry and other specialized
marketing applications. ProNet's security systems, consisting of TracPacs
and tracking receivers, provide a wireless solution to the specialized
asset recovery needs of various governmental agencies and business
customers. The Company expects to offer additional enhanced services
and technologies as they become available.
Wireless messaging is a high growth industry. Industry sources estimate
that there are currently 25 million pagers in service in the United States, a
penetration rate of 10% of the population. The number of pagers in service in
the United States has grown at an annual rate of 15-20% since the early
1980s. Industry reports continue to project rapid growth for one-way pagers
and other wireless messaging services. Factors contributing to this level of
growth include (i) increasing mobility of the population, (ii) movement
toward a service-based economy, (iii) growing consumer awareness of the
benefits of mobile communications, (iv) technical advances in equipment and
services offered, and (v) continuing price efficiencies in equipment and
services offered.
5
<PAGE>
THE EXCHANGE OFFER
The Exchange Offer applies to $100 million aggregate principal amount of
the Old Notes. The form and terms of the New Notes are the same as the form
and terms of the Old Notes except that the New Notes have been registered
under the Securities Act and, therefore, will not bear legends restricting
their transfer. The New Notes will evidence the same debt as the Old Notes
and will be entitled to the benefits of the Indenture pursuant to which the
Old Notes were issued. The Old Notes and the New Notes are sometimes
referred to collectively herein as the "Notes." See "Description of New
Notes."
The Exchange Offer......... $1,000 principal amount of New Notes
in exchange for each $1,000 principal
amount of Old Notes. As of the date
hereof, Old Notes representing $100
million aggregate principal amount
were outstanding. The terms of the
New Notes and the Old Notes are
substantially identical.
Based on an interpretation by the
Commission's staff set forth in no-
action letters issued to third parties
unrelated to the Company, the Company
believes that, with the exceptions
discussed herein, New Notes issued
pursuant to the Exchange Offer in
exchange for Old Notes may be offered
for resale, resold and otherwise
transferred by any person receiving
the New Notes, whether or not that
person is the holder (other than any
such holder or such other person that
is an "affiliate" of the Company
within the meaning of Rule 405 under
the Securities Act), without
compliance with the registration and
prospectus delivery provisions of the
Securities Act, provided that (i) the
New Notes are acquired in the ordinary
course of business of that holder or
such other person, (ii) neither the
holder nor such other person is
engaging in or intends to engage in a
distribution of the New Notes, and
(iii) neither the holder nor such
other person has an arrangement or
understanding with any person to
participate in the distribution of the
New Notes. However, the Company has
not sought, and does not intend to
seek, its own no-action letter, and
there can be no assurance that the
Commission's staff would make a
similar determination with respect to
the Exchange Offer. See "The Exchange
Offer -- Purpose and Effect." Each
broker-dealer that receives New Notes
for its own account in exchange for
Old Notes, where those Old Notes were
acquired by the broker-dealer as a
result of its market-making activities
or other trading activities, must
acknowledge that it will deliver a
prospectus in connection with any
resale of those New Notes. See "Plan
of Distribution."
Registration Rights
Agreement................. The Old Notes were sold by the Company
on June 15, 1995 in a private
placement. In connection with the
sale, the Company entered into a
Registration Rights Agreement with the
initial purchasers of the Old Notes
(the "Registration Rights Agreement")
providing for the Exchange Offer. See
"The Exchange Offer -- Purpose and
Effect."
6
<PAGE>
Expiration Date............ The Exchange Offer will expire at 5:00
P.M., New York City time, ,
1995, or such later date and time to
which it is extended.
Withdrawal Rights.......... The tender of Old Notes pursuant to
the Exchange Offer may be withdrawn at
any time prior to 5:00 p.m., New York
City time, on the Expiration Date.
Any Old Notes not accepted for
exchange for any reason will be
returned without expense to the
tendering holder thereof as promptly
as practicable after the expiration or
termination of the Exchange Offer.
Interest on the New Notes
and Old Notes............. Interest on each New Note will accrue
from the date of issuance of the Old
Note for which the New Note is
exchanged or from the date of the last
periodic payment of interest on such
Old Note, whichever is later.
Conditions to the Exchange
Offer..................... The Exchange Offer is subject to
certain customary conditions, certain
of which may be waived by the Company.
See "The Exchange Offer -- Conditions."
Procedures for Tendering
Old Notes................. Each holder of Old Notes wishing to
accept the Exchange Offer must
complete, sign and date the Letter of
Transmittal, or a copy thereof, in
accordance with the instructions
contained herein and therein, and mail
or otherwise deliver the Letter of
Transmittal, or the copy, together
with the Old Notes and any other
required documentation, to the
Exchange Agent at the address set
forth herein. Persons holding Old
Notes through the Depository Trust
Company (the "DTC") and wishing to
accept the Exchange Offer must do so
pursuant to the DTC's Automated Tender
Offer Program, by which each tendering
Participant will agree to be bound by
the Letter of Transmittal. By
executing or agreeing to be bound by
the Letter of Transmittal, each holder
will represent to the Company that,
among other things, (i) the New Notes
acquired pursuant to the Exchange
Offer are being acquired in the
ordinary course of business of the
person receiving such New Notes,
whether or not such person is the
holder of the Old Notes, (ii) neither
the holder nor any such other person
is engaging in or intends to engage in
a distribution of such New Notes,
(iii) neither the holder nor any such
other person has an arrangement or
understanding with any person to
participate in the distribution of
such New Notes, and (iv) neither the
holder nor any such other person is an
"affiliate" (as defined under Rule 405
promulgated under the Securities Act)
of the Company.
7
<PAGE>
Pursuant to the Registration Rights
Agreement, the Company is required to
file a registration statement for a
continuous offering pursuant to Rule
415 under the Securities Act in
respect of the Old Notes if existing
Commission interpretations are changed
such that the New Notes received by
holders in the Exchange Offer are not
or would not be, upon receipt,
transferable by each such holder
(other than an affiliate of the
Company) without restriction under the
Securities Act. See "The Exchange
Offer -- Purpose and Effect."
Acceptance of Old Notes
and Delivery of New Notes. The Company will accept for exchange
any and all Old Notes which are
properly tendered in the Exchange
Offer prior to 5:00 p.m., New York
City time, on the Expiration Date.
The New Notes issued pursuant to the
Exchange Offer will be delivered
promptly following the Expiration
Date. See "The Exchange Offer -- Terms
on the Exchange Offer."
Exchange Agent............. First Interstate Bank of Texas, N.A.,
is serving as Exchange Agent in
connection with the Exchange Offer.
Federal Income Tax
Considerations............ The exchange pursuant to the Exchange
Offer will not be a taxable event for
federal income tax purposes. See
"Certain Federal Income Tax
Considerations."
Effect of Not Tendering.... Old Notes that are not tendered or
that are tendered but not accepted
will, following the completion of the
Exchange Offer, continue to be subject
to the existing restrictions upon
transfer thereof. The Company will
have no further obligation to provide
for the registration under the
Securities Act of such Old Notes.
8
<PAGE>
TERMS OF NEW NOTES
Securities Offered......... $100,000,000 principal amount of 11 7/8%
Senior Subordinated Notes due 2005
Maturity Date.............. June 15, 2005
Interest Payment Dates..... June 15 and December 15, commencing December
15, 1995
Sinking Fund Provisions.... None
Optional Redemption........ The New Notes will be redeemable, in whole or
in part, at the option of the Company at any
time on or after June 15, 2000 at the
redemption prices set forth herein plus accrued
interest to the redemption date.
Change of Control.......... The Company will be required to offer to
repurchase all outstanding New Notes at 101% of
the principal amount plus accrued interest
promptly after the occurrence of a Change of
Control (as defined). See "Description of New
Notes -- Certain Covenants."
Ranking.................... The New Notes will be general unsecured
obligations of the Company and will be
subordinated to all existing and future
Senior Debt (as defined) of the Company.
The indenture pursuant to which the New Notes
will be issued (the "Indenture") provides
that the Company will not incur any debt that
is subordinate in right of payment to any
Senior Debt of the Company and senior in right
of payment to the New Notes.
Certain Covenants.......... The Indenture contains certain covenants that,
among other things, limit the ability of the
Company and its subsidiaries to incur other
indebtedness, pay dividends, engage in
transactions with affiliates, sell assets and
engage in mergers and consolidations and other
acquisitions. See "Description of New Notes --
Certain Covenants."
9
<PAGE>
SUMMARY FINANCIAL AND OPERATING INFORMATION
The following table presents summary financial data for the Company as
of the dates and for the periods indicated. The financial data for the years
ended December 31, 1990, 1991, 1992, 1993 and 1994 were derived from the
audited consolidated financial statements of the Company. The financial data
for the three months ended March 31, 1994 and 1995 have been derived from the
Company's unaudited consolidated financial statements. The following
information should be read in conjunction with the Company's pro forma
condensed consolidated financial statements and the consolidated financial
statements and related notes thereto incorporated by reference herein.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEARS ENDED DECEMBER 31, MARCH 31,
--------------------------------------------------------- ---------------------------
PRO PRO
FORMA FORMA
1990 1991 1992 1993 1994 1994 (1) 1994 1995 1995 (2)
------- -------- -------- -------- -------- -------- -------- -------- --------
(IN THOUSANDS, EXCEPT PERCENTAGES, RATIO AND UNIT DATA)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Recurring revenues (3)...... $13,028 $ 15,084 $ 16,845 $ 19,234 $ 33,079 $ 64,888 $ 5,962 $ 10,488 $ 16,747
Product sales (4)........... 1,581 1,466 1,855 2,040 6,639 13,632 601 2,196 3,277
------- -------- -------- -------- -------- -------- ------- -------- --------
Total revenues.............. 14,609 16,550 18,700 21,274 39,718 78,520 6,563 12,684 20,024
Net revenues (5)............ 13,694 15,591 17,615 20,318 33,074 65,064 6,093 10,618 17,061
Depreciation and
amortization expense....... 3,308 3,748 4,077 4,656 8,574 19,021 1,497 2,745 4,516
Operating income............ 556 1,223 1,834 2,732 3,189 4,202 598 769 2,073
Interest expense............ 528 425 310 292 1,774 12,907 171 386 3,345
Income (loss) before
extraordinary item......... 215 794 1,754 1,574 693 (6,322) 197 66 (1,068)
Net income (loss)........... 395 1,312 1,754 1,574 693 (6,322) 197 66 (1,068)
OTHER DATA:
Pagers in service at end of
period..................... 88,759 103,157 114,356 130,000 353,830 715,530 225,477 404,713 736,400
TracPacs in service at end
of period.................. 11,544 13,846 19,210 25,841 27,595 27,595 26,374 27,106 27,106
Pagers in service per
employee (6)............... 490 570 880 1,000 1,325 1,758 1,174 1,289 1,779
ARPU-Paging (7)............. $ 11.51 $ 10.64 $ 10.48 $ 10.23 $ 8.31 $ 7.04 $ 9.64 $ 8.38 $ 6.97
ARPU-TracPac (8)............ 14.25 15.00 14.75 15.90 16.52 16.52 15.78 15.68 15.68
Operating, general and
administrative costs per
paging subscriber (9)...... 4.76 4.80 5.13 5.33 3.30 3.11 4.11 3.63 3.59
EBITDA (10)................. $ 3,864 $ 4,971 $ 5,911 $ 7,388 $11,763 $ 23,223 $ 2,095 $ 3,514 $ 6,589
EBITDA margin (11).......... 28% 32% 34% 36% 36% 36% 34% 33% 39%
Capital expenditures (12)... $ 4,708 $ 4,193 $ 5,523 $ 5,497 $ 5,777 $ 7,827 $ 796 $ 1,478 $ 1,703
Ratio of total debt to
EBITDA (13)................ 1.2x 1.0x 0.6x 0.5x 0.9x 5.2x 2.8x 2.1x 4.6x
Ratio of EBITDA to interest
expense.................... 7.3 11.7 19.1 25.3 6.6 1.8 12.3 9.1 2.0
Ratio of earnings to fixed
charges (14)............... 1.8 4.1 6.1 8.7 1.8 - 3.4 1.9 -
</TABLE>
<TABLE>
<CAPTION>
AS OF MARCH 31, 1995
-----------------------------
ACTUAL PRO FORMA (15)
---------- ----------------
(IN THOUSANDS)
<S> <C> <C>
Balance Sheet Data:
Cash and cash equivalents................ $ 5,369 $ 25,821
Working capital.......................... 7,385 29,554
Total assets............................. 86,972 182,268
Total debt............................... 27,232 121,292
Total liabilities........................ 36,560 131,856
Total shareholders' equity............... 50,412 50,412
10
<PAGE>
<FN>
(1) Gives effect to (a) the acquisition of Contact Communications, Inc.
("Contact") and Metropolitan Houston Paging Services, Inc. ("Metropolitan"),
and the acquisition of the paging assets of Radio Call Company, Inc. ("Radio
Call"), the RCC division of Chicago Communication Service, Inc. ("ChiComm"),
High Tech Communications Corp. ("High Tech"), Carrier Paging Systems, Inc.
("Carrier"), Signet Paging of Charlotte, Inc. ("Signet,"), All City
Communication Company, Inc. ("All City") and Americom Paging Corporation
("Americom" and, together with Contact, Metropolitan, Radio Call, ChiComm,
High Tech, Carrier, Signet and All City, the "Completed Acquisitions") and
(b) the acquisition of the paging assets of Gold Coast Paging, Inc. ("Gold
Coast"), Denton Enterprises, Inc. ("Denton"), MetroTones, Inc.
("MetroTones"), Lewis Paging, Inc. ("Lewis"), and the acquisition of Page
East, Inc. ("Page East" and, together with Gold Coast, Denton, MetroTones and
Lewis, the "Pending Acquisitions") as if they had occurred at the beginning
of the period presented, and assumes that they were funded with a portion of
the proceeds of the offering of the Old Notes. The Completed Acquisitions
and the Pending Acquisitions are collectively referred to as the
"Acquisitions."
(2) Gives effect to the acquisitions of Carrier, Signet, Metropolitan,
All City, Americom and the Pending Acquisitions as if they had occurred at
the beginning of the period presented, and assumes that they were funded with
the proceeds of the offering of the Old Notes.
(3) Recurring revenues consist of fixed monthly, quarterly, annual and
bi-annual service and leasing fees.
(4) Product sales include pager and paging equipment sales and other
security systems' income.
(5) Net revenues are total revenues less cost of products sold.
(6) Calculated by dividing pagers in service by number of employees at
the end of the period presented. This calculation excludes employees directly
related to the security systems business.
(7) ARPU-Paging (average revenue per paging unit) is calculated by
dividing paging systems' recurring revenues for the last month in the period
by the number of pagers in service at the beginning of such month.
(8) ARPU-TracPac (average revenue per TracPac unit) is calculated by
dividing security systems' recurring revenues for the last month in the
period by the number of TracPacs in service at the beginning of such month.
(9) Calculated by dividing the sum of the cost of pager lease and access
fees and general and administrative expenses for the last month in the period
by the number of pagers in service at the beginning of such month.
(10) EBITDA is earnings before other income (expense), income taxes,
depreciation and amortization expense. Other income (expense) consists
primarily of interest expense. EBITDA does not represent cash flows as
defined by generally accepted accounting principles and does not necessarily
indicate that cash flows are sufficient to fund all of the Company's cash
needs. EBITDA should not be considered in isolation or as a substitute for
net income, cash from operating activities or other measures of liquidity
determined in accordance with generally accepted accounting principles.
(11) Calculated by dividing EBITDA by net revenues for the period
presented.
(12) Excludes acquisition costs.
11
<PAGE>
(13) Calculated by dividing total debt at the end of the period by EBITDA
for the 12 months ended on the last day of the period except the pro forma
ratio for the three months ended March 31, 1995 is based on annualized EBITDA.
(14) The ratio of earnings to fixed charges is calculated as the sum of
income before taxes plus fixed charges, divided by fixed charges. Fixed
charges consist of interest expense including amortization of deferred
financing costs. On a pro forma basis for the year ended December 31, 1994
and the three months ended March 31, 1995, earnings were insufficient to
cover fixed charges by $8.4 million and $1.1 million, respectively.
(15) Gives effect to the acquisitions of Carrier, Metropolitan, All
City, Americom and the Pending Acquisitions as if they occurred on March 31,
1995, as adjusted to reflect the sale of the Old Notes and the application of
the net proceeds therefrom. See "Use of Proceeds."
</TABLE>
12
<PAGE>
RISK FACTORS
IN ADDITION TO THE OTHER INFORMATION IN THIS PROSPECTUS, THE FOLLOWING
FACTORS SHOULD BE CONSIDERED CAREFULLY IN EVALUATING AN INVESTMENT IN THE NEW
NOTES OFFERED BY THIS PROSPECTUS.
ACQUISITION AND GROWTH STRATEGY
The Company intends to continue to pursue an aggressive acquisition
strategy. Since January 1, 1994, the Company has purchased nine paging
operations and signed definitive agreements or letters of intent to
purchase five more companies, representing 541,700 pagers in service in the
aggregate. No assurances can be given that the Pending Acquisitions will be
consummated, that further suitable acquisition candidates can be found or
purchased on favorable terms, or that the Pending Acquisitions, if completed,
will be successful. Moreover, there can be no assurance that the Company will
be able to integrate the paging operations of each of the acquired
companies successfully. If the Company is not successful in integrating such
paging operations, the business of the Company may be adversely affected. In
addition, integration of new acquisitions may, at least in the short term,
have an adverse impact upon the Company's operations.
Prior to 1994, the Company delivered paging services solely to members of
the healthcare industry. However, most of the Company's growth since January
1994 has resulted from, and much of the Company's future growth is expected
to result from, the addition of non-healthcare subscribers, such as small
businesses and individual consumers, many of whom will purchase and maintain
their own pagers rather than lease their pagers from the Company. This may
tend to reduce the Company's average revenue per unit ("ARPU") because such
subscribers will not generate leasing revenues. Marketing and providing
paging services to such businesses and consumers can vary significantly
from marketing and providing such services to healthcare subscribers. No
assurances can be given that the Company will be successful in the general
marketplace. See "Use of Proceeds."
HIGH DEGREE OF LEVERAGE; RESTRICTIONS IMPOSED BY LENDERS
The Company is, and after the completion of the offering of the Old Notes
has continued to be, highly leveraged. At March 31, 1995, after giving pro
forma effect to the acquisitions of Carrier, Metropolitan, All City, Americom
and the Pending Acquisitions and the offering of the Old Notes and the
application of the net proceeds therefrom, the Company would have had
approximately $121.3 million of debt outstanding and the Company's long-term
debt as a percentage of total capitalization would have been 71%.
The Company's high degree of leverage will have important consequences to
holders of the New Notes, including the following: (i) the ability of the
Company to obtain additional financing in the future for acquisitions,
working capital, capital expenditures or other purposes, should it need to
do so, may be impaired; (ii) a substantial portion of the Company's cash flow
from operations will be required to be dedicated to the payment of the
Company's interest expense, which will reduce the funds available to the
Company for its operations and future business opportunities; (iii) the
Company may be more highly leveraged than some of its competitors, which may
place it at a competitive disadvantage; and (iv) the Company's high degree of
leverage may make it more vulnerable to a downturn in its business or the
economy generally.
The Company's credit facility (the "Credit Facility") and the Indenture
contain financial and operating covenants including, among other things,
requirements that the Company maintain certain financial ratios and satisfy
certain financial tests and limitations on the Company's ability to incur
other indebtedness, pay dividends, engage in transactions with
affiliates, sell assets and engage in mergers and consolidations and other
acquisitions. If the Company fails to comply with these covenants, the
lenders will be able to accelerate the maturity of the applicable
indebtedness. See "Use of Proceeds," "Description of Credit Facility" and
"Description of New Notes."
13
<PAGE>
DEBT SERVICE; DEFICIT OF EARNINGS TO FIXED CHARGES
On a pro forma basis for the year ended December 31, 1994 and the three
months ended March 31, 1995, the Company's earnings were insufficient to
cover fixed charges by $8.4 million and $1.1 million, respectively. The
ability of the Company to continue making payments of principal and interest
will be largely dependent upon its future performance. Many factors, some of
which will be beyond the Company's control (such as prevailing economic
conditions), will affect its performance. Because borrowings under the
Credit Facility will bear interest at rates that will fluctuate with certain
prevailing interest rates, increases in such prevailing interest rates will
increase the Company's interest payment obligations and could have an adverse
effect on the Company. There can be no assurance that the Company will be
able to generate sufficient cash flow to cover required interest and
principal payments. If the Company is unable to meet interest and principal
payments in the future, it may, depending upon the circumstances which then
exist, seek additional equity or debt financing, attempt to refinance its
existing indebtedness or sell all or part of its business or assets to raise
funds to repay its indebtedness. There can be no assurance that sufficient
equity or debt financing will be available, or, if available, that it will be
on terms acceptable to the Company, that the Company will be able to
refinance its existing indebtedness or that sufficient funds could be raised
through asset sales. See "Use of Proceeds."
SUBORDINATION
The New Notes will be unsecured and subordinated in right of payment to
all existing and future Senior Debt of the Company, including all
indebtedness under the Credit Facility. By reason of such subordination, in
the event of the insolvency, liquidation or other reorganization of the
Company, the Senior Debt must be paid in full before the principal of,
premium, if any, and interest on the New Notes may be paid. As of March 31,
1995, after giving pro forma effect to the acquisitions of Carrier,
Metropolitan, All City, Americom and the Pending Acquisitions, the offering
of the Old Notes and the Exchange Offer, the New Notes would have been
subordinated to approximately $21.3 million of Senior Debt. The Indenture
under which the New Notes are to be issued will not limit the amount of
Senior Debt that may be incurred by the Company if certain tests are met. See
"Description of New Notes -- Certain Covenants."
The Company may not pay the principal of, premium, if any, or interest on
the New Notes, or repurchase, redeem or otherwise retire the New Notes, if
any Senior Debt is not paid when due or any default on Senior Debt occurs and
the maturity of such Senior Debt is accelerated in accordance with its terms
unless, in either case, the default has been cured or waived, any such
acceleration has been rescinded or such Senior Debt has been paid in full,
except that the Company may make payments with respect to the New Notes with
the approval of certain holders of the Senior Debt. In addition, if any
default exists with respect to certain Senior Debt and certain other
conditions are satisfied, the Company may not make any payments on the New
Notes for a designated period of time. The right of each holder of the New
Notes to require the Company to repurchase the New Notes at a premium upon
the occurrence of a Change of Control would be blocked by the foregoing
subordination provisions to the extent that the event constituting a Change
of Control also causes a default (or if a default otherwise exists) under the
Credit Facility or other Senior Debt. Upon any payment or distribution of
assets of the Company upon a total or partial liquidation, dissolution,
reorganization or similar proceeding, the holders of Senior Debt will be
entitled to receive payment in full before the holders of the New Notes are
entitled to receive any payment. See "Description of New Notes --
Subordination."
HOLDING COMPANY STRUCTURE
Because ProNet operates a significant portion of its business through
its subsidiaries, the Company's cash flow and its ability to service debt,
including the New Notes, are substantially dependent upon the cash flow of
its subsidiaries and the payment of funds by those subsidiaries to the
Company through loans, dividends or otherwise. The subsidiaries, however, are
legally distinct from the Company and have no obligation, contingent or
otherwise, to pay amounts due pursuant to the New Notes or to make any funds
available for such payment. The ability of the Company's subsidiaries to make
such payments will be subject to applicable state laws. Claims of creditors
of the Company's subsidiaries will generally have priority as to
14
<PAGE>
the assets of such subsidiaries over the claims of the Company and the
holders of the Company's indebtedness. Except as otherwise permitted in the
Indenture, the Company's subsidiaries may not incur indebtedness. However,
all of the Company's subsidiaries are guarantors of the indebtedness under
the Credit Facility and have granted security interests in substantially all
of their assets to secure such indebtedness. As a result of these factors,
the New Notes will be effectively subordinated to all liabilities of the
Company's subsidiaries. See "Description of New Notes."
FUTURE PROFITABILITY
The Company has been profitable in each of the last five years. However,
the Company anticipates incurring significantly greater depreciation,
amortization and interest expenses in future periods as a result of the
Company's recent and planned acquisitions of commercial paging companies and
the offering of the Old Notes. Such increased expenses will reduce net income
and may contribute to the Company's incurrence of losses in future periods.
In any event, no assurances can be given that the Company will continue to
achieve profitability. See "Summary -- Summary Financial and Operating
Information."
SUBSCRIBER TURNOVER
The results of operations of paging service providers such as the Company
may be significantly affected by subscriber cancellations. In order to
realize net growth in pagers in service, disconnected users must be replaced
and additional users must be added. However, the sales and marketing costs
associated with attracting new subscribers are substantial relative to the
costs of providing service to existing customers. Although the Company's
current disconnect rate is below the industry average, the Company
anticipates that it will experience a higher disconnect rate in the future
among small businesses, individual consumers and other non-healthcare
subscribers than it has experienced historically. A significant increase in
the Company's subscriber cancellation rate may adversely affect the Company's
operating results.
COMPETITION AND TECHNOLOGICAL CHANGE
The Company faces direct competition in all of its paging markets. Some of
the Company's competitors, which include certain national and regional
paging companies and Regional Bell Operating Companies, possess greater
financial and other resources than the Company. There can be no assurance
that additional competitors will not enter markets served by the Company or
that the Company will be able to continue to compete successfully. In
addition, the telecommunications industry is characterized by rapid
technological change. Future technological advances in the industry may
result in the availability of new services or products that could compete
directly with the services and products being provided or developed by the
Company. Recent and proposed regulatory changes by the Federal
Communications Commission (the "FCC") are aimed at encouraging such new
services and products. Moreover, changes in technology could lower the cost
of competitive services and products to a level at which the Company's
services and products would become less competitive or the Company would be
required to reduce the prices of its services and products. There can be no
assurance that the Company will be able to develop or introduce new services
and products to remain competitive or that the Company will not be adversely
affected in the event of such technological developments.
GOVERNMENT REGULATION
The paging industry is subject to regulation by the FCC and, depending on
the jurisdiction, may be regulated by state regulatory agencies. There can
be no assurance that either the FCC or those state agencies having
jurisdiction over the Company's business will not adopt regulations or take
other actions that would adversely affect the business of the Company.
RELIANCE ON SELECT GROUP OF EXECUTIVES
The Company believes that its success will depend to a significant extent
on the efforts and abilities of a relatively small group of executive
personnel. The loss of services of one or more of these key executives
15
<PAGE>
could adversely affect the Company. The Company does not maintain "key man"
life insurance policies on its executives. However, the Company has entered
into three-year employment agreements with Jackie R. Kimzey, the Company's
Chairman and Chief Executive Officer, and David J. Vucina, the Company's
President and Chief Operating Officer.
ABSENCE OF PUBLIC MARKET
The Old Notes are designated for trading in the PORTAL market. There
is no established trading market for the New Notes. Although the initial
purchasers of the Old Notes have advised the Company that they currently
intend to make a market in the New Notes, they are not obligated to do so and
they may discontinue such market-making at any time without notice. The
Company does not currently intend to list the New Notes on any securities
exchange or to seek approval for quotation through any automated quotation
system. Accordingly, there can be no assurance as to the development of any
market or the liquidity of any market that may develop for the New Notes. If
such a market were to exist, no assurance can be given as to the trading
prices of the New Notes. Future trading prices of the New Notes will depend
on many factors, including, among other things, prevailing interest rates,
the Company's operating results and the market for similar securities.
USE OF PROCEEDS
There will be no cash proceeds to the Company from the Exchange Offer.
The net proceeds received by the Company from the sale of the Old Notes,
after deducting expenses of the offering of the Old Notes, were $95.6
million. Approximately $49.4 million of the net proceeds received by the
Company from the sale of the Old Notes were used to repay indebtedness under
the Credit Facility. The remainder of the net proceeds will be used by the
Company to fund acquisitions of paging businesses, purchase frequency
rights, make capital expenditures for buildout of the Company's regional
paging systems and for enhanced services, and for working capital and
general corporate purposes.
16
<PAGE>
CAPITALIZATION
The following table sets forth the capitalization of the Company at March 31,
1995 on (a) an historical basis, (b) a pro forma basis to give effect to
the acquisitions of Metropolitan, Carrier, All City, Americom and the Pending
Acquisitions as if they had occurred on March 31, 1995, and were funded with
borrowings under the Credit Facility, and (c) on a pro forma basis to give
effect to the acquisition of Metropolitan, Carrier, All City, Americom and
the Pending Acquisitions as if they had occurred on March 31, 1995, as
adjusted to reflect the sale by the Company of the Old Notes (after
deducting estimated discounts, commissions and offering expenses) and the
application of the net proceeds therefrom. See "Use of Proceeds."
<TABLE>
<CAPTION>
AS OF MARCH 31, 1995
--------------------------------------
PRO FORMA FOR
ACTUAL ACQUISITIONS(1) PRO FORMA(2)
------- --------------- ------------
(IN THOUSANDS)
<S> <C> <C> <C>
Cash and cash equivalents........... $ 5,369 $ 5,578 $ 25,821
======= ======== ========
Deferred payments (3)............... $ 5,332 $ 21,292 $ 21,292
Credit Facility..................... 21,900 75,340 --
11 7/8% Senior Subordinated
Notes due 2005..................... -- -- 100,000
------- -------- --------
Total debt...................... 27,232 96,632 121,292
------- -------- --------
Shareholders' equity:
Preferred Stock, par value $1.00
per share; 1,000,000 shares
authorized; no shares issued or
outstanding (4).................. -- -- --
Common Stock, par value $.01 per
share; 10,000,000 shares
authorized; 6,128,131 shares
issued and outstanding (4)....... 65 65 65
Less treasury stock at cost....... (1,430) (1,430) (1,430)
Additional capital................ 49,685 49,685 49,685
Retained earnings................. 2,092 2,092 2,092
------- -------- --------
Total shareholders' equity...... 50,412 50,412 50,412
------- -------- --------
Total capitalization.............. $77,644 $147,044 $171,704
======= ======== ========
<FN>
___________
(1) Gives effect to the acquisition of Metropolitan, Carrier, All City,
Americom and the Pending Acquisitions as if they had occurred on March 31,
1995, and assumes that they were funded with borrowings under the Credit
Facility.
(2) Gives effect to the acquisition of Metropolitan, Carrier, All City,
Americom and the Pending Acquisitions as if they had occurred on March 31,
1995, as adjusted to reflect the sale by the Company of the Old Notes (after
deducting estimated discounts, commissions and offering expenses) and the
application of the net proceeds therefrom.
(3) Assuming the completion of all of the Pending Acquisitions, the
Company will have deferred payment obligations (the "Deferred Payments")
aggregating $21.3 million in respect of certain of the Acquisitions. The
Deferred Payments constitute Senior Debt and are due and payable one year
from the closing of the respective Acquisitions. The Company has the option
to issue Common Stock in lieu of cash for each Deferred Payment.
(4) Subsequent to March 31, 1995, the Company's Board of Directors and
stockholders approved an amendment to the Company's Certificate of
Incorporation to increase the authorized shares of Preferred Stock and Common
Stock to 5,000,000 and 20,000,000, respectively.
</TABLE>
17
<PAGE>
DESCRIPTION OF CREDIT FACILITY
On February 9, 1995, the Company amended and restated its former credit
facility with First Chicago, increasing its existing $52 million revolving
line of credit to $125 million. The Company uses the Credit Facility for
working capital purposes and for acquisitions approved by the lenders under
the Credit Facility (the "Lenders"). Borrowings by the Company are
guaranteed by the Company's subsidiaries and are secured by all of the
assets of the Company and its subsidiaries. The availability of advances
under the Credit Facility is conditioned on the continued maintenance of
certain specified financial and operating covenants, including a prohibition
on the payment of dividends or other distributions on the Company's Common
Stock. A portion of the proceeds of the offering of the Old Notes was used to
repay all outstanding balances under the Credit Facility. Concurrent with the
offering of the Old Notes, the Company and the Lenders amended the Credit
Facility to, among other things, permit the issuance of the Old Notes.
Immediately following the completion of the offering of the Old Notes, the
Company had approximately $31.3 million in borrowing availability under the
Credit Facility.
The Credit Facility consists of a revolving line of credit which, in
February 1997, will convert to a five and one half year term loan maturing in
July 2002. The term loan may be repaid at any time and will be payable in
quarterly installments, based on the principal amount outstanding on the
conversion date, in amounts ranging from 3.25% initially to 5.75% quarterly
over five and one half years. The borrowings bear interest, at the Company's
designation, at either (i) the greater of First Chicago's corporate base rate
or the Federal Funds Rate, plus a margin of up to 1.25%, or (ii) LIBOR, plus
a margin of up to 2.5%. In addition, a commitment fee is required on the
revolving line of credit at .5% per annum computed on the daily unused
portion of the available loan commitment.
The Credit Facility requires that the interest expense on 50% of the
aggregate principal amount of outstanding indebtedness of the Company be
effectively fixed at a prevailing market rate through either (i) the issuance
of indebtedness bearing interest at a fixed rate or (ii) interest exchange or
insurance agreements to effectively convert a portion of its floating rate
debt to a fixed rate basis. At March 31, 1995, none of the outstanding
borrowings under the Credit Agreement were subject to hedging agreements.
18
<PAGE>
THE EXCHANGE OFFER
PURPOSE AND EFFECT
The Old Notes were sold by the Company on June 15, 1995 in a private
placement. In connection with that placement, the Company entered into the
Registration Rights Agreement, which requires that the Company file a
registration statement under the Securities Act with respect to the New Notes
and, upon the effectiveness of that registration statement, offer to the
holders of the Old Notes the opportunity to exchange their Old Notes for a
like principal amount of New Notes, which will be issued without a
restrictive legend and may be reoffered and resold by the holder without
registration under the Securities Act. The Registration Rights Agreement
further provides that the Company must use its best efforts to cause the
registration statement with respect to the Exchange Offer to be declared
effective within 105 days following the original issuance of the Old Notes. A
copy of the Registration Rights Agreement has been filed as an exhibit to the
registration statement of which this Prospectus is a part. As a result of
the filing and the effectiveness of the registration statement, certain
prospective increases in the interest rate on the Old Notes provided for in
the Registration Rights Agreement and the Indenture will not occur.
Following the completion of the Exchange Offer, holders of Old Notes not
tendered will not have any further registration rights and those Old Notes
will continue to be subject to certain restrictions on transfer. Accordingly,
the liquidity of the market for the Old Notes could be adversely affected
upon completion of the Exchange Offer.
In order to participate in the Exchange Offer, a holder must represent to
the Company, among other things, that (i) the New Notes acquired pursuant to
the Exchange Offer are being acquired in the ordinary course of business of
the person receiving the New Notes, whether or not such person is the holder
of the Old Notes, (ii) neither the holder nor any such other person is
engaging in or intends to engage in a distribution of the New Notes, (iii)
neither the holder nor any such other person has an arrangement or
understanding with any person to participate in the distribution of the New
Notes, and (iv) neither the holder nor any such other person is an
"affiliate" (as defined under Rule 405 promulgated under the Securities Act)
of the Company.
The Old Notes are designated for trading in the PORTAL market. To the
extent Old Notes are tendered and accepted in the Exchange Offer, the
principal amount of outstanding Old Notes will decrease with a resulting
decrease in the liquidity in the market therefor. Following the consummation
of the Exchange Offer, holders of Old Notes who were eligible to participate
in the Exchange Offer but who did not tender their Old Notes will not be
entitled to certain rights under the Registration Rights Agreement and such
Old Notes will continue to be subject to certain restrictions on transfer.
Accordingly, the liquidity of the market for the Old Notes could be adversely
affected. No assurance can be given as to the liquidity of the trading
market for either the Old Notes or the New Notes.
