<PAGE>
As filed with the Securities and Exchange Commission on September 1, 1995
Registration No.
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
GEOTEK COMMUNICATIONS, INC.
(Exact name of registrant as specified in its charter)
Delaware 4812 22-2358635
(State or other jurisdiction of (Primary S.I.C. number) (I.R.S. Employer
incorporation or organization) Identification Number)
20 Craig Road
Montvale, New Jersey 07645
(201) 930-9305
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
------------------------
<PAGE>
ANSA COMMUNICATIONS, INC.
(Exact name of registrant as specified in its charter)
California 4812 95-4207737
(State or other jurisdiction of (Primary S.I.C. number) (I.R.S. Employer
incorporation or organization) Identification Number)
20 Craig Road
Montvale, New Jersey 07645
(201) 930-9305
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
------------------------
CLW COMMUNICATIONS, INC.
(Exact name of registrant as specified in its charter)
Texas 4812 74-2513789
(State or other jurisdiction of (Primary S.I.C. number) (I.R.S. Employer
incorporation or organization) Identification Number)
20 Craig Road
Montvale, New Jersey 07645
(201) 930-9305
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
------------------------
CUMULOUS HOLDING CORP., INC.
(Exact name of registrant as specified in its charter)
Delaware 4812 22-3245951
(State or other jurisdiction of (Primary S.I.C. number) (I.R.S. Employer
incorporation or organization) Identification Number)
20 Craig Road
Montvale, New Jersey 07645
(201) 930-9305
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
------------------------
<PAGE>
GEOTEK ACQUISITION CORP.
(Exact name of registrant as specified in its charter)
Delaware 4812 22-3258551
(State or other jurisdiction of (Primary S.I.C. number) (I.R.S. Employer
incorporation or organization) Identification Number)
20 Craig Road
Montvale, New Jersey 07645
(201) 930-9305
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
------------------------
GEOTEK SUBSIDIARY INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
Delaware 4812 22-3392600
(State or other jurisdiction of (Primary S.I.C. number) (I.R.S. Employer
incorporation or organization) Identification Number)
20 Craig Road
Montvale, New Jersey 07645
(201) 930-9305
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
------------------------
METRO NET SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
New York 4812 11-2986167
(State or other jurisdiction of (Primary S.I.C. number) (I.R.S. Employer
incorporation or organization) Identification Number)
20 Craig Road
Montvale, New Jersey 07645
(201) 930-9305
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
------------------------
<PAGE>
MOBILE MESSAGE SERVICE OF TEXAS, INC.
(Exact name of registrant as specified in its charter)
New York 4812 06-1259975
(State or other jurisdiction of (Primary S.I.C. number) (I.R.S. Employer
incorporation or organization) Identification Number)
20 Craig Road
Montvale, New Jersey 07645
(201) 930-9305
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
------------------------
OAK HILL COMMUNICATIONS, INC.
(Exact name of registrant as specified in its charter)
Texas 4812 76-0262202
(State or other jurisdiction of (Primary S.I.C. number) (I.R.S. Employer
incorporation or organization) Identification Number)
20 Craig Road
Montvale, New Jersey 07645
(201) 930-9305
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
------------------------
POWERSPECTRUM, INC.
(Exact name of registrant as specified in its charter)
Delaware 4812 22-3175296
(State or other jurisdiction of (Primary S.I.C. number) (I.R.S. Employer
incorporation or organization) Identification Number)
20 Craig Road
Montvale, New Jersey 07645
(201) 930-9305
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
------------------------
<PAGE>
POWERSPECTRUM MICROWAVE, INC.
(Exact name of registrant as specified in its charter)
Delaware 4812 22-3392602
(State or other jurisdiction of (Primary S.I.C. number) (I.R.S. Employer
incorporation or organization) Identification Number)
20 Craig Road
Montvale, New Jersey 07645
(201) 930-9305
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
------------------------
POWERSPECTRUM OF ATLANTA, INC.
(Exact name of registrant as specified in its charter)
Delaware 4812 22-3202887
(State or other jurisdiction of (Primary S.I.C. number) (I.R.S. Employer
incorporation or organization) Identification Number)
20 Craig Road
Montvale, New Jersey 07645
(201) 930-9305
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
------------------------
POWERSPECTRUM OF BOSTON, INC.
(Exact name of registrant as specified in its charter)
Delaware 4812 22-3202888
(State or other jurisdiction of (Primary S.I.C. number) (I.R.S. Employer
incorporation or organization) Identification Number)
20 Craig Road
Montvale, New Jersey 07645
(201) 930-9305
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
------------------------
<PAGE>
POWERSPECTRUM OF BUFFALO, INC.
(Exact name of registrant as specified in its charter)
Delaware 4812 22-3202864
(State or other jurisdiction of (Primary S.I.C. number) (I.R.S. Employer
incorporation or organization) Identification Number)
20 Craig Road
Montvale, New Jersey 07645
(201) 930-9305
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
------------------------
POWERSPECTRUM OF CHARLOTTE, INC.
(Exact name of registrant as specified in its charter)
Delaware 4812 22-3389704
(State or other jurisdiction of (Primary S.I.C. number) (I.R.S. Employer
incorporation or organization) Identification Number)
20 Craig Road
Montvale, New Jersey 07645
(201) 930-9305
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
------------------------
POWERSPECTRUM OF CHICAGO, INC.
(Exact name of registrant as specified in its charter)
Delaware 4812 22-3266310
(State or other jurisdiction of (Primary S.I.C. number) (I.R.S. Employer
incorporation or organization) Identification Number)
20 Craig Road
Montvale, New Jersey 07645
(201) 930-9305
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
------------------------
<PAGE>
POWERSPECTRUM OF CINCINNATI, INC.
(Exact name of registrant as specified in its charter)
Delaware 4812 22-3266309
(State or other jurisdiction of (Primary S.I.C. number) (I.R.S. Employer
incorporation or organization) Identification Number)
20 Craig Road
Montvale, New Jersey 07645
(201) 930-9305
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
------------------------
POWERSPECTRUM OF D.C., INC.
(Exact name of registrant as specified in its charter)
Delaware 4812 22-3202868
(State or other jurisdiction of (Primary S.I.C. number) (I.R.S. Employer
incorporation or organization) Identification Number)
20 Craig Road
Montvale, New Jersey 07645
(201) 930-9305
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
------------------------
POWERSPECTRUM OF DALLAS, INC.
(Exact name of registrant as specified in its charter)
Delaware 4812 22-3266308
(State or other jurisdiction of (Primary S.I.C. number) (I.R.S. Employer
incorporation or organization) Identification Number)
20 Craig Road
Montvale, New Jersey 07645
(201) 930-9305
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
------------------------
<PAGE>
POWERSPECTRUM OF DENVER, INC.
(Exact name of registrant as specified in its charter)
Delaware 4812 22-3202869
(State or other jurisdiction of (Primary S.I.C. number) (I.R.S. Employer
incorporation or organization) Identification Number)
20 Craig Road
Montvale, New Jersey 07645
(201) 930-9305
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
------------------------
POWERSPECTRUM OF GREENSBORO, INC.
(Exact name of registrant as specified in its charter)
Delaware 4812 22-3389703
(State or other jurisdiction of (Primary S.I.C. number) (I.R.S. Employer
incorporation or organization) Identification Number)
20 Craig Road
Montvale, New Jersey 07645
(201) 930-9305
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
------------------------
POWERSPECTRUM OF HARTFORD, INC.
(Exact name of registrant as specified in its charter)
Delaware 4812 22-3202873
(State or other jurisdiction of (Primary S.I.C. number) (I.R.S. Employer
incorporation or organization) Identification Number)
20 Craig Road
Montvale, New Jersey 07645
(201) 930-9305
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
------------------------
<PAGE>
POWERSPECTRUM OF INDIANAPOLIS, INC.
(Exact name of registrant as specified in its charter)
Delaware 4812 22-3202875
(State or other jurisdiction of (Primary S.I.C. number) (I.R.S. Employer
incorporation or organization) Identification Number)
20 Craig Road
Montvale, New Jersey 07645
(201) 930-9305
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
------------------------
POWERSPECTRUM OF JACKSONVILLE, INC.
(Exact name of registrant as specified in its charter)
Delaware 4812 22-3202889
(State or other jurisdiction of (Primary S.I.C. number) (I.R.S. Employer
incorporation or organization) Identification Number)
20 Craig Road
Montvale, New Jersey 07645
(201) 930-9305
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
------------------------
POWERSPECTRUM OF KANSAS CITY, INC.
(Exact name of registrant as specified in its charter)
Delaware 4812 22-3202892
(State or other jurisdiction of (Primary S.I.C. number) (I.R.S. Employer
incorporation or organization) Identification Number)
20 Craig Road
Montvale, New Jersey 07645
(201) 930-9305
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
------------------------
<PAGE>
POWERSPECTRUM OF MEMPHIS, INC.
(Exact name of registrant as specified in its charter)
Delaware 4812 22-3202894
(State or other jurisdiction of (Primary S.I.C. number) (I.R.S. Employer
incorporation or organization) Identification Number)
20 Craig Road
Montvale, New Jersey 07645
(201) 930-9305
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
------------------------
POWERSPECTRUM OF MIAMI, INC.
(Exact name of registrant as specified in its charter)
Delaware 4812 22-3202896
(State or other jurisdiction of (Primary S.I.C. number) (I.R.S. Employer
incorporation or organization) Identification Number)
20 Craig Road
Montvale, New Jersey 07645
(201) 930-9305
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
------------------------
POWERSPECTRUM OF MINNEAPOLIS, INC.
(Exact name of registrant as specified in its charter)
Delaware 4812 22-3202897
(State or other jurisdiction of (Primary S.I.C. number) (I.R.S. Employer
incorporation or organization) Identification Number)
20 Craig Road
Montvale, New Jersey 07645
(201) 930-9305
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
------------------------
<PAGE>
POWERSPECTRUM OF NASHVILLE, INC.
(Exact name of registrant as specified in its charter)
Delaware 4812 22-3202847
(State or other jurisdiction of (Primary S.I.C. number) (I.R.S. Employer
incorporation or organization) Identification Number)
20 Craig Road
Montvale, New Jersey 07645
(201) 930-9305
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
------------------------
POWERSPECTRUM OF NEW ORLEANS, INC.
(Exact name of registrant as specified in its charter)
Delaware 4812 22-3202848
(State or other jurisdiction of (Primary S.I.C. number) (I.R.S. Employer
incorporation or organization) Identification Number)
20 Craig Road
Montvale, New Jersey 07645
(201) 930-9305
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
------------------------
POWERSPECTRUM OF NEW YORK CITY, INC.
(Exact name of registrant as specified in its charter)
Delaware 4812 22-3266305
(State or other jurisdiction of (Primary S.I.C. number) (I.R.S. Employer
incorporation or organization) Identification Number)
20 Craig Road
Montvale, New Jersey 07645
(201) 930-9305
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
------------------------
<PAGE>
POWERSPECTRUM OF ORLANDO, INC.
(Exact name of registrant as specified in its charter)
Delaware 4812 22-3202850
(State or other jurisdiction of (Primary S.I.C. number) (I.R.S. Employer
incorporation or organization) Identification Number)
20 Craig Road
Montvale, New Jersey 07645
(201) 930-9305
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
------------------------
POWERSPECTRUM OF PHILADELPHIA, INC.
(Exact name of registrant as specified in its charter)
Delaware 4812 22-3202851
(State or other jurisdiction of (Primary S.I.C. number) (I.R.S. Employer
incorporation or organization) Identification Number)
20 Craig Road
Montvale, New Jersey 07645
(201) 930-9305
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
------------------------
POWERSPECTRUM OF PHOENIX, INC.
(Exact name of registrant as specified in its charter)
Delaware 4812 22-3202852
(State or other jurisdiction of (Primary S.I.C. number) (I.R.S. Employer
incorporation or organization) Identification Number)
20 Craig Road
Montvale, New Jersey 07645
(201) 930-9305
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
------------------------
<PAGE>
POWERSPECTRUM OF ROCHESTER, INC.
(Exact name of registrant as specified in its charter)
Delaware 4812 22-3202855
(State or other jurisdiction of (Primary S.I.C. number) (I.R.S. Employer
incorporation or organization) Identification Number)
20 Craig Road
Montvale, New Jersey 07645
(201) 930-9305
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
------------------------
POWERSPECTRUM OF SALT LAKE CITY, INC.
(Exact name of registrant as specified in its charter)
Delaware 4812 22-3202857
(State or other jurisdiction of (Primary S.I.C. number) (I.R.S. Employer
incorporation or organization) Identification Number)
20 Craig Road
Montvale, New Jersey 07645
(201) 930-9305
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
------------------------
POWERSPECTRUM OF SAN FRANCISCO, INC.
(Exact name of registrant as specified in its charter)
Delaware 4812 22-3389709
(State or other jurisdiction of (Primary S.I.C. number) (I.R.S. Employer
incorporation or organization) Identification Number)
20 Craig Road
Montvale, New Jersey 07645
(201) 930-9305
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
------------------------
<PAGE>
POWERSPECTRUM OF SEATTLE, INC.
(Exact name of registrant as specified in its charter)
Delaware 4812 22-3202859
(State or other jurisdiction of (Primary S.I.C. number) (I.R.S. Employer
incorporation or organization) Identification Number)
20 Craig Road
Montvale, New Jersey 07645
(201) 930-9305
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
------------------------
POWERSPECTRUM OF TAMPA, INC.
(Exact name of registrant as specified in its charter)
Delaware 4812 22-3202862
(State or other jurisdiction of (Primary S.I.C. number) (I.R.S. Employer
incorporation or organization) Identification Number)
20 Craig Road
Montvale, New Jersey 07645
(201) 930-9305
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
------------------------
U.S.I. VENTURE CORP.
(Exact name of registrant as specified in its charter)
Delaware 4812 13-3123779
(State or other jurisdiction of (Primary S.I.C. number) (I.R.S. Employer
incorporation or organization) Identification Number)
20 Craig Road
Montvale, New Jersey 07645
(201) 930-9305
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
Andrew Siegel, Esq.
General Counsel and Secretary
Geotek Communications, Inc.
20 Craig Road
Montvale, New Jersey 07645
(201) 930-9305
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
<PAGE>
With a copy to:
Stephen T. Burdumy, Esq.
Todd L. Silverberg, Esq.
Klehr, Harrison, Harvey, Branzburg & Ellers
1401 Walnut Street
Philadelphia, PA 19102
(215) 568-6060
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the Registration Statement becomes effective.
------------------------------
If the securities 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. [ ]
<PAGE>
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
====================================================================================================================================
Maximum value of
Title of each class of securities Amount to be securities to be received Amount of Registration
to be registered registered in the exchange (1) Fee
====================================================================================================================================
<C> <C> <C> <C>
15% Series B Senior Secured Discount $227,700,000 $81,196,288 $27,998.72
Notes Due 2005
====================================================================================================================================
Guarantee -
Evidencing Guarantee by $227,700,000 (2) None
ANSA Communications, Inc.,
CLW Communications, Inc.,
Cumulous Holding Corp., Inc.,
Geotek Acquisition Corp.,
Geotek Subsidiary Industries, Inc.,
Metro Net Systems, Inc.,
Mobile Message Service of Texas, Inc.,
Oak Hill Communications, Inc.,
PowerSpectrum, Inc.,
PowerSpectrum Microwave, Inc.,
PowerSpectrum of Atlanta, Inc.,
PowerSpectrum of Boston, Inc.,
PowerSpectrum of Buffalo, Inc.,
PowerSpectrum of Charlotte, Inc.,
PowerSpectrum of Chicago, Inc.,
PowerSpectrum of Cincinnati, Inc.,
PowerSpectrum of D.C., Inc.,
PowerSpectrum of Dallas, Inc.,
PowerSpectrum of Denver, Inc.,
PowerSpectrum of Greensboro, Inc.,
PowerSpectrum of Hartford, Inc.,
PowerSpectrum of Indianapolis, Inc.,
PowerSpectrum of Jacksonville, Inc.,
PowerSpectrum of Kansas City, Inc.,
PowerSpectrum of Memphis, Inc.,
PowerSpectrum of Miami, Inc.,
PowerSpectrum of Minneapolis, Inc.,
PowerSpectrum of Nashville, Inc.,
PowerSpectrum of New Orleans, Inc.,
PowerSpectrum of New York City, Inc.,
PowerSpectrum of Orlando, Inc.,
PowerSpectrum of Philadelphia, Inc.,
PowerSpectrum of Phoenix, Inc.,
PowerSpectrum of Rochester, Inc.,
PowerSpectrum of Salt Lake City, Inc.,
PowerSpectrum of San Francisco, Inc.,
PowerSpectrum of Seattle, Inc.,
PowerSpectrum of Tampa, Inc.,
U.S.I. Venture Corp.
====================================================================================================================================
</TABLE>
(1) Calculated pursuant to Rule 457(f)(2) under the Securities Act of 1933,
based upon the book value, as of August 31, 1995 of the securities to be
received by the registrant in the exchange. Geotek Subsidiary Industries,
Inc.,
(2) No securities will be received in exchange for the Guarantees. Mobile
Message Service of Texas, Inc.,
The registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with section 8(a) of the
Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said section 8(a),
may determine.
===============================================================================
<PAGE>
GEOTEK COMMUNICATIONS, INC.