Based on an interpretation by the Commission's staff set forth in
no-action letters issued to third parties unrelated to the Company, the
Company believes that, with the exceptions discussed herein, New Notes issued
pursuant to the Exchange Offer in exchange for Old Notes may be offered for
resale, resold and otherwise transferred by any person receiving the New
Notes, whether or not that person is the holder (other than any such holder
or such other person that is an "affiliate" of the Company within the meaning
of Rule 405 under the Securities Act), without compliance with the
registration and prospectus delivery provisions of the Securities Act,
provided that (i) the New Notes are acquired in the ordinary course of
business of that holder or such other person, (ii) neither the holder nor
such other person is engaging in or intends to engage in a distribution of
the New Notes, and (iii) neither the holder nor such other person has an
arrangement or understanding with any person to participate in the
distribution of the New Notes. Each broker-dealer that receives New Notes for
its own account in exchange for Old Notes, where those Old Notes were
acquired by the broker-dealer as a result of its market-making activities
or other trading activities, must acknowledge that it will deliver a
prospectus in connection with any resale of those New Notes. See "Plan of
Distribution."
19
<PAGE>
CONSEQUENCES OF FAILURE TO EXCHANGE
Holders of Old Notes who do not exchange their Old Notes for New Notes
pursuant to the Exchange Offer will continue to be subject to the
restrictions on transfer of such Old Notes as set forth in the legend thereon
as a consequence of the offer or sale of the Old Notes pursuant to exemptions
from, or in transactions not subject to, the registration requirements of the
Securities Act and applicable state securities laws. In general, the Old
Notes may not be offered or sold, unless registered under the Securities Act
and applicable state securities laws, except pursuant to an exemption from,
or in a transaction not subject to, the Securities Act and applicable state
securities laws. The Company does not intend to register the Old Notes under
the Securities Act and, after consummation of the Exchange Offer, will not be
obligated to do so. Based on an interpretation by the staff of the Commission
set forth in a series of no-action letters issued to third parties, the
Company believes that, except as set forth in the next sentence, New Notes
issued pursuant to the Exchange Offer in exchange for Old Notes may be offered
for resale, resold or otherwise transferred by holders thereof (other than any
such holder that is an "affiliate" of the Company within the meaning of Rule
405 under the Securities Act) without compliance with the registration and
prospectus delivery provisions of the Securities Act, provided that such Old
Notes are acquired in the ordinary course of such holders' business and such
holders have no arrangement with any person to participate in the distribution
of such New Notes. Each broker-dealer that receives New Notes for its own
account in exchange for Old Notes, where such Old Notes were acquired by such
broker-dealer as a result of market-making activities or other trading
activities, must acknowledge that it will deliver a prospectus in connection
with any resale of such New Notes. See "Plan of Distribution."
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth in this Prospectus
and in the Letter of Transmittal, the Company will accept any and all Old
Notes validly tendered and not withdrawn prior to 5:00 p.m., New York City
time, on the Expiration Date. The Company will issue $1,000 principal amount
of New Notes in exchange for each $1,000 principal amount of outstanding Old
Notes accepted in the Exchange Offer. Holders may tender some or all of
their Old Notes pursuant to the Exchange Offer. However, Old Notes may be
tendered only in integral multiples of $1,000 in principal amount.
The form and terms of the New Notes are substantially the same as the form
and terms of the Old Notes except that the New Notes have been registered
under the Securities Act and will not bear legends restricting their
transfer. The New Notes will evidence the same debt as the Old Notes and will
be issued pursuant to, and entitled to the benefits of, the Indenture
pursuant to which the Old Notes were, and the New Notes will be, issued.
As of the date of this Prospectus, $100,000,000 aggregate principal amount
of the Old Notes were outstanding. The Company has fixed the close of
business on , 1995 as the record date for the Exchange Offer for
purposes of determining the persons to whom this Prospectus, together with
the Letter of Transmittal, will initially be sent. As of such date, there
were registered holders of the Old Notes. Holders of Old Notes do not
have any appraisal or dissenters' rights under the General Corporation Law of
the State of Delaware or the Indenture in connection with the Exchange Offer.
The Company intends to conduct the Exchange Offer in accordance with the
applicable requirements of the Exchange Act and the rules and regulations of
the Commission promulgated thereunder.
The Company shall be deemed to have accepted validly tendered Old Notes
when, as, and if the Company has given oral or written notice thereof to the
Exchange Agent. The Exchange Agent will act as agent for the tendering
holders for the purpose of receiving the New Notes from the Company. If any
tendered Old Notes are not accepted for exchange because of an invalid
tender, the occurrence of certain other events set forth herein or otherwise,
certificates for any such unaccepted Old Notes will be returned, without
expense, to the tendering holder thereof as promptly as practicable after the
Expiration Date.
Holders who tender Old Notes in the Exchange Offer will not be required to
pay brokerage commissions or fees or, subject to the instructions in the
Letter of Transmittal, transfer taxes with respect to the exchange of Old
Notes pursuant to the Exchange Offer. The Company will pay all charges and
expenses,
20
<PAGE>
other than certain applicable taxes, in connection with the Exchange
Offer. See "The Exchange Offer -- Solicitation of Tenders; Fees and
Expenses."
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term "Expiration Date" shall mean 5:00 p.m., New York City time,
on , 1995, unless the Company, in its sole discretion,
extends the Exchange Offer, in which case the term "Expiration Date" shall
mean the latest date and time to which the Exchange Offer is extended. In
order to extend the Exchange Offer, the Company will notify the Exchange
Agent of any extension by oral or written notice prior to 9:00 a.m., New
York City time, on the next business day after the previously
scheduled Expiration Date. The Company reserves the right, in its sole
discretion, (i) to delay accepting any Old Notes, to extend the Exchange
Offer or, if any of the conditions set forth under "The Exchange Offer --
Conditions" shall not have been satisfied, to terminate the Exchange Offer,
by giving oral or written notice of such delay, extension or termination to
the Exchange Agent, or (ii) to amend the terms of the Exchange Offer in any
manner.
INTEREST ON THE NEW NOTES
The New Notes will bear interest from June 15, 1995, the date of original
issuance of the Old Notes. No interest will be paid on the Old Notes accepted
for exchange.
PROCEDURES FOR TENDERING
Only a holder of Old Notes may tender the Old Notes in the Exchange Offer.
Except as set forth under "The Exchange Offer --Book Entry Transfer," to
tender in the Exchange Offer a holder must complete, sign and date the Letter
of Transmittal, or a copy thereof, have the signatures thereon guaranteed if
required by the Letter of Transmittal, and mail or otherwise deliver the
Letter of Transmittal or copy to the Exchange Agent prior to the Expiration
Date. In addition, either (i) certificates for such Old Notes must be
received by the Exchange Agent along with the Letter of Transmittal, (ii) a
timely confirmation of a book-entry transfer (a "Book-Entry Confirmation")
of such Old Notes, if that procedure is available, into the Exchange Agent's
account at The Depository Trust Company (the "DTC" or the "Book-Entry
Transfer Facility") pursuant to the procedure for book-entry transfer
described below, must be received by the Exchange Agent prior to the
Expiration Date, or (iii) the holder must comply with the guaranteed delivery
procedures described below. To be tendered effectively, the Old Notes,
Letter of Transmittal and other required documents must be received by the
Exchange Agent at the address set forth under "The Exchange Offer -- Exchange
Agent" prior to the Expiration Date.
The tender by a holder that is not withdrawn before the Expiration Date
will constitute an agreement between that holder and the Company in
accordance with the terms and subject to the conditions set forth herein and
in the Letter of Transmittal.
THE METHOD OF DELIVERY OF OLD NOTES AND THE LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND RISK OF
THE HOLDER. INSTEAD OF DELIVERY BY MAIL, IT IS RECOMMENDED THAT HOLDERS USE
AN OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL CASES, SUFFICIENT TIME SHOULD
BE ALLOWED TO ASSURE DELIVERY TO THE EXCHANGE AGENT BEFORE THE EXPIRATION
DATE AND PROPER INSURANCE SHOULD BE OBTAINED. NO LETTER OF TRANSMITTAL OR
OLD NOTES SHOULD BE SENT TO THE COMPANY. HOLDERS MAY REQUEST THEIR RESPECTIVE
BROKERS, DEALERS, COMMERCIAL BANKS, TRUST COMPANIES, OR NOMINEES TO EFFECT
THESE TRANSACTIONS FOR SUCH HOLDERS.
Any beneficial owner whose Old Notes are registered in the name of a broker,
dealer, commercial bank, trust company, or other nominee and who wishes to
tender should contact the registered holder promptly and instruct the
registered holder to tender on the beneficial owner's behalf. If the
beneficial owner wishes to tender on the owner's own behalf, the owner must,
prior to completing and executing the Letter of Transmittal and delivering
the owner's Old Notes, either make appropriate arrangements to register
ownership of the Old
21
<PAGE>
Notes in the beneficial owner's name or obtain a properly completed bond
power from the registered holder. The transfer of registered ownership may
take considerable time.
Signatures on a Letter of Transmittal or a notice of withdrawal, as the
case may be, must be guaranteed by an Eligible Institution (as defined
herein) unless Old Notes tendered pursuant thereto are tendered (i) by a
registered holder who has not completed the box titled "Special Registration
Instructions" or "Special Delivery Instructions" on the Letter of Transmittal
or (ii) for the account of an Eligible Institution. If signatures on a
Letter of Transmittal or a notice of withdrawal, as the case may be, are
required to be guaranteed, the guarantee must be by any eligible guarantor
institution that is a member of or participant in the Securities Transfer
Agents Medallion Program, the New York Stock Exchange Medallion Signature
Program, the Stock Exchange Medallion Program, or an "eligible guarantor
institution" within the meaning of Rule 17Ad-15 under the Exchange Act (an
"Eligible Institution").
If the Letter of Transmittal is signed by a person other than the
registered holder of any Old Notes listed therein, the Old Notes must be
endorsed or accompanied by a properly completed bond power, signed by the
registered holder as that registered holder's name appears on the Old Notes.
If the Letter of Transmittal or any Old Notes or bond powers are signed by
trustees, executors, administrators, guardians, attorneys-in-fact, officers
of corporations, or others acting in a fiduciary or representative capacity,
such persons should so indicate when signing, and evidence satisfactory to
the Company of their authority to so act must be submitted with the Letter of
Transmittal unless waived by the Company.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance and withdrawal of tendered Old Notes will be determined
by the Company in its sole discretion, which determination will be final and
binding. The Company reserves the absolute right to reject any and all Old
Notes not properly tendered or any Old Notes the Company's acceptance of
which would, in the opinion of counsel for the Company, be unlawful. The
Company also reserves the right to waive any defects, irregularities or
conditions of tender as to particular Old Notes. The Company's interpretation
of the terms and conditions of the Exchange Offer (including the instructions
in the Letter of Transmittal) will be final and binding on all parties.
Unless waived, any defects or irregularities in connection with tenders of
Old Notes must be cured within such time as the Company shall determine.
Although the Company intends to notify holders of defects or irregularities
with respect to tenders of Old Notes, neither the Company, the Exchange Agent
nor any other person shall incur any liability for failure to give such
notification. Tenders of Old Notes will not be deemed to have been made until
such defects or irregularities have been cured or waived. Any Old Notes
received by the Exchange Agent that the Company determines are not properly
tendered and as to which the defects or irregularities have not been cured or
waived will be returned by the Exchange Agent to the tendering holders,
unless otherwise provided in the Letter of Transmittal, as soon as
practicable following the Expiration Date.
In addition, the Company reserves the right in its sole discretion to
purchase or make offers for any Old Notes that remain outstanding after the
Expiration Date or, as set forth under "The Exchange Offer -- Conditions," to
terminate the Exchange Offer and, to the extent permitted by applicable law,
purchase Old Notes in the open market, in privately negotiated transactions
or otherwise. The terms of any such purchases or offers could differ from the
terms of the Exchange Offer.
By tendering, each holder will represent to the Company that, among other
things, (i) the New Notes acquired pursuant to the Exchange Offer are being
acquired in the ordinary course of business of the person receiving such New
Notes, whether or not such person is the holder, (ii) neither the holder nor
any such other person is engaging in or intends to engage in a distribution
of such New Notes, (iii) neither the holder nor any such other person has an
arrangement or understanding with any person to participate in the
distribution of such New Notes, and (iv) neither the holder nor any such
other person is an "affiliate" (as defined in Rule 405 of the Securities Act)
of the Company. Each broker-dealer that receives New Notes for its own
account in exchange for Old Notes, where such Old Notes were acquired by such
broker-dealer as a result of market-making activities or other trading
activities (other than Old Notes acquired directly from the Company), may
22
<PAGE>
participate in the Exchange Offer but may be deemed an "underwriter" under
the Securities Act and, therefore, must acknowledge in the Letter of
Transmittal that it will deliver a prospectus in connection with any resale
of such New Notes. The Letter of Transmittal states that by so acknowledging
and by delivering a prospectus, a broker-dealer will not be deemed to admit
that it is an "underwriter" within the meaning of the Securities Act. See
"Plan of Distribution."
In all cases, issuance of New Notes for Old Notes that are accepted for
exchange pursuant to the Exchange Offer will be made only after timely
receipt by the Exchange Agent of certificates for such Old Notes or a timely
Book-Entry Confirmation of such Old Notes into the Exchange Agent's account
at the Book-Entry Transfer Facility, a properly completed and duly executed
Letter of Transmittal (or, with respect to the DTC and its participants,
electronic instructions in which the tendering holder acknowledges its
receipt of and agreement to be bound by the Letter of Transmittal), and all
other required documents. If any tendered Old Notes are submitted for a
greater principal amount than the holder desires to exchange, such
unaccepted or non-exchanged Old Notes will be returned without expense to
the tendering holder thereof (or, in the case of Old Notes tendered by
book-entry transfer into the Exchange Agent's account at the Book-Entry
Transfer Facility pursuant to the book-entry transfer procedures described
below, such non-exchanged Old Notes will be credited to an account maintained
with such Book-Entry Transfer Facility) as promptly as practicable after the
expiration or termination of the Exchange Offer.
BOOK-ENTRY TRANSFER
The Exchange Agent will make a request to establish an account with
respect to the Old Notes at the Book-Entry Transfer Facility for purposes of
the Exchange Offer within two business days after the date of this
Prospectus, and any financial institution that is a participant in the
Book-Entry Transfer Facility system may make book-entry delivery of Old Notes
being tendered by causing the Book-Entry Transfer Facility to transfer such
Old Notes into the Exchange Agent's account at the Book-Entry Transfer
Facility in accordance with such Book-Entry Transfer Facility's procedures
for transfer. However, although delivery of Old Notes may be effected through
book-entry transfer at the Book-Entry Transfer Facility, the Letter of
Transmittal or copy thereof, with any required signature guarantees and any
other required documents, must, in any case other than as set forth in the
following paragraph, be transmitted to and received by the Exchange Agent at
the address set forth under "The Exchange Offer -- Exchange Agent" on or
prior to the Expiration Date or the guaranteed delivery procedures described
below must be complied with.
The DTC's Automated Tender Offer Program ("ATOP") is the only method of
processing exchange offers through the DTC. To accept the Exchange Offer
through ATOP, participants in the DTC must send electronic instructions to
the DTC through the DTC's communication system in place of sending a signed,
hard copy Letter of Transmittal. The DTC is obligated to communicate those
electronic instructions to the Exchange Agent. To tender Old Notes through
ATOP, the electronic instructions sent to the DTC and transmitted by the DTC
to the Exchange Agent must contain the character by which the participant
acknowledges its receipt of and agrees to be bound by the Letter of
Transmittal.
GUARANTEED DELIVERY PROCEDURES
If a registered holder of the Old Notes desires to tender such Old Notes
and the Old Notes are not immediately available, or time will not permit such
holder's Old Notes or other required documents to reach the Exchange Agent
before the Expiration Date, or the procedure for book-entry transfer cannot
be completed on a timely basis, a tender may be effected if (i) the tender is
made through an Eligible Institution, (ii) prior to the Expiration Date, the
Exchange Agent received from such Eligible Institution a properly completed
and duly executed Letter of Transmittal (or a facsimile thereof) and Notice
of Guaranteed Delivery, substantially in the form provided by the Company
(by telegram, telex, facsimile transmission, mail or hand delivery), setting
forth the name and address of the holder of Old Notes and the amount of Old
Notes tendered, stating that the tender is being made thereby and
guaranteeing that within five New York Stock Exchange ("NYSE") trading days
after the date of execution of the Notice of Guaranteed Delivery, the
certificates for all physically tendered Old Notes, in proper form for
transfer, or a Book-Entry Confirmation, as the case may be, and any other
documents required by the Letter of Transmittal will be deposited by the
Eligible Institution with the
23
<PAGE>
Exchange Agent, and (iii) the certificates for all physically tendered Old
Notes, in proper form for transfer, or a Book-Entry Confirmation, as the case
may be, and all other documents required by the Letter of Transmittal, are
received by the Exchange Agent within five NYSE trading days after the date
of execution of the Notice of Guaranteed Delivery.
WITHDRAWAL RIGHTS
Tenders of Old Notes may be withdrawn at any time prior to 5:00 p.m., New
York City time, on the Expiration Date.
For a withdrawal of a tender of Old Notes to be effective, a written or
(for DTC participants) electronic ATOP transmission notice of withdrawal must
be received by the Exchange Agent at its address set forth herein prior to
5:00 p.m., New York City time, on the Expiration Date. Any such notice of
withdrawal must (i) specify the name of the person having deposited the Old
Notes to be withdrawn (the "Depositor"), (ii) identify the Old Notes to be
withdrawn (including the certificate number or numbers and principal amount
of such Old Notes), (iii) be signed by the holder in the same manner as the
original signature on the Letter of Transmittal by which such Old Notes were
tendered (including any required signature guarantees) or be accompanied by
documents of transfer sufficient to have the Trustee with respect to the Old
Notes register the transfer of such Old Notes into the name of the person
withdrawing the tender, and (iv) specify the name in which any such Old Notes
are to be registered, if different from that of the Depositor. All questions
as to the validity, form and eligibility (including time of receipt) of such
notices will be determined by the Company, in its sole discretion, whose
determination shall be final and binding on all parties. Any Old Notes so
withdrawn will be deemed not to have been validly tendered for exchange for
purposes of the Exchange Offer. Any Old Notes which have been tendered for
exchange but which are not exchanged for any reason will be returned to the
holder thereof without cost to such holder as soon as practicable after
withdrawal, rejection of tender or termination of the Exchange Offer.
Properly withdrawn Old Notes may be retendered by following one of the
procedures described under "The Exchange Offer -- Procedures for Tendering"
at any time on or prior to the Expiration Date.
CONDITIONS
Notwithstanding any other term of the Exchange Offer, the Company shall
not be required to accept for exchange, or exchange New Notes for, any Old
Notes, and may terminate the Exchange Offer as provided herein before the
acceptance of such Old Notes, if:
(a) the Exchange Offer shall violate applicable law or any applicable
interpretation of the staff of the Commission; or
(b) any action or proceeding is instituted or threatened in any court
or by any governmental agency that might materially impair the ability of
the Company to proceed with the Exchange Offer or any material adverse
development has occurred in any existing action or proceeding with respect
to the Company; or
(c) any governmental approval has not been obtained, which approval the
Company shall deem necessary for the consummation of the Exchange Offer.
If the Company determines in its sole discretion that any of the
conditions are not satisfied, the Company may (i) refuse to accept any Old
Notes and return all tendered Old Notes to the tendering holders (or, in the
case of Old Notes tendered by book-entry transfer into the Exchange Agent's
account at the Book-Entry Transfer Facility pursuant to the book-entry
transfer procedures described above, such Old Notes will be credited to an
account maintained with such Book-Entry Transfer Facility), (ii) extend the
Exchange Offer and retain all Old Notes tendered prior to the expiration of
the Exchange Offer, subject, however, to the rights of holders to withdraw
such Old Notes (see "The Exchange Offer -- Withdrawal Rights") or (iii) waive
such unsatisfied conditions with respect to the Exchange Offer and accept all
properly tendered Old Notes which have not been withdrawn. If such waiver
constitutes a material change to the Exchange Offer,
24
<PAGE>
the Company will promptly disclose such waiver by means of a prospectus
supplement that will be distributed to the registered holders, and the
Company will extend the Exchange Offer for a period of five to ten business
days, depending upon the significance of the waiver and the manner of
disclosure to the registered holders, if the Exchange Offer would otherwise
expire during such five-to-ten-business-day period.
EXCHANGE AGENT
All executed Letters of Transmittal should be directed to the Exchange
Agent. First Interstate Bank of Texas, N.A., has been appointed as Exchange
Agent for the Exchange Offer. Questions, requests for assistance and requests
for additional copies of this Prospectus or of the Letter of Transmittal
should be directed to the Exchange Agent addressed as follows:
BY REGISTERED OR CERTIFIED MAIL,
BY OVERNIGHT COURIER OR BY HAND:
First Interstate Bank of Texas, N.A.
Attention: Danny Ampaya
Debt Operations, A86-9
26610 West Agoura Road
Calabasas, CA 91302
BY FACSIMILE:
(818) 880-3090
Attention: Danny Ampaya
CONFIRM BY TELEPHONE:
(818) 880-7132
SOLICITATIONS OF TENDERS; FEES AND EXPENSES
The Company will not make any payments to brokers, dealers or others
soliciting acceptances of the Exchange Offer. The principal solicitation is
being made by mail; however, additional solicitations may be made in person
or by telephone by officers and employees of the Company.
The Company has not retained any dealer-manager or similar agent in
connection with the Exchange Offer and will not make any payments to brokers,
dealers or others soliciting acceptances of the Exchange Offer. The Company,
however, will pay the Exchange Agent reasonable and customary fees for its
services and will reimburse it for its reasonable out-of-pocket expenses in
connection therewith.
The cash expenses to be incurred in connection with the Exchange Offer
will be paid by the Company. Such expenses include fees and expenses of the
Exchange Agent and Trustee, accounting and legal fees and printing costs,
among others.
TRANSFER TAXES
Holders who tender their Old Notes for exchange will not be obligated to
pay any transfer taxes in connection therewith, except that holders who
instruct the Company to register New Notes in the name of, or request that
Old Notes not tendered or not accepted in the Exchange Offer be returned to,
a person other than the registered tendering holder will be responsible for
the payment of any applicable transfer tax thereon.
25
<PAGE>
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following discussion is a summary of certain federal income tax
considerations relevant to the exchange of Old Notes for New Notes, but does
not purport to be a complete analysis of all potential tax effects. The
discussion is based upon the Internal Revenue Code of 1986, as amended,
Treasury regulations, Internal Revenue Service rulings and pronouncements
and judicial decisions now in effect, all of which are subject to change at
any time by legislative, judicial or administrative action. Any such changes
may be applied retroactively in a manner that could adversely affect a holder
of the New Notes. The description does not consider the effect of any
applicable foreign, state, local or other tax laws or estate or gift tax
considerations.
EACH HOLDER SHOULD CONSULT HIS OR HER OWN TAX ADVISOR AS TO THE PARTICULAR
TAX CONSEQUENCES TO IT OF EXCHANGING OLD NOTES FOR NEW NOTES, INCLUDING THE
APPLICABILITY AND EFFECT OF ANY STATE, LOCAL OR FOREIGN TAX LAWS.
The exchange of Old Notes for New Notes should not be an exchange or
otherwise a taxable event to a holder for federal income tax purposes.
Accordingly, a holder should have the same adjusted issue price, adjusted
basis and holding period in the New Notes as it had in the Old Notes
immediately before the exchange.
26
<PAGE>
DESCRIPTION OF NEW NOTES
GENERAL
The Old Notes were, and the New Notes will be, issued pursuant to an
Indenture, dated as of June 15, 1995 (the "Indenture"), between the Company
and First Interstate Bank of Texas, N.A., as trustee (the "Trustee"). The
terms of the New Notes are identical in all material respects to the Old
Notes, except that the New Notes have been registered under the Securities
Act and, therefore, will not bear legends restricting their transfer. Upon
the issuance of the New Notes, the Indenture will be subject to and governed
by the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act").
The following summary of certain provisions of the Indenture and the
Registration Rights Agreement does not purport to be complete and is
qualified in its entirety by reference to the Indenture and the Registration
Rights Agreement, including the definitions therein of certain terms used
below. The Company will provide, without charge, to each person, including
any beneficial owner, to whom this Prospectus is delivered, upon such
person's written or oral request, copies of the Indenture and the
Registration Rights Agreement. Any such request should be delivered to ProNet
Inc., 600 Data Drive, Suite 100, Plano, Texas 75075 (telephone number (214)
964-9500), Attention: Jan E. Gaulding. Capitalized terms not otherwise
defined below or elsewhere in this Prospectus have the meanings given them in
the Indenture. The definitions of certain terms used in the following summary
are set forth below under "Description of New Notes -- Certain Definitions."
The Notes will be general unsecured senior subordinated obligations of
the Company and will be subordinate and junior in right of payment to all
existing and future Senior Debt of the Company.
The Notes will be limited to an aggregate principal amount of $100
million and will mature in 2005.
Interest on the Notes will be payable in cash semi-annually, on each
June 15 and December 15 (each an "Interest Payment Date"), commencing
December 15, 1995, to the persons in whose names the Notes are registered at
the close of business on the preceding June 1 and December 1, as the case may
be. Interest will accrue from the most recent Interest Payment Date to which
interest has been paid or duly provided for or, if no interest has been paid
or duly provided for, commencing June 15, 1995. Interest will be computed on
the basis of a 360-day year of twelve 30-day months. The Notes will bear
interest until maturity at the rate set forth on the cover page of this
Prospectus.
The Notes are issuable only in registered form, without coupons, in
denominations of $1,000 or any integral multiple thereof. Principal and
premium, if any, and interest on each Note will be payable and the Notes may
be presented for transfer or exchange at the office or agency of the Company
maintained for such purpose. At the option of the Company, payment of
interest may be made by check mailed to registered holders of the Notes at
the addresses set forth on the registry books maintained by the Trustee, who
will initially act as registrar for the Notes. No service charge will be made
for any exchange or registration of transfer of Notes, but the Company may
require payment of a sum sufficient to cover any tax or other governmental
charge payable in connection therewith. (Sections 4.1, 4.6) Unless otherwise
designated by the Company, the Company's office or agency will be the
corporate trust office of the Trustee. (Section 4.2)
Old Notes that remain outstanding after the consummation of the Exchange
Offer and New Notes issued in connection with the Exchange Offer will be
entitled to vote or consent on all matters as a single class of securities
under the Indenture.
SUBORDINATION
The Notes will, to the extent set forth in the Indenture, be subordinate
in right of payment to the prior payment in full of all Senior Debt. Upon any
payment or distribution of assets of the Company to creditors upon any
liquidation, dissolution, winding up, reorganization, assignment for the
benefit of creditors, marshalling of assets or any bankruptcy, insolvency or
similar proceedings of the Company, the holders of Senior Debt will first be
entitled to receive payment in full of principal of (and
27
<PAGE>
premium, if any) and interest on such Senior Debt before the holders of Notes
are entitled to receive any payment of principal of (and premium, if any) or
interest on the Notes or on account of the purchase or redemption or other
acquisition of Notes by the Company or any subsidiary of the Company. In the
event that notwithstanding the foregoing, the Trustee or the holder of any
Note receives any payment or distribution of assets of the Company of any
kind or character (excluding shares of Capital Stock of the Company or
securities of the Company provided for in a plan of reorganization or
readjustment which are subordinate in right of payment to all Senior Debt to
substantially the same extent as the Notes are so subordinated) before all
the Senior Debt is paid in full, then such payment or distribution will be
required to be paid over or delivered forthwith to the trustee in bankruptcy
or other Person making payment or distribution of assets of the Company for
application to the payment of all Senior Debt remaining unpaid, to the extent
necessary to pay the Senior Debt in full. (Section 11.2)
The Company may not make any payments on account of the Notes or on
account of the purchase or redemption or other acquisition of Notes if there
shall have occurred and be continuing a default in the payment of principal
of (or premium, if any) or interest on Senior Debt, the payment of commitment
or facility fees, letter of credit fees and agency fees under the Credit
Facility, and payments with respect to letter of credit reimbursement
arrangements with one or more lenders under the Credit Facility when due (a
"Senior Payment Default"). In addition, if any default (other than a Senior
Payment Default) with respect to any Senior Debt permitting, or which with
the giving of notice or lapse of time (or both) would permit, the holders
thereof (or a trustee on behalf thereof) to accelerate the maturity thereof
(a "Senior Nonmonetary Default") has occurred and is continuing and the
Company and the Trustee have received written notice thereof from the agent
bank for the Credit Facility or from an authorized person on behalf of any
Designated Senior Debt, then the Company may not make any payments on account
of the Notes or on account of the purchase or redemption or other acquisition
of Notes for a period (a "blockage period") commencing on the date the
Company and the Trustee receive such written notice and ending on the earlier
of (x) 179 days after such date and (y) the date, if any, on which the Senior
Debt to which such default relates is discharged or such default is waived or
otherwise cured. In any event, not more than one blockage period may be
commenced during any period of 360 consecutive days, and there shall be a
period of at least 181 consecutive days in each period of 360 consecutive
days when no blockage period is in effect. No Senior Nonmonetary Default that
existed or was continuing on the date of the commencement of any blockage
period with respect to the Senior Debt initiating such blockage period will
be, or can be, made the basis for the commencement of a subsequent blockage
period, unless such default has been cured or waived for a period of not less
than 90 consecutive days. In the event that, notwithstanding the foregoing,
the Company makes any payment to the Trustee or the holder of any Note
prohibited by the subordination provisions, then such payment will be
required to be paid over and delivered forthwith to the holders of the Senior
Debt remaining unpaid, to the extent necessary to pay in full all the Senior
Debt. (Section 11.2) For the purposes hereof, "Designated Senior Debt" means
any Senior Debt (other than under the Credit Facility) in an original
principal amount of not less than $5 million where the instrument governing
such Senior Debt expressly states that such Debt is "Designated Senior Debt"
for purposes of the Indenture and a Board Resolution setting forth such
designation by the Company has been filed with the Trustee. (Section 1.1)
By reason of such subordination, in the event of insolvency, creditors
of the Company who are not holders of Senior Debt or of the Notes may recover
less, ratably, than holders of Senior Debt and may recover more, ratably,
than the holders of the Notes.
The subordination provisions described above will cease to be applicable
to the Notes upon any defeasance or covenant defeasance of the Notes as
described under "Description of New Notes -- Defeasance." (Article 8)
As of March 31, 1995, after giving pro forma effect to certain
acquisitions and the sale of the Old Notes and the application of the
proceeds therefrom, the Company would have had approximately $21.3 million of
Senior Debt outstanding. See "Use of Proceeds" and "Capitalization." The
Company may from time to time hereafter incur additional Debt constituting
Senior Debt under the Credit Facility or otherwise, subject to the provisions
of "Limitation on Consolidated Debt" described below.
28
<PAGE>
OPTIONAL REDEMPTION
The Notes will not be redeemable at the Company's option prior to June
15, 2000. Thereafter, the Notes will be subject to redemption at the option
of the Company, in whole or in part, upon not less than 30 nor more than 60
days' notice, at the redemption prices (expressed as percentages of principal
amount) set forth below plus accrued and unpaid interest thereon to but not
including the applicable redemption date, if redeemed during the twelve-month
period beginning on June 15 of the years indicated below:
Year Percentage
2000. . . . . . . . . . . . . 105.938%
2001. . . . . . . . . . . . . 103.958%
2002. . . . . . . . . . . . . 101.979%
2003 and 2004 . . . . . . . . 100.000%
The Notes will not have the benefit of any sinking fund payments
obligations.
SELECTION AND NOTICE
If less than all of the Notes are to be redeemed or to be purchased
pursuant to any purchase offer required under the Indenture, at any time,
selection of Notes for redemption or purchase will be made by the Trustee in
compliance with the requirements of the principal national securities
exchange, if any, on which the Notes are listed, or, if the Notes are not so
listed, on a pro rata basis, by lot or by such method as the Trustee shall
deem fair and appropriate, PROVIDED, that no Notes with a principal amount of
$1,000 or less shall be redeemed or purchased in part. Notice of redemption
shall be mailed by first class mail at least 30 but not more than 60 days
before the redemption date to each holder of Notes to be redeemed at the last
address for such holder then shown on the registry books. If any Note is to
be redeemed in part only, the notice of redemption that relates to such Note
shall state the portion of the principal amount to be redeemed. A new Note in
principal amount equal to the unredeemed or unpurchased portion will be
issued in the name of the holder thereof upon cancellation of the original
Note. On and after the redemption or purchase date, interest will cease to
accrue on the Notes or portions of them called for redemption or purchase.
CERTAIN COVENANTS
The Indenture contains, among others, the following covenants:
LIMITATION ON CONSOLIDATED DEBT
The Company may not, and may not permit its Subsidiaries to, directly or
indirectly, create, incur, assume, become liable for or guarantee the payment
of (collectively, "incur") any Debt (including Acquired Debt), PROVIDED,
HOWEVER, that the Company may incur Debt (including Acquired Debt) and may
permit a Subsidiary to incur Acquired Debt if immediately thereafter the
ratio of the aggregate principal amount of Debt of the Company and its
Subsidiaries outstanding as of the most recent available quarterly or annual
balance sheet to Pro Forma Consolidated Cash Flow for the preceding four full
fiscal quarters, determined on a pro forma basis as if any such Debt had been
incurred and the proceeds thereof had been applied at the beginning of such
four fiscal quarters, would be less than 5.5 to 1.
Notwithstanding the foregoing, the Company may, and may permit its
Subsidiaries to, incur the following without regard to the foregoing
limitation and without duplication: (i) Debt of the Company under the Credit
Facility in an aggregate principal amount not to exceed $125 million at any
one time outstanding; (ii) Guarantees by Subsidiaries of Debt permitted by
clause (i); (iii) Debt of the Company evidenced by the Notes; (iv) Debt owed
by the Company to any wholly owned Subsidiary of the Company or owed by any
wholly owned Subsidiary of the Company to the Company or any other wholly
owned Subsidiary of the Company (but only so long as such Debt is held by the
Company or such wholly owned Subsidiary); (v) Debt outstanding on the date
the Notes are originally issued under the Indenture; (vi) Permitted Deferred
Payments; (vii) Debt arising from the honoring by a bank or other financial
institution of a check, draft or similar instrument drawn
29
<PAGE>
against insufficient funds in the ordinary course of business, PROVIDED that
such Debt is extinguished within two Business Days of its incurrence; (viii)
Refinancing Debt; and (ix) renewals of Guarantees permitted by clause (ii)
above. (Section 4.9)
For purposes of determining any particular amount of Debt under this
covenant, Guarantees of (or obligations with respect to letters of credit
supporting) Debt otherwise included in the determination of such amount shall
not also be included. For the purpose of determining compliance with this
covenant, (A) in the event that an item of Debt meets the criteria of more
than one of the types of Debt described in the above clauses, the Company, in
its sole discretion, shall classify such item of Debt and only be required to
include the amount and type of such Debt in one of such clauses; and (B) the
amount of Debt issued at a price which is less than the principal amount
thereof shall be equal to the amount of the liability in respect thereof
determined in accordance with generally accepted accounting principles.
(Section 4.9)
LIMITATION ON CERTAIN DEBT
So long as any of the Notes are outstanding the Company will not incur
or suffer to exist any Debt (other than (i) the Notes and (ii) any pari passu
Debt) that is by its terms subordinate in right of payment to any other Debt
of the Company unless such Debt is also subordinate by its terms in right of
payment to the Notes. (Section 4.10)
LIMITATION ON RESTRICTED PAYMENTS
The Company may not, and may not permit any of its Subsidiaries to, (i)
directly or indirectly, declare or pay any dividend, or make any
distribution, in respect of its Capital Stock or to the holders thereof
(including pursuant to a merger or consolidation of the Company, but
excluding any dividends or distributions payable solely in shares of its
Capital Stock (other than Redeemable Stock) or in options, warrants or other
rights to acquire its Capital Stock (other than Redeemable Stock)), other
than dividends or distributions payable to the Company or any wholly owned
Subsidiary of the Company, or by a Subsidiary of the Company to a holder who
is not the Company or a wholly owned Subsidiary of the Company, provided that
such dividend or distribution is paid to all of the holders of the Capital
Stock of the payor of such dividend, pro rata in accordance with their
respective interests, (ii) directly or indirectly, purchase, redeem or
otherwise acquire or retire for value (a) any Capital Stock of the Company or
any Related Person or (b) any options, warrants, or rights to purchase or
acquire shares of Capital Stock of the Company or any Related Person, (iii)
make any loan, advance, capital contribution to or investment in, or payment
on a Guarantee of any obligation of, any Affiliate or any Related Person
(other than the Company or a Subsidiary of the Company), inclusive of any
loan, advance, capital contribution to or investment in, or payment on a
Guarantee of any obligation of, any Affiliate or Related Person by the
Company pursuant to a transaction whereby any such Affiliate or Related
Person becomes an Affiliate or Related Person, but exclusive of any loan,
advance, capital contribution to or investment in, or payment on a Guarantee
of any obligation of, any Person by the Company or a Subsidiary of the
Company pursuant to a transaction whereby any such Person becomes a
Subsidiary of the Company, in each case unless otherwise prohibited by the
terms of the Indenture, or (iv) redeem, defease, repurchase, retire or
otherwise acquire or retire for value prior to any scheduled maturity,
repayment or sinking fund payment (other than with the proceeds of
Refinancing Debt) Debt of the Company which is subordinate in right of
payment to the Notes (each of clauses (i) through (iv) being a "Restricted
Payment"), if at the time of such Restricted Payment, or after giving effect
thereto: (1) an Event of Default, or an event that with the lapse of time or
the giving of notice, or both, would constitute an Event of Default, shall
have occurred and be continuing, (2) the Company could not incur $1.00 of
additional Debt under the first paragraph of the "Limitation on Consolidated
Debt" covenant, above, or (3) the aggregate of all Restricted Payments from
the date of the Indenture exceeds the sum of: (a) the remainder of (x) 100%
of cumulative Free Cash Flow after June 30, 1995 through the last day of the
last full fiscal quarter immediately preceding such Restricted Payment for
which quarterly or annual financial statements of the Company are available
minus (y) the product of 2.0 times cumulative Consolidated Fixed Charges
after June 30, 1995 through the last day of the last full fiscal quarter
immediately preceding such Restricted Payment for which quarterly or annual
financial statements of the Company are available; and (b) after the date of
the Indenture, 100% of the aggregate net proceeds from the issuance of
Capital Stock (other than Redeemable Stock) of the Company
30
<PAGE>
and options, warrants or other rights on Capital Stock (other than Redeemable
Stock) of the Company and the principal amount of Debt of the Company that
has been converted into Capital Stock (other than Redeemable Stock) of the
Company.
The foregoing provision will not be violated by reason of (i) the
payment of any dividend within 60 days after declaration thereof if at the
declaration date such payment would have complied with the foregoing
provision; (ii) the purchase, redemption, acquisition or retirement of any
shares of Capital Stock of the Company in exchange for, or out of the net
proceeds of the substantially concurrent sale (other than to a Subsidiary of
the Company) of, other shares of Capital Stock (other than Redeemable Stock)
of the Company; (iii) the purchase, redemption, defeasance or other
acquisition or retirement of Debt of the Company which is subordinate in
right of payment to the Notes, in exchange for, by conversion into, or out of
the net proceeds of, a substantially concurrent (a) issue or sale (other than
to a Subsidiary) of Capital Stock (other than Redeemable Stock) of the
Company, or (b) incurrence of Refinancing Debt with respect to such
subordinated Debt; or (iv) investments in telecommunications businesses in an
aggregate amount not exceeding $10.0 million; PROVIDED that no Default or
Event of Default shall have occurred and be continuing at the time, or shall
occur as a result, of any of the actions contemplated in clauses (ii) and
(iii) above. Any payment made pursuant to clauses (i) through (iii) (other
than subclause (iii)(b)) of this paragraph shall be a Restricted Payment for
purposes of calculating aggregate Restricted Payments under the preceding
paragraph. (Section 4.11)
LIMITATION ON DISTRIBUTIONS BY AND TRANSFERS TO SUBSIDIARIES, ETC.
The Company may not, and may not permit any Subsidiary of the Company
to, create, assume or otherwise suffer to exist any encumbrance or
restriction on the ability of any Subsidiary of the Company to (i) pay,
directly or indirectly, dividends or make any other distributions in respect
of its Capital Stock or pay any Debt or other obligation owed to the Company
or any other Subsidiary of the Company; (ii) make loans or advances to the
Company or any Subsidiary of the Company; or (iii) transfer any of its
property or assets to the Company or a Subsidiary of the Company.
Notwithstanding the foregoing, the Company may, and may permit any of its
Subsidiaries to, create, assume or otherwise suffer to exist any such
encumbrances or restrictions on the ability of any Subsidiary of the Company
if and to the extent (i) subject to the provision described under "Limitation
on Mergers, Consolidations and Certain Sales of Assets," such encumbrance or
restriction existed prior to the time any Person became a Subsidiary of the
Company and such restriction or encumbrance was not incurred in anticipation
of such acquisition of such Person by the Company; (ii) subject to the
provisions described under "Limitation on Mergers, Consolidations and
Certain Sales of Assets," "Limitation on Certain Asset Dispositions" and
"Limitation on Issuances and Sales of Capital Stock of Subsidiaries," such
encumbrance or restriction exists by reason of a customary merger or
acquisition agreement for the purchase or acquisition of the stock or assets
of the Company or any of its Subsidiaries by another Person; (iii) such
encumbrance or restriction is contained in an operating lease for real
property and is effective only upon the occurrence and during the continuance
of a default in the payment of rent; (iv) such encumbrance or restriction is
the result of applicable corporate law or regulation relating to the payment
of dividends or distributions; (v) such encumbrance or restriction is the
result of applicable statute, regulation or administrative rule which
restricts the transfer of licenses or permits; and (vi) such encumbrance or
restriction is contained in the Credit Facility on the date of the Indenture,
including any amendment, modification, supplementation, restatement or
replacement of such Credit Facility, PROVIDED that the terms and conditions
of such amendment, modification, supplementation, restatement or
replacement in respect of such encumbrance or restriction are not less
favorable to the holders of the Notes than the terms and conditions in
respect of such encumbrance or restriction of the Credit Facility on the date
of the Indenture. (Section 4.12)
LIMITATION ON LIENS
The Company will not, and will not permit any Subsidiary of the Company
to, create, incur, assume or suffer to exist any Lien (other than Permitted
Liens) upon or in respect of any of its property or assets to secure any Debt
which is pari passu with or subordinate in right of payment to the Notes,
unless the Notes are secured equally and ratably simultaneously with or prior
to the creation, incurrence or assumption of such Lien; PROVIDED, HOWEVER,
that if such Debt is expressly subordinate to the Notes, the Lien securing
such
31
<PAGE>
subordinated Debt shall be subordinate and junior to the Lien securing the
Notes with the same relative priority as such subordinated Debt shall have
with respect to the Notes. (Section 4.13)
LIMITATION ON TRANSACTIONS WITH AFFILIATES AND RELATED PERSONS
The Company may not, and may not permit any Subsidiary of the Company
to, directly or indirectly, enter into any transaction or series of
transactions after the date of the Indenture with any Affiliate or Related
Person (other than the Company or a wholly owned Subsidiary of the Company),
unless (i) such transaction or series of transactions is on terms no less
favorable to the Company or such Subsidiary than those that could be obtained
in a comparable arm's-length transaction with an entity that is not an
Affiliate or a Related Person; and (ii) if such transaction or series of
transactions involves aggregate consideration in excess of $1 million, then
such transaction or series of transactions is approved by a majority of the
Board of Directors of the Company, including the approval of a majority of
the independent, disinterested directors, and is evidenced by a resolution of
the Board of Directors of the Company. Any such transaction or series of
transactions shall be conclusively deemed to be on terms no less favorable to
the Company or such Subsidiary than those that could be obtained in an
arm's-length transaction if such transaction or transactions are approved by
a majority of the Board of Directors of the Company, including a majority of
the independent disinterested directors, and are evidenced by a resolution of
the Board of Directors of the Company. (Section 4.14)
This covenant will not apply to (a) transactions between the Company or
any of its Subsidiaries and any employee of the Company or any of its
Subsidiaries that are entered into in the ordinary course of business, (b)
the payment of reasonable and customary regular fees and expenses to
directors of the Company, (c) the making of indemnification, contribution or
similar payments to any director or officer of the Company or any Subsidiary
of the Company under the Company's or such Subsidiary's charter or bylaws
(as each may be amended after the date of this Prospectus) or any
indemnification or similar agreement between the Company or any such
Subsidiary and any of its directors or officers (collectively, the
"Indemnification Agreements") or (d) the entering into any Indemnification
Agreements with any current or future directors or officers of the Company or
any Subsidiary of the Company. (Section 4.14)
LIMITATION ON CERTAIN ASSET DISPOSITIONS
The Company may not, and may not permit any Subsidiary of the Company
to, make any Asset Disposition in one or more transactions unless: (i) the
Company (or such Subsidiary, as the case may be) receives consideration at
the time of such Asset Disposition at least equal to the fair market value
for the assets sold or disposed of as determined by the Board of Directors of
the Company; (ii) at least 80% of the consideration for such Asset
Disposition consists of cash or readily marketable cash equivalents or the
assumption of Senior Debt or pari passu Debt of the Company and release from
all liability on such Senior Debt or pari passu Debt; and (iii) all Net
Available Proceeds of such Asset Disposition, less any amounts invested
within 180 days of such Asset Disposition in assets related to the business
of the Company, are applied within 180 days of such Asset Disposition, (a)
first to the permanent reduction of any Debt then outstanding under the
Credit Facility to the extent the terms of the Credit Facility require such
application or prohibit prepayment of the Notes, (b) second, to the repayment
of any other Senior Debt to the extent the terms of such Debt require such
application or prohibit prepayment of the Notes, and (c) third, to the extent
remaining Net Available Proceeds, together with any remaining Net Available
Proceeds from any prior Asset Disposition, exceed $3 million, to make an
offer to purchase, on a pro rata basis according to their respective
principal amounts then outstanding (or accreted value, as the case may be),
the outstanding Notes and pari passu Debt, at 100% of their principal amount
(or accreted value, as the case may be) plus accrued interest to the date of
the purchase.
Notwithstanding the foregoing, the Company shall not be required to
repurchase or redeem Notes or to repay other Debt pursuant to clause (iii)
above until the Net Available Proceeds from any Asset Disposition together
with the Net Available Proceeds from any prior Asset Disposition not
otherwise applied in accordance with clauses (a), (b) or (c) of the preceding
paragraph, less any amounts invested within 180 days of such disposition or
dispositions in assets related to the business of the Company, exceed $5
million. To the extent that the aggregate purchase price of the Notes
tendered pursuant to such an offer to purchase
32
<PAGE>
is less than the aggregate purchase price offered in such offer, the Company
may use such shortfall for general corporate purposes. The Company shall not
be entitled to any credit against such obligation to purchase Notes for the
principal amount of any Notes acquired by the Company other than pursuant to
such offer to purchase. These provisions will not apply to a transaction
which is permitted under the provisions described under "Limitation on
Mergers, Consolidations and Certain Sales of Assets." (Section 4.15)
Subject to the provisions described under "Limitation on Mergers,
Consolidations and Certain Sales of Assets" below, the provisions of this
covenant shall not apply to any Asset Disposition which is part of an Asset
Exchange Transaction if (i) the Board of Directors of the Company shall
determine that the Asset Exchange Transaction is fair and reasonable to, and
in the best interests of, the Company, which determination shall be evidenced
by a resolution of the Board of Directors of the Company filed with the
Trustee and (ii) in the event (a) the properties and assets of the Company or
a Subsidiary of the Company to be transferred in such Asset Exchange
Transaction or the properties and assets of the Subsidiary of the Company
whose Capital Stock is being transferred in such Asset Exchange Transaction
represent $5 million or more as reflected in the most recent quarterly or
annual consolidated balance sheet of the Company and its Subsidiaries prior
to such Asset Exchange Transaction and (b) such transfer is made to an
Affiliate or Related Person, the Company shall have obtained the written
opinion of an independent financial advisor stating that the Asset Exchange
Transaction is fair to the Company from a financial point of view or the
determination under (i) above shall have been made by a majority of the
disinterested directors of the Company. (Section 4.15)
LIMITATION ON ISSUANCES AND SALES OF CAPITAL STOCK OF SUBSIDIARIES
The Company (i) shall not, and shall not permit any Subsidiary of the
Company to, transfer, convey, sell, lease or otherwise dispose of any Capital
Stock of such or any other Subsidiary to any Person (other than the Company
or a wholly owned Subsidiary) unless such transfer, conveyance, sale, lease
or other disposition is of all the Capital Stock of such Subsidiary owned by
the Company or such other Subsidiary and the Net Available Proceeds from such
transfer, conveyance, sale, lease or other disposition are applied in
accordance with "Limitation on Certain Asset Dispositions" and (ii) shall not
permit any Subsidiary to issue shares of its Capital Stock (other than
directors' qualifying shares), or securities convertible into, or warrants,
rights or options to subscribe for or purchase shares of, its Capital Stock
to any Person other than the Company or a wholly owned Subsidiary of the
Company. (Section 4.16)
LIMITATION ON MERGERS, CONSOLIDATIONS AND CERTAIN SALES OF ASSETS
The Company (i) may not consolidate with or merge into any other Person
or permit any other Person to consolidate with or merge into the Company or
any Subsidiary of the Company (in a transaction in which such Subsidiary
remains a Subsidiary of the Company); (ii) may not, directly or indirectly,
transfer, convey, sell, lease or otherwise dispose of all or substantially
all of its assets; (iii) may not, and may not permit any Subsidiary of the
Company to, directly or indirectly, acquire Capital Stock of any other Person
such that such Person becomes a Subsidiary of the Company; and (iv) may not,
and may not permit any Subsidiary of the Company to, directly or indirectly,
purchase, lease or otherwise acquire (x) all or substantially all of the
assets or (y) any existing business (whether existing as a separate entity,
subsidiary, division, unit or otherwise) of any Person unless: (1)
immediately before and after giving effect to such transaction and treating
any Debt incurred by the Company or a Subsidiary of the Company as a result
of such transaction as having been incurred by the Company or such Subsidiary
at the time of the transaction, no Event of Default or event that with the
passing of time or the giving of notice, or both, shall constitute an Event
of Default, shall have occurred and be continuing; (2) in a transaction in
which the Company does not survive or in which the Company conveys, sells,
leases or otherwise disposes of all or substantially all of its assets, the
successor entity to the Company is organized under the laws of the United
States or any State thereof or the District of Columbia and expressly
assumes, by a supplemental Indenture executed and delivered to the Trustee in
form satisfactory to the Trustee, all of the Company's obligations under the
Indenture; and (3) immediately after giving effect to such transaction, the
Company or the successor entity to the Company could incur at least $1.00 of
additional Debt pursuant to the first paragraph of the "Limitation on
Consolidated Debt" covenant above; PROVIDED, HOWEVER, that the provisions of
this clause (3) shall not apply to transactions described in
33
<PAGE>
clauses (i) through (iv) above which are (x) between the Company and one or
more of its wholly owned Subsidiaries or (y) between two or more wholly owned
Subsidiaries of the Company.
Notwithstanding clause (3) above, the Company or any Subsidiary of the
Company may acquire the Capital Stock of a Person in a transaction in which
such Person becomes a Subsidiary of the Company or directly or indirectly
purchase, lease or otherwise acquire (x) all or substantially all of the
assets or (y) any existing business (whether existing as a separate entity,
subsidiary, division, unit or otherwise) of any Person so long as (a) the sum
of the consideration paid for such Capital Stock or assets and the Debt
assumed in connection therewith plus the sum of the aggregate amount of
consideration paid for all other such acquisitions consummated during the
twelve-month period immediately preceding the date of such acquisition and
the Debt incurred in connection therewith does not exceed 5% of
Consolidated Tangible Assets of the Company immediately prior to such
acquisition. (Article 5)
CHANGE OF CONTROL
Upon the occurrence of a Change of Control, each holder of the Notes
shall have the right to require that the Company repurchase such holder's
Notes, in whole or in part (equal to $1,000 or integral multiples of $1,000),
at a repurchase price in cash equal to 101% of the principal amount thereof
plus accrued and unpaid interest, if any, to the date of repurchase, pursuant
to the offer described in the succeeding paragraph (the "Change of Control
Offer").
Within 30 days following any Change of Control, the Company shall mail a
notice to each holder with a copy to the Trustee stating: (i) that a Change
of Control has occurred and that such holder has the right to require the
Company to repurchase such holder's Notes, in whole or in part (equal to
$1,000 or integral multiples of $1,000), at a repurchase price in cash equal
to 101% of the principal amount thereof plus accrued and unpaid interest, if
any, to the date of repurchase; (ii) the circumstances and relevant facts
regarding such Change of Control (including relevant information with respect
to the transaction giving rise to such Change of Control and, if applicable,
information with respect to pro forma historical income, cash flow and
capitalization after giving effect to such Change of Control); (iii) the
repurchase date (which shall be not earlier than 30 days or later than 60
days from the date such notice is mailed) (the "Repurchase Date"); (iv) that
any Note not tendered will continue to accrue interest; (v) that any Note
accepted for payment pursuant to the Change of Control Offer shall cease to
accrue interest after the Repurchase Date; (vi) subject to certain
conditions, that holders electing to have a Note purchased pursuant to a
Change of Control Offer will be required to surrender the Note, with the form
titled "Option of Holder to Elect Purchase" on the reverse of the Note
completed, to the paying agent (which may be the Company) at the address
specified in the notice prior to the close of business on the Repurchase
Date; (vii) that holders will be entitled to withdraw their election if the
paying agent receives, not later than the close of business on the third
business day (or such shorter periods as may be required by applicable law)
preceding the Repurchase Date, a telegram, telex, facsimile transmission or
letter setting forth the name of the holder, the principal amount of Notes
the holder delivered for purchase, and a statement that such holder is
withdrawing his election to have such Notes purchased; and (viii) that
holders which elect to have their Notes purchased only in part will be issued
Notes in a principal amount equal to the unpurchased portion of the Notes
surrendered.
On the Repurchase Date, the Company shall (i) accept for payment Notes
or portions thereof tendered pursuant to the Change of Control Offer, (ii)
deposit with the Trustee or a paying agent (or segregate, if the Company is
acting as its own paying agent) money sufficient to pay the purchase price of
all Notes or portions thereof so tendered and (iii) deliver or cause to be
delivered to the Trustee Notes so accepted, together with an officers'
certificate stating the Notes or portions thereof which are thereby tendered
to the Company. The Trustee or a paying agent shall promptly mail to the
holders of Notes such accepted payment in an amount equal to the purchase
price and promptly authenticate and mail to such holders a new Note in a
principal amount equal to any unpurchased portion of the Note surrendered.
The Company will publicly announce the results of the Change of Control Offer
on or as soon as practicable after the Repurchase Date. (Section 4.17)
34
<PAGE>
In the event a Change of Control occurs and any repurchase pursuant to
the foregoing constitutes a "tender offer" for purposes of Rule 14e-1 under
the Exchange Act, the Company will comply with the requirements of Rule 14e-1
as then in effect, to the extent applicable, and any other applicable
securities laws or regulations with respect to such repurchase. The Change of
Control provisions described above may deter certain mergers, tender offers
and other takeover attempts involving the Company.
The Company's ability to repurchase Notes upon a Change of Control may
be limited by the terms of its then existing contractual obligations. The
Credit Facility provides that the repurchase of the Notes upon a Change of
Control will constitute a default under the Credit Facility, and any future
credit agreements or other agreements relating to Senior Debt may contain
similar provisions. If the Company makes a Change of Control Offer following
a Change of Control, the Company may not have adequate financial resources
to repurchase all Notes tendered. The Company's failure to repurchase
tendered Notes or to make a Change of Control Offer following a Change of
Control would constitute an Event of Default under the Indenture, but the
subordination provisions in the Indenture would likely restrict payments to
the Holders of Notes.
EVENTS OF DEFAULT
The following are Events of Default with respect to the Notes: (a)
failure to pay any interest on any Note when due, continued for 30 days; (b)
failure to pay principal of (or premium, if any, on) any Note when due; (c)
default in the payment of principal and interest on Notes required to be
purchased pursuant to an Offer to Purchase as described under "Limitation on
Certain Asset Dispositions" and "Change of Control" when due and payable;
(d) failure to perform or comply with the provisions described under
"Limitation on Mergers, Consolidations and Certain Sales of Assets"; (e)
failure to perform or breach of any other covenant or warranty of the Company
in the Indenture, continued for 60 days after written notice from the Trustee
or holders of at least 25% in principal amount of the outstanding Notes as
provided in the Indenture; (f) a default shall have occurred under any bonds,
debentures, notes or other evidences of indebtedness of the Company or any
Subsidiary of the Company or under any mortgages, indentures or instruments
under which there may be issued or by which there may be secured or evidenced
any indebtedness by the Company or any Subsidiary of the Company, in any case
with a principal amount of at least $2 million outstanding, and such
indebtedness already is due and payable in full or such default has resulted
in the acceleration of the maturity of such indebtedness, in each case after
a period of five days during which period such default shall not have been
cured or such acceleration shall not have been rescinded; (g) the rendering
of a final judgment or judgments (not subject to appeal) against the Company
or any of its Subsidiaries in an aggregate amount in excess of $2 million
which remain unstayed, in effect and unpaid for a period of 60 consecutive
days thereafter; and (h) certain events in bankruptcy, insolvency or
reorganization affecting the Company or any Subsidiary of the Company.
Subject to the provisions of the Indenture relating to the duties of the
Trustee in case an Event of Default shall occur and be continuing, the
Trustee will be under no obligation to exercise any of its rights or powers
under the Indenture at the request or direction of any of the holders, unless
such holders shall have offered to the Trustee reasonable indemnity. Subject
to such provisions for the indemnification of the Trustee, the holders of a
majority in aggregate principal amount of the outstanding Notes will have the
right to direct the time, method and place of conducting any proceeding for
any remedy available to the Trustee or exercising any trust or power
conferred on the Trustee. (Section 6.1)
If an Event of Default (other than Events of Default with respect to
certain events of bankruptcy, insolvency or reorganization affecting the
Company or any Subsidiary of the Company) shall occur and be continuing,
either the Trustee or the holders of at least 25% in aggregate principal
amount of the outstanding Notes may accelerate the maturity of all Notes;
PROVIDED, HOWEVER, that after such acceleration, but before a judgment or
decree based on acceleration, the holders of a majority in aggregate
principal amount of outstanding Notes may, under certain circumstances,
rescind and annul such acceleration if all Events of Default, other than the
non-payment of accelerated principal, have been cured or waived as provided
in the Indenture. If a specified Event of Default with respect to certain
event of bankruptcy, insolvency or reorganization affecting the Company or
any Subsidiary of the Company occurs, the principal of the Notes then
outstanding shall become immediately due and payable without any declaration
or other act on the part of the Trustee or any holder of the Notes. (Section
6.2) For information as to waiver of defaults, see "Modification and Waiver."
35
<PAGE>
No holder of any Note will have any right to institute any proceeding
with respect to the Indenture or for any remedy thereunder, unless such
holder shall have previously given to the Trustee written notice of a
continuing Event of Default and unless also the holders of at least 25% in
aggregate principal amount of the outstanding Notes shall have made written
request, and offered reasonable indemnity, to the Trustee to institute such
proceeding as trustee, and the Trustee shall not have received from the
holders of a majority in aggregate principal amount of the outstanding Notes
a direction inconsistent with such request and shall have failed to institute
such proceeding within 60 days. (Section 6.6) However, such limitations do
not apply to a suit instituted by a holder of a Note for enforcement of
payment of the principal of (and premium, if any) or interest on such Note on
or after the respective due dates expressed in such Note. (Section 6.7)
The Company will be required to furnish to the Trustee annually a
statement as to the performance by the Company of certain of its obligations
under the Indenture and as to any default in such performance. (Section 4.4)
DEFEASANCE
The Indenture will provide that (A) if applicable, the Company will be
discharged from any and all obligations in respect of the outstanding Notes
(including the provisions described under "Subordination") or (B) if
applicable, the Company may omit to comply with certain restrictive
covenants, and that such omission shall not be deemed to be an Event of
Default under the Indenture and the Notes, in either case (A) or (B) upon
irrevocable deposit with the Trustee, in trust, of money and/or U.S.
government obligations which will provide money in an amount sufficient in
the opinion of a nationally recognized firm of independent certified public
accountants to pay the principal of and premium, if any, and each installment
of interest, if any, on the outstanding Notes. With respect to clause (B),
the obligations under the Indenture other than with respect to such covenants
and the Events of Default other than the Event of Default relating to such
covenants above shall remain in full force and effect. Such trust may only be
established if, among other things (i) with respect to clause (A), the
Company has received from, or there has been published by, the Internal
Revenue Service a ruling or there has been a change in law, which in an
opinion of counsel to the Company provides that holders of the Notes will not
recognize gain or loss for Federal income tax purposes as a result of such
deposit, defeasance and discharge and will be subject to Federal income tax
on the same amount, in the same manner and at the same times as would have
been the case if such deposit, defeasance and discharge had not occurred; or,
with respect to clause (B), the Company has delivered to the Trustee an
opinion of counsel to the Company to the effect that the holders of the Notes
will not recognize gain or loss for Federal income tax purposes as a result
of such deposit and defeasance and will be subject to Federal income tax on
the same amount, in the same manner and at the same times as would have been
the case if such deposit and defeasance had not occurred; (ii) no Event of
Default or event that with the passing of time or the giving of notice, or
both, shall constitute an Event of Default shall have occurred or be
continuing; (iii) no default on any Senior Debt shall have occurred and be
continuing; and (iv) certain other customary conditions precedent are
satisfied. (Article 8)
MODIFICATION AND WAIVER
Modifications and amendments of the Indenture may be made by the Company
and the Trustee with the consent of the holders of a majority in aggregate
principal amount of the outstanding Notes; PROVIDED, HOWEVER, that no such
modification or amendment may, without the consent of the holder of each
outstanding Note affected thereby, (a) change the stated maturity of the
principal of, or any installment of interest on, any Note, (b) reduce the
principal amount of (or the premium) or interest on, any Note, (c) change the
place or currency of payment of principal of (or the premium) or interest on,
any Note, (d) impair the right to institute suit for the enforcement of any
payment on or with respect to any Note, (e) reduce the above-stated
percentage of outstanding Notes necessary to modify or amend the Indenture,
(f) reduce the percentage of aggregate principal amount of outstanding Notes
necessary for waiver of compliance with certain provisions of the Indenture
or for waiver of certain defaults, (g) modify any provisions of the Indenture
relating to the modification and amendment of the Indenture or the waiver of
past defaults or covenants, except as otherwise specified, (h) modify any of
the provisions of the Indenture relating to the subordination of the Notes
in a manner adverse to such holders, or (i) following the mailing of an offer
with respect to an Offer to Purchase
36
<PAGE>
the Notes as described under "Limitation on Certain Asset Dispositions" and
"Change of Control," modify the Indenture with respect to such Offer to
Purchase in a manner adverse to such holders. (Sections 9.1, 9.2)
The holders of a majority in aggregate principal amount of the
outstanding Notes may waive compliance by the Company with certain
restrictive provisions of the Indenture. (Section 9.2) The holders of a
majority in aggregate principal amount of the outstanding Notes may waive any
past default under the Indenture, except a default in the payment of
principal, premium, if any, or interest. (Section 6.4)
REPORTS
So long as the Notes are outstanding, the Company will furnish to the
holders thereof such quarterly and annual consolidated financial reports as
the Company is required to file with the Commission under the Exchange Act or
similar reports in the event the Company is not at the time required to file
such reports with the Commission. (Section 4.7)
THE TRUSTEE
The Indenture provides that, except during the continuance of an Event
of Default, the Trustee will perform only such duties as are specifically set
forth in the Indenture. During the continuance of an Event of Default, the
Trustee will exercise such rights and powers vested in it under the Indenture
and use the same degree of care and skill in its exercise as a prudent person
would exercise under the circumstances in the conduct of such person's own
affairs. (Section 7.1)
The Indenture contains limitations on the rights of the Trustee, should
it become a creditor of the Company, to obtain payment of claims in certain
cases or to realize on certain property received by it in respect of any such
claim as security or otherwise. The Trustee is permitted to engage in other
transactions with the Company or any Affiliate; PROVIDED, HOWEVER, that if
it acquires any conflicting interest (as defined in the Indenture or in the
Trust Indenture Act), it must eliminate such conflict or resign.
CERTAIN DEFINITIONS
Set forth below is a summary of certain of the defined terms used in the
Indenture. Reference is made to the Indenture for the full definition of all
such terms, as well as any other terms used herein for which no definition is
provided. (Section 1.1)
"Acquired Debt" means (i) Debt of a Person existing at the time such
Person was acquired (by merger, consolidation or otherwise) by the Company or
a Subsidiary of the Company, PROVIDED that such Debt was not incurred in
connection with or in contemplation of the acquisition of such Person and
(ii) every obligation of such Person issued as the deferred purchase price,
to the extent payable within one year, of property (but excluding trade
accounts payable or accrued liabilities arising in the ordinary course of
business).
"Affiliate" of any Person means any other Person directly or indirectly
controlling or controlled by or under direct or indirect common control with
such Person. For the purposes of this definition, "control" when used with
respect to any Person means the power to direct the management and policies
of such Person, directly or indirectly, whether through the ownership of
voting securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Asset Disposition" by any Person means any transfer, conveyance, sale,
lease or other disposition by such Person or any of its Subsidiaries
(including a consolidation or merger or other sale of any such Subsidiary
with, into or to another Person in a transaction in which such Subsidiary
ceases to be a Subsidiary, but excluding a disposition by a Subsidiary of
such Person to such Person or a wholly owned Subsidiary of such Person or by
such Person to a wholly owned Subsidiary of such Person, and excluding the
creation of a lien, pledge or security interest) of (i) shares of Capital
Stock (other than directors' qualifying shares) or other ownership interests
of a Subsidiary of such Person, (ii) substantially all of the assets of such
Person or any of its Subsidiaries representing a division or line of business
or (iii) other assets or rights of such Person or any
37
<PAGE>
of its Subsidiaries outside of the ordinary course of business, in any case
where the consideration received by such Person or a Subsidiary of such
Person exceeds $1 million.
"Asset Exchange Transaction" means (i) any transaction pursuant to which
properties or assets of the Company or a Subsidiary of the Company
constituting a paging system within a geographically identifiable area and
related properties and assets (an "Identifiable Paging System") or all of the
shares of Capital Stock of a Subsidiary of the Company, the properties and
assets of which constitute an Identifiable Paging System, are to be
exchanged for properties or assets constituting an Identifiable Paging
System of another Person or all of the shares of Capital Stock of another
Person the properties and assets of which constitute an Identifiable Paging
System or (ii) any transaction pursuant to which licenses for frequencies
(for purposes other than paging) or related agreements and related properties
or assets of the Company or a Subsidiary of the Company ("Non-Paging
Licenses") or all of the shares of Capital Stock of a Subsidiary of the
Company, the properties and assets of which constitute Non-Paging Licenses,
are to be exchanged for properties or assets constituting Non-Paging Licenses
of another Person or all of the shares of Capital Stock of another Person the
properties and assets of which constitute Non-Paging Licenses.
"Attributable Debt" in respect of a sale and leaseback means, at the
time of determination, the present value (discounted at the interest rate
implicit in the lease, compounded semiannually) of the obligation of the
lessee of the property subject to such sale leaseback transaction for rental
payments during the remaining term of the lease included in such transaction
including any period for which such lease has been extended or may, at the
option of the lessor, be extended or until the earliest date on which the
lessee may terminate such lease without penalty or upon payment of penalty
(in which case the rental payments shall include such penalty), after
excluding all amounts required to be paid on account of maintenance and
repairs, insurance, taxes, assessments, water, utilities and similar charges.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a day on which banking institutions in New York, New York
are authorized or obligated by law or executive order to close.
"Capital Expenditures" means, with respect to any Person for any period,
the aggregate of all direct and indirect expenditures (including capitalized
interest) of such Person during such period which are required to be included
in property, plant or equipment or similar tangible property account,
including, without limitation, additions to equipment and leasehold
improvements, on a consolidated balance sheet of such Person and its
Subsidiaries prepared in accordance with generally accepted accounting
principles.
"Capital Lease Obligation" of any Person means the obligation to pay
rent or other payment amounts under a lease of (or other Debt arrangements
conveying the right to use) real or personal property of such Person which is
required to be classified and accounted for as a capital lease or a liability
on the face of a balance sheet of such Person in accordance with generally
accepted accounting principles. The stated maturity of such obligation shall
be the date of the last payment of rent or any other amount due under such
lease prior to the first date upon which such lease may be terminated by the
lessee without payment of a penalty.
"Capital Stock" of any Person means any and all shares, interests,
participation or other equivalents (however designated) of corporate
stock of such Person.
"Change of Control" means the occurrence of one or more of the following
events: (i) a person or entity or group (as that term is used in Section
13(d)(3) of the Exchange Act) of persons or entities shall have become the
beneficial owner of a majority of the securities of the Company ordinarily
having the right to vote in the election of directors; (ii) during any
consecutive two-year period, individuals who at the beginning of such period
constituted the Board of Directors of the Company (together with any
directors who are members of such Board of Directors of the Company on the
date hereof and any new directors whose election by such Board of Directors
of the Company or whose nomination for election by the stockholders of the
Company was approved by a vote of 6623% of the directors then still in office
who were either directors at the beginning of such period or whose election
or nomination for election was previously so approved) cease for any reason
to constitute a majority of the Board of Directors of the Company then in
office; (iii) any sale, lease, exchange
38
<PAGE>
or other transfer (in one transaction or a series of related transactions) of
all, or substantially all, the assets of the Company to any person or entity
or group (as so defined) of persons, or entities (other than any wholly owned
Subsidiary of the Company); or (iv) the merger or consolidation of the
Company with or into another corporation or the merger of another corporation
into the Company with the effect that immediately after such transaction any
person or entity or group (as so defined) of persons or entities shall have
become the beneficial owner of securities of the surviving corporation of
such merger or consolidation representing a majority of the combined voting
power of the outstanding securities of the surviving corporation ordinarily
having the right to vote in the election of directors.
"Common Stock" of any Person means Capital Stock of such Person that
does not rank prior, as to the payment of dividends or as to the distribution
of assets upon any voluntary or involuntary liquidation, dissolution or
winding up of such Person, to shares of Capital Stock of any other class of
such Person.
"Consolidated Cash Flow" of any Person means for any period the
Consolidated Net Income of such Person for such period increased by (i)
Consolidated Interest Expense of such Person for such period, plus (ii) the
consolidated income tax expense of such Person for such period, plus (iii)
the consolidated depreciation and amortization expense included in the income
statement of such Person and its consolidated Subsidiaries for such period,
plus (iv) other non-cash charges deducted from consolidated revenues in
determining Consolidated Net Income for such period, minus (v) non-cash items
increasing Consolidated Net Income for such period.
"Consolidated Fixed Charges" of any Person means for any period
Consolidated Interest Expense plus Preferred Stock dividends declared and
payable in cash.
"Consolidated Interest Expense" of any Person means for any period the
consolidated interest expense included in a consolidated income statement
(without deduction of interest income) of such Person and its consolidated
Subsidiaries for such period determined in accordance with generally
accepted accounting principles, including without limitation or
duplication (or, to the extent not so included, with the addition of), (i)
the amortization of Debt discounts; (ii) any payments of fees with respect to
letters of credit, bankers' acceptances or similar facilities; (iii) fees
with respect to interest rate swap or similar agreements or foreign currency
hedge, exchange or similar agreements, other than fees or charges related to
the acquisition or termination thereof which are not allocable to interest
expense in accordance with generally accepted accounting principles; and (iv)
the interest component of Capital Lease Obligations.