CROSS-REFERENCE TABLE
Pursuant to Item 501(b) of Regulation S-K
<TABLE>
<CAPTION>
Item No. Form S-4 Caption Prospectus Caption
-------- ---------------- -------------------
<S> <C> <C>
Item 1 Forepart of the Registration Statement and Outside Front
Cover Page of Prospectus.......................................... Forepart of the Registration Statement and
Outside Front Cover Page of Prospectus
Item 2 Inside Front and Outside Back Cover Pages of Prospectus........... Inside Front and Outside Back Cover Pages of
Prospectus
Item 3 Risk Factors, Ratio of Earnings to Fixed Charges and Other
Information....................................................... The Company; Summary; Risk Factors;
Selected Consolidated Financial Data
Item 4 Terms of the Transaction.......................................... Summary; The Exchange Offer; Description
of Exchange Notes; Certain Federal Income
Tax Consequences
Item 5 Pro Forma Financial Information................................... Selected Consolidated Financial Data
Item 6 Material Contacts with the Company Being Acquired................. Not Applicable
Item 7 Additional Information Required for Reoffering by Persons and
Parties Deemed to be Underwriters................................. Not Applicable
Item 8 Interests of Named Experts and Counsel............................ Legal Matters; Experts
Item 9 Disclosure of Commission Position on Indemnification for
Securities Acts Liabilities....................................... Not Applicable
Item 10 Information with Respect to S-3 Registrants....................... Selected Consolidated Financial Data
Item 11 Incorporation of Certain Information by Reference................. Incorporation of Certain Information by
Reference
Item 12 Information with Respect to S-2 or S-3 Registrants................ Not Applicable
Item 13 Incorporation of Certain Information by Reference................. Not Applicable
Item 14 Information with Respect to Registrants Other than S-3 or
S-2 Registrants................................................... Not Applicable
Item 15 Information with Respect to S-3 Companies......................... Not Applicable
Item 16 Information with Respect to S-2 or S-3 Companies.................. Not Applicable
Item 17 Information with Respect to Companies Other than
S-3 or S-2 Companies.............................................. Not Applicable
Item 18 Information if Proxies, Consents or Authorizations
are to be Solicited............................................... Not Applicable
Item 19 Information if Proxies, Consents or Authorizations are
not to be Solicited or in an Exchange Offer....................... Incorporated by reference to the Issuer's
Annual Report on Form 10-K, for the year
ended December 31, 1994 (as amended on
Form 10-K/A filed on or about May 26, 1995
and August __, 1995)
</TABLE>
<PAGE>
Offer to Exchange
all outstanding
15% Series A Senior Secured Discount Notes due 2005
($227,700,000 aggregate principal amount at maturity outstanding)
for
15% Series B Senior Secured Discount Notes due 2005
($227,700,000 aggregate principal amount at maturity)
of
GEOTEK COMMUNICATIONS, INC.
The Exchange Offer and withdrawal rights will expire at 5:00
P.M., New York City time, on ________ _, 1995 (as such date may be extended, the
"Expiration Date").
Geotek Communications, Inc., a Delaware corporation (the
"Company"), hereby offers (the "Exchange Offer"), upon the terms and subject to
the conditions set forth in this Prospectus and the accompanying letter of
transmittal (the "Letter of Transmittal"), to exchange $1,000 in principal
amount at maturity of its 15% Series B Senior Secured Discount Notes due 2005
(the "Exchange Notes") for each $1,000 in principal amount at maturity of its
outstanding 15% Series A Senior Secured Discount Notes due 2005 (the "Initial
Notes") held by Eligible Holders (as hereinafter defined), of which an aggregate
of $227.7 million in principal amount at maturity are outstanding as of the date
hereof. See "The Exchange Offer. "Hereinafter, the Exchange Notes and Initial
Notes are sometimes collectively referred to as the "Notes". For purposes of the
Exchange Offer, "Eligible Holder" shall mean each of the initial purchaser's
direct and indirect transferees who became a registered owner of Initial Notes,
including any broker-dealers who hold Initial Notes that were acquired for its
own account provided that such holder is not an affiliate of the Company;
provided that the Eligible Holder is acquiring Exchange Notes in the ordinary
course of business and is not participating, and has no arrangement or
understanding with any person to participate, in the distribution of Exchange
Notes.
The Company will accept for exchange any and all Initial Notes
that are validly tendered by an Eligible Holder on or prior to 5:00 p.m., New
York City time, on the Expiration Date. Tenders of Initial Notes may be
withdrawn at any time prior to 5:00 p.m., New York City time, on the Expiration
Date. The Exchange Offer is not conditioned upon any minimum principal amount of
Initial Notes being tendered for exchange. However, the Exchange Offer is
subject to certain customary conditions and to the terms and provisions of the
Notes Registration Rights Agreement (as hereinafter defined). The Initial Notes
may be tendered only in multiples of $1,000. See "The Exchange Offer."
(continued on the next page)
----------------------------
SEE "RISK FACTORS" FOR A DISCUSSION OF CERTAIN RISKS THAT SHOULD
BE CONSIDERED BY ELIGIBLE HOLDERS IN EVALUATING THE EXCHANGE OFFER.
--------------------------------
THE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION (THE "COMMISSION") OR ANY STATE SECURITIES COMMISSION
NOR HAS THE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE
------------------------------
The date of this Prospectus is _____________ __, 1995.
<PAGE>
The Initial Notes were, and the Exchange Notes will be, issued
under an indenture (the "Indenture") dated as of June 30, 1995 between the
Company and IBJ Schroder Bank & Trust Company, as trustee (in such capacity, the
"Trustee"). The terms of the Exchange Notes will be identical in all material
respects to the terms of the Initial Notes, except that (i) the Exchange Notes
will have been registered under the Securities Act of 1933, as amended (the
"Securities Act") and, therefore, will not bear legends restricting the transfer
thereof, (ii) holders of the Exchange Notes will not be entitled to any
additional interest following the occurrence of a default by the Company under
that certain notes registration rights agreement (the "Notes Registration Rights
Agreement") dated as of July 6, 1995 between the Company and Smith Barney, Inc.
(the "Initial Purchaser") and (iii) holders of the Exchange Notes will not be,
and upon consummation of the Exchange Offer, holders of the Initial Notes (other
than holders who are ineligible to participate in this Exchange Offer) will no
longer be, entitled to certain rights under the Notes Registration Rights
Agreement intended for holders of unregistered securities. See "The Exchange
Offer - Termination of Certain Rights," and "Description of Exchange Notes -
Maturity, Interest and Principal".
Cash interest on the Exchange Notes will be payable semiannually
on January 15 and July 15, commencing January 15, 2001. The Exchange Notes will
mature on July 15, 2005 and will not be redeemable prior to July 15, 2000,
except that, at any time prior to July 15, 1998, the Company, at its option, may
redeem up to 20% of the aggregate Accreted Value of the Notes with the proceeds
of the sale of Capital Stock (as defined herein) to a Strategic Equity Investor
(as defined herein) at 115% of their Accreted Value. On or after July 15, 2000,
the Exchange Notes will be redeemable at the Company's option, in whole or in
part, at the prices set forth herein plus accrued and unpaid interest, if any,
to the redemption date. In the event of a Change of Control (as defined herein),
the Company will be required to offer to repurchase all of the Notes at a price
equal to 101% of the Accreted Value thereof plus accrued and unpaid interest, if
any, to the purchase date, although there can be no assurance that the Company
will have sufficient resources to effect such a repurchase.
The Exchange Notes will be senior obligations of the Company that
will rank senior in right of payment to all subordinated Indebtedness (as
defined herein) of the Company and the Guarantors (as defined herein), which are
certain wholly-owned subsidiaries of the Company. The Exchange Notes will rank
pari passu in right of payment to all existing and future senior Indebtedness of
the Company and the Guarantors and subordinate in right of payment to certain
indebtedness of the Guarantors. The Exchange Notes will be effectively
subordinated to all existing and future liabilities and obligations of the
Company's subsidiaries that are not Guarantors (approximately $33.5 million for
all subsidiaries as of June 30, 1995, excluding intercompany indebtedness). The
Indenture under which the Exchange Notes are to be issued will permit the
Company and its subsidiaries to incur additional indebtedness under certain
circumstances. The Exchange Notes will be secured by a pledge of all shares of
Capital Stock owned by the Company in each Pledged Company (as defined herein),
as well as certain shares of Capital Stock that may be acquired by the Company
in the future and certain other security. See "Description of the Exchange
Notes."
Based on an interpretation by the staff of the Commission set
forth in no-action letters issued to third parties, the Company believes that
Exchange Notes issued pursuant to the Exchange Offer to an Eligible Holder in
exchange for Initial Notes may be offered for resale, resold and otherwise
transferred by such Eligible Holder (other than (i) a broker-dealer who acquired
Initial Notes directly from the Company for resale pursuant to Rule 144A or any
other available exemption under the Securities Act, or (ii) a 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 the Eligible Holder is acquiring
the Exchange Notes in the ordinary course of business and is not participating,
and has no arrangement or understanding with any person to participate, in the
distribution of the Exchange Notes. Eligible Holders wishing to accept the
Exchange Offer must represent to the Company, as required by the Notes
Registration Rights Agreement, that such conditions have been met. Each
broker-dealer that receives Exchange Notes for its own account pursuant to the
Exchange Offer must acknowledge that it will deliver a prospectus in connection
with any resale of such Exchange 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. 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 Exchange Notes
received in exchange for Initial Notes where such Initial Notes were acquired by
such broker-dealer as a result of market-making or other trading activities. The
Company has agreed that, for a period of one year from the Expiration Date, it
will maintain the effectiveness of this Prospectus for use by any broker-dealer
in connection with any such resale. See "Plan of Distribution."
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As of the Record Date (as defined herein), there were ___
registered holders of the Initial Notes and Cede & Co., as nominee for The
Depository Trust Company ("DTC"), one of the registered holders, held Initial
Notes for ___ of its participants. One registered holder, S-C Rig Investments
III, L.P. ("S-C Rig"), is an affiliate of the Company and, based on an
interpretation of the staff of the Commission set forth in no action letters to
third parties, is not eligible to participate in the Exchange. S-C Rig holds
Initial Notes having an aggregate principal amount at maturity of $22.7 million.
The Company does not believe that any other Holder of the Initial Notes is an
affiliate (as such term is defined in Rule 405 under the Securities Act) of the
Company. There has previously been only a limited secondary market and no public
market for the Initial Notes. Although the Company has agreed, in certain
circumstances, to cause the Exchange Notes to be listed on each securities
exchange which similar securities issued by the company are listed (if requested
by the holders of a majority in aggregate principal amount of the Exchange Notes
in accordance with the Notes Registration Rights Agreement), the Company has no
such listed securities and has no present intention to apply for the listing of
any securities similar to the Exchange Notes. Smith Barney Inc. has advised the
Company that it currently intends to make a market in the Exchange Notes;
however, it is not obligated to so do and any market making activity may be
discontinued at any time. Therefore, there can be no assurance that an active
market for the Exchange Notes will develop. If such a trading market develops
for the Exchange Notes, future trading prices will depend on many factors,
including, among other things, prevailing interest rates, the Company's results
of operations and the market for similar securities. Depending on such factors,
the Exchange Notes may trade at a discount from their face value. See "Risk
Factors-Lack of Public Market for Exchange Notes; Liquidity."
The Company will not receive any proceeds from this offering,
but, pursuant to the Notes Registration Rights Agreement, the Company will bear
certain offering expenses. No underwriter is being utilized in connection with
the Exchange Offer.
THE EXCHANGE OFFER IS NOT BEING MADE TO, NOR WILL THE COMPANY
ACCEPT SURRENDERS FOR EXCHANGE FROM, ELIGIBLE HOLDERS OF INITIAL NOTES IN ANY
JURISDICTION IN WHICH THE EXCHANGE OFFER OR THE ACCEPTANCE THEREOF WOULD NOT BE
IN COMPLIANCE WITH THE SECURITIES OR BLUE SKY LAWS OF SUCH JURISDICTION.
As part of the issuance of the Initial Notes, two global notes
(the "Global Initial Notes") in the aggregate principal amount at maturity of
$207.7 million were issued. The Global Initial Notes were deposited with, or on
behalf of, DTC, as the initial depositary with respect to the Initial Notes (in
such capacity, the "Depositary"). The Global Initial Notes are registered in the
name of Cede & Co., as nominee of DTC, and beneficial interests in the Global
Initial Notes are shown on, and transfers thereof are effected only through,
records maintained by the Depositary and its participants. The use of the Global
Initial Notes to represent the Initial Notes permits the Depositary's
participants, and anyone holding a beneficial interest in a Initial Note
registered in the name of such a participant, to transfer interests in the
Initial Notes electronically in accordance with the Depositary's established
procedures without the need to transfer a physical certificate. Except as
provided below, the Exchange Notes will be issued initially as two notes in
global form (the "Global Exchange Notes", and together with the Global Initial
Notes, the "Global Notes") and deposited with, or on behalf of, the Depositary.
After the initial issuance of the Global Exchange Notes, Exchange Notes in
certificated form will be issued in exchange for a holder's proportionate
interest in the Global Exchange Notes only as set forth in the Indenture. See
"Description of Exchange Notes-Form of Exchange Notes."
This Prospectus incorporates documents by reference which are not
presented herein or delivered herewith. These documents are available upon
request from Andrew Siegel, General Counsel and Secretary, Geotek
Communications, Inc., 20 Craig Road, Montvale, New Jersey 07645, (201) 930-9305.
In order to ensure timely delivery of the documents, any request should be made
by [date five business days prior to Expiration Date].
3
<PAGE>
AVAILABLE INFORMATION
The Company has filed a registration statement on Form S-4
(together with any amendments thereto, the "Registration Statement") with the
Commission under the Securities Act with respect to the Exchange Notes. This
Prospectus, which constitutes a part of the Registration Statement, omits
certain information contained in the Registration Statement and reference is
made to the Registration Statement and the exhibits and schedules thereto for
further information with respect to the Company and the Exchange Notes offered
hereby. Statements contained in this Prospectus as to the contents of certain
documents filed with, or incorporated by reference in the Registration Statement
are not necessarily complete, and in each instance reference is made to such
document, each such statement being qualified in all respects by such reference.
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. Such reports, proxy statements and other information filed by
the Company can be inspected and copied at the public reference facilities
maintained by the Commission at Room 1024, 450 Fifth Street, N.W., Washington,
D.C. 20549, and at the Commission's Regional Offices located at 7 World Trade
Center, New York, NY 10048, and Northwestern Atrium Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661. Copies of such material can also be
obtained at prescribed rates from the Public Reference Section of the
Commission, Washington, D.C. 20549. The Company's Common Stock is listed on the
Nasdaq National Market (the "NNM") and the Pacific Stock Exchange (the "PSE")
and such reports, proxy statements and other information filed with the
Commission should also be available for inspection at the offices of the
National Association of Securities Dealers, Inc., Report Section, 1735 K Street
N.W., Washington, D.C. 20006, and the PSE facilities located at 115 Sansone
Street, San Francisco, California.
4
<PAGE>
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The Company incorporates by reference into this Prospectus the
documents listed below:
(1) The Company's Annual Report on Form 10-K, for the year ended
December 31, 1994 (as amended on Forms 10-K/A filed on or about May 26, 1995 and
September _, 1995);
(2) The Company's Quarterly Reports on Form 10-Q, for the
quarters ended March 31, 1995 and June 30, 1995 (as amended on Form 10-Q/A filed
on or about September _, 1995);
(3) The Company's Current Reports on Form 8-K, dated June 18,
1993 (as amended on Form 8-K/A filed on or about July 12, 1993), June 8, 1994
(as amended on Form 8-K/A filed on or about June 27, 1995), July 5, 1994 (as
amended on Form 8-K/A filed on or about September 14, 1994), August 2, 1994 (as
amended on Form 8-K/A filed on or about October 13, 1994 and Form 8-K/A filed on
or about May 25, 1995), February 27, 1995, May 26, 1995 and July 6, 1995.
All reports and other documents filed by the Company pursuant to
Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act subsequent to the date
of this Prospectus and prior to the filing of a post-effective amendment to the
Registration Statement which indicates that all securities offered hereby have
been sold or which deregisters all securities then remaining unsold, shall be
deemed to be incorporated by reference herein and to be a part hereof from the
date of the filing of such reports and documents. Any statement contained in a
document incorporated by reference herein shall be deemed to be modified or
superseded for all purposes to the extent that a statement contained herein or
in any other subsequently filed document which also is incorporated by reference
herein modifies or supersedes such statement. Any statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
The Company hereby undertakes to provide, without charge, to each
person to whom a copy of this Prospectus has been delivered, upon the written or
oral request of such person, a copy of any and all documents incorporated by
reference in this Prospectus, other than exhibits to such documents unless such
exhibits are specifically incorporated by reference herein. Requests for such
copies should be directed to Corporate Secretary, Geotek Communications, Inc.,
20 Craig Road, Montvale, New Jersey 07645; telephone number (201) 930-9305.
The Company will furnish record holders of Exchange Notes with
annual reports containing audited financial statements and reports by
independent accountants. In addition, the Company will distribute unaudited
quarterly reports to record holders of Exchange Notes for the first three
quarters of each fiscal year.
5
<PAGE>
THE COMPANY
The Company is a provider of wireless communications services for
mobile business users. Since 1992, the Company has devoted substantial financial
and management resources to the development of a low cost, high quality
integrated digital voice and data wireless communications network ("GEONET").
The Company began providing GEONET(TM) services in Philadelphia to businesses in
Philadelphia in August 1995. The Company expects to offer GEONET in a number of
other cities in the northeastern United States, including New York, Boston,
Washington, D.C. and Baltimore, by late 1995 and in a total of 36 markets by the
end of 1997. Each market will consist of a major United States city and its
surrounding area. In certain markets, the Company may also offer its services
regionally.
The Company, through operating subsidiaries, also provides analog
wireless mobile communications services to approximately 60,000 business
subscribers in the United Kingdom and Germany. The Company is also engaged in
the manufacture and sale of (i) telephone and facsimile peripherals and sound
and communications equipment through Bogen Corporation ("Bogen"), (ii) equipment
for the mobile data market through GMSI, Inc. ("GMSI") and (iii) telephone
peripherals utilizing digital voice processing through Speech Design GmbH
("Speech Design"). These operations currently generate substantially all of the
Company's operating revenues. On August 21, 1995, the Company transfered its
interests in Bogen and Speech Design to European Gateway Acquisition Corporation
("EGAC") in exchange for a controlling 64% interest in EGAC.