"Consolidated Net Income" of any Person means for any period the
consolidated net income (or loss) of such Person and its Subsidiaries for
such period determined in accordance with generally accepted accounting
principles; PROVIDED, that there shall be excluded therefrom (i) the net
income (but not the net loss) of any consolidated Subsidiary of such Person
which is subject to restrictions which prevent the payment of dividends and
the making of distributions (by loans, advances, intercompany transfers or
otherwise) to such Person to the extent of such restrictions, (ii) the net
income (or loss) of any Person that is not a consolidated Subsidiary of such
Person except to the extent of the amount of dividends or other distributions
actually paid to such Person by such other Person during such period, (iii)
gains or losses on Asset Dispositions by such Person or its consolidated
Subsidiaries and (iv) all extraordinary gains and extraordinary losses.
"Consolidated Tangible Assets" of any Person means, at any date, on a
consolidated basis, the gross book value determined in accordance with
generally accepted accounting principles of all its property both real and
personal, less (i) the net book value of all its licenses, patents, patent
applications, copyrights, trademarks, trade names, goodwill, non-compete
agreements or organizational expenses and other like intangibles, (ii)
unamortized Debt discount and expense, (iii) all reserves for depreciation,
obsolescence, depletion and amortization of its properties and (iv) all
proper reserves which in accordance with generally accepted accounting
principles should be provided in connection with the business conducted by
such Person.
"Credit Facility" means the credit agreement dated as of June 30, 1994,
between the Company and The First National Bank of Chicago, as amended and
restated as of February 9, 1995, and further amended
39
<PAGE>
as of June 12, 1995, and as the same may be amended (including any amendment
and restatement thereof), modified, supplemented, restated or replaced from
time to time.
"Debt" means (without duplication), with respect to any Person, whether
recourse is to all or a portion of the assets of such Person, and whether or
not contingent, (i) every obligation of such Person for money borrowed, (ii)
every obligation of such Person evidenced by bonds, debentures, notes or
other similar instruments, (iii) every reimbursement obligation of such
Person with respect to letters of credit, bankers' acceptances or similar
facilities issued for the account of such Person, (iv) every obligation of
such Person issued or assumed as the deferred purchase price of property or
services (but excluding trade accounts payable or accrued liabilities arising
in the ordinary course of business), (v) every Capital Lease Obligation of
such Person, (vi) Attributable Debt of such Person, (vii) the maximum fixed
redemption or repurchase price of Redeemable Stock of such Person at the time
of determination, and (viii) every obligation of the type referred to in
clauses (i) through (vii) of another Person and all dividends of another
Person the payment of which, in either case, such Person has Guaranteed or
for which such Person is responsible or liable, directly or indirectly, as
obligor, Guarantor or otherwise.
"Free Cash Flow" of any Person means, for any period, Consolidated Cash
Flow of such Person minus Capital Expenditures of such Person for such period.
"Guaranty" by any Person means any obligation, contingent or otherwise,
of such Person guaranteeing or having the economic effect of guaranteeing any
Debt of any other Person (the "primary obligor") in any manner, whether
directly or indirectly, and including, without limitation, any obligation of
such Person (i) to purchase or pay (or advance or supply funds for the
purchase or payment of) such Debt or to purchase (or to advance or supply
funds for the purchase of) any security for the payment of such Debt, (ii) to
purchase property, securities or services for the purpose of assuring the
holder of such Debt of the payment of such Debt, or (iii) to maintain working
capital, equity capital or other financial statement condition or liquidity
of the primary obligor so as to enable the primary obligor to pay such Debt
(and "Guaranteed," "Guaranteeing" and "Guarantor" shall have meanings
correlative to the foregoing); PROVIDED, HOWEVER, that the Guaranty by any
Person shall not include endorsements by such Person for collection or
deposit, in either case, in the ordinary course of business.
"Lien" means, with respect to any property or assets, any mortgage or
deed of trust, pledge, security interest, lien, charge, encumbrance of any
kind in respect of such properties or assets or other security agreement
(including, without limitation, any conditional sale or other title
retention agreement having substantially the same economic effect as any of
the foregoing).
"Net Available Proceeds" from any Asset Disposition by any Person means
cash or readily marketable cash equivalents received (including by way of
sale or discounting of a note, installment receivable or other receivable,
but excluding any other consideration received in the form of assumption by
the acquiree of Debt or other obligations relating to such properties or
assets or received in any other noncash form) therefrom by such Person, net
of (i) all legal, title and recording tax expenses, commissions and other
fees and expenses incurred and all federal, state, provincial, foreign and
local taxes required to be accrued as a liability as a consequence of such
Asset Disposition, (ii) all payments made by such Person or its Subsidiaries
on any Debt which is secured by such assets in accordance with the terms of
any Lien upon or with respect to such assets or which must by the terms of
such Lien, or in order to obtain a necessary consent to such Asset
Disposition or by applicable law be repaid out of the proceeds from such
Asset Disposition, (iii) all distributions and other payments made to
minority interest holders in Subsidiaries of such Person or joint ventures
as a result of such Asset Disposition, and (iv) a reasonable reserve for the
after-tax costs of any indemnification payments (fixed or contingent)
attributable to the seller's indemnities to the purchaser undertaken by the
Company or any of its Subsidiaries in connection with such Asset Disposition.
"Permitted Deferred Payments" means Debt incurred by the Company or any
of its Subsidiaries in connection with the acquisitions of, and payable to
the sellers of, the paging assets of Americom, Gold Coast, Denton,
MetroTones, Lewis and the capital stock of Page East (provided that the
aggregate principal amount thereof does not exceed $12.7 million).
40
<PAGE>
"Permitted Liens" means: (i) Liens incurred and pledges and deposits
made in the ordinary course of business in connection with liability
insurance, workers' compensation, unemployment insurance, old-age pensions,
and other social security benefits other than in respect of employee benefit
plans subject to ERISA; (ii) Liens securing performance, surety, and appeal
bonds and other obligations of like nature incurred in the ordinary course of
business; (iii) Liens on goods and documents securing trade letters of
credit; (iv) Liens imposed by law, such as carriers', warehousemen's,
mechanics', materialmen's, and vendor's liens, incurred in the ordinary
course of business and securing obligations which are not yet due or which
are being contested in good faith by appropriate proceedings; (v) Liens
securing the payment of taxes, assessments, and governmental charges or
levies (a) either (1) not delinquent or (2) being contested in good faith by
appropriate legal or administrative proceedings and (b) as to which adequate
reserves shall have been established on the books of the relevant
corporation in conformity with generally accepted accounting principles;
(vi) zoning restrictions, easements, rights of way, reciprocal easement
agreements, operating agreements, covenants, conditions or restrictions on
the use of any parcel of property that are routinely granted in real estate
transactions or do not interfere in any material respect with the ordinary
conduct of the business of the Company and its Subsidiaries or the value of
such property for the purpose of such business; (vii) purchase money Liens
upon any property or equipment acquired or held in the ordinary course of
business to secure Debt incurred prior to, at the time of, or within 60 days
after the acquisition of such property or equipment solely for the purpose of
financing the acquisition of such property or equipment; (viii) Liens on
property existing at the time such property is acquired and Liens on the
assets of any Subsidiary of the Company at the time such Subsidiary is
acquired, provided such Liens apply only to such acquired property; (ix)
Liens existing as of the date of the Indenture; (x) Liens securing Debt
incurred for the purpose of financing all or any part of the cost of
acquiring assets (whether by merger, consolidation, purchase of assets or
otherwise), PROVIDED that such Debt is incurred prior to, at the time of, or
within 60 days after the acquisition of such assets solely for the purpose of
financing the acquisition of such assets in compliance with the provision
described under "Limitation on Consolidated Debt" covenant above; (xi) any
attachment or judgment Lien, unless the judgment it secures would constitute
an Event of Default; (xii) Liens with respect to assets of a Subsidiary
granted by such Subsidiary to the Company to secure Debt owing to the
Company; (xiii) right of banks to set off deposits against debts owed to said
banks; (xiv) any interest or title of a lessor in property of the Company or
a Subsidiary of the Company subject to any capitalized lease or operating
lease, as each are defined under generally accepted accounting principles;
(xv) other Liens incidental to the conduct of the business of the Company or
any of its Subsidiaries, as the case may be, or the ownership of their assets
that do not materially detract from the value of the property of the Company
or a Subsidiary of the Company subject thereto; (xvi) Liens in addition to
the foregoing securing Debt not to exceed, together with Attributable Debt in
connection with sale-leaseback transactions, $500,000 in the aggregate
outstanding at any time; and (xvii) without limiting the ability of the
Company or any of its Subsidiaries to create, incur, assume, or suffer to
exist any Lien otherwise permitted under any of the foregoing clauses, any
extension, renewal, or replacement, in whole or in part, of any Lien
described in the foregoing clauses; PROVIDED, HOWEVER, that any such
extension, renewal, or replacement Lien is limited to the property or assets
covered by the Lien extended, renewed, or replaced or substitute property or
assets, the value of which is determined by the Board of Directors of the
Company to be not materially greater than the value of the property or assets
for which the substitute property or assets are substituted.
"Person" means an individual, partnership, corporation, trust or
unincorporated organization, and a government or agency or political
subdivision thereof.
"Preferred Stock," as applied to the Capital Stock of any Person, means
Capital Stock of such Person of any class or classes (however designated)
that ranks prior, as to the payment of dividends or as to the distribution of
assets upon any voluntary or involuntary liquidation, dissolution or winding
up of such Person, to shares of Capital Stock of any other class of such
Person.
"Pro Forma Consolidated Cash Flow" of any Person means for any period
the Consolidated Cash Flow of such Person for such period calculated on a pro
forma basis to give effect to any Asset Disposition or acquisition of assets
not in the ordinary course of business (including acquisitions of other
Persons by merger, consolidation or purchase of Capital Stock) during such
period as if such Asset Disposition or acquisition had taken place on the
first day of such period.
41
<PAGE>
"Redeemable Stock" means any equity security that by its terms or
otherwise is required to be redeemed prior to the stated maturity of the
Notes, or is redeemable at the option of the holder thereof at any time prior
to the stated maturity of the Notes.
"Refinancing Debt" means any Debt of the Company that renews, refunds or
extends any Debt of the Company or a Subsidiary of the Company, in any case
in an amount not to exceed the outstanding principal amount of the Debt so
refinanced plus the amount of any premium required to be paid in connection
with such refinancing pursuant to the terms of the debt refinanced or the
amount of any premium reasonably determined by the Company as necessary to
accomplish such refinancing by means of a tender offer or privately
negotiated repurchase, plus the expenses of the Company incurred in
connection with such refinancing, PROVIDED that, (A) in the case of any
refinancing of the Notes or any pari passu Debt, such Refinancing Debt is
made pari passu or subordinate in right of payment to the Notes, (B) in the
case of any refinancing of Debt that is subordinate in right of payment to
the Notes, such Refinancing Debt is made subordinate in right of payment to
the Notes, and (C) such Refinancing Debt does not require the payment of all
or a portion of the principal thereof (whether pursuant to purchase,
redemption, repayment, defeasance, retirement, prepayment, sinking fund
payment, payment at stated maturity or otherwise) prior to the final
scheduled maturity of the Debt being renewed, refunded or extended.
"Related Person" means any Person owning (i) 5% or more of the
outstanding Common Stock of the Company or a Subsidiary of the Company or
(ii) 5% or more of the Voting Stock of the Company or a Subsidiary of the
Company.
"Senior Debt" means (i) the principal of (and premium, if any), interest
(including interest accruing on or after the filing of any petition in
bankruptcy or for reorganization relating to the Company whether or not such
claim for post-petition interest is allowed in such proceeding) on,
penalties and any obligation of the Company for reimbursement, indemnities
and fees relating to, Debt outstanding pursuant to the Credit Facility, (ii)
all other Debt of the Company referred to in the definition of Debt other
than clauses (vii) and (viii) (with respect to clause (vii) of such
definition) thereof, (iii) payment obligations of the Company under interest
rate swap or similar agreements or foreign currency hedge, exchange or
similar agreements required by the Credit Facility, where the counterparty to
such agreement is a lender under the Credit Facility, and (iv) all renewals,
extensions, modifications, refinancings, refundings and amendments of any
Debt or payment obligations referred to in clause (i), (ii), or (iii) above
(including, without limitation, any interest rate swap or similar agreements
or foreign currency hedge, exchange or similar agreements that are entered
into by the Company for the purpose of modifying, terminating or hedging
any agreement that constitutes Senior Debt under clause (iii) above whether
or not such modification, termination or hedge was required by the Credit
Facility and whether or not the counterparty to such agreement is a lender or
former lender under such Credit Facility), unless, in the case of any
particular Debt referred to above, (a) such Debt is owed to a Subsidiary of
the Company, (b) the instrument creating or evidencing the same or pursuant
to which the same is outstanding expressly provides that such Debt is not
superior in right of payment to the Notes, (c) such Debt is incurred in
violation of the Indenture, or (d) such Debt is by its terms subordinate in
right of payment in respect of any other Debt of the Company.
"Subsidiary" of any Person means (i) a corporation more than 50% of the
outstanding Voting Stock of which is owned, directly or indirectly, by such
Person or by one or more other Subsidiaries of such Person, or by such
Person and one or more other Subsidiaries thereof or (ii) any other Person
(other than a corporation) in which such Person, or one or more other
Subsidiaries of such Person or such Person and one or more other Subsidiaries
thereof, directly or indirectly, has at least a majority ownership and power
to direct the policies, management and affairs thereof; PROVIDED, that an
Unrestricted Subsidiary shall not be deemed to be a Subsidiary of the Company
for purposes of the Indenture.
"Unrestricted Subsidiary" means (i) any Subsidiary of the Company which
at the time of determination shall be an Unrestricted Subsidiary (as
designated by the Board of Directors of the Company, as provided below) and
(ii) any Subsidiary of an Unrestricted Subsidiary. The Board of Directors of
the Company may designate any Subsidiary of the Company (other than as
provided below but including any newly acquired or newly formed Subsidiary)
to be an Unrestricted Subsidiary unless such Subsidiary owns any Capital
Stock of,
42
<PAGE>
or owns or holds any Lien on any property of, any other Subsidiary of the
Company which is not a Subsidiary of the Subsidiary to be so designated or
otherwise an Unrestricted Subsidiary, PROVIDED, that (a) either (x) the
Subsidiary to be so designated has total assets of $10,000 or less or (y)
immediately after giving effect to such designation, the Company could incur
$1.00 of additional Debt pursuant to the first paragraph of the
"Limitation on Consolidated Debt" covenant and (b) immediately after giving
effect to such designation, the Company could make an additional Restricted
Payment of $1.00 pursuant to the first paragraph of the "Limitation of
Restricted Payments" covenant above; PROVIDED that the holders of Debt
thereof do not have direct or indirect recourse against the Company or any
Subsidiary of the Company and neither the Company nor any Subsidiary of the
Company otherwise has liability, for any payment obligations in respect of
such Debt. The Board of Directors of the Company may designate any
Unrestricted Subsidiary to be a Subsidiary, PROVIDED, that immediately after
giving effect to such designation, the Company could incur $1.00 of
additional Debt pursuant to the first paragraph of the "Limitation on
Consolidated Debt" covenant. Any such designation by the Board of Directors
of the Company shall be evidenced by filing with the Trustee a certified copy
of the resolution of the Board of Directors of the Company giving effect to
such designation and an Officers' Certificate certifying that such
designation complies with the foregoing conditions.
"Voting Stock" of any Person means Capital Stock of such Person which
ordinarily has voting power for the election of directors (or persons
performing similar functions) of such Person, whether at all times or only so
long as no senior class of securities has such voting power by reason of any
contingency.
BOOK-ENTRY, DELIVERY AND FORM
The certificates representing the Old Notes were issued, and the
certificates representing the New Notes will be issued, in fully registered
form, without coupons. The Old Notes are represented by a single, permanent
global certificate in definitive, fully registered form without interest
coupons (the "Initial Global Note"). Except as described in the next
paragraph, the New Notes initially will be represented by a single,
permanent global certificate in definitive, fully registered form (the
"Global Note") and will be deposited with, or on behalf of, the DTC, and
registered in the name of Cede & Co., as the DTC's nominee or will remain in
the custody of the Trustee pursuant to a FAST Balance Certificate Agreement
between the DTC and the Trustee. If any holder of Old Notes whose interest in
such Old Notes is represented by the Initial Global Note fails to tender in
the Exchange Offer, the Company may issue and deliver to such holder a
separate certificate representing such holder's Old Notes in registered form
without interest coupons.
New Notes exchanged for Old Notes originally purchased by or transferred
to (i) institutional "accredited investors" (as defined in Rule 501(a)(1),
(2), (3) or (7) under the Securities Act) who are not "qualified
institutional buyers" (as defined in Rule 144A under the Securities Act)
("QIBs") or (ii) QIBs who elect to take physical delivery of their
certificates (collectively, "Non-Global Purchasers") will be issued in
registered form without interest coupons (the "Certificated Notes"). Upon the
transfer to a QIB of Certificated Notes initially issued to a Non-Global
Purchaser, such Certificated Notes will, unless the transferee requests
otherwise or the Global Note has previously been exchanged in whole for
Certificated Notes, be exchanged for an interest in the Global Note.
The DTC has advised the Company that it is a limited-purpose trust
company that was created to hold securities for its participating
organizations (collectively, the "Participants" or the "Depository's
Participants") and to facilitate the clearance and settlement of
transactions in such securities between Participants through electronic
book-entry changes in accounts of its Participants. The Depository's
Participants include securities brokers and dealers, banks and trust
companies, clearing corporations and certain other organizations. Access to
the Depository's system is also available to other entities such as banks,
brokers, dealers and trust companies (collectively, the "Indirect
Participants" or the "Depository's Indirect Participants") that clear
through or maintain a custodial relationship with a Participant, either
directly or indirectly. Persons who are not Participants may beneficially own
securities held by or on behalf of the Depository only thorough the
Depository's Participants or the Depository's Indirect Participants.
The Company has been advised by the Depository that (i) upon deposit of
the Global Note, the Depository credited the accounts of Participants
designated by the initial purchasers of the Old Notes with
43
<PAGE>
portions of the principal amount of the Global Note and (ii) ownership of the
Notes evidenced by the Global Note is shown on, and the transfer of ownership
thereof will be effected only through, records maintained by the Depository
(with respect to the interests of the Depository's Participants), the
Depository's Participants and the Depository's Indirect Participants.
Prospective purchasers are advised that the laws of some states require that
certain persons take physical delivery in definitive form of securities that
they own. Consequently, the ability to transfer Notes evidenced by the Global
Note will be limited to such extent.
So long as the Global Note holder is the registered owner of any Notes,
the Global Note holder will be considered the sole holder under the Indenture
of any Notes evidenced by the Global Note. Beneficial owners of Notes
evidenced by the Global Note will not be considered the owners or holders
thereof under the Indenture for any purpose, including with respect to the
giving of any directions, instructions or approvals to the Trustee
thereunder. Neither the Company nor the Trustee will have any responsibility
or liability for any aspect of the records of the Depository or for
maintaining, supervising or reviewing any records of the Depository relating
to the Notes.
Payments in respect of the principal of, premium, if any, and interest
on any Notes registered in the name of the Global Note holder on the
applicable record date will be payable by the Trustee to or at the direction
of the Global Note holder in its capacity as the registered holder under the
Indenture. Under the terms of the Indenture, the Company and the Trustee may
treat the persons in whose names the Notes, including the Global Note, are
registered as the owners thereof for the purpose of receiving such payments.
Consequently, neither the Company nor the Trustee has or will have any
responsibility or liability for the payment of such amounts to beneficial
owners of the Notes (including principal, premium, if any, or interest). The
Company believes, however, that it is currently the policy of the Depository
to immediately credit the accounts of the relevant Participants with such
payments, in amounts proportionate to their respective holdings of beneficial
interests in the relevant security as shown on the records of the Depository.
Payments by the Depository's Participants and the Depository's Indirect
Participants to the beneficial owners of the Notes will be governed by
standing instructions and customary practice and will be the responsibility
of the Depository's Participants or the Depository's Indirect Participants.
CERTIFICATED SECURITIES
Subject to certain conditions, any person having a beneficial interest
in the Global Note may, upon request to the Trustee, exchange such beneficial
interest for Notes in the form of Certificated Securities. Upon any such
issuance, the Trustee is required to register such Certificated Notes in the
name of, and cause the same to be delivered to, such person or persons (or
the nominee of any thereof). In addition, if (i) the Company notifies the
Trustee in writing that the Depository is no longer willing or able to act as
a depository and the Company is unable to locate a qualified successor within
90 days or (ii) the Company, at its option, notifies the Trustee in writing
that it elects to cause the issuance of Notes in the form of Certificated
Notes under the Indenture, then, upon surrender by the Global Note holder of
its Global Note, Notes in such form will be issued to each person that the
Global Note holder and the Depository identify as being the beneficial owner
of the related Notes.
Neither the Company nor the Trustee will be liable for any delay by the
Global Note holder or the Depository in identifying the beneficial owners of
Notes and the Company and the Trustee may conclusively rely on, and will be
protected in relying on, instructions from the Global Note holder or the
Depository for all purposes.
SAME-DAY SETTLEMENT AND PAYMENT
The Indenture will require that payments in respect of the Notes
(including principal, premium, if any, and interest) be made in immediately
available funds.
44
<PAGE>
EXCHANGE OFFER; REGISTRATION RIGHTS AGREEMENT
The Old Notes were sold by the Company on June 15, 1995 in a private
placement. In connection with that placement, the Company entered into the
Registration Rights Agreement with the initial purchasers of the Old Notes on
or prior to the date of issuance of the Old Notes (the "Issue Date"). The
summary herein of certain provisions of the Registration Rights Agreement
does not purport to be complete and is subject to, and is qualified in its
entirety by reference to, all the provisions of the Registration Rights
Agreement, a copy of which is available upon request to the Company.
Pursuant to the Registration Rights Agreement, the Company agreed,
within 30 days after the Issue Date, to file with the Commission and use its
best reasonable efforts to cause to become effective within 105 days after
the Issue Date a registration statement (the "Exchange Offer Registration
Statement") with respect to the issue of the New Notes and, upon becoming
effective, to offer the holders of the Old Notes the opportunity to exchange
their Old Notes for the New Notes. The Company will keep the Exchange Offer
open for not less than 30 days (or longer if required by applicable law)
after the date notice of the Exchange Offer is mailed to the holders of Old
Notes. For each Old Note surrendered to the Company pursuant to the Exchange
Offer, the holder of such Old Note will receive a New Note having a principal
amount equal to that of the surrendered Old Note. Interest on each New Note
will accrue from the last interest payment date on which interest was paid on
the Old Note surrendered in exchange therefor or, if no interest has been
paid on such Old Note, from the date of its original issue.
The New Notes will be issued (i) under the Indenture or (ii) under an
indenture substantially similar to the Indenture, which, in either event,
will provide that the New Notes will not be subject to transfer restrictions
and that the New Notes and the Old Notes of the corresponding series will
vote and consent together on all matters as one class and that neither the
New Notes nor the Old Notes will have the right to vote or consent as a
separate class on any matter.
The Company will be entitled to close the Exchange Offer provided that
it has accepted all Old Notes theretofore validly tendered in accordance with
the terms of the Exchange Offer. Old Notes not tendered in the Exchange Offer
shall bear interest at the same rates as in effect at the time of issuance of
the Old Notes.
Under current Commission interpretations, the New Notes will in general
be freely transferable after the Exchange Offer without further registration
under the Securities Act, provided that broker-dealers ("Participating
Broker-Dealers") receiving New Notes in the Exchange Offer will have a
prospectus delivery requirement with respect to resales of such New Notes.
The Commission has taken the position that Participating Broker-Dealers
may fulfill their prospectus delivery requirements with respect to the New
Notes (other than a resale of an unsold allotment from the original sale of
the Old Notes) with the prospectus contained in the Exchange Offer
Registration Statement. Under the Registration Rights Agreement, the Company
is required to allow Participating Broker-Dealers and other persons, if any,
with similar prospectus delivery requirements to use the prospectus contained
in the Exchange Offer Registration Statement in connection with the resale of
such New Notes. However, any Purchaser of Old Notes who is an "affiliate" of
the Company or who intends to participate in the Exchange Offer for the
purpose of distributing the New Notes (i) will not be able to rely on the
interpretations of the Commission; (ii) will not be able to tender its Old
Notes in the Exchange Offer; and (iii) must comply with the registration and
prospectus delivery requirements of the Securities Act in connection with any
sale or transfer of the Old Notes unless such sale or transfer is made
pursuant to an exemption from such requirements.
Each holder of the Old Notes (other than certain specified holders) who
wishes to exchange Old Notes for New Notes in the Exchange Offer will be
required to represent that (i) it is not an affiliate of the Company; (ii)
any New Notes to be received by it were acquired in the ordinary course of
its business; and (iii) at the time of commencement of the Exchange Offer, it
has no arrangement with any person to participate in the distribution (within
the meaning of the Securities Act) of the New Notes. In addition, in
connection with any resale of New Notes, any broker-dealer who acquired the
Old Notes for its own account as a result of market-making activities or
other trading activities must deliver a prospectus meeting the requirements
of the Securities Act (which may be this Prospectus).
45
<PAGE>
The Company has agreed to pay all expenses incident to the Exchange
Offer and will indemnify the initial purchasers of the Old Notes against
certain liabilities, including liabilities under the Securities Act.
In the event that, due to any change in law or the current
interpretations of the Commission, the Company is not permitted to effect
such Exchange Offer, or if for any reason the Exchange Offer is not
consummated within 105 days after the Issue Date, or upon the request of any
initial purchaser of the Old Notes (under certain circumstances), the Company
will, at its cost, within 30 days after the date of such change in law or
interpretations of the Commission (the "Exchange Offering Determination
Date"), file a registration statement covering resales of Old Notes (a "Shelf
Registration Statement") and will use its best reasonable efforts to cause
such Shelf Registration Statement to become effective within 105 days after
the Exchange Offer Determination Date and to keep such Shelf Registration
Statement effective for three years from the effective date thereof. The
Company shall, in the event of a shelf registration, provide to each holder
of the Old Notes copies of the prospectus which is a part of the Shelf
Registration Statement, notify each such holder when the Shelf Registration
Statement has become effective and take certain other actions as are required
to permit unrestricted resales of the Old Notes. The Company shall have the
right under certain circumstances to restrict the use of such prospectus upon
notice to the holders of the Old Notes (a "Suspension Event Notice"). A
holder that sells Old Notes pursuant to a Shelf Registration Statement
generally will be required to be named as a selling security holder in the
related prospectus and to deliver a current prospectus to purchasers, will be
subject to certain of the civil liability provisions under the Securities Act
in connection with such sales and will be bound by the provisions of the
Registration Rights Agreement which are applicable to such a holder
(including certain indemnification obligations).
If the Company fails to comply with the above provisions, additional
interest (the "Additional Interest") shall be assessed as follows:
(i) if the Exchange Offer Registration Statement or the Shelf
Registration Statement is not filed within 30 days following the Issue
Date or the Exchange Offer Determination Date, as the case may be, then
commencing on the 31st day after the Issue Date or the Exchange Offer
Determination Date, as the case may be, Additional Interest shall be
accrued on the Old Notes over and above the stated interest at a rate
of 0.50% per annum for the first 90 days immediately following the 30th
day after the Issue Date or the Exchange Offer Determination Date, as
the case may be, such Additional Interest rate increasing by an
additional 0.25% per annum at the beginning of each subsequent 90-day
period;
(ii) if an Exchange Offer Registration Statement or the Shelf
Registration Statement is filed pursuant to clause (i) above but is not
declared effective within 105 days following the Issue Date or the
Exchange Offer Determination Date, as the case may be, then commencing on
the 106th day after the Issue Date or the Exchange Offer Determination
Date, as the case may be, Additional Interest shall be accrued on the
Old Notes over and above the stated interest at a rate of 0.50% per annum
for the first 90 days immediately following the 105th day after the Issue
Date or the Exchange Offer Determination Date, as the case may be, such
Additional Interest rate increasing by an additional 0.25% per annum at
the beginning of each subsequent 90-day period; and
(iii) if (A) the Exchange Offer is not consummated within
30 days following the effective date of the Exchange Offer Registration
Statement or (B) the Shelf Registration Statement ceases to be effective
or the prospectus which is a part thereof cannot be used as a result of
a Suspension Event Notice for a period of more than 90 days prior to
three years from its original effective date, then Additional
Interest shall be accrued on the Old Notes over and above the stated
interest at a rate of 0.50% per annum for the first 60 days immediately
following (x) the 30 days after the effective date of the Exchange Offer
Registration Statement, in the case of (A) above, or (y) the day such
Shelf Registration Statement ceases to be effective or a Suspension
Event has lasted for more than 90 days in the case of (B) above, such
Additional Interest rate increasing by an additional 0.25% per annum at
the beginning of each subsequent 60-day period;
PROVIDED, HOWEVER, that the Additional Interest rate on the Old Notes may not
exceed 1.00% per annum; and, PROVIDED, FURTHER, that (1) upon the filing of
the Exchange Offer Registration Statement or the Shelf
46
<PAGE>
Registration Statement (in case of clause (i) above), (2) upon the
effectiveness of the Exchange Offer Registration Statement or the Shelf
Registration Statement (in the case of clause (ii) above), (3) upon the
consummation of the Exchange Offer (in the case of clause (iii) (A) above),
or (4) upon the effectiveness of the Shelf Registration Statement that had
ceased to remain effective prior to three years from its original effective
date or the end of the Suspension Event (in the case of clause (iii) (B)
above), Additional Interest on the Old Notes as a result of such clause (i),
(ii) or (iii) shall cease to accrue.
47
<PAGE>
PLAN OF DISTRIBUTION
Based on an interpretation by the Commission's staff set forth in
no-action letters issued to third parties unrelated to the Company, the
Company believes that, with the exceptions set forth below, New Notes issued
pursuant to the Exchange Offer in exchange for Old Notes may be offered for
resale, resold and otherwise transferred by any person receiving such New
Notes, whether or not such person is the holder (other than any such holder
or such other person which is an "affiliate" of the Company within the
meaning of Rule 405 under the Securities Act) without compliance with the
registration and prospectus delivery provisions of the Securities Act,
provided that the New Notes are acquired in the ordinary course of business
of the holder or such other person and neither the holder nor such other
person has an arrangement or understanding with any person to participate in
the distribution of such New Notes. The Company, however, has not sought, and
does not intend to seek, its own no-action letter and there can be no
assurance that the Commission's staff would make a similar determination with
respect to the Exchange Offer. Any holder who tenders in the Exchange Offer
for the purpose of participating in a distribution of the New Notes cannot
rely on this interpretation by the Commission's staff and must comply with
the registration and prospectus delivery requirements of the Securities Act
in connection with a secondary resale transaction.
Each broker-dealer that receives New Notes for its own account in
exchange for Old Notes, where the Old Notes were acquired by that
broker-dealer as a result of market-making activities or other trading
activities, must acknowledge that it will deliver a prospectus in connection
with any resale of such New Notes. This Prospectus, as it may be amended or
supplemented from time to time, may be used by a broker-dealer in connection
with resales of New Notes received in exchange for Old Notes where such Old
Notes were acquired as a result of market-making activities or other trading
activities. The Company has agreed that it will make this Prospectus, as
amended or supplemented, available to any broker-dealer for use in connection
with any such resale for such period of time as such persons must comply with
such requirements in order to resell the New Notes.
The Company will not receive any proceeds from any sale of New Notes by
broker-dealers. New Notes received by broker-dealers for their own account
pursuant to the Exchange Offer may be sold from time to time in one or more
transactions in the over-the-counter market, in negotiated transactions,
through the writing of options on the New Notes or a combination of such
methods of resale, at market prices prevailing at the time of resale, at
prices related to such prevailing market prices or negotiated prices. Any
such resale may be made directly to purchasers or to or through brokers or
dealers who may receive compensation in the form of commissions or
concessions from any such broker-dealer or the purchasers of any such New
Notes. Any broker-dealer that resells New Notes that were received by it for
its own account pursuant to the Exchange Offer and any broker or dealer that
participates in a distribution of such New Notes may be deemed to be an
"underwriter" within the meaning of the Securities Act, and any profit on any
such resale of New Notes and any commissions or concessions received by any
such persons may be deemed to be underwriting compensation under the
Securities Act. The Letter of Transmittal states that by acknowledging that
it will deliver and by delivering a prospectus, a broker-dealer will not be
deemed to admit that it is an "underwriter" within the meaning of the
Securities Act.
The Company will promptly send additional copies of this Prospectus and
any amendment or supplement to this Prospectus to any broker-dealer that
requests such documents in the Letter of Transmittal for such period of time
as such persons must comply with such requirements in order to resell the New
Notes. The Company has agreed to pay all expenses incident to the Exchange
Offer (including the expenses of one counsel for the holders of the Notes)
other than commissions or concessions of any brokers or dealers.
LEGAL MATTERS
The validity of the New Notes offered hereby will be passed upon for the
Company by Vinson & Elkins L.L.P., Dallas, Texas.
48
<PAGE>
EXPERTS
The consolidated financial statements of ProNet Inc. for the three years
ended December 31, 1994, appearing in ProNet Inc.'s Annual Report on Form
10-K have been audited by Ernst & Young LLP, independent auditors, as
indicated in their report incorporated by reference herein upon the authority
of such firm as experts in accounting and auditing.
The combined financial statements of Contact Communications, Inc.
appearing in one of the documents incorporated herein by reference to the
extent and for the periods indicated in their report have been audited by
Hiltzik, Schneider, Ehrlich & Wengrover, independent public accountants, as
indicated in their report incorporated by reference herein upon the authority
of such firm as experts in accounting and auditing.
The combined financial statements of Radio Call Company, Inc. appearing
in one of the documents incorporated herein by reference have been audited by
Cummings & Carroll, P.C., independent public accountants, as indicated in
their report incorporated by reference herein upon the authority of such firm
as experts in accounting and auditing.
The financial statements of the RCC Division of Chicago Communication
Service, Inc. appearing in one of the documents incorporated herein by
reference to the extent and for the periods indicated in their report have
been audited by Natarelli & Associates, independent public accountants, as
indicated in their report incorporated by reference herein upon the authority
of such firm as experts in accounting and auditing.
The financial statements of All City Communication Company, Inc.
appearing in one of the documents incorporated herein by reference to the
extent and for the periods indicated in their report have been audited by
Winter, Kloman, Moter & Repp, S.C., independent public accountants, as
indicated in their report incorporated by reference herein upon the authority
of such firm as experts in accounting and auditing.
The financial statements of Signet Paging of Charlotte, Inc. appearing
in one of the documents incorporated herein by reference have been audited
by Greer & Walker, L.L.P., independent public accountants, as indicated in
their report incorporated by reference herein upon the authority of such firm
as experts in accounting and auditing.
The financial statements of Metropolitan Houston Paging Services, Inc.
appearing in one of the documents incorporated herein by reference to the
extent and for the periods indicated in their report have been audited by
Arthur Andersen LLP, independent public accountants, as indicated in their
report incorporated by reference herein upon the authority of such firm as
experts in accounting and auditing.
The financial statements of Americom Paging Corporation as of December
31, 1994, and for each of the years in the two-year period ended December 31,
1994, have been incorporated by reference in reliance upon the report of KPMG
Peat Marwick LLP, independent certified public accountants, incorporated by
reference herein, and upon the authority of said firm as experts in
accounting and auditing. The report of KPMG Peat Marwick LLP covering the
December 31, 1994, financial statements contains an explanatory paragraph
that states that the Company's recurring losses from operations and net
capital deficiency raise substantial doubt about the entity's ability to
continue as a going concern. These financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
The combined financial statements of Page East, Inc. appearing in one of
the documents incorporated herein by reference to the extent and for the
periods indicated in their report have been audited by Ernst & Young LLP,
independent auditors, as indicated in their report incorporated by reference
herein upon the authority of such firm as experts in accounting and auditing.
49
<PAGE>
- -------------------------------------------
-------------------------------------------
- -------------------------------------------
-------------------------------------------
NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS IN CONNECTION WITH THE OFFER MADE
BY THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR BY ANY
INITIAL PURCHASER OF THE OLD NOTES. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER
OF ANY SECURITIES OTHER THAN THOSE TO WHICH IT RELATES OR AN OFFER TO SELL, OR A
SOLICITATION OF AN OFFER TO BUY, TO ANY PERSON IN ANY JURISDICTION WHERE SUCH AN
OFFER OR SOLICITATION WOULD BE UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS
NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE AN IMPLICATION
THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE
HEREOF.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Available Information.......................... 2
Incorporation of Certain Documents by
Reference..................................... 2
Summary........................................ 4
Risk Factors................................... 13
Use of Proceeds................................ 16
Capitalization................................. 17
Description of Credit Facility................. 18
The Exchange Offer............................. 19
Certain Federal Income Tax Considerations...... 26
Description of New Notes....................... 27
Plan of Distribution........................... 48
Legal matters.................................. 48
Experts........................................ 49
</TABLE>
$100,000,000
PRONET INC.
11 7/8% SENIOR SUBORDINATED
NOTES DUE 2005
---------------------
PROSPECTUS
, 1995
---------------------
- -------------------------------------------
-------------------------------------------
- -------------------------------------------
-------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Article Six of the Certificate of Incorporation of the Registrant
provides that the Registrant shall indemnify its officers and directors to
the maximum extent allowed by the Delaware General Corporation Law. Pursuant
to Section 145 of the Delaware General Corporation Law, the Registrant
generally has the power to indemnify its present and former directors against
expenses and liabilities incurred by them in connection with any suit to
which they are, or are threatened to be made, a party by reason of their
serving in those positions so long as they acted in good faith and in a
manner they reasonably believed to be in, or not opposed to, the best
interests of the Registrant, and with respect to any criminal action, so long
as they had no reasonable cause to believe their conduct was unlawful. With
respect to suits by or in the right of the Registrant, however,
indemnification is generally limited to attorneys' fees and other expenses
and is not available if the person is adjudged to be liable to the
Registrant, unless the court determines that indemnification is appropriate.
The statute expressly provides that the power to indemnify authorized thereby
is not exclusive of any rights granted under any bylaw, agreement, vote of
stockholders or disinterested directors, or otherwise. The Registrant also
has the power to purchase and maintain insurance for its directors and
officers and has purchased a policy providing such insurance.
The preceding discussion of the Registrant's Certificate of
Incorporation and Section 145 of the Delaware General Corporation Law is not
intended to be exhaustive and is qualified in its entirety by the Certificate
of Incorporation and Section 145 of the Delaware General Corporation Law.
The Registrant has entered into indemnification agreements with the
Registrant's directors and officers. Pursuant to such agreements, the
Registrant will, to the extent permitted by applicable law, indemnify such
persons against all expenses, judgments, fines and penalties incurred in
connection with the defense or settlement of any actions brought against them
by reason of the fact that they were directors or officers of the Registrant
or assumed certain responsibilities at the direction of the Registrant.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
- ------ -----------------------
3.1 -- Restated Certificate of Incorporation dated July 31, 1987.
3.2 -- Certificate of Designation of Series A Junior
Participating Preferred Stock dated April 11, 1995
(filed as part of the Registrant's Registration
Statement on Form 8-A dated April 7, 1995, and
incorporated herein by reference).
3.3 -- Certificate of Amendment to Restated Certificate of
Incorporation dated June 12, 1995 (filed as an
exhibit to the Registrant's Current Report on Form 8-K,
dated July 5, 1995, and incorporated herein by
reference).
3.4 -- Bylaws of the Registrant, as amended (filed as an
exhibit to the Registrant's Annual Report on Form 10-K
for the year ended December 31, 1990, and
incorporated herein by reference).
4.1 -- Indenture, dated as of June 15, 1995, between the
Registrant and First Interstate Bank of Texas, N.A.,
as Trustee (filed as an exhibit to the Registrant's
Current Report on Form 8-K, dated July 5, 1995,
and incorporated herein by reference).
4.2 -- Registration Rights Agreement, dated as of June 15,
1995, between the Registrant, Lehman Brothers, Inc.,
Alex. Brown & Sons Incorporated and PaineWebber
Incorporated.
4.3 -- Rights Agreement, dated as of April 5, 1995,
between the Registrant and Chemical Shareholder
Services Group, Inc., as Rights Agent, specifying
the terms of the rights to purchase the Registrant's
Series A Junior Participating Preferred Stock, and
the exhibits thereto (filed as an exhibit to the
Registrant's Registration Statement on Form 8-A dated
April 7, 1995, and incorporated herein by reference).
<PAGE>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
- ------ -----------------------
5.1 -- Opinion of Vinson & Elkins L.L.P.
10.1 -- Agreement dated June 15, 1988, between the Registrant
and Texas Instruments Incorporated for the
acquisition of assets including the use of patents,
technology and software related to ProNet Tracking
Systems (filed as an exhibit to the Registrant's
Current Report on Form 8-K, dated July 21, 1988,
and incorporated herein by reference).
10.2 -- Office/Showroom/Warehouse Lease Agreement dated
January 2, 1990, between the Registrant and Dal-Mac
Westridge I, Ltd., as amended (filed as an exhibit
to the Registrant's Annual Report on Form 10-K for the
year ended December 31, 1990, and incorporated
herein by reference).
10.3 -- Stock Purchase Agreement dated September 24, 1993,
by and between the Registrant and Contact
Communications, Inc. (filed as an exhibit to the
Registrant's Current Report on Form 8-K, dated March
1, 1994, and incorporated herein by reference).
10.4 -- Amendment Letter No. One to Stock Purchase
Agreement dated October 20, 1993, by and between
the Registrant and Contact Communications, Inc. (filed
as an exhibit to the Registrant's Current Report on
Form 8-K, dated March 1, 1994, and incorporated
herein by reference).
10.5 -- Amendment Letter No. Two to Stock Purchase
Agreement dated January 4, 1994, by and between the
Registrant and Contact Communications, Inc. (filed as
an exhibit to the Registrant's Current Report on Form
8-K, dated March 1, 1994, and incorporated herein
by reference).
10.6 -- Amendment Letter No. Three to Stock Purchase
Agreement dated March 1, 1994, by and between the
Registrant and Contact Communications, Inc. (filed as
an exhibit to the Registrant's Current Report on Form
8-K, dated March 1, 1994, and incorporated herein
by reference).
10.7 -- Asset Purchase Agreement dated March 22, 1994, by
and among the Registrant, Radio Call Company, Inc., a
New York corporation, MRN Communications, Inc., a
New York corporation, Radio Call Co. of N.J., Inc.,
a New Jersey corporation and Marvin R. Neuwirth
(filed as an exhibit to the Registrant's Current
Report on Form 8-K, dated August 5, 1994, and
incorporated herein by reference).
10.8 -- Asset Purchase Agreement dated May 5, 1994, by and
among the Registrant, Chicago Communication Service,
Inc., an Illinois corporation, Gerald C. Bear,
Gerald C. Bear, Trustee of the Lewis Bear Trust,
Leo Magiera and Gerald Manikowski (filed as an
exhibit to the Registrant's Current Report on Form
8-K, dated August 5, 1994, and incorporated herein by
reference).
10.9 -- Asset Purchase Agreement dated June 30, 1994, by
and among the Registrant, All City Communication
Company, Inc., Robert J. von Bereghy, Maurice S.
Meyers, Martin T. Franke, Virginia Franke, Personal
Representative of the estate of Martin K. Franke
and Cove Communications of Wisconsin, Inc. (filed
as an exhibit to the Registrant's Quarterly Report on
Form 10-Q for the fiscal quarter ended June 30,
1994, and incorporated herein by reference).
10.10 -- Amendment Agreement dated July 29, 1994, by and
among the Registrant, Radio Call Company, Inc., a New
York corporation, MRN Communications, Inc., a New
York corporation, Radio Call Co. of N.J., Inc., a
New Jersey corporation and Marvin R. Neuwirth
(filed as an exhibit to the Registrant's Current
Report on Form 8-K, dated August 5, 1994, and
incorporated herein by reference).
10.11 -- Amendment Agreement dated August 1, 1994, by and
among the Registrant, All City Communication Company,
Inc., Robert J. von Bereghy, Maurice S. Meyers,
Martin T. Franke, Virginia Franke, Personal
Representative of the estate of Martin K. Franke
and Cove Communications of Wisconsin, Inc. (filed
as an exhibit to the Registrant's Quarterly Report on
Form 10-Q for the fiscal quarter ended June 30,
1994, and incorporated herein by reference).
II-2
<PAGE>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
- ------ -----------------------
10.12 -- Stock Purchase Agreement dated April 20, 1994,
regarding the acquisition of the outstanding
capital stock of Metropolitan Houston Paging
Services, Inc., ("Metro Houston") by and among
Contact Communications Inc., Metro Houston and the
shareholders of Metro Houston (filed as an exhibit
to the Registrant's Quarterly Report on Form 10-Q for the
fiscal quarter ended March 31, 1995, and incorporated
herein by reference).
10.13 -- Form of PS-58 Split Dollar Agreement between the
Registrant and each of its executive officers (filed
as an exhibit to the Registrant's Registration
Statement on Form S-2 (File No. 33-85696) filed
with the Commission on October 28, 1994, and
incorporated herein by reference).
10.14 -- Asset Purchase Agreement dated November 30, 1994,
among Signet Paging of Charlotte, Inc., Eileen L.
Knight, John R. Knight, Sr., John R. Knight, Jr.
and Contact Communications Inc. (filed as an
exhibit to Amendment No. 2 to the Registrant's
Registration Statement on Form S-2 (File No. 33-
85696) filed with the Commission on December 14,
1994, and incorporated herein by reference).
10.15 -- Employment Agreement dated May 18, 1994, by and
between the Registrant and Jackie R. Kimzey (filed as
an exhibit to the Registrant's Quarterly Report on
Form 10-Q for the fiscal quarter ended June 30,
1994, and incorporated herein by reference).
10.16 -- Employment Agreement dated May 18, 1994, by and
between the Registrant and David J. Vucina (filed as
an exhibit to the Registrant's Quarterly Report on
Form 10-Q for the fiscal quarter ended June 30,
1994, and incorporated herein by reference).
10.17 -- Change in Control Agreement dated May 18, 1994, by
and between the Registrant and Bo Bernard (filed as an
exhibit to the Registrant's Quarterly Report on Form
10-Q for the fiscal quarter ended June 30, 1994,
and incorporated herein by reference).
10.18 -- Change in Control Agreement dated May 18, 1994, by
and between the Registrant and Jan E. Gaulding (filed
as an exhibit to the Registrant's Quarterly Report on
Form 10-Q for the fiscal quarter ended June 30,
1994, and incorporated herein by reference).
10.19 -- Change in Control Agreement dated May 18, 1994, by
and between the Registrant and Jeffery Owens (filed as
an exhibit to the Registrant's Quarterly Report on
Form 10-Q for the fiscal quarter ended June 30,
1994, and incorporated herein by reference).
10.20 -- Change in Control Agreement dated January 17, 1995,
by and between the Registrant and Mark A. Solls (filed
as an exhibit to the Registrant's Annual Report on Form 10-K
for the year ended December 31, 1994, and incorporated
herein by reference).
10.21 -- Asset Purchase Agreement dated May 24, 1995,
regarding the acquisition of substantially all of
the paging assets of Americom Paging Corporation,
by and among the Registrant, Gregory W. Hadley, Mo
Shebaclo and American 900 Paging, Inc. dba Americom
Paging Corporation (filed as an exhibit to the
Registrant's Current Report on Form 8-K, dated July 7, 1995,
and incorporated herein by reference).
10.22 -- Amended and Restated Credit Agreement dated
February 9, 1995, by and among the Registrant, The
First National Bank of Chicago, as Agent, and the
Lenders party thereto (filed as an exhibit to the
Registrant's Annual Report on Form 10-K for the year
ended December 31, 1994, and incorporated herein by
reference).
10.23 -- Waiver, Consent and Amendment No. 1 dated as of
June 12, 1995 by and among the Registrant, The First
National Bank of Chicago, as Agent, and the Lenders
party thereto.
II-3
<PAGE>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
- ------ -----------------------
10.24 -- Letter of Agreement dated March 31, 1995, regarding
the acquisition of substantially all of the common
stock of Lewis Paging Inc., by and among the
Registrant and Terry W. Lewis (filed as an exhibit to
the Registrant's Quarterly Report on Form 10-Q for the
fiscal quarter ended March 31, 1995, and incorporated
herein by reference).
10.25 -- Letter of Agreement dated March 31, 1995, regarding
the acquisition of substantially all of the common
stock of Page East Inc., by and among the Registrant
and C.T. Spruill (filed as an exhibit to the
Registrant's Current Report on Form 8-K, dated
July 5, 1995, and incorporated herein by reference).
10.26 -- Office Lease Agreement by and between the Registrant
and Carter-Crowley Properties, Inc., as Landlord
(filed as an exhibit to the Registrant's Current Report
on Form 8-K, dated July 5, 1995, and incorporated herein
by reference).
22 -- Subsidiaries of the Registrant (filed as an exhibit to
the Registrant's Annual Report on Form 10-K for the
year ended December 31, 1994, and incorporated
herein by reference).
23.1 -- Consent of Vinson & Elkins L.L.P. (set forth in
Exhibit 5.1).
23.2 -- Consent of Ernst & Young LLP, Independent Auditors.
23.3 -- Consent of Hiltzik, Schneider, Ehrlich & Wengrover,
Independent Public Accountants.
23.4 -- Consent of Cummings & Carroll, P.C., Independent
Public Accountants.
23.5 -- Consent of Natarelli & Associates, Independent
Public Accountants.
23.6 -- Consent of Winter, Kloman, Moler & Repp, S.P.,
Independent Public Accountants.
23.7 -- Consent of Greer & Walker, L.L.P., Independent
Public Accountants.
23.8 -- Consent of Arthur Andersen LLP, Independent Public
Accountants.
23.9 -- Consent of KPMG Peat Marwick LLP, Independent
Public Accountants.
24.1 -- Powers of Attorney (set forth on signature page).
25.1 -- Form T-1 of First Interstate Bank of Texas, N.A.
99.1 -- Form of Letter of Transmittal.
99.2 -- Form of Notice of Guaranteed Delivery.
II-4
<PAGE>
ITEM 22. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(1) to file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement:
(i) to include any prospectus required by section 10(a)(3) of the
Securities Act of 1933 (the "Securities Act");
(ii) to reflect in the prospectus any facts or events arising after the
effective date of this Registration Statement (or the most recent
post-effective amendment hereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in this
Registration Statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Securities and
Exchange Commission pursuant to rule 424(b) if, in the aggregate, the changes
in volume and price represent no more than a 20% change in the maximum
aggregate offering price set forth in the "Calculation of Registration Fee"
table in this Registration Statement when it becomes effective;
(iii) to include any material information with respect to the plan of
distribution not previously disclosed in this Registration Statement or any
material change to such information in this Registration Statement;
PROVIDED, HOWEVER, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply
if this Registration Statement is on Form S-3 or Form S-8, and the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Registrant pursuant
to section 13 or section 15(d) of the Securities Exchange Act of 1934 (the
"Exchange Act") that are incorporated by reference in this Registration
Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination
of the offering.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to section 13(a) or section 15(d) of the
Exchange Act that is incorporated by reference in this Registration Statement
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
II-5
<PAGE>
The undersigned Registrant hereby undertakes to deliver or cause to be
delivered with the prospectus, to each person to whom the prospectus is sent
or given, the latest annual report to security holders that is incorporated
by reference in the prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 and Rule 14c-3 under the Exchange Act; and, where
interim financial information required to be presented by Article 3 of
Regulation S-X is not set forth in the prospectus, to deliver, or cause to be
delivered to each person to whom the prospectus is sent or given, the latest
quarterly report that is specifically incorporated by reference in the
prospectus to provide such interim financial information.
The undersigned Registrant hereby undertakes to file an application for
the purpose of determining the eligibility of the trustee to act under
subsection (a) of Section 310 of the Trust Indenture Act in accordance with
the rules and regulations prescribed by the Commission under Section
305(b)(2) of the Trust Indenture Act.
The undersigned Registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11 or 13 of this Form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of this Registration Statement through
the date of responding to the request.
The undersigned Registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in this Registration Statement when it became effective.
II-6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the Registrant has duly caused this Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized in the City of
Plano, State of Texas, on July 6, 1995.
PRONET INC.
By: /s/ Jan E. Gaulding
__________________________
Jan E. Gaulding
Senior Vice President and
Chief Financial Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Jan E. Gaulding and Mark A. Solls, or either
of them, his true and lawful attorney-in-fact and agent, with full power of
substitution, for him and his name, place and stead, in any and all
capacities, to sign any and all amendments (including post-effective
amendments) to this Registration Statement, and to file the same with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agent full power and authority to do and perform each and every act and thing
requisite and ratifying and confirming all that said attorney-in-fact and
agent or his substitute or substitutes may lawfully do or cause to be done by
virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities indicated on the dates indicated.
SIGNATURE TITLE DATE
/s/ Jackie R. Kimzey
_______________________ Chairman, Chief Executive Officer July 6, 1995
Jackie R. Kimzey and Director
(Principal Executive Officer)
/s/ David J. Vucina
_______________________ President, Chief Operating July 6, 1995
David J. Vucina Officer and Director
/s/ Jan E. Gaulding
_______________________ Senior Vice President, Treasurer July 6, 1995
Jan E. Gaulding and Chief Financial Officer
(Principal Financial and
Accounting Officer)
/s/ Thomas V. Bruns
_______________________ Director July 6, 1995
Thomas V. Bruns
/s/ Harvey B. Cash
_______________________ Director July 6, 1995
Harvey B. Cash
/s/ Edward E. Jungerman
_______________________ Director July 6, 1995
Edward E. Jungerman
/s/ Mark C. Masur
_______________________ Director July 6, 1995
Mark C. Masur
II-7
<PAGE>
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
- ------ -----------------------
3.1 -- Restated Certificate of Incorporation dated July 31, 1987.
3.2 -- Certificate of Designation of Series A Junior
Participating Preferred Stock dated April 11, 1995
(filed as part of the Registrant's Registration
Statement on Form 8-A dated April 7, 1995, and
incorporated herein by reference).
3.3 -- Certificate of Amendment to Restated Certificate of
Incorporation dated June 12, 1995 (filed as an
exhibit to the Registrant's Current Report on Form
8-K, dated July 5, 1995, and incorporated herein by
reference).
3.4 -- Bylaws of the Registrant, as amended (filed as an
exhibit to the Registrant's Annual Report on Form 10-K
for the year ended December 31, 1990, and
incorporated herein by reference).
4.1 -- Indenture, dated as of June 15, 1995, between the
Registrant and First Interstate Bank of Texas, N.A.,
as Trustee (filed as an exhibit to the Registrant's
Current Report on Form 8-K, dated July 5, 1995,
and incorporated herein by reference).
4.2 -- Registration Rights Agreement, dated as of June 15,
1995, between the Registrant, Lehman Brothers, Inc.,
Alex. Brown & Sons Incorporated and PaineWebber
Incorporated.
4.3 -- Rights Agreement, dated as of April 5, 1995,
between the Registrant and Chemical Shareholder
Services Group, Inc., as Rights Agent, specifying
the terms of the rights to purchase the Registrant's
Series A Junior Participating Preferred Stock, and
the exhibits thereto (filed as an exhibit to the
Registrant's Registration Statement on Form 8-A dated
April 7, 1995, and incorporated herein by
reference).
5.1 -- Opinion of Vinson & Elkins L.L.P.
10.1 -- Agreement dated June 15, 1988, between the Registrant
and Texas Instruments Incorporated for the
acquisition of assets including the use of patents,
technology and software related to ProNet Tracking
Systems (filed as an exhibit to the Registrant's
Current Report on Form 8-K, dated July 21, 1988,
and incorporated herein by reference).
10.2 -- Office/Showroom/Warehouse Lease Agreement dated
January 2, 1990, between the Registrant and Dal-Mac
Westridge I, Ltd., as amended (filed as an exhibit
to the Registrant's Annual Report on Form 10-K for the
year ended December 31, 1990, and incorporated
herein by reference).
10.3 -- Stock Purchase Agreement dated September 24, 1993,
by and between the Registrant and Contact
Communications, Inc. (filed as an exhibit to the
Registrant's Current Report on Form 8-K, dated March
1, 1994, and incorporated herein by reference).
10.4 -- Amendment Letter No. One to Stock Purchase
Agreement dated October 20, 1993, by and between
the Registrant and Contact Communications, Inc. (filed
as an exhibit to the Registrant's Current Report on
Form 8-K, dated March 1, 1994, and incorporated
herein by reference).
10.5 -- Amendment Letter No. Two to Stock Purchase
Agreement dated January 4, 1994, by and between the
Registrant and Contact Communications, Inc. (filed as
an exhibit to the Registrant's Current Report on Form
8-K, dated March 1, 1994, and incorporated herein
by reference).
10.6 -- Amendment Letter No. Three to Stock Purchase
Agreement dated March 1, 1994, by and between the
Registrant and Contact Communications, Inc. (filed as
an exhibit to the Registrant's Current Report on Form
8-K, dated March 1, 1994, and incorporated herein
by reference).
10.7 -- Asset Purchase Agreement dated March 22, 1994, by
and among the Registrant, Radio Call Company, Inc., a
New York corporation, MRN Communications, Inc., a
New York corporation, Radio Call Co. of N.J., Inc.,
a New Jersey corporation and Marvin R. Neuwirth
(filed as an exhibit to the Registrant's Current
Report on Form 8-K, dated August 5, 1994, and
incorporated herein by reference).
<PAGE>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
- ------ -----------------------
10.8 -- Asset Purchase Agreement dated May 5, 1994, by and
among the Registrant, Chicago Communication Service,
Inc., an Illinois corporation, Gerald C. Bear,
Gerald C. Bear, Trustee of the Lewis Bear Trust,
Leo Magiera and Gerald Manikowski (filed as an
exhibit to the Registrant's Current Report on Form
8-K, dated August 5, 1994, and incorporated herein by
reference).
10.9 -- Asset Purchase Agreement dated June 30, 1994, by
and among the Registrant, All City Communication
Company, Inc., Robert J. von Bereghy, Maurice S.
Meyers, Martin T. Franke, Virginia Franke, Personal
Representative of the estate of Martin K. Franke
and Cove Communications of Wisconsin, Inc. (filed
as an exhibit to the Registrant's Quarterly Report on
Form 10-Q for the fiscal quarter ended June 30,
1994, and incorporated herein by reference).
10.10 -- Amendment Agreement dated July 29, 1994, by and
among the Registrant, Radio Call Company, Inc., a New
York corporation, MRN Communications, Inc., a New
York corporation, Radio Call Co. of N.J., Inc., a
New Jersey corporation and Marvin R. Neuwirth
(filed as an exhibit to the Registrant's Current
Report on Form 8-K, dated August 5, 1994, and
incorporated herein by reference).
10.11 -- Amendment Agreement dated August 1, 1994, by and
among the Registrant, All City Communication Company,
Inc., Robert J. von Bereghy, Maurice S. Meyers,
Martin T. Franke, Virginia Franke, Personal
Representative of the estate of Martin K. Franke
and Cove Communications of Wisconsin, Inc. (filed
as an exhibit to the Registrant's Quarterly Report on
Form 10-Q for the fiscal quarter ended June 30,
1994, and incorporated herein by reference).
10.12 -- Stock Purchase Agreement dated April 20, 1994,
regarding the acquisition of the outstanding
capital stock of Metropolitan Houston Paging
Services, Inc., ("Metro Houston") by and among
Contact Communications Inc., Metro Houston and the
shareholders of Metro Houston (filed as an exhibit
to the Registrant's Quarterly Report on Form 10-Q for the
fiscal quarter ended March 31, 1995, and incorporated
herein by reference).
10.13 -- Form of PS-58 Split Dollar Agreement between the
Registrant and each of its executive officers (filed
as an exhibit to the Registrant's Registration
Statement on Form S-2 (File No. 33-85696) filed
with the Commission on October 28, 1994, and
incorporated herein by reference).
10.14 -- Asset Purchase Agreement dated November 30, 1994,
among Signet Paging of Charlotte, Inc., Eileen L.
Knight, John R. Knight, Sr., John R. Knight, Jr.
and Contact Communications Inc. (filed as an
exhibit to Amendment No. 2 to the Registrant's
Registration Statement on Form S-2 (File No. 33-
85696) filed with the Commission on December 14,
1994, and incorporated herein by reference).
10.15 -- Employment Agreement dated May 18, 1994, by and
between the Registrant and Jackie R. Kimzey (filed as
an exhibit to the Registrant's Quarterly Report on
Form 10-Q for the fiscal quarter ended June 30,
1994, and incorporated herein by reference).
10.16 -- Employment Agreement dated May 18, 1994, by and
between the Registrant and David J. Vucina (filed as
an exhibit to the Registrant's Quarterly Report on
Form 10-Q for the fiscal quarter ended June 30,
1994, and incorporated herein by reference).
10.17 -- Change in Control Agreement dated May 18, 1994, by
and between the Registrant and Bo Bernard (filed as an
exhibit to the Registrant's Quarterly Report on Form
10-Q for the fiscal quarter ended June 30, 1994,
and incorporated herein by reference).
10.18 -- Change in Control Agreement dated May 18, 1994, by
and between the Registrant and Jan E. Gaulding (filed
as an exhibit to the Registrant's Quarterly Report on
Form 10-Q for the fiscal quarter ended June 30,
1994, and incorporated herein by reference).
10.19 -- Change in Control Agreement dated May 18, 1994, by
and between the Registrant and Jeffery Owens (filed as
an exhibit to the Registrant's Quarterly Report on
Form 10-Q for the fiscal quarter ended June 30,
1994, and incorporated herein by reference).
<PAGE>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
- ------ -----------------------
10.20 -- Change in Control Agreement dated January 17, 1995,
by and between the Registrant and Mark A. Solls (filed
as an exhibit to the Registrant's Annual Report on Form 10-K
for the year ended December 31, 1994, and incorporated
herein by reference).
10.21 -- Asset Purchase Agreement dated May 24, 1995,
regarding the acquisition of substantially all of
the paging assets of Americom Paging Corporation,
by and among the Registrant, Gregory W. Hadley, Mo
Shebaclo and American 900 Paging, Inc. dba Americom
Paging Corporation (filed as an exhibit to the
Registrant's Current Report on Form 8-K, dated
July 7, 1995, and incorporated herein by reference).
10.22 -- Amended and Restated Credit Agreement dated
February 9, 1995, by and among the Registrant, The
First National Bank of Chicago, as Agent, and the
Lenders party thereto (filed as an exhibit to the
Registrant's Annual Report on Form 10-K for the year
ended December 31, 1994, and incorporated herein by
reference).
10.23 -- Waiver, Consent and Amendment No. 1 dated as of
June 12, 1995 by and among the Registrant, The First
National Bank of Chicago, as Agent, and the Lenders
party thereto.
10.24 -- Letter of Agreement dated March 31, 1995, regarding
the acquisition of substantially all of the common
stock of Lewis Paging Inc., by and among the
Registrant and Terry W. Lewis (filed as an exhibit to
the Registrant's Quarterly Report on Form 10-Q for the
fiscal quarter ended March 31, 1995, and incorporated
herein by reference).
10.25 -- Letter of Agreement dated March 31, 1995, regarding
the acquisition of substantially all of the common
stock of Page East Inc., by and among the Registrant
and C.T. Spruill (filed as an exhibit to the
Registrant's Current Report on Form 8-K, dated
July 5, 1995, and incorporated herein by reference).
10.26 -- Office Lease Agreement by and between the Registrant
and Carter-Crowley Properties, Inc., as Landlord
(filed as an exhibit to the Registrant's Current Report
on Form 8-K, dated July 5, 1995, and incorporated
herein by reference).
22 -- Subsidiaries of the Registrant (filed as an exhibit to
the Registrant's Annual Report on Form 10-K for the
year ended December 31, 1994, and incorporated
herein by reference).
23.1 -- Consent of Vinson & Elkins L.L.P. (set forth in
Exhibit 5.1).
23.2 -- Consent of Ernst & Young LLP, Independent Auditors.
23.3 -- Consent of Hiltzik, Schneider, Ehrlich & Wengrover,
Independent Public Accountants.
23.4 -- Consent of Cummings & Carroll, P.C., Independent
Public Accountants.
23.5 -- Consent of Natarelli & Associates, Independent
Public Accountants.
23.6 -- Consent of Winter, Kloman, Moler & Repp, S.P.,
Independent Public Accountants.
23.7 -- Consent of Greer & Walker, L.L.P., Independent
Public Accountants.
23.8 -- Consent of Arthur Andersen LLP, Independent Public
Accountants.
23.9 -- Consent of KPMG Peat Marwick LLP, Independent
Public Accountants.
24.1 -- Powers of Attorney (set forth on signature page).
25.1 -- Form T-1 of First Interstate Bank of Texas, N.A.
99.1 -- Form of Letter of Transmittal.
99.2 -- Form of Notice of Guaranteed Delivery.
<PAGE>
EXHIBIT 3.1
<PAGE>
RESTATED CERTIFICATE OF INCORPORATION
OF
PRONET, INC.
1. The name of the corporation is PRONET INC. The corporation's original
certificate of incorporation was filed with the Secretary of State of the State
of Delaware on April 29, 1982.
2. This Restated Certificate of Incorporation restates and integrates and
further amends the corporation's Certificate of Incorporation.
3. The Restated Certificate of Incorporation was duly adopted by the
directors and stockholders of the corporation in accordance with Sections 228,
242 and 245 of the General Corporation Law of the State of Delaware.
4. The Certificate of Incorporation as amended is restated as follows:
FIRST:
The name of the Corporation is ProNet Inc.
SECOND:
The address of its registered office in the State of Delaware is
Corporation Trust Center, 1209 Orange Street in the City of Wilmington,
County of New Castle. The name of its registered agent at such address is
The Corporation Trust Company.
THIRD:
The nature of the business or purposes to be conducted or promoted is
to engage in any lawful act or activity for which corporations may be
organized under the General Corporation Law of Delaware.
<PAGE>
FOURTH:
A. Authorized Shares and Classes of Stock:
The total number of shares of stock that the Corporation shall have
authority to issue is 11,000,000 shares, which shall be divided into two
(2) classes as follows: 10,000,000 shares of Common Stock, par value $0.01
per share (the "Common Stock"), and 1,000,000 shares of Preferred Stock,
par value $1.00 per share (the "Preferred Stock").
B. Preferred Stock:
The Board of Directors of the Corporation is hereby expressly vested
with authority to issue one million (1,000,000) shares of Preferred Stock,
from time to time in series, with such series designation, number of shares
in the series, and such powers, preferences, and rights, and
qualifications, limitations, or restrictions thereof that are not fixed by
this Certificate of Incorporation and as may be fixed and determined by
resolution or resolutions of the Board of Directors. Shares of any series
of the Preferred Stock, upon issuance, may be redeemable if entitled to a
preference upon any distribution of the Corporation's assets, whether by
dividend or by liquidation, over another class of stock or series of
Preferred Stock of the Corporation. The Board of Directors in establishing
a series of Preferred Stock is hereby authorized to fix and determine:
-2-
<PAGE>
(1) The annual rate of dividend and, if cumulative, the date from
which such dividends would accumulate;
(2) The price at which and the terms and conditions upon which shares
may be redeemed;
(3) The amount payable on shares in the event of involuntary
liquidation;
(4) The amount payable on shares in the event of voluntary
liquidation;
(5) Sinking fund provisions for the redemption or purchase of shares;
(6) The terms and conditions upon which shares may be converted, if
the shares of any series are issued with the privilege of conversion;
(7) Voting rights; and,
(8) The restrictions, if any, on the transfer of the shares of any
series.
Shares of Preferred Stock that have been redeemed or converted, or
that have been issued and reacquired in any manner and retired, shall have
the status of authorized and unissued Preferred Stock and may be reissued
by the Board of Directors as shares of the same or any other series, unless
otherwise provided with respect to any series in the resolution or
resolutions of the Board of Directors creating such series.
-3-
<PAGE>
FIFTH:
The Board of Directors is authorized to make, alter or repeal the
bylaws of the Corporation. Election of directors need not be by ballot.
SIXTH:
Liability of Directors and Indemnification
A. Director Liability:
To the fullest extent permitted by the Delaware General Corporation
Law as the same exists or as may hereafter be amended, a director of the
Corporation shall not be personally liable to the Corporation or its
stockholders for monetary damages for breach of fiduciary duty as a
director. Neither any amendment nor repeal of this Article Sixth, nor the
adoption of any provision of this certificate of incorporation inconsistent
with this Article Sixth, shall eliminate or reduce the effect of this
Article Sixth in respect of any matter occurring, or any cause of action,
suit or claim that, but for this Article Sixth, would accrue or arise,
prior to such amendment, repeal or adoption of an inconsistent provision.
B. Indemnification:
(1) The Corporation shall indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending, or
completed action, suit or proceeding, whether civil, criminal,
administrative, or investigative (other than an action
-4-
<PAGE>
by or in the right of the Corporation) by reason of the fact that he is or
was a director, officer, employee, or agent of the Corporation, or is or
was serving at the request of the Corporation as a director, officer,
employee, or agent of another corporation, partnership, joint venture,
trust, or other enterprise, against expenses (including attorneys' fees),
judgments, fines, and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit, or proceeding if he
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful. The termination of any action, suit, or proceeding by
judgment, order, settlement, conviction, or upon a plea of NOLO CONTENDERE
or its equivalent, shall not, of itself, create a presumption that the
person did not act in good faith and in a manner which he reasonably
believed to be in or not opposed to the best interest of the Corporation,
and, with respect to any criminal action or proceeding, had reasonable
cause to believe that his conduct was unlawful.
(2) The Corporation shall indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending, or
completed action or suit by or in the right of the Corporation to procure a
judgment in its favor by reason of the fact that he is or was a
-5-
<PAGE>
director, officer, employee, or agent of the Corporation, or is or was
serving at the request of the Corporation as a director, officer, employee,
or agent of another corporation, partnership, joint venture, trust, or
other enterprise against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection wit the defense or settlement of
such action or suit if he acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the Corporation
and except that no indemnification shall be made in respect of any claim,
issue, or matter as to which such person shall have been adjudged to be
liable to the Corporation unless and only to the extent that the Delaware
Court of Chancery or the court in which such action or suit was brought
shall determine upon application that, despite the adjudication of
liability but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses that the
Court of Chancery or such other court shall deem proper.
(3) To the extent that a director, officer, employee, or agent
of the Corporation has been successful on the merits or otherwise in
defense of any action, suit, or proceeding referred to in subparagraphs (1)
and (2) of this Article, or in defense of any claim, issue, or matter
therein, he shall be indemnified
-6-
<PAGE>
against expenses (including attorneys' fees) actually and reasonably
incurred by him in connection therewith.
(4) Any indemnification under subparagraphs (1) and (2) of this
Article (unless ordered by a court) shall be made by the Corporation only
as authorized in the specific case upon a determination that
indemnification of the director, officer, employee, or agent is proper in
the circumstances because he has met the applicable standard of conduct set
forth in such subparagraphs (1) and (2). Such determination shall be made
(a) by the Board of Directors by a majority vote of a quorum consisting of
directors who were not parties to such action, suit, or proceeding, or (b)
if such a quorum is not obtainable, or even if obtainable, if a quorum of
disinterested directors so directs, by independent legal counsel in a
written opinion, or (c) by the stockholders. Notwithstanding the
foregoing, a director, officer, employee, or agent of the Corporation shall
be able to contest any determination that the director, officer, employee,
or agent has not met the applicable standard of conduct set forth in
subparagraphs (1) and (2) of this Article by petitioning a court of
appropriate jurisdiction.