The Company is a Delaware corporation. Its principal executive offices
are located at 20 Craig Road, Montvale, New Jersey 07645. The Company's
telephone number is (201) 930-9305.
The chart on the following page sets forth the organizational structure
of the Company and its subsidiaries. Unless otherwise indicated, each subsidiary
is owned 100% by its parent company. Powerspectrum, Inc., U.S.I. Venture Corp.,
Geotek Subsidiary Industries, Inc., Geotek Acquisition Corp., Metro Net Systems,
Inc., Cumulous Holding Corp., Inc., and each of the PowerSpectrum, Inc.
Subsidiaries have fully and unconditionally guaranteed the Company's obligations
under the Notes and the Indenture. All of the Capital Stock owned by the Company
in each of PowerSpectrum, Inc., Geotek Communications GmbH, U.S.I. Venture
Corp., Geotek Subsidiary Industries, Inc., Geotek Acquisition Corp., Metro Net
Systems, Inc., and National Band Three Limited have been pledged to the Trustee
to secure the Company's obligations under the Notes and the Indenture.
6
<PAGE>
[INFORMATION ON CHART DEFINED IN LEGEND AT THE END OF THIS DOCUMENT]
7
<PAGE>
SUMMARY
The Exchange Offer
<TABLE>
<CAPTION>
<S> <C>
The Exchange Offer .......................... The Company is offering, upon the terms and subject to the conditions set forth
herein and in the accompanying Letter of Transmittal, to exchange $1,000 in
principal amount at maturity of the Exchange Notes for each $1,000 in principal
amount at maturity of the outstanding Initial Notes. As of the date of this
Prospectus, $227.7 million in aggregate principal amount at maturity of the Initial
Notes is outstanding. As of the Record Date, there were ___ registered holders
of the Initial Notes and Cede & Co., as nominee for the DTC, one of the
registered holders, held Initial Notes for ______ of its participants. See "The
Exchange Offer-Terms of the Exchange Offer."
Expiration Date ............................. 5:00 p.m., New York City time, on ________ __, 1995, as the same may be
extended. See "The Exchange Offer-Expiration Date; Extensions; Amendments."
Termination of Certain Rights ............... Pursuant to the Notes Registration Rights Agreement, holders of Initial Notes
have (i) rights to receive additional interest in the event the Company fails to
take certain actions under the Notes Registration Rights Agreement and (ii) certain
rights intended for the holders of unregistered securities. These rights will
terminate upon the consummation of the Exchange Offer. See "The Exchange
Offer - Termination of Certain Rights."
Procedure for Tendering Initial Notes ....... Each Eligible Holder desiring to accept the Exchange Offer must complete
and sign the Letter of Transmittal, have the signature thereon guaranteed
if required by the Letter of Transmittal, and mail or deliver the Letter of
Transmittal, together with the Initial Notes and any other required
8
<PAGE>
documents (such as evidence of authority to act, if the Letter of
Transmittal is signed by someone acting in a fiduciary or
representative capacity), to the Exchange Agent (as defined herein) at
the address set forth on the back cover page of this Prospectus on or
prior to 5:00 p.m., New York City time, on the Expiration Date. Any
Beneficial Owner (as defined herein) of Initial Notes whose Initial
Notes are registered in the name of a nominee, such as a broker,
dealer, commercial bank or trust company and who wishes to tender
Initial Notes in the Exchange Offer, should instruct such entity or
person to promptly tender on such Beneficial Owner's behalf. See "The
Exchange Offer-Procedures For Tendering Initial Notes."
Acceptance of Initial Notes and Delivery
of Exchange Notes ......................... Upon satisfaction or waiver of all conditions of the Exchange Offer, the Company
will accept any and all Initial Notes that are properly tendered in the Exchange
Offer prior to 5:00 p.m., New York City time, on the Expiration Date. The
Exchange Notes issued pursuant to the Exchange Offer will be delivered promptly
after acceptance of the Initial Notes. See "The Exchange Offer-Acceptance of
Initial Notes for Exchange; Delivery of Exchange Notes."
Withdrawal Rights ........................... Tenders of Initial Notes may be withdrawn at any time prior to 5:00 p.m., New
York City time, on the Expiration Date. See "The Exchange Offer-Withdrawal
Rights."
Conditions of the Exchange Offer. ........... The Exchange Offer is subject to certain customary conditions, including that the
consummation of the Exchange Offer would not violate (i) any applicable law; (ii)
any applicable interpretation of the staff of the Commission; or (iii) any order
of any governmental agency or court of competent jurisdiction; provided, however,
that the Company will use reasonable efforts to modify or amend the Exchange
Offer or to take such other reasonable steps in order to effectuate the Exchange
Offer.
The Exchange Agent .......................... IBJ Schroder Bank & Trust Company is the exchange agent (in such capacity, the
"Exchange Agent"). The address and telephone number of the Exchange Agent are
set forth in "The Exchange Offer-The Exchange Agent; Assistance."
Fees and Expenses ........................... All expenses incident to the Company's consummation of the Exchange Offer and
compliance with the Notes Registration Rights Agreement will be borne by the
Company. See "The Exchange Offer-Fees and Expenses."
Resales of the Exchange Notes ............... Based on an interpretation by the staff of the Commission set forth in no-action
letters issued to third parties, the Company believes that Exchange Notes issued
pursuant to the Exchange Offer to an Eligible Holder in exchange for the Initial
Notes may be offered for resale, resold and otherwise transferred by such Eligible
Holder (other than (i) a broker-dealer who acquired Initial Notes directly from
the Company for resale pursuant to Rule 144A under the Securities Act or any other
available exemption under the Securities Act, or (ii) a 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
9
<PAGE>
Securities Act, provided that the Eligible Holder is acquiring the
Exchange Notes in the ordinary course of business and is not
participating, and has no arrangement or understanding with any person
to participate, in a distribution of the Exchange Notes. Each
broker-dealer that receives Exchange Notes for its own account in
exchange for the Initial Notes, where such Exchange Notes were
acquired by such broker-dealer as a result of market-making or other
trading activities, must acknowledge that it will deliver a prospectus
in connection with any resale of such Exchange Notes. See "The
Exchange Offer-Resales of Exchange Notes" and "Plan of Distribution."
Certain ..................................... Federal Tax Consequences For a discussion of certain federal tax
consequences of the exchange of the Initial Notes, see "Certain
Federal Income Tax Consequences."
Consequences of Failure to Exchange. ........ The liquidity of the market for the Initial Notes could be adversely affected as a
result of the completion of this Exchange Offer. See "The Exchange Offer--
Consequences of Failure to Exchange."
</TABLE>
10
<PAGE>
Description of Exchange Notes
The Initial Notes were, and the Exchange Notes will be, issued
under the Indenture. The form and terms of the Exchange Notes will be identical
in all material respects to the form and terms of the Initial Notes, except that
(i) the Exchange Notes have been registered under the Securities Act and,
therefore, in the event the Company fails to take certain actions required will
not bear legends restricting the transfer thereof, (ii) holders of the Exchange
Notes will not be entitled to any additional interest in the event the Company
fails to take certain actions required under the Notes Registration Rights
Agreement and (iii) holders of the Exchange Notes will not be, and upon
consummation of the Exchange Offer, Eligible Holders of the Initial Notes will
no longer be, entitled to certain rights under the Notes Registration Rights
Agreement intended for the holders of unregistered securities. See "The Exchange
Offer - Termination of Certain Rights," and "Description of Exchange Notes -
Maturity, Interest and Principal".
<TABLE>
<CAPTION>
<S> <C>
Issuer: ................................ Geotek Communications, Inc.
Securities Offered ..................... 15% Series B Senior Secured Discount Notes Due 2005 to be issued under the
Indenture in an aggregate principal amount at maturity of $227.7 million less the
aggregate principal amount of any Initial Notes that are not exchanged. See
"Description of Exchange Notes."
Use of Proceeds ........................ The Company will receive no cash proceeds from the issuance of the Exchange
Notes. In consideration for issuing the Exchange Notes, the Company will
receive Initial Notes in like principal amount. The Initial Notes surrendered in
exchange for the Exchange Notes will be cancelled and retired and cannot be
reissued. Accordingly, the issuance of the Exchange Notes will not result in any
increase in the outstanding indebtedness of the Company.
Maturity Date........................... July 15, 2005.
Interest Rate .......................... 15% per annum.
Interest ............................... Payment Dates 15% per annum (computed on a semi-annual bond equivalent
basis). No interest will accrue prior to July 15, 2000. Thereafter,
cash interest on the Exchange Notes will accrue until maturity at the
rate of 15% per annum and will be payable semi-annually on each July
15, and January, 15, commencing January 15, 2000 to holders of record.
Original ............................... Issue Discount The Exchange Notes will have original issue discount
requiring holders of the Exchange Notes to include amounts in gross
income for Federal Income Tax Purposes prior to the receipt of the
cash to which such income is attributable. See "Certain Federal Income
Tax Considerations - Original Issue Discount".
Mandatory Redemption ................... None.
Optional Redemption .................... The Exchange Notes are redeemable at the option of the Company, in whole or
in part, at any time on or after July 15, 2000 at the redemption prices set forth
herein, plus accrued and unpaid interest, if any, to the redemption date. In
addition, in the event of a sale by the Company to a Strategic Equity Investor
(subject to certain exceptions) on or prior to July 15, 1998 of Capital Stock of the
Company in a single transaction or series of related transactions for an aggregate
purchase price equal to or exceeding $50.0 million, up to a maximum of 20% of
11
<PAGE>
the aggregate Accreted Value of the Notes will be redeemable at the option of the
Company from the net proceeds of such sale or sales, to the extent such proceeds
consist of cash or cash equivalents, at a redemption price equal to 115% of the
Accreted Value of the Notes to be redeemed on the redemption date. See
"Description of Exchange Notes - Redemption."
Ranking ................................ The Exchange Notes will be senior obligations of the Company that will rank
senior in right of payment to all subordinated indebtedness of the Company and
the Guarantors. The Exchange Notes will rank pari passu in right of payment
with all other existing and future indebtedness of the Company and the Guarantors
(other than Indebtedness incurred by a Guarantor to finance the construction or
acquisition of Telecommunication Assets (as defined herein) by such Guarantor).
As of June 30, 1995, the Company had $40.0 million of senior indebtedness.
The Company is a holding company that conducts substantially all of its business
through subsidiaries. The Exchange Notes will be effectively subordinated to all
existing and future liabilities, including trade payables, of the Company's
subsidiaries that are not Guarantors. The Exchange Notes will also be
subordinated in right of payment to all Indebtedness incurred by a Guarantor to
finance the construction or acquisition of Telecommunications Assets by such
Guarantors. As of June 30, 1995, the Company's subsidiaries that are not
Guarantors had approximately $33.5 million of outstanding indebtedness
(excluding intercompany indebtedness). See "Risk Factors - Holding Company
Structure".
Change of Control ...................... The Company is obligated upon the occurrence of a Change of Control (as
defined herein) to make an offer to purchase all outstanding Notes at a purchase
price of 101% of the Accreted Value thereof, plus accrued and unpaid interest,
if any, to the date of purchase. There can be no assurance that the Company will
have the financial resources necessary to repurchase the Notes upon a Change of
Control. See "Description of Exchange Notes - Certain Covenants -- Change of
Control".
Certain Covenants ...................... The Indenture governing the terms of the Exchange Notes, among other things,
contains certain covenants that, subject to certain exceptions, limit the ability of
the Company and its Subsidiaries to incur Indebtedness, repurchase Capital Stock
and subordinated Indebtedness, engage in transactions with Affiliates, engage in
Sale-Leaseback transactions, incur or suffer to exist certain Liens, pay dividends
or other distributions, make Investments, sell assets, engage in mergers and
acquisitions and engage in businesses other than the telecommunications business.
In addition, the Indenture limits the ability of the Company's Subsidiaries to issue
Preferred Stock and to create restrictions on their ability to pay dividends and
make certain other payments to the Company. See "Description of Exchange
Notes - Certain Covenants" and "Description of the Exchange Notes - Merger,
Sale of Assets, Etc."
Security ............................... The Exchange Notes will be secured by a pledge of all shares of
Capital Stock owned by the Company in each Pledged Company (as defined
herein), as well as certain shares of Capital Stock that may be
acquired by the Company in the future and certain other security.
12
<PAGE>
In addition to the covenants contained in the Indenture, the Pledge
Agreements (as defined herein) contain covenants that restrict the
Company's and the Pledged Companies' ability to incur Indebtedness and
create, incur, assume or suffer to exist certain Liens. See
"Description of Exchange Notes - Security."
Guarantees ............................. The Exchange Notes will be fully and unconditionally guaranteed, jointly and
severally on a senior basis, by the Guarantors. The guarantees will be
subordinated in right of payment to any obligation of a Guarantor pursuant to any
Indebtedness incurred by such Guarantor to finance the construction or acquisition
of Telecommunications Assets by such Guarantor. See "Description of Exchange
Notes - Security - Subsidiary Guarantees." In addition, under certain
circumstances, the guarantees may be further limited by federal and state
fraudulent conveyance laws. See "Risk Factors - Fraudulent Conveyance
Considerations."
</TABLE>
For a more detailed discussion of the terms of the Exchange
Notes, see "Description of Exchange Notes."
13
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RISK FACTORS
In addition to the other information and financial data set forth
elsewhere or incorporated by reference into this Prospectus, prospective
investors should carefully consider, among other things, the following factors
in evaluating the Company, its business and the Exchange Offer.
The securities described herein involve a substantial degree of risk.
Prospective purchasers should carefully consider, among other things, the
following factors:
Commercial Implementation of GEONET
The Company's current business plan contemplates the commercial
implementation of GEONET in 36 target markets in the United States between the
Summer of 1995 and the end of 1997. In each of these markets, the Company
expects gradually to add subscribers and increase its service offerings. The
Company expects to continue to generate negative cash flow in each of its target
markets until it achieves an adequate subscriber base in such market.
The successful and timely implementation of GEONET will depend upon a
number of factors, many of which are beyond the control of the Company,
including, but not limited to, the timely and cost-effective manufacture,
construction and integration of the system infrastructure and software, the
acquisition and control of additional radio spectrum, the procurement and
preparation of base station and remote sites, the receipt of all necessary
regulatory approvals, the establishment of effective sales and marketing
organizations and distribution channels and the need for substantial additional
financing. See "- Dependence on Third Party Providers," "- Need for Spectrum;
Need for Transmission Sites," "- Government Regulation" and "- Need for
Additional Financing." The failure or delay with respect to any of these items
could adversely affect the timing of the implementation of GEONET in one or more
of the Company's U.S. target markets, which could have a material adverse effect
on the Company.
The Company will make continuing hardware and software modifications to
GEONET prior to, during and after the system's commercial roll-out. For example,
the Company must integrate the initial GEONET data applications, which are
expected to be completed in the fourth quarter of 1995, with the initial GEONET
voice applications. Subsequent applications also will need to be integrated with
existing GEONET applications. There can be no assurance that the Company will be
able to satisfactorily complete such modifications and/or integration efforts,
or that they will be able to be completed in a manner that enables the Company
to offer its GEONET services on a profitable basis. A failure by the Company to
satisfactorily complete any such modifications or integration efforts or to
complete them on a cost-effective basis could have a material adverse effect on
the Company.
To date, no other wireless service provider has been successful at
providing the level of integrated voice and data services contemplated by the
Company. Accordingly, in implementing GEONET, the Company may encounter
unforeseen technical issues. In addition, each of the Company's U.S. target
markets is expected to present unique technical issues to the Company due to
differences in geography and the level of local development. Technical
difficulties in the operation and/or performance of GEONET also may be
experienced as additional subscribers are added to the system in a given market
or as the coverage area in any market is increased. There can be no assurance
that the Company will be able to adequately address any such issues in any given
market or that such issues will be able to be addressed in a cost-effective
manner. Any failure by the Company to adequately address such issues or to
address them in a cost-effective manner could have a material adverse effect on
the Company.
Limited Operating History; Management of Growth
The Company entered the wireless communications industry in 1992 and,
therefore, has limited experience in developing, establishing and operating
wireless communications systems. To date, most of the Company's wireless
communications services experience has been in foreign markets and has involved
different technology than that to be employed by the Company in its U.S. target
markets. In addition, the Company's only experience to date in the United States
with respect to its digital wireless communications services has been testing
GEONET in Philadelphia and, beginning in August 1995, providing wireless
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communication services to customers in Philadelphia. Prospective investors,
therefore, have limited historical financial information about the Company on
which to make a determination as to the prospects for the Company's U.S.
wireless communications operations or financial condition and as to an
investment in the Exchange Notes.
Although the Company has added experienced senior management and hired
over 28 people for various sales and field service positions during the last
year, the Company will need to rapidly and significantly increase the number of
technical, sales, management and administrative personnel that it employs as the
roll-out of GEONET progresses. The Company's success will depend upon its
ability to continue to attract, motivate, train and manage additional employees.
Management's ability to manage the Company's growth effectively also will
require it to significantly expand its operational, financial and management
systems. The failure of the Company to manage its growth effectively would have
a material adverse effect on the Company's future operations.
Need for Spectrum; Need for Transmission Sites
The Company will require additional spectrum to add capacity and to
service anticipated demand in certain of its target markets, including in
certain of its 1995 and 1996 markets. The Company also requires additional
spectrum to initiate services in certain of its 1997 target markets. Moreover, a
significant portion of the Company's existing radio spectrum in Philadelphia,
New York City, Washington, Chicago, Dallas and Houston is subject to management
agreements with Motorola. The Company began service in Philadelphia in August
1995 and intends to enter into several of these markets in the Fall of 1995. The
Company cannot utilize this radio spectrum for GEONET services until such
management agreements are terminated. In November 1994, Motorola and NEXTEL
Communications, Inc. ("NEXTEL") entered into a consent decree with the federal
government pursuant to which NEXTEL and Motorola agreed that, upon effectiveness
of the consent decree, they will take steps to reduce their ownership and
management of radio spectrum in certain U.S. markets including each of the
above-referenced markets, so that they collectively own and/or manage no more
than thirty 900 MHz channels in such markets. The consent decree further
provides that any Motorola management agreements will be terminable at the sole
option of the party owning the license upon 120 days' notice to Motorola. The
consent decree allows Motorola to refuse to terminate such management agreements
when Motorola and NEXTEL together control (including by management agreement)
thirty or fewer 900 MHz channels in the licensee's market (including the managed
channels as to which the termination of the agreement is being sought). The
consent decree became effective on July 25, 1995. There can be no assurance that
Motorola will not retain its management rights over some or all of the radio
spectrum owned by the Company in these U.S. markets. In the event the Company is
unable to terminate any of the Motorola management agreements or such ability is
delayed, the Company's ability to enter into such markets may, depending upon
the availability of other radio spectrum to the Company, be materially adversely
affected.
As to the spectrum that the Company has agreed to acquire, certain of
such agreements are subject to regulatory approval. Although the Company
believes that such approval will be forthcoming prior to its expected roll-out
in each such market, there can be no assurance that such approvals will be
received on a timely basis or at all. The failure by the Company to obtain any
such approvals could have a material adverse effect on the Company.
The Company intends to acquire sufficient spectrum in each of its
target markets in which it does not have sufficient spectrum to initiate service
and to add additional capacity in certain of its other U.S. target markets. The
Company expects the Federal Communications Commission (the "FCC") to auction
spectrum during 1995 in each market in which the Company desires to acquire
additional spectrum. Although the Company intends to bid on such spectrum to the
extent such spectrum is needed, there can be no assurance that the Company will
be the successful bidder for any radio spectrum auctioned by the FCC. In
addition, the Company cannot predict the cost of obtaining licenses for
additional spectrum since such costs are determined by factors beyond the
Company's control, including but not limited to, the availability of licenses
and the number of competitors seeking to acquire licenses in any particular
market. Although the Company believes that it will be able to acquire sufficient
spectrum in each of its U.S. markets, there can be no assurance that the Company
will be able to make such acquisitions on a timely basis if at all or that such
acquisitions will be able to be made on commercially acceptable terms. A failure
by the Company to obtain sufficient radio spectrum on commercially acceptable
terms and/or on a timely basis could have a material adverse effect on the
Company. See "- Commercial Implementation of GEONET."
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There are only a limited number of existing communications towers
capable of providing the Company with optimal coverage area for its radio
transmissions and that are capable of supporting the Company's transmission
equipment. In the event the Company cannot obtain leases for existing towers, it
may be required to purchase sites, obtain necessary permits and build such
towers, a process which the Company estimates could take up to one year to
complete for each tower. If the Company is required to build new towers, the
roll-out of GEONET in one or more target markets could be delayed, which could
have a material adverse effect on the Company.
Deficiency of Earnings; Net Losses; Additional Indebtedness
On a consolidated basis, the Company experienced net losses from
continuing operations of $2.4 million, $50.4 million and $42.4 million for the
years ended December 31, 1992, December 31, 1993 and December 31, 1994,
respectively and $26.1 million for the six month period ended June 30, 1995. In
addition, the Company had a deficiency of earnings before interest, taxes,
depreciation and amortization ("EBITDA") of $0.9 million, $15.2 million and
$34.2 million for the years ended December 31, 1992, December 31, 1993 and
December 31, 1994, respectively and $19.3 million for the six month period ended
June 30, 1995. The Company anticipates that its net operating losses from
operations and its EBITDA deficiency will increase significantly during the
roll-out of GEONET. There can be no assurance that the Company will ever operate
at profitable levels or have positive EBITDA. Until sufficient cash flow is
generated from operations, the Company will have to utilize its capital
resources or external sources of funding to satisfy its working capital needs.
In the event the Company cannot achieve profitability or have positive EBITDA,
it may not be able to make required payments on the Notes. As of June 30, 1995,
after giving effect to the transactios set forth in note 1 to the "Summary
Selected Historical and Pro Forma Consolidated Financial Data," the Company had
$125.4 million of unrestricted cash, cash equivalents and temporary investments.
See "Selected Consolidated Financial Data".
The accretion of original issue discount on the Notes will cause the
indebtedness represented by the Notes to increase to $227.7 million by July 15,
2000, and the Indenture under which the Exchange Notes are to be issued (the
"Indenture") permits the Company to incur additional indebtedness under certain
conditions.
The Indenture imposes significant operating and financial restrictions
on the Company affecting, among other things, the ability of the Company to
incur indebtedness, make prepayments of certain indebtedness, pay dividends,
make investments, engage in transactions with stockholders and affiliates, issue
capital stock of restricted subsidiaries, create liens, sell assets and engage
in mergers and consolidations. In addition, the Pledge Agreements impose
additional limitations on the ability of the Pledged Companies to incur certain
indebtedness and to create liens. The covenants are subject to various
exceptions that are generally designed to allow the Company to continue to
operate its business without undue restraint and, therefore, are only limited
prohibitions with respect to certain activities. However, these restrictions, in
combination with the leveraged nature of the Company, could limit the ability of
the Company to effect future financing, respond to changing market conditions
and otherwise may restrict corporate activities. See "Description of Exchange
Notes - Certain Covenants" and "- Security."
The Company's business plan assumes the roll-out of GEONET in each of
its U.S. target markets and substantial growth in the Company's subscriber base.
There can be no assurance that the Company will be able to achieve the growth
contemplated by its business plan. If such growth is not achieved, the Company
may not be able to make required payments on the Exchange Notes and may have to
refinance the Exchange Notes in order to repay these obligations. No assurance
can be given that the Company would be able to refinance the Exchange Notes.
Need for Additional Financing
The Company's existing cash on hand and expected cash flow from
operations will not be sufficient to fund the Company's full roll-out of GEONET.
Based on the Company's projected roll-out schedule in its 36 U.S. target markets
and its projected loading of subscribers in these markets, the Company estimates
that it will need at least an additional $250.0 million of financing to fund
GEONET's infrastructure costs as well as operating losses and working capital
needs. Additionally, the macrocellular architecture of GEONET will allow the
Company to adjust its aggregate cash expenditures by focusing its activities in
certain markets while reducing its planned investments in other markets.
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Pursuant to the terms of a Defeasance Security Agreement dated July 6,
1995, the Company pledged to the holders of its Senior Secured Notes due 1998
$40.5 million, at maturity, of United States Treasury obligations to secure the
Company's obligations under such Notes. These Notes are convertible into Common
Stock beginning September 30, 1995 at a 12.5% discount to the market price of
the Common Stock on the date of conversion. To the extent these Notes are not
converted into Common Stock, the Company's financing needs will increase by an
amount equal to the face value of the United States Treasury obligations
securing such Notes which would otherwise have been released to the Company upon
conversion.
The Company's need for additional financing will increase if the
Company experiences delays in the commercial implementation of GEONET, cost
overruns or unanticipated cash needs. Moreover, additional financing may be
necessary to satisfy the terms of certain financing transactions, including, but
not limited to, possible redemption obligations of the Company in connection
with the Company's preferred stock. Additional financing also may be required to
fund acquisitions of additional spectrum and businesses. The amount of
additional funding required will depend upon the timing of such expenditures,
the availability of cash flow from operations and, to the extent applicable, the
availability of lease and vendor financing. It is presently anticipated that
additional financing, if obtained, would be obtained from one or more sources,
including, but not limited to, equity or debt financing (whether through public
or private offerings), strategic partners, joint ventures, vendor financing,
leasing arrangements or a combination thereof. The Indenture and the Pledge
Agreements limit the ability of the Company to incur additional indebtedness and
engage in certain other financing transactions. See "Description of the Exchange
Notes." There can be no assurance that additional financing will be available to
the Company on desirable terms or at all.
Competition
Although the Company believes that the quality, array and flexibility
of services to be offered by the Company through GEONET will meaningfully
differentiate such services from those offered by other wireless communications
providers in the Company's target markets, the Company will face significant
competition from such other providers. The Company expects to experience
competition for each type of service it intends to offer from existing dispatch,
cellular telephony, paging and public data service providers. In addition, the
Company expects to experience competition from manufacturers of Private Mobile
Radio ("PMR") equipment, which target existing private network operators and
Specialized Mobile Radio ("SMR") customers and urge them to build or upgrade
their own private networks rather than utilize SMR service providers. Many of
these providers and manufacturers are larger, more established, have more
experience in the telecommunications industry, have greater name recognition,
have larger sales staffs and/or have greater financial resources than the
Company.
NEXTEL has announced plans to construct a nationwide digital Enhanced
Specialized Mobile Radio ("ESMR") network and is offering services in several
cities. NEXTEL has also secured a significant number of 800 MHz SMR channels in
several of the largest U.S. markets. In addition, OneComm Corp. ("OneComm") has
constructed an ESMR network in several cities. Furthermore, several large SMR
providers are positioning themselves to compete for wireless voice and data
traffic and have announced plans to construct digital ESMR networks utilizing
equipment manufactured primarily by Motorola. These providers include Dial Page,
Inc. ("Dial Page") and Pittencrieff Communications, Inc. ("Pittencrieff").
Motorola has announced agreements to transfer its 800 MHz SMR licenses to
NEXTEL, OneComm and Dial Page in consideration for equity positions in these
companies. Motorola will remain the largest SMR service provider in the 900 MHz
band utilizing analog equipment. In addition, to the extent that Motorola is the
largest provider of PMR equipment, Motorola may be deemed to be an indirect
competitor of the Company. In 1994, NEXTEL announced plans to acquire OneComm
and Dial Page.
The Company also may face competition from technologies and services
introduced in the future. In March 1995, the FCC completed auctions for Personal
Communications Services ("PCS") licenses in most telecommunication markets
within the United States. PCS could compete with services to be offered by the
Company. The FCC also may license additional spectrum for other wireless
services. It is also possible that satellite technology ultimately could be
developed to permit urban use equal to or superior to that available through SMR
systems, which would result in increased competition for the Company's services.
The commercialization or further development of any such technologies could have
a material adverse effect on the Company. See "- Rapid Technological Changes".
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Many of the target customers for GEONET currently use other wireless
communications services. In order to be successful, the Company will need to
migrate a portion of its target customers from their existing services to those
provided by the Company over GEONET. The Company's ability to migrate its target
customers over to its services will be highly dependent on the perceived utility
of the Company's services to its target customers as compared to the services
currently utilized by such customers. Because there currently is no integrated
wireless communications network commercially available that is comparable to
that expected to be offered by the Company over GEONET, the extent of the demand
for the Company's wireless communication services cannot be predicted with any
degree of certainty. The demand for the Company's digital wireless
communications services also could be affected by other matters beyond its
control, such as the future cost of subscriber equipment, marketing and pricing
strategies of competitors and general economic conditions.
The Company also expects to experience competition for radio spectrum
from existing and future providers of wireless communications services. The
Company also expects to experience competition for communications tower space.
See "- Need for Spectrum; Need for Transmission Sites."
The Company also experiences competition for each of its products and
services other than GEONET in the markets in which it sells such products and
services. Such competition is expected to remain strong for the foreseeable
future.
Government Regulation
The licensing, construction, operation and acquisition of SMR systems
in the United States is regulated by the FCC under the Communications Act of
1934, as amended (the "Communications Act"). During 1994, the FCC initiated
several regulatory proceedings with wide-ranging implications for the wireless
telecommunications industry. A primary intent of these recent amendments was to
encourage competition among mobile communications service providers by removing
regulatory distinctions between common carriers such as cellular telephone
companies and private carriers such as SMR service providers. Although the
Company will not be required to comply with most of these regulatory changes
prior to 1996, the regulations may materially impact the Company's operations in
the future. For example, the Company will be required to provide services on a
"nondiscriminatory basis" and on terms that are not "unjust and unreasonable,"
as such terms are defined by the Communications Act. In addition, the FCC may,
in the future, require that the Company provide equal access to its wireless
services to other wireless and wireline communications providers and
interconnection to wireline and wireless entities. The FCC may, in the future,
specify by rule other common carrier regulations that would apply to commercial
mobile service providers such as the Company. Moreover, the FCC did not delay
the effective date of the applicability of its rules concerning foreign
investment in and management and/or participation in any entity holding an FCC
license. However, the FCC did provide a mechanism for newly re-classified
providers to petition for a waiver of these limitations. The Company filed a
petition to retain its foreign directors and officers, including certain
executive officers of the Company the loss of the services of which could
adversely affect the conduct of the Company's business. The Company's petition
was granted by the FCC, which permits the Company to retain its foreign
directors and officers until August 10, 1996. Thereafter, the Company's ability
to retain foreign directors and officers will be limited by current FCC
regulations. See "- Dependence on Key Personnel." These limitations may also
affect the Company's ability to secure foreign financing through the sale of
shares of Common Stock or Common Stock equivalents and to issue Common Stock in
the acquisition of foreign subsidiaries. The Company cannot predict the effect
of any of these regulations or any future regulation adopted by the FCC on the
Company's operations. Moreover, there has been little experience in the
interpretation and implementation of these regulations. Future interpretations
or practices with respect to such regulations could have a material adverse
effect on the Company.
The Company has been granted a waiver to construct and activate certain
systems it has acquired. In the event the Company fails to construct or activate
such systems in accordance with the dates set forth in the waiver, the Company
could lose the waiver and lose all of the frequencies covered by such waiver
which have not been constructed or activated. The Company's waiver is currently
subject to a pending challenge that was filed by a third party with whom the
Company failed to negotiate a satisfactory management agreement. The Company
believes that this challenge is without merit and is vigorously opposing it. A
loss of the frequencies covered by such waiver that have not been constructed or
activated would have a material adverse effect on the Company.
The Company intends to acquire additional SMR licenses. There can be no
assurance that the Company will be successful in its efforts to negotiate the
acquisition of all licenses it seeks to acquire or in its efforts to obtain
regulatory approval therefor. In addition, there can be no assurance that any
licenses currently owned or acquired in the future by the Company will be
renewed. The failure of the Company to renew existing or future SMR licenses
could have a material adverse effect on the Company.
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All of the equipment utilizing the Company's technology, to the extent
it is used to send or receive signals, must meet FCC criteria. Although GEONET
base stations have received such approval and the mobile subscriber units have
been designed to meet FCC standards, there can be no assurance that the
subscriber units will meet such criteria. A failure by the Company's subscriber
units or any of its other equipment to meet FCC standards could have a material
adverse effect on the Company.
Future changes in regulation or legislation affecting digital wireless
telecommunications service or the allocation by the FCC or Congress of
additional spectrum for services that compete with such service could adversely
affect the Company's business. See "- Competition."
The telecommunication laws of the United States and certain foreign
countries must be complied with in order for the Trustee, on behalf of the
holders of the Exchange Notes, to exercise certain rights under the Pledge
Agreements. See "- Risk of Inability to Realize Upon Security Interests" and
"Description of Exchange Notes - Security - Events of Default."
Dependence on Third Party Providers
The Company's digital wireless telecommunications system is being
developed and commercialized by PowerSpectrum, Ltd. ("PST"), a joint venture
between the Company and Rafael Armament Development Authority ("Rafael").
Although the Company owns a 56% interest in PST on a fully-diluted basis and
holds the non-Israel worldwide rights to license, market, distribute and sell
the systems utilizing the technology developed by PST, the development of the
technology and systems is dependent in large part upon the efforts of Rafael to
adapt frequency hopping from a military to a commercial application, to
integrate the frequency hopping technology with other digital technologies
required for optimal commercial deployment of GEONET and, as discussed below,
for the cost-effective manufacture of the base station hardware. In this regard,
approximately 90 employees of Rafael are presently engaged on a full-time
subcontract basis in the development of FHMA. If Rafael reduces its commitment
to PowerSpectrum or continuing development efforts are not successful, the
Company's prospects could be materially adversely affected.
Neither the Company nor PST manufacture the system architecture,
hardware and mobile subscriber units necessary for the commercial implementation
of GEONET. Rafael has been contracted by PST to manufacture the system hardware
for GEONET. Third parties, including Mitsubishi Consumer Electronics America
("Mitsubishi"), Hughes Network Systems ("Hughes"), a unit of GM Hughes
Electronics, and Kenwood Corporation of Japan ("Kenwood"), will manufacture
subscriber units and certain other components of the system hardware for GEONET.
There can be no assurance that such third parties will deliver such equipment on
a timely basis or that the Company will be able to successfully integrate such
components and hardware in a cost effective system on a timely basis, if at all.
The Company has only a single manufacturing source for certain of the components
of the GEONET system hardware, including the base stations and subscriber units.
Although the Company believes that it can obtain all components necessary to
build GEONET from other sources, delays may be encountered in the event of a
component shortage because of the time it may take to identify substitute
sources and manufacture substitute components. A failure by the Company to
obtain hardware components on a timely basis or at satisfactory prices could
adversely affect the ability of the Company to roll-out and market GEONET, which
could have a material adverse effect on the Company. See "- Commercial
Implementation of GEONET."
The Company has entered into an agreement with IBM Corporation ("IBM")
to manage the construction of the GEONET stations and the installation of FHMA
equipment in the Company's U.S. target markets. A failure by IBM to manage the
preparation and construction of the Company's base stations and remote sites
could have a material adverse effect on the Company. See "- Commercial
Implementation of GEONET".
Rapid Technological Changes
The telecommunications industry is subject to rapid and significant
changes in technology, which could lead to new products and services that
compete with those offered by the Company or could lower the cost of current
competing products and services to the point where the Company's products and
services could become non-competitive and the Company could be required to
reduce the prices of its services. While the Company is not aware of any
proposed changes that will materially affect the attractiveness of its product
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and service offerings, the effect of technological changes on the businesses of
the Company cannot be predicted. In the future, the Company expects to
experience competition from new technologies such as ESMR networks, PCS and
possibly satellite technology, as well as from advances with respect to existing
technologies such as cellular, paging and mobile data transmission. See "-
Competition."