(5) Expenses incurred in defending or settling a civil or
criminal action, suit or proceeding by an individual who may be entitled to
indemnification pursuant to subparagraphs (1) and (2) of this Article
-7-
<PAGE>
shall be paid by the Corporation in advance of the final disposition of
such action, suit, or proceeding as authorized by the Board of Directors
upon receipt of an undertaking by or on behalf of the director officer,
employee, or agent to repay such amount if it shall ultimately be
determined that he is not entitled to be indemnified by the Corporation as
authorized in this Article.
(6) The indemnification and advancement of expenses provided by,
or granted pursuant to, the other subparagraphs of this Article shall not
be deemed exclusive of any other rights to which those seeking
indemnification or advancement of expenses may be entitled under any
by-law, agreement, vote of stockholders or disinterested directors, or
otherwise, both as to action in his official capacity and as to action in
another capacity while holding such office.
(7) The Corporation shall have the power to purchase and
maintain insurance on behalf of any person who is or was a director,
officer, employee, or agent of the Corporation, or is or was serving at the
request of the Corporation as a director, officer, employee, or agent of
another corporation, partnership, joint venture, trust, or other enterprise
against any liability asserted against him and incurred by him in any such
capacity, or arising out of his status as such, whether or not the
Corporation would have the power to
-8-
<PAGE>
indemnify him against such liability under the provisions of this Article.
(8) For purposes of this Article, references to "the
Corporation" shall include, in addition to the resulting corporation, any
constituent corporation (including any constituent of a constituent)
absorbed in a consolidation or merger, that, if its separate existence had
continued, would have had power and authority to indemnify its directors,
officers, and employees or agents, so that any person who is or was a
director, officer, employee, or agent of such constituent corporation, or
who is or was serving at the request of such constituent corporation as a
director, officer, employee, or agent of another corporation, partnership,
joint venture, trust, or other enterprise, shall stand in the same position
under the provisions of this Article with respect to the resulting or
surviving corporation as he would have with respect to such constituent
corporation if its separate existence had continued.
(9) For purposes of this Article, references to "other
enterprises" shall include employee benefit plans; references to "fines"
shall include any excise taxes assessed on a person with respect to an
employee benefit plan; and references to "serving at the request of the
Corporation" shall include any service as a director, officer, employee, or
agent of the Corporation
-9-
<PAGE>
that imposes duties on, or involves services by, such director, officer,
employee, or agent with respect to an employee benefit plan, its
participants, or beneficiaries; and a person who acted in good faith and in
a manner he reasonably believed to be in the interest of the participants
and beneficiaries of an employee benefit plan shall be deemed to have acted
in a manner "not opposed to the best interests of the Corporation" as
referred to in this Article.
(10) The indemnification and advancement of expenses provided by,
or granted pursuant to, this Article shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a
director, officer, employee, or agent and shall inure to the benefit of the
heirs, executors, and administrators of such a person.
IN WITNESS WHEREOF, PRONET INC. has caused this Restated Certificate of
Incorporation to be signed by its President and attested by its Secretary this
31st day of July, 1987.
PRONET INC.
By: /S/ JACKIE R. KIMZEY
----------------------------------
Jackie R. Kimzey, President
ATTEST:
/S/ JAN E. CLINGER
- ------------------------------------
Jan E. Clinger, Secretary
-10-
<PAGE>
STATE OF TEXAS Section
Section
COUNTY OF DALLAS Section
Before me, a notary public, on this day personally appeared Jackie R.
Kimzey, known to me to be the person whose name is subscribed to the foregoing
document and, being by me first duly sworn, acknowledged that the foregoing
instrument is the act and deed of PRONET INC., a Delaware corporation and that
the facts stated therein are true.
Given under my hand this 31st day of July, 1987.
[SEAL] /S/ SHIRLEY ANN ROBINSON
---------------------------------
Notary Public in and for
The State of Texas
My commission expires:
6/17/89
-11-
<PAGE>
EXHIBIT 4.2
<PAGE>
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made and
entered into as of June 15, 1995, among ProNet Inc., a Delaware corporation
("ProNet") and Lehman Brothers Inc., Alex. Brown & Sons Incorporated and
PaineWebber Incorporated (the "Initial Purchasers").
This Agreement is made pursuant to the Purchase Agreement, dated
June 12, 1995, among ProNet and the Initial Purchasers (the "Purchase
Agreement"), which provides for the sale by ProNet to the Initial Purchasers of
$100,000,000 aggregate principal amount of ProNet's 11 7/8% Senior Subordinated
Notes due 2005 (the "Securities") to be issued pursuant to the provisions of an
Indenture dated as of June 15, 1995 (the "Indenture") among ProNet and First
Interstate Bank of Texas, N.A., as trustee. In order to induce the Initial
Purchasers to enter into the Purchase Agreement, ProNet has agreed to provide to
the Initial Purchasers and its direct and indirect transferees, among other
things, the registration rights for the Securities set forth in this Agreement.
The execution of this Agreement is a condition to the closing under the Purchase
Agreement.
The parties hereby agree as follows:
1. EXCHANGE OFFER
(a) If permitted either by current laws, regulations or
interpretations of the staff of the Securities and Exchange Commission (the
"Commission"), ProNet agrees to use its reasonable best efforts to file with the
Commission as soon as practicable, but in no event later than the 30th day after
the date (the "Issue Date") on which the original Securities were first
authenticated under the Indenture (the "Filing Date"), the Exchange Offer
Registration Statement (as defined below) in connection with an offer to
exchange (the "Exchange Offer") any and all of the Registrable Securities (as
defined below) for a like aggregate principal amount of debt securities of
ProNet, which are substantially identical to the Securities and which are
entitled to the benefits of the indenture or a trust indenture which is
identical to the Indenture (other than such changes as are necessary to comply
with any requirements of the Commission to effect or maintain the qualification
thereof under The Trust Indenture Act of 1939, as amended (the "Trust Indenture
Act")) (the "Exchange Securities"). The Exchange Securities shall not bear any
restrictions on transfer. As used herein (i) the term "Registrable Securities"
means the Securities and, if any, the Private Exchange Securities (as defined
below), until in each case, (A) the Exchange Offer has been consummated with
respect to such securities, (B) a Shelf Registration Statement (as defined
below) covering such securities has been declared effective by
<PAGE>
2
the Commission and such securities have been disposed of in accordance with such
effective Registration Statement, (C) such securities are sold in compliance
with Rule 144 or (D) such securities cease to be outstanding; and (ii) the term
"Registration Statement" means any registration statement filed by ProNet with
the Commission under the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder (the "Securities Act") that covers any of the
Registrable Securities pursuant to the provisions of this Agreement, including
the Prospectus (as defined below), amendments and supplements thereto, all
exhibits, and all material incorporated by reference or deemed to be
incorporated by reference in such registration statement.
The Exchange Securities will be registered under the Securities Act on
the appropriate form of a registration statement (the "Exchange Offer
Registration Statement") and the Exchange Offer will comply with all applicable
tender offer rules and regulations under the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission promulgated thereunder
(the "Exchange Act"). ProNet agrees to use its reasonable best efforts to
(i) cause the Exchange Offer Registration Statement to become effective under
the Securities Act on or before the 105th day after the Issue Date (the
"Effectiveness Date"); (ii) keep the Exchange Offer open for at least 30 days
(or longer if required by applicable law) after the date that notice of the
Exchange Offer is mailed to any holders of Registrable Securities (the
"Holders"); and (iii) consummate the Exchange Offer on or prior to the 30th day
following the date on which the Exchange Offer Registration Statement is
declared effective. Each Holder who participates in the Exchange Offer will be
required to represent in writing to the Company that any Exchange Securities
received by it will be acquired in the ordinary course of its business, that at
the time of the consummation of the Exchange Offer such Holder will have no
arrangement or understanding with any person to participate in the distribution
of the Exchange Securities, and that such Holder is not an affiliate of ProNet
within the meaning of the Securities Act. Upon consummation of the Exchange
Offer in accordance with this Section 1, the provisions of this Agreement shall
continue to apply, MUTATIS MUTANDIS, solely with respect to Registrable
Securities that are Private Exchange Securities and Exchange Securities held by
Participating Broker-Dealers (as defined below), and ProNet shall have no
further obligation to register Registrable Securities (other than Private
Exchange Securities) pursuant to Section 2 of this Agreement.
(b) ProNet shall include within the Prospectus contained in the
Exchange Offer Registration Statement a section entitled "Plan of Distribution,"
reasonably acceptable to the Initial Purchasers, which shall contain a summary
statement of the positions taken or policies made by the staff of the Commission
with respect to the potential "underwriter" status of any broker-dealer that is
the beneficial owner (as defined in
<PAGE>
3
Rule 13d-3 under the Exchange Act) of Exchange Securities received by such
broker-dealer in the Exchange Offer (a "Participating Broker-Dealer"). Such
"Plan of Distribution" section shall also allow the use of such Prospectus by
all persons subject to the prospectus delivery requirements of the Securities
Act, including all Participating Broker-Dealers, and include a statement
describing the means by which Participating Broker-Dealers may resell the
Exchange Securities. As used herein the term "Prospectus" means, with respect
to any Registration Statement, the prospectus included in such Registration
Statement (including, without limitation, any prospectus subject to completion
and a prospectus filed with the Commission pursuant to Rule 424(b) under the
Securities Act), as amended or supplemented. Reference made herein to any
preliminary Prospectus or Prospectus shall be deemed to refer to and include any
documents incorporated by reference therein.
(c) ProNet shall use its reasonable best efforts to keep the Exchange
Offer Registration Statement effective and to amend and supplement the
Prospectus contained therein in accordance with the terms of this Agreement, in
order to permit such Prospectus to be lawfully delivered by all persons subject
to the prospectus delivery requirements of the Securities Act for such period of
time as such persons must comply with such requirements in order to resell the
Exchange Securities.
(d) If, prior to consummation of the Exchange Offer, any Initial
Purchaser holds any Securities acquired by it and having the status as an unsold
allotment in the initial distribution, ProNet upon the request of such Initial
Purchaser shall, simultaneously with the delivery of the Exchange Securities in
the Exchange Offer, issue and deliver to such Initial Purchaser, in exchange
(the "Private Exchange") for the Securities held by such Initial Purchaser, a
like principal amount of debt securities of ProNet, that are identical to the
Exchange Securities (the "Private Exchange Securities"). The Private Exchange
Securities shall bear the same CUSIP number as the Exchange Securities.
(e) Interest on the Exchange Securities and Private Exchange
Securities will accrue from the last interest payment date on which interest was
paid on the Securities surrendered in exchange therefor or, if no interest has
been paid on the Securities, from the date of original issue.
(f) In connection with the Exchange Offer, ProNet shall:
(i) mail to each Holder a copy of the Prospectus included in the
Exchange Offer Registration Statement, together with an appropriate letter
of transmittal and related documents;
<PAGE>
4
(ii) utilize the services of a depositary for the Exchange Offer with
an address in the Borough of Manhattan, The City of New York; and
(iii) permit Holders to withdraw tendered Securities at any time prior
to the close of business, New York time, on the last business day on which
the Exchange Offer shall remain open.
(g) As soon as practicable after the close of the Exchange Offer or
the Private Exchange, as the case may be, ProNet shall:
(i) accept for exchange all Securities tendered and not validly
withdrawn;
(ii) deliver to the trustee under the Indenture for cancellation all
Securities so accepted for exchange; and
(iii) issue and cause the trustee under the Indenture and, if any, the
trustee under any indenture governing the Exchange Securities and Private
Exchange Securities (the "Trustee") to authenticate and deliver promptly to
each Holder, Exchange Securities or Private Exchange Securities, as the
case may be, equal in principal amount to the Securities of such Holder so
accepted for exchange.
(h) If (i) prior to the consummation of the Exchange Offer, ProNet or
Holders of at least a majority in aggregate principal amount of the Registrable
Securities reasonably determine in good faith that (A) the Exchange Securities
would not, upon receipt, be tradeable by such Holders which are not affiliates
of ProNet without restriction under the Securities Act and without restrictions
under applicable blue sky or state securities laws or (B) after conferring with
counsel, the Commission is unlikely to permit the consummation of the Exchange
Offer prior to the Effectiveness Date or any change in law prohibits such
consummation, (ii) subsequent to the consummation of the Private Exchange, any
Initial Purchaser receiving the Private Exchange Securities so requests or (iii)
the Exchange Offer is commenced but not consummated within 135 days following
the Issue Date for any reason, then ProNet shall promptly deliver to the Holders
and the Trustee written notice thereof (the "Shelf Notice") and shall file an
Initial Shelf Registration Statement pursuant to Section 2. Following the
delivery of a Shelf Notice to the Holders of Registrable Securities, ProNet
shall not have any further obligation to conduct the Exchange Offer or the
Private Exchange under this Section 1.
2. SHELF REGISTRATION STATEMENT
If a Shelf Notice is delivered as contemplated by
<PAGE>
5
Section 1(h), then:
(a) INITIAL SHELF REGISTRATION STATEMENT. ProNet shall use its
reasonable best efforts to file with the Commission a Shelf Registration
Statement (the "Initial Shelf Registration Statement") for an offering to
be made on a continuous basis pursuant to Rule 415 under the Securities
Act, as such Rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the Commission ("Rule 415"), covering all
of the Registrable Securities; PROVIDED, HOWEVER, that no holder of the
Registrable Securities (other than the Initial Purchasers) shall be
entitled to have Registrable Securities held by it covered by such Shelf
Registration Statement (as defined below) unless such Holder agrees in
writing to be bound by all of the provisions of this Agreement applicable
to such Holder. ProNet shall use its best efforts to file with the
Commission the Initial Shelf Registration Statement within 30 days after
the occurrence of an event which obligates ProNet to deliver a Shelf
Notice, which in the case of Section 1(h)(i) shall be deemed to be the
date of such change in law or interpretation (the "Exchange Offer
Determination Date"). The Initial Shelf Registration Statement shall be
on Form S-3 or another appropriate form permitting registration of such
Registrable Securities for resale by the Holders in the manner or manners
reasonably designated by them (including, without limitation, one or more
underwritten offerings). ProNet shall not permit any securities other
than the Registrable Securities to be included in the Initial Shelf
Registration Statement or any Subsequent Shelf Registration Statement.
ProNet shall use its best efforts, as described in Section 4(b), to cause
the Initial Shelf Registration Statement to be declared effective under the
Securities Act within 105 days after the Exchange Offer Determination Date
and to keep the Initial Shelf Registration Statement continuously effective
under the Securities Act for three years from the effective date thereof,
subject to extension pursuant to Section 2(b) (the "Effectiveness Period"),
or such shorter period ending when (i) all Registrable Securities covered
by the Initial Shelf Registration Statement have been sold in the manner
set forth and as contemplated in the Initial Shelf Registration Statement
or (ii) a Subsequent Shelf Registration Statement covering all of the
Registrable Securities has been declared effective under the Securities
Act.
(b) SUBSEQUENT SHELF REGISTRATION STATEMENTS. If the Initial Shelf
Registration Statement or any Subsequent Shelf Registration Statement
ceases to be effective for any reason at any time during the Effectiveness
Period (other than because of the sale of all of the Securities registered
thereunder), ProNet shall use its reasonable best efforts to obtain the
prompt withdrawal of any order suspending the effectiveness thereof, and in
any event shall within 45 days
<PAGE>
6
of such cessation of effectiveness amend the Shelf Registration Statement
in a manner reasonably expected to obtain the withdrawal of the order
suspending the effectiveness thereof, or file an additional Registration
Statement pursuant to Rule 415 covering all of the Registrable Securities
(such amended or additional Registration Statement, a "Subsequent Shelf
Registration Statement"). If a Subsequent Shelf Registration Statement is
filed, ProNet shall use its reasonable best efforts to cause the Subsequent
Shelf Registration Statement to be declared effective as soon as
practicable after such filing and to keep such Registration Statement
continuously effective for a period equal to the number of days in the
Effectiveness Period less the aggregate number of days during which the
Initial Shelf Registration Statement or any Subsequent Shelf Registration
Statement was previously continuously effective. As used herein the term
"Shelf Registration Statement" means the Initial Shelf Registration
Statement and any Subsequent Shelf Registration Statement.
3. ADDITIONAL INTEREST
(a) Additional interest (the "Additional Interest") shall be assessed
as follows:
(i) if the Exchange Offer Registration Statement or a Shelf
Registration Statement is not filed with the Commission within 30 days
following the Issue Date or the Exchange Offer Determination Date, as the
case may be, then commencing on the 31st day after the Issue Date or the
Exchange Offer Determination Date, as the case may be, Additional Interest
shall be accrued on the Securities over and above the stated interest at a
rate of 0.50% per annum for the first 90 days immediately following the
30th day after the Issue Date or the Exchange Offer Determination Date, as
the case may be, such Additional Interest rate increasing by an additional
0.25% per annum at the beginning of each subsequent 90-day period;
(ii) if an Exchange Offer Registration Statement or the Shelf
Registration Statement is filed within the time periods set forth in
Section 3(a)(i) above but is not declared effective by the Commission
within 105 days following the Issue Date or the Exchange Offer
Determination Date, as the case may be, then, commencing on the 106th day
after the Issue Date or the Exchange Offer Determination Date, as the case
may be, Additional Interest shall be accrued on the Securities over and
above the stated interest at a rate of 0.50% per annum for the first 90
days immediately following the 105th day after the Issue Date or the
Exchange Offer Determination Date, as the case may be, such Additional
Interest rate increasing by an additional 0.25% per annum at the beginning
of each subsequent 90-day period; and
<PAGE>
7
(iii) if (A) the Exchange Offer is not consummated in accordance with
the terms of the Exchange Offer within 30 days following the Effectiveness
Date, or (B) applicable, a Shelf Registration Statement has been declared
effective and such registration statement ceases to be effective or the
Prospectus which forms a part thereof cannot be used as a result of a
Suspension Event Notice (as defined below) for a period of more than 90
days prior to three years from its original effective date, then Additional
Interest shall be accrued on the Securities over and above the stated
interest at a rate of 0.50% per annum for the first 60 days immediately
following (x) the 30 days after such effective date of the Exchange Offer
Registration Statement, in the case of (A) above, or (y) the day such Shelf
Registration Statement ceases to be effective or a Suspension Event (as
defined below) has lasted for more than 90 days in the case of (B) above,
such Additional Interest rate increasing by an additional 0.25% per annum
at the beginning of each subsequent 60-day period;
PROVIDED, however, that the Additional Interest rate on the Securities may not
exceed 1.0% per annum at any time; and PROVIDED FURTHER, that (1) upon the
filing of the Exchange Offer Registration Statement or a Shelf Registration
Statement (in the case of Section 3 (a)(i) above), (2) upon the effectiveness
of the Exchange Offer Registration Statement or a Shelf Registration Statement
(in the case of 3(a)(ii) above) , (3) upon the consummation of the Exchange
Offer (in the case of Section 3(a)(iii) (A) above), or (4) upon the
effectiveness of the Shelf Registration Statement which had ceased to remain
effective prior to three years from its original effective date or the end of
the Suspension Event (in the case of Section 3 (a)(iii) (B) above), Additional
Interest on the Securities as a result of such Sections 3(a)(i) , 3(a)(ii)
or 3(a)(iii) shall immediately cease to accrue. Notwithstanding the foregoing
or any other term hereof, if any of the events described in Sections 3(a)(i),
3(a)(ii) or 3(a)(iii) occur with respect to any Shelf Registration Statement
that registers (1) Private Exchange Securities only or (2) Securities or
Exchange Securities held by the Initial Purchasers only, then no Additional
Interest shall be assessed on any of the Securities other than the Private
Exchange Securities or any Securities or Exchange Securities held by the Initial
Purchasers.
(b) Any amounts of Additional Interest due pursuant to Section
3(a)(i) , 3(a)(ii) , or 3(a)(iii) will be payable in cash on the same original
payment dates of the Securities. The amount of Additional Interest will be
determined by multiplying the applicable Additional Interest rate by the
principal amount of the Securities, multiplied by a fraction, the numerator of
which is the number of days such Additional Interest rate was applicable during
such period (determined on the basis of a 360-day year comprised of twelve 30-
day months), and the denominator of which is 360.
<PAGE>
8
(c) ProNet shall notify the Trustee within one business day after
each and every date on which an event occurs in respect of which Additional
Interest is required to be paid (an "Event Date"). Additional Interest shall be
paid by depositing with the Trustee, in trust, for the benefit of the Holders
thereof, on or before the applicable semi-annual interest payment date provided
in the Indenture (whether or not any interest other than Additional Interest is
payable on the Securities), immediately available funds in sums sufficient to
pay the Additional Interest then due to Holders of Securities with respect to
which the Trustee serves. The Additional Interest due shall be payable on each
interest payment date to the record Holders who would be entitled to receive the
interest payment to be made on such date as set forth in the Indenture. Each
obligation to pay Additional Interest shall be deemed to accrue from the
applicable Event Date.
4. REGISTRATION PROCEDURES
In connection with the registration of any Registrable Securities or
Private Exchange Securities pursuant to Section 1 or 2, ProNet shall effect such
registrations to permit the sale of such Registrable Securities or Private
Exchange Securities in accordance with the intended method or methods of
disposition thereof, and pursuant thereto ProNet shall:
(a) Prepare and file with the Commission, as soon as practicable
after the date hereof but in any event prior to the prescribed time period
herein, a Registration Statement or Registration Statements as prescribed by
Section l or 2, and to use its reasonable best efforts to cause each such
Registration Statement to become effective and remain effective as provided
herein, PROVIDED that, if (i) such filing is pursuant to Section 2, or (ii) a
Prospectus contained in an Exchange Offer Registration Statement is required to
be delivered under the Securities Act by any Participating Broker-Dealer who
seeks to sell Exchange Securities, before filing any Registration Statement or
Prospectus or any amendments or supplements thereto, ProNet shall, if requested,
furnish to and afford the selling Holders and any such Participating Broker-
Dealer covered by such Registration Statement, their counsel and the managing
underwriters, if any, a reasonable opportunity to review copies of all such
documents (including copies of any documents to be incorporated by reference
therein and all exhibits thereto) proposed to be filed (at least five business
days prior to such filing). ProNet shall not file any Registration Statement or
Prospectus or any amendments or supplements thereto in respect of which the
Holders must be afforded an opportunity to review prior to the filing of such
document, if the Holders of a majority in aggregate principal amount of the
Registrable Securities covered by such Registration Statement, or any such
Participating Broker-Dealer, their counsel, or the managing underwriters, if
any, shall reasonably object within five business days after receipt thereof.
<PAGE>
9
(b) Prepare and file with the Commission such amendments to each
Shelf Registration Statement or Exchange Offer Registration Statement as may be
necessary to keep such Registration Statement continuously effective for the
prescribed time period herein; cause the related Prospectus to be supplemented
by any required Prospectus supplement, and as so supplemented to be filed
pursuant to Rule 424 (or any similar provisions then in force) under the
Securities Act; and comply with the provisions of the Securities Act and the
Exchange Act applicable to it with respect to the disposition of all securities
covered by such Registration Statement as so amended or in such Prospectus as so
supplemented and with respect to the subsequent resale of any securities being
sold by a Participating Broker-Dealer covered by any such Prospectus. ProNet
shall be deemed not to have used its reasonable best efforts to keep a
Registration Statement effective during the prescribed time period if it
voluntarily takes any action that would result in selling Holders of the
Registrable Securities covered thereby or Participating Broker-Dealers seeking
to sell Exchange Securities not being able to sell such Registrable Securities
or such Exchange Securities during that period unless (i) such action is
required by applicable law, or (ii) such action is taken by ProNet in good faith
and for valid business reasons (not including avoidance of ProNet's obligations
hereunder), including the acquisition or divestiture of assets.
(c) If a Shelf Registration Statement is filed or a Prospectus
contained in an Exchange Offer Registration Statement is required to be
delivered under the Securities Act by any Participating Broker-Dealer who seeks
to sell Exchange Securities during the applicable period, notify the selling
Holders of Registrable Securities named in any Registration Statement, or any
such Participating Broker-Dealer, their counsel and the managing underwriters,
if any, promptly (but in any event within two business days), and confirm such
notice in writing, (i) when a Prospectus or any Prospectus supplement or
post-effective amendment thereto has been filed, and, with respect to a
Registration Statement or any post-effective amendment thereto, when the same
has become effective (including in such notice a written statement that any
Holder may, upon request, obtain, without charge, one conformed copy of such
Registration Statement or post-effective amendment including financial
statements and schedules, documents incorporated or deemed to be incorporated by
reference and exhibits), (ii) of the issuance by the Commission of any stop
order suspending the effectiveness of a Registration Statement or of any order
preventing or suspending the use of any preliminary prospectus or the initiation
of any proceedings for that purpose, (iii) if at any time when a prospectus is
required by the Securities Act to be delivered in connection with sales of the
Registrable Securities the representations and warranties of the issuer
contained in any agreement (including any underwriting agreement) contemplated
by Section 4(m) below cease to be true and correct in any material respect,
(iv) of the receipt by ProNet of any notification with respect to the suspension
of the
<PAGE>
10
qualification or exemption from qualification of a Registration Statement or any
of the Registrable Securities or the Exchange Securities to be sold by any
Participating Broker-Dealer for offer or sale in any jurisdiction, or the
initiation or threatening of any proceeding for such purpose, (v) of the
happening of any event or any information becoming known that makes any
statement made in such Registration Statement or related Prospectus or any
document incorporated or deemed to be incorporated therein by reference untrue
in any material respect or that requires the making of any changes in such
Registration Statement, Prospectus or documents so that, in the case of the
Registration Statement or Prospectus, it will not contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading, and (vi) of
any reasonable determination by ProNet that a post-effective amendment to a
Registration Statement would be appropriate.
(d) If a Shelf Registration Statement is filed or a Prospectus
contained in an Exchange Offer Registration Statement is required to be
delivered under the Securities Act by any Participating Broker-Dealer who seeks
to sell Exchange Securities, use its reasonable best efforts to prevent the
issuance of any order suspending the effectiveness of a Registration Statement
or of any order preventing or suspending the use of a Prospectus or suspending
the qualification (or exemption from qualification) of any of the Registrable
Securities or the Exchange Securities to be sold by any Participating Broker-
Dealer, for sale in any jurisdiction, and, if any such order is issued, to use
its reasonable best efforts to obtain the withdrawal of any such order at the
earliest possible moment.
(e) If a Shelf Registration Statement is filed and if requested by
any managing underwriters or the Holders of a majority in aggregate principal
amount of the Registrable Securities being sold in connection with an
underwritten offering, (i) promptly incorporate in a prospectus supplement or
post-effective amendment such information as such managing underwriters, or such
Holders or counsel reasonably request to be included therein, (ii) make all
required filings of such prospectus supplement or such post-effective amendment
as soon as practicable after ProNet has received notification of the matters to
be incorporated in such prospectus supplement or post-effective amendment, and
(iii) supplement or make amendments to such Registration Statement.
(f) If a Shelf Registration Statement is filed or a Prospectus
contained in an Exchange Offer Registration Statement is required to be
delivered under the Securities Act by any Participating Broker-Dealer who seeks
to sell Exchange Securities, furnish to each Holder of Registrable Securities
included within the coverage of the Shelf Registration Statement and to each
such Participating Broker-Dealer who so requests and
<PAGE>
11
to their counsel and each managing underwriter and their counsel, if any,
without charge, one conformed copy of the Registration Statement or Registration
Statements and each post-effective amendment thereto, including financial
statements and schedules, and, if requested, all documents incorporated or
deemed to be incorporated therein by reference and all exhibits.
(g) If a Shelf Registration Statement is filed or a Prospectus
contained in an Exchange Offer Registration Statement is required to be
delivered under the Securities Act by any Participating Broker-Dealer who seeks
to sell Exchange Securities, deliver to each Holder of Registrable Securities
included within the coverage of the Shelf Registration Statement or any such
Participating Broker-Dealer, their counsel, and the underwriters, if any,
without charge, as many copies of the Prospectus or Prospectuses (including each
form of preliminary prospectus) and each amendment or supplement thereto and any
documents incorporated by reference therein as such persons may reasonably
request; and, subject to this Agreement, ProNet hereby consents to the use of
such Prospectus and each amendment or supplement thereto by each of the Holders
of Registrable Securities included within the coverage of the Shelf Registration
Statement or any such Participating Broker-Dealer, and any underwriters or
agents, and any dealers, in connection with the offering and sale of the
Registrable Securities covered by or the sale by Participating Broker-Dealers of
the Exchange Securities pursuant to such Prospectus and any amendment or
supplement thereto provided such usage complies with applicable laws and
regulations.
(h) Prior to any public offering of Registrable Securities or any
delivery of a Prospectus contained in the Exchange Offer Registration Statement
by any Participating Broker-Dealer who seeks to sell Exchange Securities, to use
its reasonable best efforts to register or qualify, and to cooperate with the
Holders of Registrable Securities included within the coverage of the Shelf
Registration Statement or any such Participating Broker-Dealer, any
underwriters, and their respective counsel in connection with the registration
or qualification (or exemption from such registration or qualification) of such
Registrable Securities for offer and sale under the securities or Blue Sky laws
of such jurisdictions within the United States as any Holder of Registrable
Securities included within the coverage of the Shelf Registration Statement,
Participating Broker-Dealer, or the managing underwriters, if any, reasonably
request in writing, PROVIDED that where Exchange Securities held by
Participating Broker-Dealers or Registrable Securities are offered other than
through an underwritten offering, ProNet agrees to cause its counsel to perform
Blue Sky investigations and file registrations and qualifications required to be
filed pursuant to this Section 4(h); keep each such registration or
qualification (or exemption therefrom) effective during the period such
Registration Statement is required to be kept effective and do any and all other
acts or things reasonably
<PAGE>
12
necessary or advisable to enable the disposition in such jurisdictions of the
Exchange Securities held by Participating Broker-Dealers or the Registrable
Securities covered by the applicable Registration Statement, PROVIDED that
ProNet shall not be required to (i) qualify generally to do business in any
jurisdiction where it is not then so qualified or (ii) take any action that
would subject it to general service of process in any such jurisdiction where it
is not then so subject.
(i) If a Shelf Registration Statement is filed, cooperate with the
Holders of Registrable Securities included within the coverage of the Shelf
Registration Statement and the managing underwriters, if any, to facilitate the
timely preparation and delivery of certificates representing Registrable
Securities to be sold, which certificates shall not bear any restrictive legends
and shall be in a form eligible for deposit with The Depository Trust Company;
and enable such Registrable Securities to be in such denominations and
registered in such names as the managing underwriters, if any, or Holders may
reasonably request at least two business days prior to any sale of Registrable
Securities.
(j) Use its reasonable best efforts to cause the Registrable
Securities covered by the Registration Statement to be registered with or
approved by such other governmental agencies or authorities as may be necessary
to enable the seller or sellers thereof or the underwriters, if any, to
consummate the disposition of such Registrable Securities, except as may be
required solely as a consequence of the nature of such selling Holder's
business, in which case ProNet will cooperate in all reasonable respects with
the filing of such Registration Statement and the granting of such approvals.
(k) If a Shelf Registration Statement is filed, or a Prospectus
contained in an Exchange Offer Registration Statement is required to be
delivered under the Securities Act by any Participating Broker-Dealer who seeks
to sell Exchange Securities, upon the occurrence of any event contemplated by
Sections 4(c)(v) or 4(c)(vi), as promptly as practicable prepare and
(subject to Section 4(a)) file with the Commission, at the expense of ProNet, a
supplement or post-effective amendment to the Registration Statement or a
supplement to the related Prospectus or any document incorporated or deemed to
be incorporated therein by reference, or file any other required document so
that, as thereafter delivered to the purchasers of the Registrable Securities
being sold thereunder or to the purchasers of the Exchange Securities to whom
such Prospectus will be delivered by a Participating Broker-Dealer, any such
Prospectus will not contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading.
<PAGE>
13
(l) Prior to the effective date of the first Registration Statement
relating to the Registrable Securities, (i) provide the Trustee with
certificates for the Registrable Securities in a form eligible for deposit with
The Depository Trust Company and (ii) provide a CUSIP number for the Registrable
Securities.
(m) In connection with an underwritten offering of Registrable
Securities pursuant to a Shelf Registration Statement, enter into an
underwriting agreement in form, scope and substance customary in underwritten
offerings and take all such other actions as are reasonably requested by the
managing underwriters in order to expedite or facilitate the registration or the
disposition of such Registrable Securities, and in such connection, (i) make
such representations and warranties to the underwriters with respect to the
business of ProNet and its respective subsidiaries and the Registration
Statement, Prospectus and documents, if any, incorporated or deemed to be
incorporated by reference therein, in each case, as are customarily made by
issuers to underwriters in underwritten offerings, and confirm the same if and
when reasonably requested, (ii) obtain opinions of counsel to ProNet and updates
thereof in form, scope and substance reasonably satisfactory to the managing
underwriters, addressed to the underwriters covering the matters customarily
covered in opinions requested in underwritten offerings and such other related
matters as may be reasonably requested by underwriters, (iii) obtain "cold
comfort" letters and updates thereof in form and substance reasonably
satisfactory to the managing underwriters from the independent certified public
accountants of ProNet (and, if necessary, any other independent certified public
accountants of any subsidiary of ProNet or of any business acquired by ProNet
for which financial statements and financial data are, or are required to be,
included in the Registration Statement), addressed to each of the underwriters,
such letters to be in customary form and covering matters of the type
customarily covered in "cold comfort" letters in connection with underwritten
offerings and such other related matters as are reasonably requested by
underwriters as permitted by Statement on Auditing Standards No. 72, and (iv) if
an underwriting agreement is entered into, the same shall contain
indemnification provisions and procedures substantially the same as, and no less
favorable than, those set forth in Section 6 (or such other provisions and
procedures acceptable to Holders of a majority in aggregate principal amount of
Registrable Securities covered by such Registration Statement and the managing
underwriters or agents) with respect to all parties to be indemnified pursuant
to said Section. The above shall be done at each closing under such
underwriting agreement, or as and to the extent required thereunder.
(n) If a Shelf Registration Statement is filed or a Prospectus
contained in an Exchange Offer Registration Statement is required to be
delivered under the Securities Act by any Participating Broker-Dealer who seeks
to sell Exchange
<PAGE>
14
Securities, make available for inspection by any selling Holder of such
Registrable Securities being sold, or any such Participating Broker-Dealer, any
underwriter participating in any such disposition of Registrable Securities, if
any, and any attorney, accountant or other agent retained by any such selling
Holder or any such Participating Broker-Dealer, or underwriter (collectively,
the "Inspectors"), at the offices where normally are kept, during reasonable
business hours, all financial and other records, pertinent corporate documents
and properties of ProNet and its subsidiaries (collectively, the "Records") as
shall be reasonably necessary to enable them to exercise any applicable due
diligence responsibilities, and cause the officers, directors and employees of
ProNet and its subsidiaries to supply all information in each case reasonably
requested by any such Inspector in connection with such Registration Statement.
Records which ProNet determines, in good faith, to be confidential and any
Records which it notifies the Inspectors are confidential shall not be disclosed
by the Inspectors unless (i) the disclosure of such Records is necessary to
avoid or correct a misstatement or omission in such Registration Statement, (ii)
the release of such Records is ordered pursuant to a subpoena or other order
from a court of competent jurisdiction or (iii) the information in such Records
has been made generally available to the public. Each selling Holder and each
such Participating Broker-Dealer will be required to agree that information
obtained by it as a result of such inspections shall be deemed confidential and
shall not be used by it as the basis for any market transactions in the
securities of ProNet unless and until such is made generally available to the
public. Each selling Holder and each such Participating Broker-Dealer will be
required to further agree that it will, upon learning that disclosure of such
Records is sought in a court of competent jurisdiction, give notice to ProNet
and allow ProNet to undertake appropriate action to prevent disclosure of the
Records deemed confidential at its expense.