Holding Company Structure
The Exchange Notes will be obligations exclusively of the Company,
which is a holding company, and the Guarantors. Since the operations of the
Company currently are conducted entirely through subsidiaries, the cash flow of
the Company and its ability to service its debt, including the Exchange Notes,
are dependent upon the cash flows of such subsidiaries and the distribution of
those cash flows to the Company, or upon loans or other payments of funds by
such subsidiaries to the Company. The Company's subsidiaries are separate and
distinct legal entities and, except for the Guarantors, have no obligation,
contingent or otherwise, to pay any amounts due pursuant to the Exchange Notes
or to make any funds available thereof, whether by dividends, loans or other
payments. In addition, the payment of dividends and certain loans and advances
to the Company by such subsidiaries may be subject to certain statutory or
contractual restrictions, are contingent upon the earnings of such subsidiaries
and are subject to various business considerations. The Exchange Notes will be
effectively subordinated to all Indebtedness and other liabilities and
commitments (including trade payable and lease obligations) of the Company's
subsidiaries that are not Guarantors. Any right of the Company to receive assets
of any such subsidiary upon the liquidation or reorganization of any such
subsidiary (and the consequent right of the holders of the Exchange Notes to
participate in those assets) will be effectively subordinated to the claims of
that subsidiary's creditors, except to the extent that the Company is itself
recognized as a creditor of such subsidiary, in which case the claims of the
Company would still be subordinate to any security in the assets of such
subsidiary and any Indebtedness of such subsidiary senior to that held by the
Company. As of June 30, 1995, the Company's subsidiaries that are not Guarantors
had approximately $33.5 million of liabilities (excluding intercompany
indebtedness).
Certain of the Company's subsidiaries are not wholly-owned and certain
subsidiaries are indirectly owned by the Company as a result of its majority
ownership of other entities. Although the Company has a sufficient interest in
its subsidiaries to be able to exercise control over them, the Company may owe a
fiduciary duty to the holders of various minority interests in its subsidiaries.
Accordingly, the Company may not exercise unfettered control over such
subsidiaries and may be required to deal with such subsidiaries on terms no less
favorable to such subsidiaries than could be obtained from unaffiliated third
parties. In addition, dividends or other distributions paid or made by such
subsidiaries must be paid or made on a pro rata basis to all stockholders.
Ranking; Other Senior Indebtedness
The Exchange Notes will rank pari passu as to all existing and future
senior Indebtedness of the Company and the Guarantors and subordinated in right
of payment to all Indebtedness incurred by a Guarantor to finance the
construction or acquisition of Telecommunications Assets by such Guarantor. As
of June 30, 1995, the Company had $148.9 million of senior indebtedness
(including the Notes), $36.0 million of which relates to the Company's Senior
Secured Notes due 1998 which the Company defeased. In the event of any
insolvency or bankruptcy case or proceeding, or any receivership, liquidation,
reorganization or other similar case or proceeding in connection therewith,
relating to the Company, a Guarantor or any of their respective assets, or any
liquidation, dissolution or other winding-up of the Company or any Guarantor,
whether voluntary or involuntary, or any assignment for the benefit of creditors
or other marshalling of assets or liabilities of the Company or any Guarantor,
holders of the Exchange Notes will participate ratably with all holders of such
indebtedness, based upon the respective amount owed to each holder, in the
assets of the Company, and there may not be sufficient assets to pay amounts due
on the Exchange Notes.
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Any holder of indebtedness of the Company secured by assets of the
Company other than the collateral under the Pledge Agreements will be entitled
to payment of their indebtedness out of the proceeds of their collateral prior
to the holders of the Exchange Notes. In addition, any rights of the holders of
the Exchange Notes to receive assets of the Pledged Companies will be subject to
the claims of any creditors of the Pledged Companies. See "Description of
Exchange Notes - Security."
Fraudulent Conveyance Considerations
The issuance by the Guarantors of the guarantees could be subject to
review under relevant federal and state fraudulent conveyance laws in a
bankruptcy proceeding or a lawsuit by or on behalf of unpaid creditors of a
Guarantor or a representative of such creditors, such as a trustee or a
Guarantor as debtor-in-possession. Under such laws, if a court were to find
that, at the time a Guarantor issued the guarantee, either (i) the Guarantor
issued such guarantee with the intent of hindering, delaying or defrauding
creditors, or (ii) the Guarantor received less than a reasonably equivalent
value or fair consideration for issuing such guarantee, and the Guarantor (a)
was insolvent or rendered insolvent by reason of the issuance of such guarantee,
(b) was engaged in business or a transaction, or was about to engage in business
or a transaction, for which any property remaining with the Guarantor after
giving effect to the issuance of such guarantee constituted an unreasonably
small amount of capital, or (c) intended to incur, or believed that it would
incur, debts beyond its ability to pay as they matured, such court could void
the Guarantor's obligations under such guarantee and direct the repayment of any
amounts paid thereunder to the Guarantor or to a fund for the benefit of the
Guarantor's creditors, or take other action detrimental to the holders of the
Exchange Notes.
The measure of insolvency for purposes of the foregoing will vary
depending upon the law of the jurisdiction which is being applied. Generally,
however, an entity will be considered insolvent for purposes of the foregoing if
the sum of its debts is greater than all of its property at a fair valuation, or
if the present fair saleable value of its assets is less than the amount
required to pay its probable liabilities on its existing debts as they become
absolute and matured. Based upon management's analysis of internal cash flow
projections and other financial information and estimated values of assets and
liabilities of the Company's subsidiaries which are Guarantors, the Company
believes that, immediately after the exchange of the Initial Notes for the
Exchange Notes assuming no Event of Default exists under the Indenture, the
Guarantors will be solvent, and will have sufficient capital to carry on their
businesses and that the Guarantors will be able to pay their debts as they
mature. No assurance can be given, however, that a court would reach the same
conclusions with regard to these issues.
Risk of Inability to Realize Upon Security Interests
The Exchange Notes will be secured by pledges of all of the Capital
Stock owned by the Company in each Pledged Company. The ability of the Trustee
to foreclose on such collateral upon the occurrence of an Event of Default under
the Indenture will be subject to practical problems associated with realization
upon security interests generally, as well as the need to obtain consent of the
FCC for the transfer of control of each Pledged Company that would be occasioned
by such foreclosure. In addition, in certain instances, the ability to foreclose
on the collateral upon the occurrence of an Event of Default under the Indenture
will be subject to perfection and priority issues under the Pledge Agreements.
Approximately 18% of the Capital Stock of Bogen owned by the Company is subject
to a prior lien. See "Description of Exchange Notes - Security."
The Pledged Companies directly or indirectly through various
subsidiaries hold interests in licenses authorized by the FCC and certain
foreign regulatory authorities. In the event that the Company fails to meet its
obligations under the Exchange Notes, the Trustee would be required to obtain
various regulatory approvals prior to foreclosing on or selling the collateral
under the Pledge Agreements. The need to obtain any such regulatory approvals
could adversely affect the ability of the Trustee to dispose of such Collateral.
See "Description of Exchange Notes - Security - Events of Default."
The Indenture permits the Company's subsidiaries, including the Pledged
Companies, to issue common stock and, under certain circumstances, to acquire
subsidiaries that had preferred stock outstanding on the date of acquisition. To
the extent that the Company owns less than all of the shares of Capital Stock of
a Pledged Company, the ability of the Trustee to dispose of any such collateral
may be adversely affected. See "Description of Exchange Notes - Limitation on
Issuances and Sale of Preferred Stock by Subsidiaries." Under certain
circumstances provided for in the Indenture and the Pledge Agreements, the
Company's subsidiaries, including the Pledged Companies, will be able to incur
indebtedness and grant liens on their assets, other than FCC licenses. The
incurrence of any such indebtedness and the existence of any such liens may have
an adverse effect on the ability of the Trustee to dispose of collateral. See
"Description of Exchange Notes - Security" and "Description of Exchange Notes -
Limitation on Indebtedness."
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If an Event of Default occurs with respect to the Exchange Notes, there
can be no assurance that the liquidation of the collateral securing the Exchange
Notes would produce proceeds in an amount sufficient to pay the principal,
premium, if any, and accrued interest on the Exchange Notes. In this regard,
substantially all of the assets of certain of the Pledged Companies consist of
licenses for radio spectrum issued by the FCC, the value of which is uncertain.
Moreover, such liquidation would require approval of the FCC. The need to obtain
any such regulatory approval could adversely affect the ability of the Trustee
to liquidate such Collateral. See "- Uncertain Value of FCC Licenses."
The ability to take possession and dispose of the Collateral securing
the Exchange Notes upon acceleration of the Exchange Notes is likely to be
significantly impaired or delayed by applicable bankruptcy law if a bankruptcy
case were to be commenced by or against the Company.
Dependence on Key Personnel
The success of the Company will depend greatly upon the active
participation and the experience of its management. The loss of the services of
Yaron Eitan, the Company's President and Chief Executive Officer, could
adversely affect the conduct of the Company's business. In addition, the
successful implementation of the Company's business plan will depend, to a large
extent, upon the ability of the Company's and its subsidiaries' engineers and
scientific personnel to perfect and improve upon existing and proposed products.
The loss of some or all of such personnel, or the inability of the Company to
attract additional personnel, or the inability of such persons to design such
systems or to continue product enhancement will directly inhibit the ability of
the Company to sell its products and services and to operate profitably.
Uncertain Value of FCC Licenses
A significant portion of the Company's assets (including substantially
all of the assets of the Pledged Companies directly or indirectly holding FCC
licenses) consist of intangible assets, principally FCC licenses and agreements
to use FCC licenses held by others, the value of which will depend significantly
upon the success of the Company's business, the growth of the wireless
communications industry in general, FCC actions and a variety of other factors.
Moreover, any transfer of a FCC license is subject to the approval of the FCC,
which approval may be withheld for a variety of reasons. In the event of a
default on the Exchange Notes or liquidation of the Company, there can be no
assurance that the future fair value of these assets would be sufficient to
satisfy the Company's obligations under the Notes. See " - Risk of Inability to
Realize Upon Security Interests."
Risks of International Business
The Company operates in and sells products and services to clients in
various countries and certain of its products and components are manufactured
abroad. The Company's research and development activities are reliant upon
foreign providers. Accordingly, the Company is subject to the risks inherent in
conducting business across national boundaries, including, but not limited to,
currency exchange rate fluctuations, international incidents, military
outbreaks, economic downturns, government instability, nationalization of
foreign assets, government protectionism and changes in governmental policy, any
of which risks could have a material adverse impact on the Company.
Original Issue Discount Consequences
A holder of an Exchange Note will be required to include in such
holder's income for federal income tax purposes the original issue discount with
respect to the Exchange Note as it accrues, although no cash payments of
interest on the Exchange Notes are expected to be made until January 15, 2001.
See "Certain Federal Income Tax Considerations - Original Issue Discount." In
addition, because the Exchange Notes have a yield to maturity in excess of the
"applicable federal rate" plus 5 percentage points, they will constitute
"applicable high yield discount obligations," with the result that the Company's
deductions with respect to such original issue discount will be deferred until
the related payments are made and a portion of such deduction will be
permanently disallowed, which, in turn, could reduce the after-tax cash flows of
the Company. See "Certain Federal Income Tax Considerations -- Certain Federal
22
<PAGE>
Income Tax Consequences to the Company and Corporate Holders". Prospective
investors should consult their tax advisors about the application of federal
income tax law, as well as any applicable state, local or foreign tax laws. This
Prospectus contains no information regarding taxation other than under the
federal income tax laws of the United States.
Influence by Significant Stockholders
As of the date hereof, approximately 25% of the total voting power of
the Common Stock (on a fully-diluted basis but without giving effect to the
exercise of the options held by Vanguard Cellular Systems, Inc. ("Vanguard"))
was beneficially owned by the directors and executive officers of the Company
and their affiliates. Vanguard holds options to purchase approximately 5.3
million shares of Common Stock. Consequently, the Company's directors and
executive officers will be able to exert significant influence with respect to
all matters upon which stockholder approval is required. Certain decisions
concerning the operations or financial structure of the Company may present
conflicts of interest between the owners of the Company's capital stock and the
holders of the Exchange Notes. For example, if the Company encounters financial
difficulties, or is unable to pay its debts as they mature, the interests of the
Company's equity investors might conflict with those of the holders of the
Exchange Notes. In addition, the equity investors may have an interest in
pursuing acquisitions, divestitures, financings or other transactions that, in
their judgment, could enhance their equity investment, even though such
transactions might involve risk to the holders of the Exchange Notes.
Pursuant to certain agreements among them, certain of the principal
stockholders of the Company have the right to require the other stockholders to
cause (to the extent permitted by law and to the extent within such other
stockholders' control) the directors of the Company to vote, or refrain from
voting, in accordance with such stockholders' direction with respect to the
election of directors. The Company also has granted to the holders of its
preferred stock the right to elect additional directors to the Board of
Directors of the Company upon the occurrence of certain events of default. The
operation of such provisions could result in such stockholders exerting
significant influence over the Board of Directors of the Company.
Transactions with Affiliates
During the period since its inception, the Company has undertaken a
wide variety of financing and merger/acquisition activity which has resulted in
its present corporate and financial structure. Included in such activity have
been transactions which have involved persons who now serve, or who did serve at
the time, as directors and officers of the Company or persons or entities
related to such persons. In every instance where such transactions have involved
any such persons or entities, the specific transaction has been approved
unanimously by directors of the Company, including all disinterested and outside
directors, with the affected parties abstaining. It is the Company's view that
each such transaction has been on terms no less favorable to the Company than
other similar transactions available to the Company with unaffiliated parties,
if available at all. In most of such instances, such transactions have been the
Company's only recourse to meet financing needs and/or business goals. Despite
the foregoing, prospective purchasers may wish to consider the circumstances in
which such transactions were made, the terms of such transactions and the
Company's possible alternative courses of action.
Patent Issues
The Company protects its proprietary information by way of
confidentiality and non-disclosure agreements with employees and third parties
who may have access to such information. The Company continually reviews its
technology developments in order to file patent applications and has filed
patent applications with respect to certain aspects of its FHMA(TM) frequency
hopping technology and GEONET in Israel and expects to file additional patent
applications in Israel and the United States. Generally, the Company intends to
file all patent applications in the United States and Israel and in such other
countries as it deems appropriate. There can be no assurance that such
applications will be granted. There can be no assurance that any patents issued
will afford meaningful protection against competitors with similar technology or
that any patents issued will not be challenged by third parties. There also can
be no assurance that others will not independently develop similar technologies,
duplicate the Company's technologies or design around the patented aspects of
any technologies developed by the Company. Many patents and patent applications
have been filed by third parties with respect to wireless communications
technology. The Company does not believe that its technology infringes on the
23
<PAGE>
patent rights of third parties. However, there can be no assurance that certain
aspects of the Company's technology will not be challenged by the holders of
such patents or that the Company will not be required to license or otherwise
acquire from third parties the right to use certain technology. The failure to
overcome such challenges or obtain such licenses or rights could have a material
adverse effect on the Company's operations.
Lack of Public Market for the Exchange Notes; Liquidity
The Exchange Notes are a new issue of securities, have no established
trading market and may not be widely distributed. Although the Company has
agreed to cause the Exchange Notes to be listed on each securities exchange
which similar securities issued by the Company are listed (if requested by the
holders of a majority in aggregate principal amount of the Exchange Notes in
accordance with the Notes Registration Rights Agreement), the Company has no
such listed securities and has no present intention to apply for the listing of
any securities similar to the Exchange Notes. Smith Barney Inc. has advised the
Company that it currently intends to make a market in the Exchange Notes;
however, it is not obligated to so do and any market making activity may be
discontinued at any time. Therefore, there can be no assurance that an active
market for the Exchange Notes will develop. If such a trading market develops
for the Exchange Notes, future trading prices will depend on many factors,
including, among other things, prevailing interest rates, the Company's results
of operations and the market for similar securities. Depending on such factors,
the Exchange Notes may trade at a discount from their face value.
24
<PAGE>
SELECTED HISTORICAL AND PRO FORMA CONSOLIDATED FINANCIAL DATA (UNAUDITED)
(In thousands, except per share data and ratios)
The following table presents selected historical consolidated financial
data for the Company as of and for each of the five years in the period ended
December 31, 1994. The data for each of the years in the period ended December
31, 1994 have been derived from consolidated financial statements (including
those incorporated by reference into this Prospectus) which have been audited by
Coopers & Lybrand L.L.P., independent accountants and other auditors. The pro
forma consolidated financial data presented below reflects pro forma adjustments
that are based upon available information and certain assumptions that the
Company believes are reasonable. The pro forma consolidated financial data does
not necessarily reflect the results of operations or the financial position of
the Company that actually would have resulted had the transactions to which the
pro forma effect is given been consummated as of the date indicated. The
information set forth below with respect to the historical financial statements
should be read in conjunction with the annual and interim consolidated financial
statements and the related notes incorporated by reference into this Prospectus.
<TABLE>
<CAPTION>
Six Months
Ended June 30, December 31, Ended June 30,
------------------------------------------------------------- -----------------------
Pro Pro
Forma Forma
1990 1991 1992 1993 1994 1994 (1) 1994 1995 1995 (1)
---- ---- ---- ---- ---- -------- ---- ---- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Statement of Operations
Data:
Net sales ................... $ 6,453 $ 22,186 $ 28,546 $ 48,971 $ 72,991 $ 72,991 $ 31,753 $ 39,504 $ 39,504
Cost of sales ............... 6,408 14,459 19,924 33,611 47,752 47,752 20,934 22,124 22,124
Gross profit ................ 45 7,727 8,622 15,360 25,239 25,239 10,819 17,380 17,380
Non-cash acquisition
charge (2) .................. -- -- -- 32,430 -- -- -- -- --
Other operating expenses .... 3,919 7,044 10,379 33,423 66,918 69,550 27,915 41,250 42,567
Operating income (loss) ..... (3,874) 683 (1,757) (50,493) (41,679) (44,311) (17,126) (23,870) (25,187)
Interest expense ............ 627 1,712 1,099 2,591 3,101 26,880 370 3,583 13,901
Interest and other income ... (418) (335) (475) (1,188) (3,206) (3,206) (1,352) (2,262) (2,262)
Taxes on income ............. 48 -- -- -- 660 660 -- 744 744
Minority interest ........... -- 198 -- (1,455) 171 171 180 180 180
Income (loss) from
continuing operations ....... (4,131) (892) (2,381) (50,441) (42,405) (69,766) (16,324) (26,115) (37,900)
Net income (loss) ........... (3,886) 174 (2,120) (53,665) (42,405) (69,766) (16,324) (26,115) (37,900)
Preferred dividends ......... 521 1,155 777 246 2,066 4,504 999 1,606 2,559
Net loss per common share ... (1.38) (0.14) (0.20) (1.52) (0.90) (1.49) (0.35) (0.54) (0.79)
Weighted average shares
outstanding ............... 3,188 7,251 14,232 35,579 49,687 49,687 49,173 51,450 51,450
Ratio of earnings to fixed
charges (3) ................ -- -- -- -- -- -- -- -- --
Other Data:
EBITDA (4) .................. (3,589) 1,370 (943) (15,153) (34,241) (35,216) (14,147) (19,257) (19,745)
Depreciation and
Amortization .................. 285 687 814 2,910 7,438 9,095 2,979 4,613 5,442
Capital Expenditures ........ 192 229 926 2,279 10,458 10,458 3,822 7,288 7,288
</TABLE>
25
<PAGE>
<TABLE>
<CAPTION>
As of
As of December 31 June 30,
--------------------------------------------- -----------------
As Adjusted
1990 1991 1992 1993 1994 1995 1995 (1)
---- ---- ---- ---- ---- ---- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance Sheet Data:
Cash, cash equivalents and temporary
investments ........................................... $ 1,686 $ 409 $ 3,025 $ 59,559 $ 52,046 $ 52,439 $125,439
Current assets ......................................... 8,456 12,085 18,571 80,051 79,552 87,440 166,940
Restricted cash ........................ ............... -- -- -- -- -- -- 40,500
Property, plant and equipment, net ..................... 1,121 1,668 2,152 17,535 24,446 29,554 29,554
Intangible assets, net ................................. 687 11,753 12,487 29,741 46,099 49,487 57,503
Total assets ........................................... 23,902 34,646 39,366 135,644 179,844 193,789 311,789
Long-term debt (net of current maturiti6,596 ........... 6,596 7,083 2,582 3,961 29,396 39,689 116,791
Redeemable preferred stock ............................. -- 531 -- 40,000 40,000 40,000 40,000
Stockholders' equity ................................... 11,536 15,351 24,432 69,244 77,356 81,872 131,086
</TABLE>
--------
(1) The following transactions and their related effects have been included,
on a pro forma basis, as if they had occurred at the beginning of the
fiscal period:
<TABLE>
<CAPTION>
Transaction Pro forma Adjustment
==================================================================================================================================
<S> <C>
(A) The sale of Units consisting of Notes with an aggregate (A) 1994 - Increase interest expense $20.3 million
principal amount at maturity of $227.7 million and warrants Increase other operating expenses $.500 million
to purchase 6,831,000 shares of Common Stock to the initial 1995 - Increase interest expense $9.9 million
Purchaser for aggregate proceeds (excluding $5.0 million of Increase other operating expenses $.250 million
issuance costs which have been deferred) of $105.0 million. Increase cash - $105.0 million
The value ascribed to the detachable warrants and the Increase long-term debt $77.9 million
deferred issuance costs incurred are being amortized into Increase stockholders' equity $32.1 million
expense over the ten year maturity period of the Notes. for the value ascribed to the warrants
Interest expense accrues at 15% compounded semi annually.
----------------------------------------------------------------------------------------------------------------------------------
(B) The Company refinanced $25.0 million of Senior (B) 1994 - Increase interest expense $3.5 million
Secured Notes (with an interest rate of 14%) through the Increase other operating expenses $.950 million
issuance, in March 1995 of $36.0 million of the Company's 1995 - Increase interest expense $.463 million
14.75% Senior Secured Notes due 1998. In connection with Increase other operating expenses $.150 million
the issuance, the Company issued warrants for the purchaser Decrease cash $40.5 million
to acquire 700,000 shares of the Company's Common Stock which Increase restricted cash $40.5 million
will be amortized into expense over 3 years. In connection with
the Units (A above), the Company placed $40.5 million of cash
in a restricted cash account.
----------------------------------------------------------------------------------------------------------------------------------
(C) The issuance of shares of preferred stock to Vanguard (C) 1995 - Increase cash $5.0 million
for $5.0 million in cash. Such transaction is expected to close Increase stockholders' equity $5.0 million
September 1995.
----------------------------------------------------------------------------------------------------------------------------------
(D) In August 1995, EGAC shareholder approval was (D) 1995 - Increase cash $7.0 million
obtained for the transfer of the Company's interest in Speech Decrease intangible assets $7.0 million
Design and Bogen to EGAC in exchange for $7.0 milion in
cash. The Company has reduced its intangible assets of the
above mentioned entities as a result of this transaction.
----------------------------------------------------------------------------------------------------------------------------------
(E) In August 1995, the Company signed a letter of intent (E) 1994 - Increase other operating expenses $.832 million
with RDC whereby RDC will convert all the principal and 1995 - Increase other operating expenses $.416 million
interest issued to it by PST into shares of PST, representing Increase intangible assets $8.3 million
a 38% ownership interest in PST. Additionally, the letter of Increase stockholders' equity $12.1 million
intent calls for the purchase by RDC of $3.0 million for the $8.3 increase in intangible assets, the
of the Company's Common Stock. $.792 million decrease in long term debt and the
$3.0 million increase in cash.
Decrease long-term debt $.792 million
Increase cash $3.0 million
----------------------------------------------------------------------------------------------------------------------------------
(F) In July 1995, the Company acquired the remaining (F) 1994 - Increase other operating expenses $1.3 million
50.1% of DBF that it did not own for approximately $6.5 1995 - Decrease cash $6.5 million
million. The Company has recorded 100% of DBF's Increase intangible assets $6.5 million
losses in its income statement. Increase other operating expenses $.651 million
==================================================================================================================================
</TABLE>
<PAGE>
The pro formas have not been adjusted to reflect the proposed
acquisition of the remaining interest in PBG which the Company does not
presently own, which remains subject to certain regulatory approval.
(2) Consists of a non-cash charge for the purchase of incomplete research
and development in connection with the merger of PSI into a
wholly-owned subsidiary of the Company. PSI is a wholly-owned
subsidiary of the Company through which the Company owns its 56%
interest (on a fully-diluted basis) in PST. In August 1995, the Company
entered into a letter of intent to purchase an approximate additional
38% in PST.
(3) Earnings include income before income taxes plus fixed charges less
capitalized interest. Fixed charges include interest and one-third of
rent expense (representing the estimated interest component of
operating leases).The dollar amount of the deficiency in earnings to
fixed charges was $4.6 million, $2.1 million, $3.2 million, $52.1
million, $43.6 million and $72.1 million for the years ended December
31, 1990, 1991, 1992, 1993, 1994 and 1994 (pro forma) respectively. The
dollar amount of the deficiency was $17.3 million, $27.0 million and
$38.9 million for the six month periods ended June 30, 1994, June 30,
1995 and June 30, 1995 (pro forma).
(4) EBITDA means earnings before interest, income taxes, depreciation and
amortization (excluding certain non-recurring charges and extraordinary
items). EBITDA has been included solely to facilitate the consideration
of the covenants in the Indenture that are based, in part, on EBITDA
and because the Company understands that it is used by certain
investors as one measure of the Company's historical ability to service
its debt. EBITDA is not intended to represent cash flow from operations
as defined by generally accepted accounting principles. EBITDA for the
fiscal year ended December 31, 1993 does not include a non-cash
acquisition charge of approximately $32.0 million. (See Note 2 above).
26
<PAGE>
THE EXCHANGE OFFER
Purpose and Effect of the Exchange Offer
The Company and the holders of the Initial Notes are parties to the
Notes Registration Rights Agreement, pursuant to which the Company agreed, with
respect to the Initial Notes, to (i) cause to be filed, on or prior to September
4, 1995, a registration statement with the Commission under the Securities Act
covering the Exchange Offer, (ii) use its best efforts (a) to cause such
registration statement to be declared effective by the Commission on or prior to
November 3, 1995, and (b) to commence the Exchange Offer promptly after such
registration statement is declared effective and to issue Exchange Notes in
exchange for all Initial Notes validly tendered pursuant to the Exchange Offer
on or prior to 45 business days after the date such registration statement is
declared effective. This Exchange Offer is intended to satisfy the Company's
exchange obligations under the Notes Registration Rights Agreement. Upon the
completion of the Exchange Offer, the Company's obligations with respect to the
registration of the Initial Notes and the Exchange Notes will terminate except
as provided below. A copy of the Notes 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 Initial
Notes provided for in the Notes Registration Rights Agreement will not occur.
Following the completion of the Exchange Offer, Eligible Holders of Initial
Notes not tendered will not have any further registration rights, except as
provided below, and the Initial Notes will continue to be subject to certain
restrictions on transfer. Accordingly, the liquidity of the market for the
Initial Notes could be adversely affected upon completion of the Exchange Offer.
While the Company has not sought a no-action letter from the
Commission, based on an interpretation by the staff of the Commission set forth
in no-action letters issued to third parties, the Company believes that the
Exchange Notes issued pursuant to the Exchange Offer to an Eligible Holder in
exchange for Initial Notes may be offered for resale, resold and otherwise
transferred by such Eligible Holder (other than (i) a broker-dealer who acquired
27
<PAGE>
Initial Notes directly from the Company for resale pursuant to Rule 144A under
the Securities Act or any other available exemption under the Securities Act, or
(ii) a 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 the Eligible
Holder is acquiring the Exchange Notes in the ordinary course of business and is
not participating, and has no arrangement or understanding with any person to
participate, in the distribution of the Exchange Notes. Any holder who tenders
in the Exchange Offer for the purpose of participating in a distribution of the
Exchange Notes cannot rely on such interpretation by the staff of the Commission
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 Exchange Notes for its own account in exchange for
Initial Notes, where such Initial 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 meeting the requirements of the Securities Act
in connection with any resales of such Exchange Notes. See "Plan of
Distribution."
In the event that any holder of Initial Notes would not receive freely
tradeable Exchange Notes in the Exchange Offer or is not eligible to participate
in the Exchange Offer, such holder can elect to have such holder's Initial Notes
registered in a "shelf" registration statement on an appropriate form pursuant
to Rule 415 under the Securities Act as provided in the Notes Registration
Rights Agreement.
Consequences of Failure to Exchange
Following the completion of the Exchange Offer, Eligible Holders of
Initial Notes not tendered will not have any further registration rights, except
as set forth above, and the Initial Notes will continue to be subject to certain
restrictions on transfer. Accordingly, the liquidity of the market for a
holder's Initial Notes could be adversely affected upon completion of the
Exchange Offer if such holder does not participate in the Exchange Offer.
Terms of the Exchange Offer
The Company hereby offers, upon the terms and subject to the conditions
set forth herein and in the accompanying Letter of Transmittal, to exchange
$1,000 in principal amount at maturity of the Exchange Notes for each $1,000 in
principal amount at maturity of the outstanding Initial Notes. The Company
will accept for exchange any and all Initial Notes that are validly tendered on
or prior to 5:00 p.m., New York City time, on the Expiration Date. Tenders of
the Initial Notes may be withdrawn at any time prior to 5:00 p.m., New York City
time, on the Expiration Date. The Exchange Offer is not conditioned upon any
minimum principal amount of Initial Notes being tendered for exchange. However,
the Exchange Offer is subject to the terms and provisions of the Notes
Registration Rights Agreement. See "The Exchange Offer-Conditions of the
Exchange Offer."
Initial Notes may be tendered only in multiples of $1,000. Subject to
the foregoing, Eligible Holders may tender less than the aggregate principal
amount represented by the Initial Notes held by them, provided that they
appropriately indicate this fact on the Letter of Transmittal accompanying the
tendered Initial Notes (or so indicate pursuant to the procedures for book-entry
transfer).
As of the date of this Prospectus, $227.7 million in aggregate
principal amount at maturity, of the Initial Notes were outstanding. As of the
Record Date, there were ___ registered holders of the Initial Notes, and Cede &
Co., as nominee for DTC, one of the registered holders, held Initial Notes for
____ of its participants. Solely for reasons of administration (and for no other
purpose), the Company has fixed the close of business on ________ __, 1995 as
the record date (the "Record Date") for purposes of determining the persons to
whom this Prospectus and the Letter of Transmittal will be mailed initially.
Only an Eligible Holder of the Initial Notes (or such Eligible Holder's legal
representative or attorney-in-fact) may participate in the Exchange Offer.
The Company shall be deemed to have accepted validly tendered Initial
Notes when, as and if the Company had given oral or written notice thereof to
the Exchange Agent. The Exchange Agent will act as agent for the tendering
Eligible Holders of Initial Notes and for the purpose of receiving the Exchange
Notes from the Company.
28
<PAGE>
If any tendered Initial 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 Initial Notes will be returned,
without expense, to the tendering Eligible Holder thereof as promptly as
practicable after the Expiration Date.
Expiration Date; Extensions; Amendments
The Expiration Date shall be 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 Expiration Date shall be 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 and will make a public
announcement thereof, each prior to 10:00 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 Initial Notes, (ii) to extend the Exchange Offer, (iii) if any of
the conditions set forth below under "Conditions of the Exchange Offer" 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,
and (iv) to amend the terms of the Exchange Offer in any manner. If the Exchange
Offer is amended in a manner determined by the Company to constitute a material
change, the Company will promptly disclose such amendments by means of a
prospectus supplement that will be distributed to the registered holders of the
Initial Notes. If the Exchange Offer would otherwise expire during such five to
ten business day period, the Company will extend the Exchange Offer for a period
of five to ten business days, depending upon the significance of the amendment
and the manner of disclosure to the registered holders.
Conditions of the Exchange Offer
The Exchange Offer is not conditioned upon any minimum principal amount
of the Initial Notes being tendered for exchange. However, notwithstanding any
other provisions of the Exchange Offer, the Company shall not be required to
accept for exchange, or to issue the Exchange Notes in exchange for, any Initial
Notes, if the consummation of the Exchange Offer would violate (i) any
applicable law; (ii) any applicable interpretation of the staff of the
Commission; or (iii) any order of any governmental agency or court of
competent jurisdiction; provided, however, that the Company will use
reasonable efforts to modify or amend the Exchange Offer or to take such other
reasonable steps in order to effectuate the Exchange Offer.
The Company expects that the foregoing conditions will be satisfied.
The foregoing conditions are for the benefit of the Company and all Eligible
Holders. Any determination by the Company concerning the events described above
will be final and binding upon all parties.
Termination of Certain Rights
Pursuant to the Notes Registration Rights Agreement and the Initial
Notes, Eligible Holders of the Initial Notes (i) have rights to receive the
additional interest payable in cash (the "Additional Interest") in certain
situations (as described below) and (ii) have certain rights intended for the
holders of unregistered securities. These rights will terminate upon the
consummation of the Exchange Offer.
If an exchange offer registration statement or shelf registration
statement required to be filed pursuant to the terms of the Notes Registration
Rights Agreement (respectively, an "Exchange Offer Registration Statement" and
"Shelf Registration Statement") is not filed by September 4, 1995, then,
commencing on September 5, 1995, Additional Interest shall accrue on the Initial
Notes at a rate of 0.50% per annum for the first 90 days immediately following
September 4, 1995, such Additional Interest rate increasing by an additional
0.25% per annum at the beginning of each subsequent 90 day period. If an
Exchange Offer Registration Statement or Shelf Registration Statement is filed
pursuant to clause (i) above or otherwise prior to November 3, 1995 and is not
declared effective by such date, then, commencing on November 4, 1995,
Additional Interest shall accrue on the Initial Notes at a rate of 0.50% per
annum for the first 90 days immediately following November 3, 1995, such
Additional Interest rate increasing by an additional 0.25% per annum at the
beginning of each subsequent 90 day period. If (A) the Company has not exchanged
Exchange Notes for all Initial Notes validly tendered in accordance with the
terms of the Exchange Offer on or prior to 45 days after the date on which an
Exchange Offer Registration Statement was declared effective or (B) if
applicable, a 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, in each case under this clause
(B) prior to three years from the effective date of such Shelf Registration
Statement, then Additional Interest shall accrue on the Initial Notes at a rate
of 0.50% per annum for the first 60 days immediately following (x) the 46th day
after such effective date, 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.
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In the case of each of clauses (i), (ii) and (iii) of the preceding
paragraph, such Additional Interest will be payable in cash semi-annually in
arrears on each July 15th and January 15th, commencing January 15, 1996 and
shall be calculated at the rates noted above as a percentage of the Accreted
Value of the Initial Notes as of the January 1, or July 1, immediately preceding
the interest payment date (or as of July 15, 1995 in the case of the first such
interest payment date); provided, however, that the Additional Interest rate on
the Initial Notes may not exceed 1.0% per annum; and, provided, further, that
(1) upon the filing of the Exchange Offer Registration Statement or a Shelf
Registration Statement (in the case of clause (i) above), (2) upon the
effectiveness of the Exchange Offer Registration Statement or a Shelf
Registration Statement (in the case of clause (ii) above) or (3) upon the
exchange of Exchange Notes for all Notes validly tendered or 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) above), Additional Interest on
the Notes as a result of such clause (i), (ii) or (iii) shall cease to accrue.