(o) Provide an indenture trustee for the Registrable Securities or
the Exchange Securities, as the case may be, and cause the Indenture or the
trust indenture provided for in Section 1(a) to be qualified under the Trust
Indenture Act not later than the earlier of the effective date of the Exchange
Offer Registration Statement or the first Registration Statement relating to the
Registrable Securities; and in connection therewith, cooperate with the trustee
under any such indenture and the Holders to effect such changes to such
indenture as may be required for such indenture to be so qualified in accordance
with the terms of the Trust Indenture Act; and execute, and use its reasonable
best efforts to cause such trustee to execute, all documents as may be required
to effect such changes, and all other forms and documents required to be filed
with the Commission to enable such indenture to be so qualified in a timely
manner.
<PAGE>
15
(p) Comply with all applicable rules and regulations of the
Commission and make generally available to its securityholders earnings
statements satisfying the provisions of Section 11(a) of the Securities Act and
Rule 158 thereunder (or any similar rule promulgated under the Securities Act)
no later than 45 days after the end of any 12-month period (or 90 days after the
end of any 12-month period if such period is a fiscal year) (i) commencing at
the end of any fiscal quarter in which Registrable Securities are sold to
underwriters in a firm commitment or best efforts underwritten offering and (ii)
if not sold to underwriters in such an offering, commencing on the first day of
the first fiscal quarter of ProNet after the effective date of a Registration
Statement, which statements shall cover said 12-month periods.
(q) If an Exchange Offer or a Private Exchange is to be consummated,
upon delivery of the Registrable Securities by Holders to ProNet (or to such
other person as directed by ProNet) in exchange for the Exchange Securities or
the Private Exchange Securities, ProNet shall mark, or cause to be marked, on
such Registrable Securities that such Registrable Securities are being cancelled
in exchange for the Exchange Securities or the Private Exchange Securities,
as the case may be; in no event shall such Registrable Securities be marked as
paid or otherwise satisfied.
(r) Cooperate with each seller of Registrable Securities covered by
any Registration Statement and each underwriter, if any, participating in the
disposition of such Registrable Securities and their respective counsel in
connection with any filings required to be made with the National Association of
Securities Dealers, Inc. (the "NASD").
ProNet may require each seller of Registrable Securities or
Participating Broker-Dealer as to which any registration is being effected to
furnish to ProNet such information regarding such seller or Participating
Broker-Dealer and the distribution of such Registrable Securities or Exchange
Securities to be sold by such Participating Broker-Dealer, as the case may be,
as ProNet may reasonably request. ProNet may exclude from such registration the
Registrable Securities of any seller or Participating Broker-Dealer who
unreasonably fails to furnish such information in writing to ProNet within ten
business days (or longer time period if agreed by ProNet in writing) after
receiving such request. Each Holder of Securities included within the coverage
of any Registration Statement and any Participating Broker-Dealer agrees to
furnish promptly to ProNet all information required by applicable law to be
disclosed by such party in order to make the information previously furnished to
ProNet by such party not materially misleading.
Each Holder and each Participating Broker-Dealer agrees by acquisition
of such Registrable Securities or Exchange Securities to be sold by such
Participating Broker-Dealer, as the case may be, that, upon receipt of any
notice (the "Suspension
<PAGE>
16
Event Notice") from ProNet of the happening of any event (a "Suspension Event")
of the kind described in Section 4(c)(ii), 4(c)(iv), 4(c)(v) or 4(c)(vi),
such Holder will forthwith discontinue disposition of such Registrable
Securities covered by such Registration Statement or Prospectus or Exchange
Securities to be sold by such Participating Broker-Dealer, as the case may be,
until such Holder's receipt of the copies of the supplemented or amended
Prospectus contemplated by Section 4(k), or until it is advised in writing (the
"Advice") by ProNet that the use of the applicable Prospectus may be resumed,
and has received copies of any amendments or supplements thereto. In the event
ProNet shall give any such Suspension Event Notice, the time period regarding
the effectiveness of such Registration Statement set forth in Section 1 or
Section 2 shall be extended by the number of days during such periods from and
including the date of the giving of such Suspension Event Notice to and
including the date when each seller of Registrable Securities covered by such
Registration Statement or Exchange Securities to be sold by such Participating
Broker Dealer, as the case may be, shall have received (i) the copies of the
supplemented or amended Prospectus contemplated by Section 4(k) or (ii) the
Advice.
Each Participating Broker-Dealer further agrees by acquisition of such
Registrable Securities or Exchange Securities to be sold by such Participating
Broker-Dealer for its own account as a result of market-making activities or
other trading activities, that in connection with such resale, such
Participating Broker-Dealer will deliver a Prospectus meeting the requirements
of the Securities Act (which may be the Prospectus for the Exchange Offer).
5. REGISTRATION EXPENSES
(a) All fees and expenses incident to the performance of or
compliance with this Agreement by ProNet shall be borne by ProNet, whether or
not the Exchange Offer Registration Statement or a Shelf Registration Statement
is filed or becomes effective, including, without limitation, (i) all
registration and filing fees (including, without limitation, (A) fees with
respect to filings required to be made with the NASD in connection with an
underwritten offering and (B) fees and expenses of compliance with state
securities or Blue Sky laws (including, without limitation, reasonable fees and
disbursements of counsel in connection with Blue Sky qualifications of the
Registrable Securities or Exchange Securities and determination of the
eligibility of the Registrable Securities or Exchange Securities for investment
under the laws of such jurisdictions (x) where the Holders are located, in the
case of the Exchange Securities, or (y) as provided in Section 4(h), in the case
of Registrable Securities or Exchange Securities to be sold by a Participating
Broker-Dealer)), (ii) printing expenses (including, without limitation, expenses
of printing certificates for Registrable Securities or Exchange Securities in a
form eligible for deposit with The Depository Trust Company and of printing
prospectuses if
<PAGE>
17
the printing of prospectuses is requested by the managing underwriters, if any,
or, in respect of Registrable Securities or Exchange Securities to be sold by
any Participating Broker-Dealer by the Holders of a majority in aggregate
principal amount of the Registrable Securities included in any Registration
Statement or of such Exchange Securities, as the case may be), (iii) messenger,
telephone and delivery expenses, (iv) fees and disbursements of counsel for
ProNet and fees and disbursements of special counsel for the Holders of
Registrable Securities included in any Registration Statement (subject to the
provisions of Section 5(b)), (v) fees and disbursements of all independent
certified public accountants referred to in section 4(m)(iii) (including,
without limitation, the expenses of any special audit and "cold comfort" letters
required by or incident to such performance), (vi) the fees and expenses of any
"qualified independent underwriter" or other independent appraiser participating
in an offering pursuant to Section 3 of Schedule E to the By-laws of the NASD,
(vii) rating agency fees, (viii) Securities Act liability insurance, if ProNet
desires such insurance, (ix) fees and expenses of all other Persons retained by
ProNet, (x) internal expenses of ProNet (including, without limitation, all
salaries and expenses of officers and employees of ProNet performing legal or
accounting duties), (xi) the expense of any annual audit of ProNet and its
consolidated subsidiaries, (xii) the fees and expenses incurred in connection
with the listing of the securities to be registered on any securities exchange
and (xiii) the expenses relating to printing, word processing and distributing
all Registration Statements, underwriting agreements, securities sales
agreements, indentures and any other documents necessary in order to comply with
this Agreement.
(b) In connection with any Shelf Registration Statement hereunder,
ProNet shall reimburse the holders of the Registrable Securities being
registered in such registration for the reasonable fees and disbursements of not
more than one counsel (in addition to not more than one local counsel) chosen by
the Holders of a majority in aggregate principal of the amount Registrable
Securities to be included in such Registration Statement and other out-of-pocket
expenses of the Holders incurred in connection with the registration of the
Registrable Securities; provided that in any underwritten offering ProNet shall
not be obligated to pay any underwriters' discounts and commissions nor any
transfer tax related to such offering.
6. INDEMNIFICATION
(a) In connection with a Shelf Registration Statement or in
connection with any delivery of a Prospectus contained in an Exchange Offer
Registration Statement by any Participating Broker-Dealer or Initial Purchaser,
as applicable, who seeks to sell Exchange Securities, ProNet shall indemnify and
hold harmless each Holder of Registrable Securities included within any such
Shelf Registration Statement and each Participating
<PAGE>
18
Broker-Dealer or Initial Purchaser selling Exchange Securities, and each person,
if any, who controls any such person within the meaning of Section 15 of the
Securities Act, (each, a "Participant") from and against any loss, claim, damage
or liability, joint or several, or any action in respect thereof (including, but
not limited to, any loss, claim, damage, liability or action relating to
purchases and sales of Securities), to which such Participant may become
subject, under the Securities Act or otherwise, insofar as such loss, claim,
damage, liability or action arises out of, or is based upon, (i) any untrue
statement or alleged untrue statement of a material fact contained in any such
Registration Statement or any prospectus forming part thereof or in any
amendment or supplement thereto or (ii) the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, and shall reimburse each Participant
promptly upon demand for any legal or other expenses reasonably incurred by such
Participant in connection with investigating or defending or preparing to defend
against any such loss, claim, damage, liability or action as such expenses are
incurred; PROVIDED, HOWEVER, that (i) ProNet shall not be liable in any such
case to the extent that any such loss, claim, damage, liability or action arises
out of, or is based upon, any untrue statement or alleged untrue statement or
omission or alleged omission made in any such Registration Statement or any
prospectus forming part thereof or in any such amendment or supplement in
reliance upon and in conformity with written information furnished to ProNet by
or on behalf of any Participant specifically for inclusion therein; and PROVIDED
FURTHER that as to any preliminary Prospectus, the indemnity agreement contained
in this Section 6(a) shall not inure to the benefit of any such Participant on
account of any loss, claim, damage, liability or action arising from the sale of
the Exchange Securities to any person by that Participant if (i) that
Participant failed to send or give a copy of the Prospectus, as the same may be
amended or supplemented, to that person within the time required by the
Securities Act and (ii) the untrue statement or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact in such
preliminary Prospectus was corrected in the Prospectus, unless, in each case,
such failure resulted from non-compliance by ProNet with Section 4(c). The
foregoing indemnity agreement is in addition to any liability which ProNet may
otherwise have to any Participant or to any controlling person of that
Participant.
(b) Each Participant, severally and not jointly, shall indemnify and
hold harmless ProNet, each of its directors, each of its officers, employees or
agents and each person, if any, who controls ProNet within the meaning of
Section 15 of the Securities Act, from and against any loss, claim, damage or
liability, joint or several, or any action in respect thereof, to which ProNet
or any such director, officer, employees or agents or controlling person may
become subject, under the Securities Act or otherwise, insofar as such loss,
claim, damage, liability
<PAGE>
19
or action arises out of, or is based upon, (i) any untrue statement or alleged
untrue statement of a material fact contained in any preliminary Prospectus,
Registration Statement or Prospectus or in any amendment or supplement thereto
or (ii) the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, but in each case only to the extent that the untrue statement or
alleged untrue statement or omission or alleged omission was made in reliance
upon and in conformity with written information furnished to ProNet by or on
behalf of that Participant specifically for inclusion therein, and shall
reimburse ProNet and any such directors, officers, employees or agents or
controlling persons for any legal or other expenses reasonably incurred by
ProNet or any such directors, officers, employees or agents or controlling
persons in connection with investigating or defending or preparing to defend
against any such loss, claim, damage, liability or action as such expenses are
incurred. The foregoing indemnity agreement is in addition to any liability
which any Participant may otherwise have to ProNet or any such director, officer
or controlling person.
(c) Promptly after receipt by an indemnified party under this Section
6 of notice of any claim or the commencement of any action, the indemnified
party shall, if a claim in respect thereof is to be made against the
indemnifying party under this Section 6, notify the indemnifying party in
writing of the claim or the commencement of that action; PROVIDED, HOWEVER, that
the failure to notify the indemnifying party shall not relieve it from any
liability which it may have under this Section 6 except to the extent it has
been materially prejudiced by such failure and, PROVIDED FURTHER, that the
failure to notify the indemnifying party shall not relieve it from any liability
which it may have to an indemnified party otherwise than under this Section 6.
If any such claim or action shall be brought against an indemnified party, and
it shall have notified the indemnifying party thereof, the indemnifying party
shall be entitled to participate therein and, to the extent that it wishes,
jointly with any other similarly notified indemnifying party, to assume the
defense thereof with counsel reasonably satisfactory to the indemnified party.
After notice from the indemnifying party to the indemnified party of its
election to assume the defense of such claim or action, the indemnifying party
shall not be liable to the indemnified party under this Section 6 for any legal
or other expenses subsequently incurred by the indemnified party in connection
with the defense thereof other than reasonable costs of investigation; PROVIDED,
HOWEVER, that any indemnified party shall have the right to employ separate
counsel in any such action and to participate in the defense thereof, but the
fees and expenses of such counsel shall be at the expense of such indemnified
party unless (i) the employment thereof has been specifically authorized by the
indemnifying party in writing, (ii) such indemnified party shall have been
advised by such counsel that there may be one or more legal defenses available
to it which are different from or additional to those available to
<PAGE>
20
such indemnifying party and in the reasonable judgment of such counsel it is
advisable for such indemnified party to employ separate counsel or (iii) the
indemnifying party has failed to reasonably and promptly assume the defense of
such action and employ counsel reasonably satisfactory to the indemnified party
in which case, if such indemnified party notifies the indemnifying party in
writing that it elects to employ separate counsel at the expense of the
indemnifying party, the indemnifying party shall not have the right to assume
the defense of such action on behalf of such indemnified party, it being
understood, however, that the indemnifying party shall not, in connection with
any one such action or separate but substantially similar or related actions in
the same jurisdiction arising out of the same general allegations or
circumstances, be liable for the reasonable fees and expenses of more than one
separate firm of attorneys (in addition to not more than one local counsel) at
any time for all such indemnified parties, which firm shall be designated in
writing by the Initial Purchasers, if the indemnified parties under this Section
6 consist of any Initial Purchaser or any of their respective controlling
persons, or by ProNet, if the indemnified parties under this Section 6 consist
of ProNet or any of its respective directors, officers or controlling persons.
Each indemnified party, as a condition of the indemnity agreements contained in
Sections 6(a) and 6(b), shall use its best efforts to cooperate with the
indemnifying party in the defense of any such action or claim. No indemnifying
party shall be liable for any settlement of any such action effected without its
written consent (which consent shall not be unreasonably withheld), but if
settled with its written consent or if there be a final judgment of the
plaintiff in any such action, the indemnifying party agrees to indemnify and
hold harmless any indemnified party from and against any loss of liability by
reason of such settlement or judgment.
(d) If the indemnification provided for in this Section 6 shall for
any reason be unavailable to or insufficient to hold harmless an indemnified
party under Section 6(a) or 6(b) in respect of any loss, claim, damage or
liability, or any action in respect thereof, referred to therein, then each
indemnifying party shall, in lieu of indemnifying such indemnified party,
contribute to the amount paid or payable by such indemnified party as a result
of such loss, claim, damage or liability, or action in respect thereof, in such
proportion as shall be appropriate to reflect the relative fault of ProNet on
the one hand and the Participants on the other with respect to the statements or
omissions which resulted in such loss, claim, damage or liability, or action in
respect thereof, as well as any other relevant equitable considerations. The
relative fault shall be determined by reference to whether the untrue or alleged
untrue statement of a material fact or omission or alleged omission to state a
material fact relates to information supplied by ProNet or the Participants, the
intent of the parties and their relative knowledge, access to information and
opportunity to correct or prevent such statement or omission. ProNet and the
<PAGE>
21
Participants agree that it would not be just and equitable if contributions
pursuant to this Section 6(d) were to be determined by pro rata allocation
(even if the Participants were treated as one entity for such purpose) or by
any other method of allocation which does not take into account the equitable
considerations referred to herein. The amount paid or payable by an
indemnified party as a result of the loss, claim, damage or liability, or
action in respect thereof, referred to above in this Section 6(d) shall be
deemed to include, for purposes of this Section 6(d), any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 6(d), no Participant shall be required to
contribute any amount in excess of the amount by which proceeds received by
such Participant from an offering of Registrable Securities exceeds the
amount of any damages which such Participant has otherwise paid or become
liable to pay by reason of any untrue or alleged untrue statement or omission
or alleged omission. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Participants' obligations to contribute as provided in
this Section 6(d) are several and not joint.
7. RULES 144 AND 144A
ProNet covenants that it will file the reports required to be filed
by it under the Securities Act and the Exchange Act in a timely manner and,
if at any time ProNet is not required to file such reports, it will, within
120 days after the end of ProNet's fiscal year and within 60 days after the
end of each of its first three fiscal quarters, at the request of any Holder,
make publicly available its financial statements and other information which
ProNet would otherwise be required to include in annual or quarterly reports
filed under the Exchange Act and other information so long as necessary to
permit sales pursuant to Rule 144 under the Securities Act, as such Rule may
be amended from time to time ("Rule 144") and Rule 144A under the Securities
Act, as such Rule may be amended from time to time ("Rule 144A"). ProNet
further covenants that it will take such further action as any Holder may
reasonably request, all to the extent required from time to time to enable
such Holder to sell Registrable Securities without registration under the
Securities Act within the limitation of the exemptions provided by (a) Rule
144 and Rule 144A, or (b) any similar rule or regulation hereafter adopted by
the Commission.
8. UNDERWRITTEN REGISTRATIONS
If any of the Registrable Securities covered by any Shelf
Registration Statement are to be sold in an underwritten offering, where
securities of ProNet or a Holder are sold by an underwriter for reoffering to
the public, the investment banker
<PAGE>
22
or investment bankers and manager or managers that will manage the offering will
be selected by the Holders of a majority in aggregate principal amount of such
Registrable Securities included in such offering and will be reasonably
acceptable to ProNet. In the event of any underwritten offering, ProNet agrees
to enter into an underwriting agreement containing terms and conditions
customary to such transaction.
No Holder may participate in any underwritten registration hereunder
unless such Holder (a) agrees to sell such Holder's Registrable Securities on
the basis provided in any underwriting arrangements approved by the persons of
entities entitled hereunder to approve such arrangements and (b) completes and
executes all questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents required under the terms of such underwriting
arrangements.
9. MISCELLANEOUS
(a) REMEDIES. In the event of a breach by ProNet of any of its
obligations under this Agreement, each Holder, in addition to being entitled to
exercise all rights provided herein, in the Indenture or, in the case of the
Initial Purchasers, in the Purchase Agreement or granted by law, including
recovery of damages, will be entitled to specific performance of its rights
under this Agreement. ProNet agrees that monetary damages would not be adequate
compensation for any loss incurred by reason of a breach by it of any of the
provisions of this Agreement and hereby further agrees that, in the event of any
action for specific performance in respect of such breach, it shall waive the
defense that a remedy at law would be adequate.
(b) NO INCONSISTENT AGREEMENTS. ProNet has not, as of the date
hereof, and ProNet shall not, after the date of this Agreement, enter into any
agreement with respect to any of its securities that is inconsistent with the
rights granted to the Holders in this Agreement or otherwise conflicts with the
provisions hereof. ProNet will not enter into any agreement with respect to any
of its securities which will grant to any Person piggy-back rights with respect
to a Registration Statement.
(c) ADJUSTMENTS AFFECTING REGISTRABLE SECURITIES. ProNet shall not
directly or indirectly take any action with respect to the Registrable
Securities as a class that would adversely affect the ability of the Holders to
include such Registrable Securities in a registration undertaken pursuant to
this Agreement.
(d) AMENDMENTS AND WAIVERS. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, unless ProNet has obtained the written consent of Holders of
at least a
<PAGE>
23
majority of the then outstanding aggregate principal amount of Registrable
Securities. Notwithstanding the foregoing, a waiver or consent to depart from
the provisions hereof with respect to a matter that relates exclusively to the
rights of Holders whose securities are being sold pursuant to a Registration
Statement and that does not directly or indirectly affect, impair, limit or
compromise the rights of other Holders may be given by Holders of at least a
majority in aggregate principal amount of the Registrable Securities being sold
by such Holders pursuant to such Registration Statement, PROVIDED that the
provisions of this sentence may not be amended, modified or supplemented except
in accordance with the provisions of the immediately preceding sentence.
(e) NOTICES. All notices and other communications (including without
limitation any notices or other communications to the Trustee) provided for or
permitted hereunder shall be made in writing by hand-delivery, registered first-
class mail, next day air courier or telecopier:
(i) if to a Holder of Registrable Securities, at the most current
address given by the Trustee to ProNet; and
(ii) if to ProNet, 600 Data Drive, Suite 100, Plano, Texas 75075,
Attention: Jan E. Gaulding, Senior Vice President and Chief Financial
Officer.
All such notices and communications shall be deemed to have been duly
given: when delivered by hand, if personally delivered; five business days after
being deposited in the mail, postage prepaid, if mailed; one business day after
being timely delivered to a next-day air courier; and when receipt is
acknowledged by the addressee, if telecopied.
Copies of all such notices, demands or other communications shall be
concurrently delivered by the person giving the same to the Trustee under the
Indenture at the address specified in such Indenture.
(f) SUCCESSORS AND ASSIGNS. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the
parties, including, without limitation and without the need for an express
assignment, subsequent Holders. ProNet agrees that the Holders shall be third
party beneficiaries to the agreements made hereunder by Initial Purchasers and
ProNet and each Holder shall have the right to enforce such agreements directly
to the extent it deems such enforcement necessary or advisable to protect its
rights hereunder.
(g) COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
<PAGE>
24
(h) HEADINGS. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(i) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS
MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAW.
(j) SEVERABILITY. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their best efforts to find and employ an alternative means to
achieve the same or substantially the same result as that contemplated by such
term, provision, covenant or restriction. It is hereby stipulated and declared
to be the intention of the parties that they would have executed the remaining
terms, provisions, covenants and restrictions without including any of such that
may be hereafter declared invalid, illegal, void or unenforceable.
(k) ENTIRE AGREEMENT. This Agreement, together with the Purchase
Agreement, is intended by the parties as a final expression of their agreement,
and is intended to be a complete and exclusive statement of the agreement and
understanding of the parties hereto in respect of the subject matter contained
herein and therein.
(l) SECURITIES HELD BY PRONET OR ITS AFFILIATES. Whenever the consent
or approval of Holders of a specified percentage of Registrable Securities is
required hereunder, Registrable Securities held by ProNet or its affiliates (as
such term is defined in Rule 405 under the Securities Act) shall not be counted
in determining whether such consent or approval was given by the Holders of such
required percentage.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
PRONET INC.
By: /s/ Jan E. Gaulding
----------------------------------------
Name: Jan E. Gaulding
Title: Senior Vice President and
Chief Financial Officer
LEHMAN BROTHERS INC.
By: /s/ John W. Russell
----------------------------------------
Name: John W. Russell
Title: MD
ALEX. BROWN & SONS INCORPORATED
By: /s/ Steven K. Fischer
----------------------------------------
Name: Steven K. Fischer
Title: Managing Director
PAINEWEBBER INCORPORATED
By: /s/ Stephen M. Winningham
----------------------------------------
Name: Stephen M. Winningham
Title: Managing Director
<PAGE>
[Letterhead of Vinson & Elkins]
Exhibit 5.1
WRITER'S TELEPHONE
(214) 220-7734
July 7, 1995
ProNet Inc.
600 Data Drive, Suite 100
Plano, Texas 75075
Ladies and Gentlemen:
We have acted as counsel for ProNet Inc., a Delaware corporation (the
"COMPANY"), in connection with the registration of $100 million aggregate
principal amount 11 7/8% Senior Subordinated Notes due 2005 (the "NOTES") under
the Securities Act of 1933 (the "SECURITIES ACT") on a Registration Statement on
Form S-4 (the "REGISTRATION STATEMENT").
In reaching the opinion set forth in this letter, we have reviewed
originals or copies of the Registration Statement, an executed counterpart of
the Indenture dated as of June 15, 1995, between the Company and First
Interstate Bank of Texas, N.A., as trustee (the "INDENTURE"), and such other
agreements, certificates of public officials, certificates of officers of the
Company, certificates of other persons, records, documents and matters of law as
we deemed relevant.
Based on and subject to the foregoing and subject further to the
assumptions, exceptions and qualifications hereinafter stated, we express the
opinion that, subject to compliance with applicable federal and state securities
laws (as to which we express no opinion), the Notes, when executed,
authenticated, issued and delivered in accordance with the terms of the
Indenture and when delivered in exchange for the Old Notes (as defined in the
Registration Statement), will constitute legally binding obligations of the
Company, subject to bankruptcy, insolvency, fraudulent conveyance or transfer,
reorganization, moratorium and other laws of general applicability relating to
or affecting creditors' rights and to general equitable principles.
The opinion expressed above is subject to the following assumptions,
exceptions and qualifications:
(a) We have assumed that (i) all information contained in all documents
reviewed by us is true and correct, (ii) all signatures on all documents
reviewed by us are genuine, (iii) all documents submitted to us as originals are
true and complete, (iv) all documents submitted to us as copies are true and
complete copies of the originals thereof, (v) each natural person signing any
document reviewed by us had the legal capacity to do so, (vi) each natural
person signing in a representative capacity any document reviewed by us
<PAGE>
ProNet Inc.
July 7, 1995
Page 2
had authority to sign in such capacity, and (vii) the laws of any jurisdiction
other than Texas that govern any of the documents reviewed by us (other than the
Company's certificate of incorporation and bylaws) do not modify the terms that
appear in any such document.
(b) The opinion expressed in this letter is limited to the laws of the
State of Texas, the General Corporation Law of the State of Delaware, and the
federal laws of the United States of America. You should be aware that we are
not admitted to the practice of law in the State of Delaware.
(c) We note that the Indenture provides that it is governed by the laws of
the State of New York. While we express no opinion with respect to the laws of
the State of New York, we have assumed that the internal laws of the State of
New York are the same as the internal laws of the State of Texas. We have made
no investigation to confirm whether such assumption is correct.
This opinion may be filed as an exhibit to the Registration Statement.
Consent is also given to the reference to this firm under the caption "Legal
Matters" in the Prospectus included in the Registration Statement as having
passed on certain legal matters in connection with the Notes. In giving this
consent we do not admit that we come within the category of persons whose
consent is required under Section 7 of the Securities Act or the rules and
regulations of the Securities and Exchange Commission promulgated thereunder.
This opinion speaks as of the date hereof, and we disclaim any duty to
advise you regarding any changes subsequent to the date hereof in, or to
otherwise communicate with you with respect to, the matters addressed herein.
Very truly yours,
/s/ VINSON & ELKINS L.L.P.
<PAGE>
EXHIBIT 10.23
<PAGE>
WAIVER, CONSENT AND AMENDMENT NO. 1
This Waiver, Consent and Amendment No. 1 (the "Amendment") is entered into
as of June 12, 1995 by and among ProNet Inc. (the "Borrower"), the undersigned
Lenders and The First National Bank of Chicago, as Agent.
W I T N E S S E T H:
WHEREAS, the Borrower, the Lenders and the Agent are parties to that
certain Amended and Restated Credit Agreement dated as of February 9, 1995 (the
"Agreement"); and
WHEREAS, the Borrower and the Lenders desire to (i) waive a certain
violation of the Agreement, (ii) consent to the incurrence of certain
subordinated indebtedness and the terms of subordination thereof, and (iii)
amend the Agreement in certain respects, all as more fully described
hereinafter;
NOW, THEREFORE, in consideration of the premises herein contained. and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto hereby agree as follows:
1. DEFINED TERMS. Capitalized terms used herein and not otherwise
defined shall have the meanings attributed to such terms in the Agreement, as
amended hereby.
2. WAIVER. The Lenders hereby waive the violation of Section 6.23 of the
Agreement and any Default created thereby to the extent that such violation or
Default was caused by the failure of the Borrower to maintain, during the period
from April 10, 1995 to and including the earlier of (i) the date on which the
Borrower incurs the 1995 Senior Subordinated Indebtedness and (ii) July 3, 1995,
the interest rate exchange or insurance agreements required to be maintained
under said Section 6.23.
3. CONSENT; NOTICE.
(a) The Lenders hereby consent to the incurrence by the Borrower of
the Subordinated Indebtedness evidenced and governed by that certain indenture
dated as of June 15. 1995 (the "Indenture") between the Borrower and First
Interstate Bank of Texas, N.A., as Trustee, in substantially the form of the
draft dated June 6, 1995, a copy of which is attached hereto as Annex I, and the
terms of subordination thereof, provided that, (i) the 11 7/8% Senior
Subordinated Notes due 2005 issued pursuant to the Indenture shall bear interest
at a rate not in excess of 12.5% per annum and (ii) concurrently with the
issuance of such 11 7/8% Senior Subordinated Notes due 2005, the Borrower shall
(1) make a prepayment on the Advances outstanding in an amount equal to the
lesser of (aa) the aggregate unpaid principal amount of the Advances outstanding
and (bb) 100% of the Net Cash Proceeds realized by the Borrower from the
issuance of such 11 7/8% Senior Subordinated Notes due 2005 (which prepayment
may, subject to and in accordance with the terms of the Agreement, be
reborrowed), together with interest accrued on the amount prepaid and any
amounts which may be required under Section 3.4 of the Agreement, (2) pay to the
Agent, for the account of each of the Lenders, such fees as shall have
heretofore been agreed upon in writing, and (3) furnish to the Agent copies,
certified by the Secretary or an Assistant Secretary of the Borrower, of a fully
executed counterpart of the Indenture, together with all exhibits, supplements
and amendments thereto, all of which shall be in form and substance satisfactory
to the Required Lenders.
(b) Promptly after the Indenture has become effective, the Borrower
shall provide written notice thereof to the Agent.
<PAGE>
4. AMENDMENTS TO THE AGREEMENT.
4.1. Article 1 of the Agreement is hereby amended by:
(i) Deleting, in its entirety, the definition of "Leverage Ratio" where
it appears therein.
(ii) Amending the definition of "Operating Cash Flow" set forth therein by
deleting the words "Leverage Ratio" in each place they appear therein
and inserting the words "Senior Leverage Ratio or Total Leverage
Ratio" in lieu thereof in each such place.
(iii) Amending the definition of "Subordinated Indebtedness" set forth
therein to read in its entirety as follows:
"'Subordinated indebtedness' of a Person means, collectively,
(i) with respect to the Borrower, the 1995 Senior Subordinated
Indebtedness and (ii) with respect to the Borrower or any other
Person, any other Indebtedness of such Person the payment of which is
subordinated to payment of the Secured Obligations to the written
satisfaction of the Required Lenders."
(iv) Inserting, in proper alphabetical order, the following definitions:
"'First Amendment Effective Date' means the 'First Amendment
Effective Date' under and as defined in that certain Waiver, Consent
and Amendment No. 1 dated as of June 12, 1995 to this Agreement.
"'1995 Senior Subordinated Indebtedness' means any and all
Indebtedness of the Borrower evidenced or governed by or outstanding
under that certain Indenture dated as of June 15,1995 between the
Borrower and First Interstate Bank of Texas, N.A., as Trustee."
"'Senior Leverage Ratio' means, as at any date of determination
thereof, the ratio of (i) (a) all Indebtedness (excluding
Subordinated Indebtedness) outstanding as at such date of
determination minus (b) prior to July 1, 1996 and so long as no
Default or Unmatured Default shall exist on such date of
determination and no Advances shall be outstanding hereunder, cash on
hand in excess of $1,000,000 to (ii) Annualized Operating Cash Flow
as at such date of determination, all calculated for the Borrower and
Subsidiaries on a consolidated basis in accordance with Agreement
Accounting Principles consistently applied."
"'Total Leverage Ratio' means, as at any date of determination
thereof, the ratio of (i) (a) all Indebtedness (including
Subordinated Indebtedness) outstanding as at such date of
determination minus (b) prior to July 1, 1996 and so long as, on such
date of determination, no Default or Unmatured Default shall exist
and no Advances shall be outstanding hereunder, cash on hand in
excess of $1,000,000 to (ii) Annualized Operating Cash Flow as at
such date of determination, all calculated for the Borrower and
Subsidiaries on a consolidated basis in accordance with Agreement
Accounting Principles consistently applied."
4.2. Section 2.4 of the Agreement is hereby amended (i) by inserting,
immediately before the words "Leverage Ratio" in each place they appear therein,
the word "Total" and (ii) amending the table set forth therein to read in its
entirety as follows:
-2-
<PAGE>
Applicable Margin Applicable Margin
"Total for Floating for Eurodollar
Leverage Ratio Rate Advances Advances
-------------- ------------- --------
Greater than
4.5:1.0 1.25% 2.50%
Less than or
equal to 4.5:1.0
but greater than
4.0:1.0 1.00% 2.25%
Less than or equal
to 4.0:1.0 but greater
than 3.5:1.0 .75% 2.00%
Less than or equal
to 3.5:1.0 but greater
than 3.0:1.0 .50% 1.75%
Less than or equal
to 3.0:1.0 but greater
than 2.5:1.0 .25% 1.50%
Less than or equal
to 2.5:1.0 but greater
than 2.0:1.0 0% 1.25%
Less than or equal
to 2.0:1.0 0% 1.00%"
4.3. Section 6.4.1 of the Agreement is hereby amended to read in its entirety as
follows:
"6.4.1. TOTAL LEVERAGE RATIO. The Borrower will maintain, as at the
last day of each fiscal quarter ending during the periods set forth below,
a Total Leverage Ratio not greater than the ratio set forth below opposite
each such period:
Period Ratio
------ -----
Restructuring Date through but
excluding First Amendment Effective
Date 4.00:1.0
First Amendment Effective Date
through and including 6/30/96 5.00:1.0
-3-
<PAGE>
7/1/96 through and including 6/30/97 4.75:1.0
7/1/97 and thereafter 4.50:1.0"
4.4. Section 6.4 of the Agreement is hereby amended by inserting, at the
end thereof, the following new Section 6.4.4:
"6.4.4. SENIOR LEVERAGE RATIO. The Borrower will maintain, as at
the last day of each fiscal quarter ending during the periods set
forth below, a Senior Leverage Ratio not greater than the ratio set
forth below opposite each such period:
Period Ratio
------ -----
Restructuring Date through but
excluding First Amendment Effective Date 4.00:1.0
First Amendment Effective Date through
and including 6/30/96 3.75:1.0
7/1/96 through and including 6/30/97 3.50:1.0
7/1/97 through and including 6/30/98 3:25:1.0
7/1/98 through and including 6/30/99 3.00:1.0
7/1/99 and thereafter 2.50:1.0"
4.5. Section 6.23 of the Agreement is hereby amended to read in its
entirety as follows:
"6.23. RATE HEDGING OBLIGATIONS. The Borrower will, at all
times on and after the earlier of (i) the date on which the Borrower
incurs the 1995 Senior Subordinated Indebtedness and (ii) July 3,
1995, cause the Interest Expense on not less than 50% of the
aggregate principal amount of all outstanding Indebtedness of the
Borrower to be effectively fixed at a prevailing market rate through
either or both of (a) loans or other financial accommodations being
interest at a fixed rate or (b) an interest rate exchange or
insurance agreement or agreements with one or more financial
institutions acceptable to the Required Lenders in their reasonable
discretion."
4.6. Section 7.15 of the Agreement is hereby amended to read in its
entirety as follows:
"7.15. Any Change in Control shall occur; or any 'Change of Control'
under and as defined in that certain Indenture dated as of June 15, 1995
between the Borrower and First Interstate Bank of Texas, N.A. shall occur."
4.7. Schedule I to Exhibit "C" to the Agreement is hereby amended to read
in its entirety in the form of Annex II hereto.
5. REPRESENTATIONS AND WARRANTIES. In order to induce the Lenders and
the Agent to enter into this Amendment, the Borrower represents and warrants
that:
-4-
<PAGE>
5.1. The representations and warranties set forth in Article V of the
Agreement, as amended hereby, are true, correct and complete on the date hereof
as if made on and as of the date hereof, except to the extent any such
representation or warranty is stated to relate solely to an earlier date, in
which case such representation or warranty was true and correct on and as of
such earlier date, and, after giving effect to the waiver herein contained,
there exists no Default or unmatured Default on the date hereof.
5.2. The execution and delivery by the Borrower of this Amendment have
been duly authorized by proper corporate proceedings, and this Amendment and the
Agreement, as amended by this Amendment, constitute the legal, valid and binding
obligations of the Borrower, enforceable against the Borrower in accordance with
their terms, except as enforceability may be limited by bankruptcy, insolvency,
moratorium or similar laws affecting the enforcement of creditors' rights
generally.