The Exchange Offer is intended to satisfy the Company's obligations to
Eligible Holders under the Notes Registration Rights Agreement. Under certain
circumstances, if a determination is made that the Exchange Offer cannot be
consummated, the Notes Registration Rights Agreement provides that the Company
will file a shelf registration statement with the Commission and use its best
efforts to cause such shelf registration statement (i) to become effective under
the Securities Act by November 4, 1995 (ii) subject to certain exceptions to
remain effective for a period of three years following the effective date of
such shelf registration statement. These registration rights, as well as certain
related rights provided in the Notes Registration Rights Agreement for the
benefit of Eligible Holders, will terminate upon the consummation of the
Exchange Offer.
Procedures for Tendering Initial Notes
The tender by an Eligible Holder as set forth below and the acceptance
thereof by the Company will constitute a binding agreement between the tendering
Eligible Holder and the Company upon the terms and subject to the conditions set
forth in this Prospectus and in the accompanying Letter of Transmittal. Except
as set forth below, an Eligible Holder who wishes to tender Initial Notes for
exchange pursuant to the Exchange Offer must transmit such Initial Notes,
together with a properly completed and duly executed Letter of Transmittal,
including all other documents required by such Letter of Transmittal, to the
Exchange Agent at the address set forth on the back cover page of this
Prospectus on or prior to 5:00 p.m., New York City time on the Expiration Date.
THE METHOD OF DELIVERY OF INITIAL NOTES, LETTERS OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS IS AT THE ELECTION AND RISK OF THE ELIGIBLE HOLDER. IF SUCH
DELIVERY IS BY MAIL, IT IS RECOMMENDED THAT REGISTERED MAIL, PROPERLY INSURED,
WITH RETURN RECEIPT REQUESTED, BE USED. INSTEAD OF DELIVERY BY MAIL, IT IS
RECOMMENDED THAT THE ELIGIBLE HOLDER USE AN OVERNIGHT OR HAND DELIVERY SERVICE.
IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE TIMELY DELIVERY.
Any financial institution that is a participant in DTC's Book-Entry
Transfer Facility system may make book-entry delivery of the Initial Notes by
causing DTC to transfer such Initial Notes into the Exchange Agent's account in
accordance with DTC's procedures for such transfer. In connection with a
book-entry transfer, a Letter of Transmittal need not be transmitted to the
Exchange Agent, provided that the book-entry transfer procedure must be complied
with on or prior to 5:00 p.m., New York City time, on the Expiration Date.
Each signature on a Letter of Transmittal or a notice of withdrawal, as
the case may be, must be guaranteed unless the Initial Notes surrendered for
exchange pursuant hereto are tendered (i) by a registered holder of the Initial
Notes who has not completed either the box entitled "Special Exchange
Instructions" or the box entitled "Special Delivery Instructions" in the Letter
of Transmittal, or (ii) by an Eligible Institution (as defined below). In the
event that a signature on a Letter of Transmittal or a notice of withdrawal, as
the case may be, is required to be guaranteed, such guarantee must be by a firm
which is a member of a registered national securities exchange or the National
Association of Securities Dealers, Inc., a commercial bank or trust company
having an office or correspondent in the United States or otherwise be an
"eligible guarantor institution" within the meaning of Rule 17Ad-15 under the
Exchange Act (collectively, "Eligible Institutions"). If the Letter of
Transmittal is signed by a person other than the registered holder of the
Initial Notes listed therein, the Initial Notes surrendered for exchange must
either (i) be endorsed by the registered holder, with the signature thereon
guaranteed by an Eligible Institution, or (ii) be accompanied by a bond power,
in satisfactory form as determined by the Company in its sole discretion, duly
executed by the registered holder, with the signature thereon guaranteed by an
Eligible Institution. The term "registered holder" as used herein with respect
to the Initial Notes means any person in whose name the Initial Notes are
registered on the books of the Registrar.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance and withdrawal of Initial Notes tendered for exchange will
be determined by the Company in its sole discretion, which determination shall
be final and binding. The Company reserves the absolute right to reject any and
all Initial Notes not properly tendered and to reject any Initial Notes the
Company's acceptance of which might, in the judgment of the Company or its
counsel, be unlawful. The Company also reserves the absolute right to waive any
defects or irregularities or conditions of the Exchange Offer as to particular
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Initial Notes either before or after the Expiration Date (including the right to
waive the ineligibility of any holder who seeks to tender Initial Notes in the
Exchange Offer). The interpretation of the terms and conditions of the Exchange
Offer (including the Letter of Transmittal and the instructions thereto) by the
Company shall be final and binding on all parties. Unless waived, any defects or
irregularities in connection with tenders of Initial Notes for exchange must be
cured within such period of time as the Company shall determine. The Company
will use reasonable efforts to give notification of defects or irregularities
with respect to tenders of Initial Notes for exchange but shall not incur any
liability for failure to give such notification. Tenders of the Initial Notes
will not be deemed to have been made until such irregularities have been cured
or waived. Therefore, holders of Initial Notes desiring to tender such Initial
Notes in exchange for Exchange Notes should allow sufficient time to ensure
timely delivery. Initial Notes that are not tendered or are tendered but not
accepted will, following the consummation of the Exchange Offer, continue to be
subject to the existing restrictions upon transfer thereof and the Company will
have no further obligation to provide for the registration under the Securities
Act of such Initial Notes except as described herein. See "The Exchange
Offer--Purpose and Effect."
If any Letter of Transmittal, endorsement, bond power, power of
attorney or any other document required by the Letter of Transmittal is signed
by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a
corporation or other person acting in a fiduciary or representative capacity,
such person should so indicate when signing, and, unless waived by the Company,
proper evidence satisfactory to the Company, in its sole discretion, of such
person's authority to so act must be submitted.
Any beneficial owner of the Initial Notes (a "Beneficial Owner") whose
Initial Notes are registered in the name of a broker, dealer, commercial bank,
trust company or other nominee and who wishes to tender Initial Notes in the
Exchange Offer should contact such registered holder promptly and instruct such
registered holder to tender on such Beneficial Owner's behalf. If such
Beneficial Owner wishes to tender directly, such Beneficial Owner must, prior to
completing and executing the Letter of Transmittal and tendering Initial Notes,
make appropriate arrangements to register ownership of the Initial Notes in such
Beneficial Owner's name. Beneficial Owners should be aware that the transfer of
registered ownership may take considerable time.
By tendering, each registered holder will represent to the Company
that, among other things (i) the Exchange Notes to be acquired in connection
with the Exchange Offer by the Eligible Holder and each Beneficial Owner of the
Initial Notes are being acquired by the Eligible Holder and each Beneficial
Owner in the ordinary course of business of the Eligible Holder and each
Beneficial Owner, (ii) the Eligible Holder and each Beneficial Owner are not
participating, do not intend to participate, and have no arrangement or
understanding with any person to participate, in the distribution of the
Exchange Notes, (iii) the Eligible Holder and each Beneficial Owner acknowledge
and agree that any person participating in the Exchange Offer for the purpose of
distributing the Exchange Notes must comply with the registration and prospectus
delivery requirements of the Securities Act in connection with a secondary
resale transaction of the Exchange Notes acquired by such person and cannot rely
on the position of the Staff of the Commission set forth in no-action letters
that are discussed herein under "The Exchange Offer-Resales of the Exchange
Notes," (iv) that if the Eligible Holder is a broker-dealer that acquired
Initial Notes as a result of market-making or other trading activities, it will
deliver a prospectus in connection with any resale of Exchange Notes acquired in
the Exchange Offer, (v) the Eligible Holder and each Beneficial Owner understand
that a secondary resale transaction described in clause (iii) above should be
covered by an effective registration statement containing the selling security
holder information required by Item 507 of Regulation S-K of the Commission, and
(vi) neither the Eligible Holder nor any Beneficial Owner is an "affiliate," as
defined under Rule 405 of the Securities Act, of the Company except as otherwise
disclosed to the Company in writing. In connection with a book-entry transfer,
each participant will confirm that it makes the representations and warranties
contained in the Letter of Transmittal.
Guaranteed Delivery Procedures
Eligible Holders who wish to tender their Initial Notes and (i) whose
Initial Notes are not immediately available, or (ii) who cannot deliver their
Initial Notes or any other documents required by the Letter of Transmittal to
the Exchange Agent prior to the Expiration Date (or complete the procedure for
book-entry transfer on a timely basis), may tender their Initial Notes according
to the guaranteed delivery procedures set forth in the Letter of Transmittal.
Pursuant to such procedures: (i) such tender must be made by or through an
Eligible Institution and a Notice of Guaranteed Delivery (as defined in the
Letter of Transmittal) must be signed by such Eligible Holder, (ii) prior to the
Expiration Date, the Exchange Agent must have received from the Eligible Holder
and the Eligible Institution a properly completed and duly executed Notice of
Guaranteed Delivery (by facsimile transmission, mail or hand delivery) setting
forth the name and address of the Eligible Holder, the certificate number or
numbers of the tendered Initial Notes, and the principal amount of tendered
Initial Notes, stating that the tender is being made thereby and guaranteeing
that, within four business days after the date of delivery of the Notice of
Guaranteed Delivery, the tendered Initial Notes, a duly executed Letter of
Transmittal and any other required documents will be deposited by the Eligible
Institution with the Exchange Agent, and (iii) such properly completed and
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executed documents required by the Letter of Transmittal and the tendered
Initial Notes in proper form for transfer (or confirmation of a book-entry
transfer of such Initial Notes into the Exchange Agent's account at DTC) must be
received by the Exchange Agent within four business days after the Expiration
Date. Any Eligible Holder who wishes to tender Initial Notes pursuant to the
guaranteed delivery procedures described above must ensure that the Exchange
Agent receives the Notice of Guaranteed Delivery and Letter of Transmittal
relating to such Initial Notes prior to 5:00 p.m., New York City time, on the
Expiration Date.
Acceptance of Initial Notes for Exchange; Delivery of Exchange Notes
Upon satisfaction or waiver of all the conditions to the Exchange
Offer, the Company will accept any and all Initial Notes that are properly
tendered in the Exchange Offer prior to 5:00 p.m., New York City time, on the
Expiration Date. The Exchange Notes issued pursuant to the Exchange Offer will
be delivered promptly after acceptance of the Initial Notes. For purposes of the
Exchange Offer, the Company shall be deemed to have accepted validly tendered
Initial Notes, when, as, and if the Company has given oral or written notice
thereof to the Exchange Agent.
In all cases, issuances of Exchange Notes for Initial Notes that are
accepted for exchange pursuant to the Exchange Offer will be made only after
timely receipt by the Exchange Agent of such Initial Notes, a properly completed
and duly executed Letter of Transmittal and all other required documents (or of
confirmation of a book-entry transfer of such Initial Notes into the Exchange
Agent's account at DTC); provided, however, that the Company reserves the
absolute right to waive any defects or irregularities in the tender or
conditions of the Exchange Offer. If any tendered Initial Notes are not accepted
for any reason, such unaccepted Initial Notes will be returned without expense
to the tendering Eligible Holder thereof as promptly as practicable after the
expiration or termination of the Exchange Offer.
Withdrawal Rights
Tenders of the Initial Notes may be withdrawn by delivery of a written
notice to the Exchange Agent, at its address set forth on the back cover page of
this Prospectus, at any time 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 Initial Notes to be withdrawn (the "Depositor"),
(ii) identify the Initial Notes to be withdrawn (including the certificate
number or numbers and principal amount of such Initial Notes, as applicable),
(iii) be signed by the Eligible Holder in the same manner as the original
signature on the Letter of Transmittal by which such Initial Notes were tendered
(including any required signature guarantees) or be accompanied by a bond power
in the name of the person withdrawing the tender, in satisfactory form as
determined by the Company in its sole discretion, duly executed by the
registered holder, with the signature thereon guaranteed by an Eligible
Institution together with the other documents required upon transfer by the
Indenture, and (iv) specify the name in which such Initial Notes are to be
re-registered, if different from the Depositor, pursuant to such documents of
transfer. 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. The Initial Notes so withdrawn will be deemed not to have been
validly tendered for exchange for purposes of the Exchange Offer. Any Initial
Notes which have been tendered for exchange but which are withdrawn will be
returned to the Eligible Holder thereof without cost to such Eligible Holder as
soon as practicable after withdrawal. Properly withdrawn Initial Notes may be
retendered by following one of the procedures described under "The Exchange
Offer- Procedures for Tendering Initial Notes" at any time on or prior to the
Expiration Date.
The Exchange Agent; Assistance
IBJ Schroder Bank & Trust Company is the Exchange Agent. All tendered
Initial Notes, executed Letters of Transmittal and other related documents
should be directed to the Exchange Agent. Questions and requests for assistance
and requests for additional copies of the Prospectus, the Letter of Transmittal
and other related documents should be addressed to the Exchange Agent as
follows:
By Mail:
IBJ Schroder Bank & Trust Company
P.O. Box 84
Bowling Green Station
New York, New York 10274-0084
Attention: Reorganization Operations Department
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By Hand:
IBJ Schroder Bank & Trust Company
One State Street
New York, New York 10004-0084
Attention: Securities Processing Window, Subcellar One, (SC-1)
By Overnight Courier:
IBJ Schroder Bank & Trust Company
One State Street
New York, New York 10004-0084
Attention: Securities Processing Window, Subcellar One, (SC-1)
By Facsimile:
(212) 858-2611
To conform Facsimile Transmission call
(212) 858-2103
Fees and Expenses
All expenses incident to the Company's consummation of the Exchange
Offer and compliance with the Notes Registration Rights Agreement will be borne
by the Company, including without limitation: (i) all SEC, stock exchange or
National Association of Securities Dealers, Inc. registration and filing fees,
(ii) all fees and expenses incurred in connection with compliance with state
securities or "blue sky" laws, (iii) all expenses of any persons retained by the
Company in preparing or assisting in preparing, word processing, printing and
distributing this Prospectus and the Registration Statement of which this
Prospectus is a part, or, in each case any amendments or supplements thereto,
(iv) all rating agency fees, (v) all fees and disbursements relating to the
qualification of the Indenture under applicable securities laws, (vi) the fees
and disbursements of the Trustee, (vii) the fees and disbursements of counsel
for the Company, and (viii) the fees and disbursements of the independent public
accountants of the Company and any partnership or joint venture in which the
Company or any of its subsidiaries is a partner, including the expenses of any
special audits or "cold comfort" letters required by or incident to such
performance and compliance.
The Company will, in any event, bear its internal expenses (including,
without limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties), the expense of any annual audit, and the
fees and expenses of any person, including special experts, retained by the
Company.
The Company has not retained any dealer-manager in connection with the
Exchange Offer and will not make any payments to brokers, dealers or others
soliciting acceptance 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 Company estimates that the expenses to be incurred in connection
with the Exchange Offer will aggregate approximately $80,000.00.
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Accounting Treatment
The Exchange Notes will be recorded at the same carrying value as the
Initial Notes, as reflected in the Company's accounting records on the date of
the exchange. Accordingly, no gain or loss will be recognized by the Company for
accounting purposes. The expenses of the Exchange Offer will be amortized over
the term of the Exchange Notes.
Resales of the Exchange Notes
While the Company has not sought a no-action letter from the
Commission, based on an interpretation by the staff of the Commission set forth
in no-action letters issued to third parties, the Company believes that the
Exchange Notes issued pursuant to the Exchange Offer to an Eligible Holder in
exchange for Initial Notes may be offered for resale, resold and otherwise
transferred by such Eligible Holder (other than (i) a broker-dealer who acquired
Initial Notes directly from the Company for resale pursuant to Rule 144A under
the Securities Act or any other available exemption under the Securities Act, or
(ii) a 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 the Eligible
Holder is acquiring the Exchange Notes in the ordinary course of business and is
not participating, and has no arrangement or understanding with any person to
participate, in the distribution of the Exchange Notes. However, if any Eligible
Holder acquires Exchange Notes in the Exchange Offer for the purpose of
distributing or participating in a distribution of the Exchange Notes, such
Eligible Holder cannot rely on the position of the Staff of the Commission
enunciated in Morgan Stanley & Co., Incorporated (available June 5, 1991) and
Exxon Capital Holdings Corporation (available April 13, 1989), or interpreted in
the Commission's letter to Shearman and Sterling dated July 2, 1993, or similar
no-action or interpretive letters and must comply with the registration and
prospectus delivery requirements of the Securities Act in connection with a
secondary resale transaction, unless an exemption from registration is otherwise
available. Each broker-dealer that receives Exchange Notes for its own account
in exchange for Initial Notes, where such Initial Notes were acquired by such
broker-dealer as a result of market-making or other trading activities, must
acknowledge that it will deliver a prospectus in connection with any resale of
such Exchange Notes. See "Plan of Distribution."
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DESCRIPTION OF EXCHANGE NOTES
The Exchange Notes will be issued under the Indenture. The following
summary of the material provisions of the Indenture and the Pledge Agreements
does not purport to be complete and is subject to, and qualified in its entirety
by reference to, the provisions of the Indenture and the Pledge Agreements
(copies of which have been filed with the Commission as an exhibit to the
Registration Statement of which this Prospectus is a part) including the
definitions of certain terms contained therein and those terms made part of the
Indenture by reference to the Trust Indenture Act of 1939, as amended (the
"TIA"). The definitions of certain capitalized terms used in the following
summary are set forth below under "- Certain Definitions." References in this
"Description of Exchange Notes" to the "Company" mean the Company, but not any
subsidiary of the Company, until a successor replaces the Company (or any
previous successor) pursuant to the Indenture and, thereafter, means such
successor.
General
The Exchange Notes will be senior obligations of the Company, limited
to $227,700,000 aggregate principal amount at maturity less the aggregate
principal amount at maturity of any Initial Notes not exchanged in the Exchange
Offer. The Exchange Notes will be issued only in registered form, without
interest coupons, in denominations of $1,000 principal amount at maturity and
integral multiples thereof. Principal of, premium, if any, and interest on the
Exchange Notes will be payable, and the Exchange Notes will be transferable, at
the office of the Company's agent in the City of New York located at the
corporate trust office of the Trustee. In addition, interest may be paid, at the
option of the Company, by check mailed to the person entitled thereto as shown
on the security register. No service charge will be made for any transfer,
exchange or redemption of Exchange Notes, except in certain circumstances for
any tax or other governmental charge that may be imposed in connection
therewith.