5.3. Neither the execution and delivery by the Borrower of this Amendment,
nor the consummation of the transactions herein contemplated, nor compliance
with the provisions hereof will violate any law, rule, regulation, order, writ,
judgment, injunction, decree or award binding on the Borrower or any of its
Subsidiaries or the Borrower's or any of its Subsidiaries' articles of
incorporation or by-laws or the provisions of any indenture, instrument or
agreement to which the Borrower or any of its Subsidiaries is a party or is
subject, or by which it or its property is bound, or conflict with or constitute
a default thereunder. No consent, approval or authorization of any Person is
required to authorize, or is required in connection with the execution, delivery
and performance of, or the legality, validity, binding effect or enforceability
of, this Amendment or the Agreement, as amended by this Amendment.
6. FIRST AMENDMENT EFFECTIVE DATE. This Amendment shall become effective
as of the date first above written (the "First Amendment Effective Date") upon
receipt by the Agent of the following:
(i) Counterparts of this Amendment duly executed by the Borrower and the
Required Lenders.
(ii) Copies, certified by the Secretary or an Assistant Secretary of the
Borrower, of a fully executed counterpart of the Purchase Agreement
dated as of June 12, 1995 among the Borrower, Lehman Brothers Inc.,
Alex. Brown & Sons Incorporated and PaineWebber Incorporated,
together with all exhibits, supplements and amendments thereto, all
of which shall be in form and substance satisfactory to the Required
Lenders, and evidence satisfactory to the Agent that such Purchase
Agreement shall have become effective.
(iii) Such other documents (including, without limitation, an opinion of
Borrower's counsel) as the Agent may reasonably request.
7. RATIFICATION. It is understood and agreed that all of the terms,
conditions and covenants of the Agreement, except as specifically waived or
amended hereby, shall remain unaltered and in full force and effect and shall
continue to be binding upon the Borrower in all respects. The Agreement, as
amended hereby, is hereby ratified, approved and confirmed in all respects.
8. REFERENCE TO AGREEMENT. From and after the First Amendment Effective
Date, each reference in the Agreement to "this Agreement", "hereof", or
"hereunder" or words of like import, and all references to the Agreement in any
and all agreements, instruments, documents, notes, certificates and other
writings of every kind and nature shall be deemed to mean the Agreement, as
amended by this Amendment.
-5-
<PAGE>
9. COSTS AND EXPENSES. The Borrower agrees to pay all costs, fees and
out-of-pocket expenses (including attorneys' fees and time charges of attorneys
for the Agent, which attorneys may be employees of the Agent) incurred by the
Agent in connection with the preparation, execution and enforcement of this
Amendment.
10. CHOICE OF LAW. THIS AMENDMENT SHALL BE CONSTRUED IN ACCORDANCE WITH
THE INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS) OF THE STATE OF ILLINOIS, BUT
GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.
11. EXECUTION IN COUNTERPARTS. This Amendment may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and all of
which taken together shall constitute one and the same agreement.
IN WITNESS WHEREOF, the Borrower, the undersigned Lenders and the Agent
have executed this Amendment as of the date first above written.
PRONET INC.
By:/s/ Jan Gaulding
---------------------------
Jan Gaulding
Senior Vice President
THE FIRST NATIONAL BANK OF CHICAGO,
Individually and as Agent
By:/s/ C. Mark Hedrick
----------------------------
C. Mark Hedrick
Vice President
FIRST INTERSTATE BANK OF TEXAS, N.A.
By:/s/ Jeffrey Cook
-----------------------------
Print Name: Jeffrey Cook
---------------------
Title: Vice President
--------------------------
THE BANK OF CALIFORNIA, N.A.
By:/s/ Gail L. Fletcher
-----------------------------
Print Name: Gail L. Fletcher
---------------------
Title: Vice President
--------------------------
-6-
<PAGE>
EXHIBIT 23.2
Consent of Independent Auditors
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-4, No. 33-00000) and related Prospectus of
ProNet Inc. for the registration of $100,000,000 of 11 7/8% Senior
Subordinated Notes due 2005 and to the incorporation by reference therein of
our reports (a) dated March 3, 1995, with respect to the consolidated financial
statements and schedule of ProNet Inc. included in its Annual Report (Form 10-K)
for the year ended December 31, 1994, and (b) dated June 9, 1995,with respect to
the combined financial statements of Page East, Inc. for the year ended
December 31, 1994 included in ProNet Inc.'s Current Report on Form 8-K dated
July 5, 1995, both filed with the Securities and Exchange Commission.
/s/ Ernst & Young LLP
Dallas, Texas
July 7, 1995
<PAGE>
EXHIBIT 23.3
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-4, No. 33-00000) and related Prospectus of
ProNet Inc. for the registration of $100,000,000 of 11-7/8% Senior
Subordinated Notes due 2005 and to the incorporation by reference therein of
our report dated September 17, 1993, with respect to the combined financial
statements of Contact Communications, Inc. and its Affiliated Companies
included in ProNet Inc.'s Current Report on Form 8-K/A dated May 12, 1994,
both filed with the Securities and Exchange Commission.
/s/ Schneider, Ehrlich & Wengrover
---------------------------------------------------
SCHNEIDER, EHRLICH & WENGROVER
(successor firm to Hiltzik, Schneider, Ehrlich & Co.)
July 3, 1995
Great Neck, New York
<PAGE>
EXHIBIT 23.4
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-4, No. 33-00000) and related prospectus of
ProNet Inc. for the registration $100,000,000 of 11 7/8% Senior Subordinated
Notes due 2005 and to the incorporation by reference therein of our report
dated September 16, 1994, with respect to the consolidated financial statements
of Radio Call Company, Inc. and Affiliates included in ProNet Inc.'s Current
Report on Form 8-K/A dated October 14, 1994, both filed with the Securities
and Exchange Commission.
CUMMINGS & CARROLL, P.C.
/s/ Cummings & Carroll, P.C.
--------------------------------
Certified Public Accountants
July 3, 1995
Great Neck, New York
<PAGE>
EXHIBIT 23.5
July 3, 1995
Consent of Independent Auditors
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-4, No. 33-00000) and related Prospectus of
ProNet Inc. for the registration $100,000,000 of 11 7/8% Senior
Subordinated Notes due 2005 and to the incorporation by reference therein of
our report dated October 10, 1994, with respect to the consolidated financial
statements of RCC Division of Chicago Communication Service, Inc. included in
ProNet Inc.'s Current Report on Form 8-K/A dated October 14, 1994, both filed
with the Securities and Exchange Commission.
/s/ Charles J. Natarelli
- ----------------------------
Charles J. Natarelli
NATARELLI & ASSOCIATES
Chicago, Illinois
<PAGE>
EXHIBIT 23.6
Consent of Independent Auditors
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-4, No. 33-00000) and related Prospectus of
ProNet Inc. for the registration of $100,000,000 of 11 7/8% Senior
Subordinated Notes due 2005 and to the incorporation by reference therein of
our report dated April 14, 1995, with respect to the consolidated financial
statements of All City Communication Company, Inc. included in ProNet Inc.'s
Current Report on Form 8-K dated June 2, 1995, both filed with the Securities
and Exchange Commission.
/s/ Winter, Kloman, Moter & Repp, S.C.
- --------------------------------------
July 3, 1995
Elm Grove, Wisconsin
<PAGE>
EXHIBIT 23.7
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-4, No. 33-00000) and related Prospectus of
ProNet Inc. for the registration $100,000,000 of 11 7/8% Senior Subordinated
Notes due 2005 and to the incorporation by reference therein of our report
dated April 13, 1995, with respect to the financial statements of Signet
Paging of Charlotte, Inc. included in ProNet Inc.'s Current Report on
Form 8-K/A dated May 12, 1995, both filed with the Securities and Exchange
Commission.
/s/ Greer & Walker, L.L.P.
July 3, 1995
Charlotte, North Carolina
<PAGE>
EXHIBIT 23.8
As independent public accountants, we hereby consent to the incorporation by
reference in this Registration Statement of our reports dated April 20, 1995
with respect to the financial statements of Metropolitan Houston Paging
Services, Inc. included in ProNet Inc.'s Form 8-K dated May 18, 1995, and to
all references to our firm included in this Registration Statement.
/s/ ARTHUR ANDERSEN LLP
Little Rock, Arkansas,
July 5, 1995.
<PAGE>
EXHIBIT 23.9
ACCOUNTANT'S CONSENT
We consent to incorporation by reference in the Registration Statement (No.
33-00000) on Form S-4 of ProNet Inc. and related Prospectus of ProNet Inc.
for the registration $100,000,000 of 11 7/8% Senior Subordinated Notes due
2005 with respect to the balance sheet of Americom Paging Corporation as of
December 31, 1994, and the related statements of operations, changes in
shareholders' deficit, and cash flows for each of the years in the two-year
period ended December 31, 1994, which report appears in the Form 8-K of
ProNet Inc. dated July 6, 1995 and to the reference to our firm under the
heading "Experts" in the Form S-4 of ProNet Inc. and the related Prospectus
of ProNet Inc. for the registration of $100,000,000 of 11 7/8% Senior
Subordinated Notes due 2005.
Our report dated April 17, 1995, contains an explanatory paragraph that states
that the Americom Paging Corporation has suffered recurring losses from
operations and has a net capital deficiency, which raise substantial doubt
about its ability to continue as a going concern. The financial statements
do not include any adjustments that might result from the outcome of that
uncertainty.
/s/ KPMG Peat Marwick LLP
Houston, Texas
July 5, 1995
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------------------
Form T-1
STATEMENT OF ELIGIBILITY UNDER THE
TRUST INDENTURE ACT OF 1939 OF A CORPORATION
DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2)
-------
------------------------------------
FIRST INTERSTATE BANK OF TEXAS, N.A.
(EXACT NAME OF TRUSTEE AS SPECIFIED IN ITS CHARTER)
P. O. Box 4441 76-0034784
Houston, Texas 77210-4441 (I.R.S. EMPLOYER
(713) 250-4020 IDENTIFICATION NUMBER)
(ADDRESS OF PRINCIPAL
EXECUTIVE OFFICES)
------------------------------------
PRONET INC.
(EXACT NAME OF OBLIGOR AS SPECIFIED IN ITS CHARTER)
DELAWARE
(STATE OF INCORPORATION)
75-1832168
(I.R.S. EMPLOYER IDENTIFICATION NUMBER)
ATTENTION: CHIEF FINANCIAL OFFICER
600 DATA DRIVE, SUITE 100
PLANO, TEXAS 75075
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
PRONET INC. 11 7/8% SENIOR SUBORDINATED NOTES DUE 2005
(TITLE OF THE INDENTURE SECURITIES)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
ITEM 1. GENERAL INFORMATION.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to which
it is subject.
Name: Address:
--------------------------------------- -----------------------
Comptroller of the Currency Washington, D.C.
Federal Reserve Bank Dallas, Texas
Federal Deposit Insurance Corporation Washington, D.C.
National Bank Examiners Dallas, Texas
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
ITEM 2. AFFILIATIONS WITH THE OBLIGOR.
If the obligor is an affiliate of the trustee, describe each such affiliation.
None.
ITEM 3. VOTING SECURITIES OF THE TRUSTEE.
Furnish the following information as to each class of voting securities of the
trustee:
Col. A Col. B
Title of Class Amount Outstanding
-------------- ------------------
Not Applicable.
ITEM 4. TRUSTEESHIPS UNDER OTHER INDENTURES.
If the trustee is a trustee under another indenture under which any other
securities, or certificates of interest or participation in any other
securities, of the obligor are outstanding, furnish the following information:
(a) Title of the securities outstanding under each such other indenture.
None.
(b) A brief statement of the facts relied upon as a basis for the claim
that no conflicting interest within the meaning of Section 310(b)(1)
of the Act arises as a result of the trusteeship under any such other
indenture, including a statement as to how the indenture securities
will rank as compared with the securities issued under such other
indenture.
None.
<PAGE>
ITEM 5. INTERLOCKING DIRECTORATES AND SIMILAR RELATIONSHIPS WITH THE OBLIGOR OR
UNDERWRITERS.
If the trustee or any of the directors or executive officers of the trustee is a
director, officer, partner, employee, appointee, or representative of the
obligor or of any underwriter for the obligor, identify each such person having
any such connection and state the nature of each such connection.
Not Applicable.
ITEM 6. VOTING SECURITIES OF THE TRUSTEE OWNED BY THE OBLIGOR OR ITS OFFICIALS.
Furnish the following information as to the voting securities of the trustee
owned beneficially by the obligor and each director, partner, and executive
officer of the obligor:
- -------------------------------------------------------------------------------
Col. A Col. B Col. C Col. D
------ ------ ------ ------
Name of Owner Title of Class Amount Owned Percentage of Voting
Beneficially Securities Represented
by Amount Given in Col. C
- -------------------------------------------------------------------------------
Not Applicable.
ITEM 7. VOTING SECURITIES OF THE TRUSTEE OWNED BY UNDERWRITERS OR THEIR
OFFICIALS.
Furnish the following information as to the voting securities of the trustee
owned beneficially by each underwriter for the obligor and each director,
partner, and executive officer of each such underwriter:
- -------------------------------------------------------------------------------
Col. A Col. B Col. C Col. D
------ ------ ------ ------
Name of Owner Title of Class Amount Owned Percentage of Voting
Beneficially Securities Represented
by Amount Given in Col. C
- -------------------------------------------------------------------------------
Not Applicable.
ITEM 8. SECURITIES OF THE OBLIGOR OWNED OR HELD BY THE TRUSTEE.
Furnish the following information as to securities of the obligor owned
beneficially or held as collateral security for obligations in default by the
trustee:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
Col. A Col. B Col. C Col. D
------ ------ ------ ------
<S> <C> <C> <C>
Title of Class Whether the Securites Amount Owned Percentage of Class
are Voting or Beneficially or Held Represented by Amount
Non-Voting Securities as Collateral Security Given in Col. C
for Obligations in Default
- --------------------------------------------------------------------------------------------------------
</TABLE>
Not Applicable.
<PAGE>
ITEM 9. SECURITIES OF UNDERWRITERS OWNED BY OR HELD BY THE TRUSTEE.
If the trustee owns beneficially or holds as collateral security for obligations
in default any securities of an underwriter for the obligor, furnish the
following information as to each class of securities of such underwriter any of
which are so owned or held by the trustee:
- -------------------------------------------------------------------------------
Col. A Col. B Col. C Col. D
------ ------ ------ ------
Title of Issuer Amount Amount Owned Percentage of Class
and Title of Outstanding Beneficially or Held as Represented by Amount
Class Collateral Security for Given in Col. C
Obligations in Default
By Trustee
- -------------------------------------------------------------------------------
Not Applicable.
ITEM 10. OWNERSHIP OR HOLDINGS BY THE TRUSTEE OF VOTING SECURITIES OF CERTAIN
AFFILIATES OR SECURITY HOLDERS OF THE OBLIGOR.
If the trustee owns beneficially or holds as collateral security for obligations
in default voting securities of a person who, to the knowledge of the trustee
(1) owns ten percent (10%) or more of the voting securities of the obligor or
(2) is an affiliate, other than a subsidiary, of the obligor, furnish the
following information as to the voting securities of such person:
- -------------------------------------------------------------------------------
Col. A Col. B Col. C Col. D
------ ------ ------ ------
Title of Issuer Amount Amount Owned Percentage of Class
and Title of Outstanding Beneficially or Held as Represented by Amount
Class Collateral Security for Given in Col. C
Obligations in Default
By Trustee
- -------------------------------------------------------------------------------
Not Applicable.
ITEM 11. OWNERSHIP OR HOLDINGS BY THE TRUSTEE OF ANY SECURITIES OF A PERSON
OWNING 50 PERCENT OR MORE OF THE VOTING SECURITIES OF THE OBLIGOR.
If the trustee owns beneficially or holds as collateral security for obligations
in default any securities of a person who, to the knowledge of the trustee, owns
fifty percent (50%) or more of the voting securities of the obligor, furnish the
following information as to each class of securities of such person any of which
are so owned or held by the trustee:
- -------------------------------------------------------------------------------
Col. A Col. B Col. C Col. D
------ ------ ------ ------
Title of Issuer Amount Amount Owned Percentage of Class
and Title of Outstanding Beneficially or Held as Represented by Amount
Class Collateral Security for Given in Col. C
Obligations in Default
By Trustee
- -------------------------------------------------------------------------------
Not Applicable.
<PAGE>
ITEM 12. INDEBTEDNESS OF THE OBLIGOR TO THE TRUSTEE.
Except as noted in the instructions, if the obligor is indebted to the
trustee, furnish the following information:
- -------------------------------------------------------------------------------
Col. A Col. B Col. C
------ ------ ------
Nature of Amount Date Due
Indebtedness Outstanding
- -------------------------------------------------------------------------------
Not Applicable.
ITEM 13. DEFAULTS BY THE OBLIGOR.
(a) State whether there is or has been a default with respect to the
securities under this indenture. Explain the nature of any such default.
Not Applicable.
(b) If the trustee is a trustee under another indenture under which any
other securities, or certificates of interest or participation in any other
securities, of the obligor are outstanding, or is trustee for more than one
outstanding series of securities under the indenture, state whether there has
been a default under any such indenture or series, identify the indenture or
series affected, and explain the nature of any such default.
Not Applicable.
ITEM 14. AFFILIATIONS WITH THE UNDERWRITERS.
If any underwriter is an affiliate of the trustee, describe each such
affiliation.
Not Applicable
ITEM 15. FOREIGN TRUSTEE.
Identify the order or rule pursuant to which the foreign trustee is authorized
to act as sole trustee under the indentures qualified or to be qualified under
the Act.
Not Applicable.
ITEM 16. LIST OF EXHIBITS.
List below all exhibits filed as a part of this statement of eligibility.
Exhibits identified in brackets below, on file with the Commission, are
incorporated herein by reference as exhibits hereto.
EXHIBIT 1. A COPY OF THE ARTICLES OF ASSOCIATION OF FIRST INTERSTATE BANK
OF TEXAS, NATIONAL ASSOCIATION AS NOW IN EFFECT, INCORPORATED HEREIN BY
REFERENCE TO EXHIBIT 1 TO T-1; REGISTRATION NO. 33-73538.
<PAGE>
EXHIBIT 2. A COPY OF THE CERTIFICATE OF AUTHORITY OF FIRST INTERSTATE
BANK OF TEXAS, NATIONAL ASSOCIATION TO COMMENCE BUSINESS, INCORPORATED
HEREIN BY REFERENCE TO EXHIBIT 2 TO T-1; REGISTRATION NO. 33-73538.
EXHIBIT 3. A COPY OF THE AUTHORIZATION OF FIRST INTERSTATE BANK OF
TEXAS, NATIONAL ASSOCIATION TO EXERCISE CORPORATE TRUST POWERS,
INCORPORATED HEREIN BY REFERENCE TO EXHIBIT 3 TO T-1; REGISTRATION NO.
33-73538.
EXHIBIT 4. A COPY OF THE EXISTING BY-LAWS OF FIRST INTERSTATE BANK OF
TEXAS, NATIONAL ASSOCIATION AS NOW IN EFFECT, INCORPORATED HEREIN BY
REFERENCE TO EXHIBIT 4 TO T-1; REGISTRATION NO. 33-73538.
EXHIBIT 5. NOT APPLICABLE.
EXHIBIT 6. THE CONSENT OF FIRST INTERSTATE BANK OF TEXAS, NATIONAL
ASSOCIATION REQUIRED BY SECTION 321(b) OF THE TRUST INDENTURE ACT OF
1939, INCORPORATED HEREIN BY REFERENCE TO EXHIBIT 6 TO T-1;
REGISTRATION NO. 33-73538.
EXHIBIT 7. A COPY OF THE LATEST REPORT OF CONDITION OF FIRST
INTERSTATE BANK OF TEXAS, NATIONAL ASSOCIATION PUBLISHED PURSUANT TO
LAW OR THE REQUIREMENTS OF ITS SUPERVISING OR EXAMINING AUTHORITY,
INCORPORATED HEREIN BY REFERENCE TO EXHIBIT 7 TO T-1; REGISTRATION
NO. 33-60769.
EXHIBIT 8. NOT APPLICABLE.
EXHIBIT 9. NOT APPLICABLE.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939 the trustee,
First Interstate Bank of Texas, N.A., a national banking association organized
and existing under the laws of the United States, has duly caused this statement
of eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in the City of Dallas and State of Texas, on the 5th day of
July, 1995.
FIRST INTERSTATE BANK OF TEXAS, N.A.
By: /s/ Dennis J. Roemlein
_______________________________________________
Name: Dennis J. Roemlein
Title: Vice President and Trust Officer
<PAGE>
EXHIBIT 99.1
<PAGE>
LETTER OF TRANSMITTAL
TO TENDER
Unregistered 11 7/8% Senior Subordinated Notes due 2005
of
PRONET INC.
PURSUANT TO THE EXCHANGE OFFER AND PROSPECTUS DATED , 1995
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK
CITY TIME, ON , 1995 (THE "EXPIRATION DATE"), UNLESS THE EXCHANGE
OFFER IS EXTENDED BY THE COMPANY.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
THE EXCHANGE AGENT FOR THE EXCHANGE OFFER IS:
FIRST INTERSTATE BANK OF TEXAS, N.A.
BY REGISTERED OR CERTIFIED MAIL,
by Overnight Courier or by Hand:
First Interstate Bank of Texas, N.A.
Attention: Danny Ampaya
Debt Operations, A86-9
26610 West Agoura Road
Calabasas, CA 91302
BY FACSIMILE:
(818) 880-3090
Attention: Danny Ampaya
CONFIRM BY TELEPHONE:
(818) 880-7132
(Originals of all documents sent by facsimile should be sent promptly by
or certified mail, by hand, or by overnight delivery service.)
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OR TRANSMISSION OF
instructions via facsimile other than as set forth above will not constitute a
valid delivery.
IF YOU WISH TO EXCHANGE UNREGISTERED 11 7/8% SENIOR SUBORDINATED NOTES DUE
2005 FOR AN EQUAL AGGREGATE PRINCIPAL AMOUNT OF REGISTERED 11 7/8% SENIOR
SUBORDINATED NOTES DUE 2005 PURSUANT TO THE EXCHANGE OFFER, YOU MUST VALIDLY
TENDER (AND NOT WITHDRAW) OLD NOTES TO THE EXCHANGE AGENT PRIOR TO THE
EXPIRATION DATE.
SIGNATURES MUST BE PROVIDED
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY.
<PAGE>
DESCRIPTION OF TENDERED OLD NOTES
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
Aggregate
Name(s) and Address(es) of Registered Owner(s) Certificate Principal Amount
(Please fill in, if blank) Number(a) Tendered
- -----------------------------------------------------------------------------------------
<S> <C> <C>
-----------------------------------
-----------------------------------
-----------------------------------
-----------------------------------
Total Principal
Amount of Notes
Tendered
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
</TABLE>
2
<PAGE>
LADIES AND GENTLEMEN:
1. The undersigned hereby tenders to ProNet Inc., a Delaware corporation (the
"Company"), the 11 7/8% Senior Subordinated Notes due 2005 (the "Old Notes")
described above pursuant to the Company's offer of $1,000 principal amount of
11 7/8% Senior Subordinated Notes due 2005 (the "New Notes") in exchange for
each
$1,000 principal amount of the Old Notes, upon the terms and subject to the
conditions contained in the Prospectus dated , 1995 (the "Prospectus"), receipt
of which is hereby acknowledged, and in this Letter of Transmittal (which
together constitute the "Exchange Offer").
2. The undersigned hereby represents and warrants that it has full authority
to tender the Old Notes described above. The undersigned will, upon request,
execute and deliver any additional documents deemed by the Company to be
necessary or desirable to complete the tender of Old Notes.
3. The undersigned understands that the tender of the Old Notes pursuant to
all of the procedures set forth in the Prospectus will constitute an agreement
between the undersigned and the Company as to the terms and conditions set forth
in the Prospectus.
4. The undersigned hereby represents and warrants that:
(i) the New Notes acquired pursuant to the Exchange Offer are being
obtained in the ordinary course of business of the undersigned,
whether or not the undersigned is the holder;
(ii) neither the undersigned nor any such other person is engaging in or
intends to engage in a distribution of such New Notes;
(iii) neither the undersigned nor any such other person has an arrangement
or understanding with any person to participate in the distribution
of such New Notes; and
(iv) neither the holder nor any such other person is an "affiliate," as
such term is defined under Rule 405 promulgated under the Securities
Act of 1933, as amended (the "Securities Act"), of the Company.
5. If the undersigned is not a broker-dealer, the undersigned represents that
it is not engaged in, and does not intend to engage in, a distribution of New
Notes. If the undersigned is a broker-dealer that will receive New Notes for
its own account in exchange for Old Notes that were acquired as a result of
market-making activities or other trading activities, it acknowledges that it
will deliver a prospectus in connection with any resale of such New Notes;
however, by so acknowledging and delivering a prospectus, the undersigned will
not be deemed to admit that it is an "underwriter" within the meaning of the
Securities Act.
6. Any obligation of the undersigned hereunder shall be binding upon the
successors, assigns, executors, administrators, trustees in bankruptcy and legal
and personal representatives of the undersigned.
7. Unless otherwise indicated herein under "Special Delivery Instructions,"
please issue the certificates for the New Notes in the name of the undersigned.
3
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(See Instruction 1)
To be completed ONLY IF the New Notes are to be issued or sent to someone
other than the undersigned or to the undersigned at an address other than that
provided above.
Mail / / Issue / / (check appropriate boxes) certificates to:
Name:
----------------------------------------------------------------------
(Please Print)
Address:
--------------------------------------------------------------------
--------------------------------------------------------------------
--------------------------------------------------------------------
(Including Zip Code)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SPECIAL BROKER-DEALER INSTRUCTIONS
(See Item 5)
/ / Check here if you are a broker-dealer and wish to receive 10 additional
copies of the Prospectus and 10 copies of any amendments or supplements thereto.
Name:
----------------------------------------------------------------------
(Please Print)
Address:
--------------------------------------------------------------------
--------------------------------------------------------------------
--------------------------------------------------------------------
(Including Zip Code)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
4
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SIGNATURE
To be completed by all exchanging noteholders. Must be signed by registered
holder exactly as name appears on Old Notes. If signature is by trustee,
executor, administrator, guardian, attorney-in-fact, officer of a corporation or
other person acting in a fiduciary or representative capacity, please set forth
full title. See Instruction 3.
X
--------------------------------------------------------------------------
X
--------------------------------------------------------------------------
SIGNATURE(s) OF REGISTERED HOLDER(s) OR AUTHORIZED SIGNATURE
Dated:
----------------------------------------------------------------------
Name(s):
--------------------------------------------------------------------
----------------------------------------------------------------------------
(PLEASE TYPE OR PRINT)
Capacity:
-------------------------------------------------------------------
Address:
--------------------------------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(INCLUDING ZIP CODE)
Area Code and Telephone No.:
------------------------------------------------
SIGNATURE GUARANTEE (IF REQUIRED BY INSTRUCTION 1)
Certain Signatures Must be Guaranteed by an Eligible Institution
- --------------------------------------------------------------------------------
(NAME OF ELIGIBLE INSTITUTION GUARANTEEING SIGNATURES)
- --------------------------------------------------------------------------------
(ADDRESS (INCLUDING ZIP CODE) AND TELEPHONE NUMBER (INCLUDING
AREA CODE) OF FIRM)
- --------------------------------------------------------------------------------
(AUTHORIZED SIGNATURE)
- --------------------------------------------------------------------------------
(PRINTED NAME)
- --------------------------------------------------------------------------------
(TITLE)
Dated:
----------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PLEASE READ THE INSTRUCTIONS ON THE FOLLOWING PAGE,
WHICH FORM A PART OF THIS LETTER OF TRANSMITTAL.
5
<PAGE>
INSTRUCTIONS
1. GUARANTEE OF SIGNATURES. Signatures on this Letter of Transmittal
must be guaranteed by an eligible guarantor institution that is a member of or
participant in the Securities Transfer Agents Medallion Program, the New York
Stock Exchange Medallion Signature Program, the Stock Exchange Medallion
Program, or by an "eligible guarantor institution" within the meaning of Rule
17Ad-15 promulgated under the Securities Exchange Act of 1934, as amended (an
"Eligible Institution"), unless the box titled "Special Delivery Instructions"
above has not been completed or the Old Notes described above are tendered for
the account of an Eligible Institution.
2. DELIVERY OF LETTER OF TRANSMITTAL AND OLD NOTES. The Old Notes,
together with a properly completed and duly executed Letter of Transmittal (or
copy thereof), should be mailed or delivered to the Exchange Agent at the
address set forth above.
THE METHOD OF DELIVERY OF OLD NOTES AND THE LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND RISK OF
THE HOLDER. INSTEAD OF DELIVERY BY MAIL, IT IS RECOMMENDED THAT HOLDERS USE AN
OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL CASES, SUFFICIENT TIME SHOULD BE
ALLOWED TO ASSURE DELIVERY TO THE EXCHANGE AGENT BEFORE THE EXPIRATION DATE. NO
LETTER OF TRANSMITTAL OR OLD NOTES SHOULD BE SENT TO THE COMPANY. HOLDERS MAY
REQUEST THEIR RESPECTIVE BROKERS, DEALERS, COMMERCIAL BANKS, TRUST COMPANIES, OR
NOMINEES TO EFFECT THE ABOVE TRANSACTIONS FOR SUCH HOLDERS.
3. SIGNATURE ON LETTER OF TRANSMITTAL, BOND POWERS AND ENDORSEMENTS.
If this Letter of Transmittal is signed by a person other than a registered
holder of any Old Notes, such Old Notes must be endorsed or accompanied by
appropriate bond powers, signed by such registered holder exactly as such
registered holder's name appears on such Old Notes.
If this Letter of Transmittal or any Old Notes or bond powers are signed
by trustees, executors, administrators, guardians, attorneys-in-fact, officers
of corporations, or others acting in a fiduciary or representative capacity,
such persons should so indicate when signing, and, unless waived by the Company,
proper evidence satisfactory to the Company of their authority to so act must be
submitted with this Letter of Transmittal.
4. MISCELLANEOUS. All questions as to the validity, form,
eligibility (including time of receipt), acceptance, and withdrawal of tendered
Old Notes will be resolved by the Company in its sole discretion, which
determination will be final and binding. The Company reserves the absolute
right to reject any or all Old Notes not properly tendered or any Old Notes the
Company's acceptance of which would, in the opinion of counsel for the Company,
be unlawful. The Company also reserves the right to waive any defects,
irregularities, or conditions of tender as to particular Old Notes. The
Company's interpretation of the terms and conditions of the Exchange Offer
(including the instructions in this Letter of Transmittal) will be final and
binding. Unless waived, any defects or irregularities in connection with
tenders of Old Notes must be cured within such time as the Company shall
determine. Neither the Company, the Exchange Agent, nor any other person shall
be under any duty to give notification of defects in such tenders or shall incur
any liability for failure to give such notification. Tenders of Old Notes will
not be deemed to have been made until such defects or irregularities have been
cured or waived. Any Old Notes received by the Exchange Agent that are not
properly tendered and as to which the defects or irregularities have not been
cured or waived will be returned by the Exchange Agent to the tendering holder
thereof as soon as practicable following the Expiration Date.
6
<PAGE>
EXHIBIT 99.2
<PAGE>
NOTICE OF GUARANTEED DELIVERY
TO TENDER
UNREGISTERED 11 7/8% SENIOR SUBORDINATED NOTES DUE 2005
OF
PRONET INC.
PURSUANT TO THE EXCHANGE OFFER AND PROSPECTUS DATED , 1995
As set forth in the Exchange Offer (as defined in the Prospectus (as
defined below)), this form or one substantially equivalent hereto must be used
to accept the Exchange Offer if certificates for unregistered 11 7/8% Senior
Subordinated Notes due 2005 (the "Old Notes") of ProNet Inc. are not immediately
available or time will not permit a holder's Old Notes or other required
documents to reach the Exchange Agent on or prior to the Expiration Date (as
defined), or the procedure for book-entry transfer cannot be completed on a
timely basis. This form may be delivered by facsimile transmission, by
registered or certified mail, by hand, or by overnight delivery service to the
Exchange Agent. See "The Exchange Offer -- Procedures for Tendering" in the
Prospectus.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY
TIME, ON , 1995 (THE "EXPIRATION DATE"), UNLESS THE EXCHANGE OFFER IS
EXTENDED BY THE COMPANY.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
THE EXCHANGE AGENT FOR THE EXCHANGE OFFER IS:
FIRST INTERSTATE BANK OF TEXAS, N.A.
BY REGISTERED OR CERTIFIED MAIL,
BY OVERNIGHT COURIER OR BY HAND:
First Interstate Bank of Texas, N.A.
Attention: Danny Ampaya
Debt Operations, A86-9
26610 West Agoura Road
Calabasas, CA 91302
BY FACSIMILE:
(818) 880-3090
Attention: Danny Ampaya
CONFIRM BY TELEPHONE:
(818) 880-7132
(Originals of all documents sent by facsimile should be sent promptly by
registered or certified mail, by hand, or by overnight delivery service.)
DELIVERY OF THIS NOTICE TO AN ADDRESS OR TRANSMISSION OF INSTRUCTIONS
VIA FACSIMILE OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID
DELIVERY.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to ProNet Inc., a Delaware corporation (the
"Company"), in accordance with the Company's offer, upon the terms and subject
to the conditions set forth in the Prospectus dated , 1995 (the
"Prospectus"), and in the accompanying Letter of Transmittal, receipt of which
is hereby acknowledged, $_________________________________ in aggregate
principal amount of Old Notes pursuant to the guaranteed delivery procedures
described in the Prospectus.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Name(s) of Registered Holder(s):
-----------------------------------------------
(Please Type or Print)
Address:
-----------------------------------------------------------------------
- -------------------------------------------------------------------------------
Area Code & Telephone No.:
-----------------------------------------------------
Certificate Number(s) for
Old Notes (if available):
------------------------------------------------------
Total Principal Amount
Tendered and Represented
by Certificate(s): $
-----------------------------------------------------------
Signature of Registered Holder(s):
---------------------------------------------
Dated:
-------------------------------------------------------------------------
/ / The Depository Trust Company
(Check if Old Notes will be tendered
by book-entry transfer)
Account Number:
----------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
THE GUARANTEE ON THE FOLLOWING PAGE MUST BE COMPLETED
2
<PAGE>
GUARANTEE
(Not to be used for signature guarantee)
The undersigned, being a member firm of a registered national securities
exchange, a member of the National Association of Securities Dealers, Inc., or a
commercial bank or trust company having an office in the United States, hereby
guarantees (a) that the above named person(s) "own(s)" the Old Notes tendered
hereby within the meaning of Rule 14e-4 ("Rule 14e-4") under the Securities
Exchange Act of 1934, as amended, (b) that such tender of such Old Notes
complies with Rule 14e-4, and (c) to deliver to the Exchange Agent the
certificates representing the Old Notes tendered hereby or confirmation of book-
entry transfer of such Old Notes into the Exchange Agent's account at The
Depository Trust Company, in proper form for transfer, together with the Letter
of Transmittal (or facsimile thereof), properly completed and duly executed,
with any required signature guarantees and any other required documents, within
five New York Stock Exchange trading days after the Expiration Date.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Name of Firm:
-----------------------------------------------------------------
Address:
----------------------------------------------------------------------
- -------------------------------------------------------------------------------
Area Code and Telephone No.:
--------------------------------------------------
Authorized Signature:
Name:
-------------------------------------------------------------------------
Title:
------------------------------------------------------------------------
Dated:
------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NOTE: DO NOT SEND CERTIFICATES OF OLD NOTES WITH THIS FORM. CERTIFICATES OF
OLD NOTES SHOULD BE SENT ONLY WITH A LETTER OF TRANSMITTAL.
3