Maturity, Interest and Principal
The Exchange Notes will mature on July 15, 2005. Although for U.S.
federal income tax purposes a significant amount of original issue discount,
taxable as ordinary income, will be recognized by a holder as such discount
accrues from the issue date of the Exchange Notes (the "Issue Date"), no
interest will be payable on the Exchange Notes prior to July 15, 2000. See
"Certain Federal Income Tax Considerations - Original Issue Discount". The
Exchange Notes will be issued with an Accreted Value equal to the Accreted Value
of the Initial Notes exchanged therefore. From and after July 15, 2000, cash
interest on the Exchange Notes will accrue at the rate of 15% per annum and will
be payable semiannually on each July 15th and January 15th, commencing January
15, 2001, to the holders of record of Exchange Notes at the close of business on
the January 1 and July 1 immediately preceding such interest payment date. From
and after January 15, 2001, cash interest on the Exchange Notes will accrue from
the most recent date to which interest has been paid or, if no interest has been
paid, from July 15, 2000. Interest will be computed on the basis of a 360-day
year comprised of twelve 30-day months.
The Exchange Notes will not be entitled to the benefit of any mandatory
sinking fund.
Redemption
Optional Redemption. The Exchange Notes will be redeemable at the
option of the Company, in whole or in part, at any time on or after July 15,
2000, on not less than 30 nor more than 60 days' prior notice, at the redemption
prices (expressed as percentages of principal amount) set forth below, plus
accrued and unpaid interest, if any, to the redemption date, if redeemed during
the 12-month period beginning July 15th of the years indicated below:
Redemption
Year Price
---- ----------
2000 ................................................... 110.000%
2001 ................................................... 106.667%
2002 ................................................... 103.333%
2003 and thereafter .................................... 100.000%
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Optional Redemption upon Stock Sale to a Strategic Equity Investor. In
the event of the sale by the Company to a Strategic Equity Investor (other than
Vanguard) on or prior to July 15, 1998 of Capital Stock of the Company, in a
single transaction or series of related transactions for an aggregate purchase
price equal to or exceeding $50,000,000, up to a maximum of 20% of the aggregate
Accreted Value of the Notes will be redeemable at the option of the Company out
of the net proceeds of such sale or sales to the extent that such proceeds
consist of cash or Cash Equivalents. Such Notes will be redeemable on not less
than 30 nor more than 60 days' prior notice at a redemption price equal to
115.0% of the Accreted Value of the Notes to be redeemed to the redemption date.
Any such redemption shall occur within 90 days after (but not before) such sale
or last such sale in the case of a series of related transactions.
Mandatory Redemption upon a Change of Control and Certain Asset Sales.
The Company is obligated (a) upon the occurrence of a Change of Control to make
an offer to purchase all outstanding Notes at a purchase price of 101% of the
Accreted Value thereof, plus accrued and unpaid interest, if any, to the date of
purchase, and (b) to make an offer to purchase Notes with a portion of the net
cash proceeds of certain sales or other dispositions of assets at a purchase
price of 100% of the Accreted Value thereof, plus accrued and unpaid interest,
if any, to the date of purchase. See "- Certain Covenants - Change of Control"
and " - Certain Covenants - Disposition of Proceeds of Asset Sales."
Selection and Notice. In the event that less than all of the Notes are
to be redeemed at any time, selection of such Notes for redemption will be made
by the Trustee in compliance with the requirements of the principal national
securities exchange, if any, on which the Notes are listed or, if the Notes are
not then listed on a national securities exchange, on a pro rata basis, by lot
or by such method as the Trustee shall deem fair and appropriate; provided,
however, that no Notes of a principal amount at maturity of $1,000 or less shall
be redeemed 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 its registered address. 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 at maturity thereof to be redeemed. A new Note
in a principal amount at maturity equal to the principal amount at maturity of
the unredeemed portion thereof will be issued in the name of the holder thereof
upon surrender for cancellation of the original Note. On and after the
redemption date, principal will cease to accrete or interest will cease to
accrue, as the case may be, on Notes or portions thereof called for redemption,
unless the Company defaults in the payment of the redemption price therefor.
Security
Pledges of Capital Stock
The Initial Notes are, and the Exchange Notes will be, secured by a
pledge of all of the Capital Stock now or hereinafter owned by the Company in
National Band Three Limited ("NB3"), PowerSpectrum, Inc. ("PSI"), Metro Net
Systems, Inc. ("Metro Net"), Geotek Communications GmbH ("Geotek Germany") and
the entities through which the Company owns its interest in Bogen (each a
"Pledged Company"), which companies comprise or own all of the Company's
significant subsidiaries. The Collateral consisting of pledged Capital Stock
includes, in addition to certain other Capital Stock, all of the Capital Stock
of (i) NB3, the Company's U.K. subsidiary, (ii) PSI, the Company's U.S.
subsidiary which, directly or indirectly owns the Company's U.S. 900 MHz
licenses (except those held by Metro Net) and the Company's interest in PST, and
holds the non-Israel worldwide rights to license, market, distribute and sell
the systems utilizing the FHMA technology developed by PST, (iii) Metro Net,
(iv) Geotek Germany, the Company's subsidiary that, directly or indirectly owns
the Company's German operating subsidiaries, and (v) EGAC, the entity through
which the Company owns its interests in Bogen and Speech Design. The Company has
entered into pledge agreements (the "Pledge Agreements") providing for the grant
by the Company to the Trustee, as collateral agent for the holders of the Notes,
of security interests in the Collateral comprised of Capital Stock. All such
security interests will secure the payment and performance when due of all of
the obligations of the Company under the Notes and the Indenture.
Limitation on Indebtedness. In addition to the limitations on the
incurrence of Indebtedness contained in the Indenture, the Pledge Agreements
contain a covenant that prohibits the Pledged Companies (other than EGAC) and
their direct and indirect subsidiaries (which will include any entities
controlled by a Pledged Company through the ownership of voting securities, by
contract or otherwise) from directly or indirectly creating, incurring, issuing,
assuming, guaranteeing or in any manner becoming directly or indirectly liable,
contingently or otherwise, for the payment of any Indebtedness (including,
without limitation, any Acquired Indebtedness) other than Permitted
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Pledge Agreement Indebtedness; provided that the aggregate outstanding
Indebtedness of the Pledged Companies (excluding Indebtedness owed to other
Pledged Companies or the Company and Indebtedness of EGAC) at any time shall not
exceed $62.0 million.
Additional Pledges of Collateral. If the Company shall have (i) 50,000
Qualified GEONET Subscribers at the end of the most recently completed billing
month and (ii) positive Operating Cash Flow in any two of its GEONET markets for
the most recently completed fiscal quarter, the Company may, to the extent
otherwise permitted by the Indenture and the Pledge Agreements, grant a security
interest, that is equal and ratable to the security interest granted to the
Trustee, in the Collateral consisting of Capital Stock of Pledged Companies
that, directly or indirectly, hold, or hold any rights in, Licenses for U.S. 900
MHz radio channels; provided that such security interest shall not secure
Indebtedness in an amount in excess of the product of $1,500 and the number of
Qualified GEONET Subscribers as of the end of the most recently completed
billing month.
Limitation on Liens. In addition to the limitations on the creation,
incurrence, assumption or existence of Liens contained in the Indenture, the
Pledge Agreements contain a covenant that prohibits the Pledged Companies (other
than EGAC) and their direct and indirect subsidiaries (which will include any
entities controlled by a Pledged Company through the ownership of voting
securities, by contract or otherwise) from creating, incurring, assuming or
suffering to exist any Lien of any kind against or upon any of their respective
properties or assets, or any proceeds therefrom, except for Permitted Pledge
Agreement Liens.
Additional Subsidiary Pledges. The Pledge Agreements provide that if
the Company transfers the Capital Stock of any Pledged Company to any person in
exchange for Capital Stock of such person (including pursuant to a transaction
described in clause (k) of the definition of "Permitted Investments")
("Non-Pledged Stock"), or any Pledged Company transfers or causes to be
transferred, directly or indirectly, in one or a series of related transactions,
property or assets (including, without limitation, businesses, divisions, real
property, assets or equipment) having a fair market value (as determined in good
faith by the Board of Directors of the Company evidenced by a resolution of the
Board of Directors of the Company set forth in an officers' certificate
delivered to the Trustee), exceeding $2.0 million to any subsidiary of the
Company that is not a Pledged Company, the Company shall (a) enter into a pledge
agreement (or an amendment to an existing Pledge Agreement) in order to pledge
all of such Non-Pledged Stock or the outstanding Capital Stock of such
subsidiary, as the case may be, owned by the Company as security to the Trustee
for the benefit of the holders of the Exchange Notes and (b) deliver to the
Trustee an opinion of counsel reasonably satisfactory to the Trustee that such
pledge agreement (or amendment to an existing Pledge Agreement) has been duly
authorized, executed and delivered, is enforceable in accordance with its terms
and creates a valid and perfected first priority security interest in such
Non-Pledged Stock or Capital Stock. However, the Pledge Agreements provide that
the foregoing provisions will not apply to (A) transfers of property or assets
(other than cash) by a Pledged Company to the Company or a subsidiary that is
not a Pledged Company in exchange for cash in an amount equal to the fair market
value (as determined in good faith by the Board of Directors of the Company
evidenced by a resolution of the Board of Directors of the Company set forth in
an officers' certificate delivered to the Trustee), of such property or assets,
or (B) Restricted Payments and Investments (other than a Permitted Investment
within the meaning of clause (k) of the definition of "Permitted Investments")
permitted by the Indenture.
In the event that any Pledged Company transfers or causes to be
transferred to any person, directly or indirectly, in one or a series of related
transactions, property or assets (including, without limitation, businesses,
divisions, real property, assets or equipment) having a fair market value (as
determined in good faith by the Board of Directors of the Company evidenced by a
resolution of the Board of Directors of the Company set forth in an officers'
certificate delivered to the Trustee) exceeding $2.0 million to any such person,
the Net Cash Proceeds resulting from the sale or other disposition of such
property or assets shall, to the extent permitted by law, be immediately
deposited in the Collateral Account (as defined herein) and the Company shall
cause any non-cash proceeds from such sale or other disposition (including
securities) received by the Company or a Subsidiary to immediately become
subject to a first priority perfected Lien in favor of the Trustee. Any Net Cash
Proceeds resulting from such sale or disposition shall be required to be applied
as described under "Termination of Collateral Arrangements; Release of
Collateral."
Notwithstanding any other provision contained herein, if the Company
transfers any FCC License to any wholly-owned subsidiary of the Company that is
not a Pledged Company, all of the Capital Stock of such subsidiary shall be
pledged to the Trustee as Collateral.
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Events of Default. Upon the occurrence and during the continuance of an
Event of Default and after the acquisition of any required regulatory approvals,
(i) all rights of the Company to exercise voting or other consensual rights with
respect to the stock of the Pledged Companies shall cease, and all such rights
shall, to the extent permitted by applicable law, become vested in the Trustee,
which, to the extent permitted by law, shall have the sole right to exercise
such voting and other consensual rights, (ii) all rights of the Company to
receive cash dividends, interest and other payments made upon or with respect to
such pledged stock shall cease and such cash dividends, interest and other
payments shall be paid to the Trustee and (iii) to the extent permitted by
applicable law, the Trustee may sell the Collateral or any part thereof in
accordance with the terms of the Pledge Agreements. All funds distributed under
the Pledge Agreements and received by the Trustee for the benefit of the holders
of the Notes shall be distributed by the Trustee in accordance with the
provisions of the Indenture.
Subsidiary Guarantees
Certain of the Company's existing and future wholly-owned direct and
indirect subsidiaries organized under the laws of a state of the United States
(collectively, the "Guarantors") will jointly and severally guarantee the
obligations of the Company under the Notes and the Indenture. To the extent that
the Company establishes or acquires wholly-owned direct and indirect
subsidiaries which are organized under the laws of a state of the United States
and doing business in the United States after the date of the Indenture, the
Company shall be required to use its best efforts to cause such subsidiary to
jointly and severally guarantee the obligations of the Company under the Notes
and the Indenture pursuant to a guarantee in form and substance satisfactory to
the Trustee. Notwithstanding the foregoing, a wholly-owned U.S. subsidiary of
the Company is not required to become a guarantor under the Indenture to the
extent that such subsidiary either (i) is prohibited under applicable law (but
not by the terms of any contract) from becoming a Guarantor and compliance with
any such law would be materially burdensome to such Guarantor or (ii) has assets
with an aggregate fair market value of less than $100,000 and does not hold any
License. To the extent that any wholly-owned U.S. subsidiary of the Company is
not required to execute and deliver a guarantee as contemplated above, the
Company shall covenant in the Indenture that such subsidiary shall not engage in
any business activities. The obligations of each Guarantor pursuant to its
guarantee will be subordinated in right of repayment to any obligation of such
Guarantor pursuant to any Indebtedness incurred by such Guarantor to finance the
construction or acquisition of Telecommunications Assets by such Guarantor.
The Indenture provides that, subject to the next paragraph, no
Guarantor may consolidate or merge with or into (whether or not such Guarantor
is the surviving entity), or sell, assign, transfer, lease, convey or otherwise
dispose of all or substantially all of its properties or assets in one or more
related transactions to another person unless:
(a) such Guarantor is the surviving person or the person formed by or
surviving any such consolidation or merger (if other than such Guarantor) or to
which such sale, assignment, transfer, lease, conveyance or other disposition
shall have been made is a corporation organized or existing under the laws of
the United States, any state thereof or the District of Columbia;
(b) the person formed by or surviving any such consolidation or merger
(if other than such Guarantor) or the person to which such sale, assignment,
transfer, lease, conveyance or other disposition will have been made assumes all
the obligations of such Guarantor, pursuant to a supplemental indenture in form
reasonably satisfactory to the Trustee, under the Notes and the Indenture;
(c) immediately after such transaction, no Default or Event of Default
exists; and
(d) such Guarantor or the person formed by or surviving any such
consolidation or merger, or to whom such sale, assignment, transfer, lease,
conveyance or other disposition will have been made (i) will have Consolidated
Net Worth immediately after the transaction (but prior to any purchase
accounting adjustments or accrual of deferred tax liabilities resulting from the
transaction) not less than the Consolidated Net Worth of such Guarantor
immediately preceding the transaction and (ii) will have an Indebtedness to Cash
Flow Ratio (as defined in the Indenture) immediately after the transaction that
does not exceed such Guarantor's Indebtedness to Cash Flow Ratio immediately
preceding the transaction.
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Except as set forth in the provisions entitled "Certain Covenants" and
"Merger, Sale of Assets, Etc.," nothing contained in the Indenture shall prevent
any consolidation or merger of a Guarantor with or into the Company or shall
prevent any sale or conveyance of the property of a Guarantor as an entirety or
substantially as an entirety to the Company.
The Indenture will provide that in the event of a sale or other
disposition of all of the assets of any Guarantor, by way of merger,
consolidation or otherwise, or a sale or other disposition of all of the capital
stock of any Guarantor, then such Guarantor (in the event of a sale or other
disposition, by way of such a merger, consolidation or otherwise, of all of the
capital stock of such Guarantor) or the person acquiring the property (in the
event of a sale or other disposition of all of the assets of such Guarantor)
will be released and relieved of any obligations under its Guarantee, provided
that the proceeds of such sale or other disposition are applied in accordance
with the provisions described under "- Asset Sales."
Pledges of Intercompany Notes
To the extent that, on or after the date of the Indenture, the Company
makes any cash investment in any of its wholly-owned subsidiaries which are
organized under the laws of and doing business in the United States, such
Investment shall be required to be made in the form of a loan, which shall be
evidenced by a note (an "Intercompany Note"). All Intercompany Notes shall be
required to be pledged by the Company to the Trustee as Collateral.
Ability to Foreclose upon Collateral
The ability of the Trustee to foreclose on the Collateral upon the
occurrence of an Event of Default will be subject in certain instances to
perfection and priority issues and to practical problems associated with
realization upon security interests. Regulatory limitations also will limit the
ability of the Trustee to foreclose on and sell the Collateral upon the
occurrence of an Event of Default. See "Risk Factors - Risk of Inability to
Realize Upon Security Interests."
Certain of the Pledged Companies directly or indirectly through various
subsidiaries hold interests in licenses authorized by the FCC. The
Communications Act requires prior FCC approval of all assignments of licenses
and transfers of control of companies holding licenses. Further, the
Communications Act limits the ownership interests that may be held by foreign
persons or entities directly and indirectly in licenses authorized by the FCC.
In the event the Company fails to meet its obligations under the Indenture and
the Notes, the Trustee would be required to obtain FCC approval prior to
foreclosing on the Collateral. Further, the Trustee would be required to satisfy
the foreign ownership limits and other conditions of ownership specified in the
Communications Act and prescribed by the FCC. There can be no assurance that the
Trustee would be able to meet the foreign ownership limits and other conditions
or obtain on a timely basis or at all the necessary FCC approvals for the
transfer of control or assignment of licenses to foreclose on the Collateral.
Moreover, before the Trustee could sell the Collateral, it would be required to
obtain FCC approval and the purchaser would be required to meet the same
limitations and conditions imposed upon the Trustee. There can be no assurance
that the Trustee would be able to meet the foreign ownership limits and other
conditions or obtain on a timely basis or at all the necessary FCC approvals for
the transfer of control or assignment of the licenses. In addition, the Company
expects to participate in FCC auctions for additional 900MHz radio licenses in
Major Trading Areas ("MTAs"), which auctions are expected to be held within the
ensuing year. In a recent rulemaking proceeding, the FCC has proposed rules that
would prohibit changes in control of applicants for MTA licenses in the 900MHz
SMR auctions. If the FCC adopts such rules as proposed and the Trustee
foreclosed on the Collateral, absent a waiver, the FCC would dismiss, deny or
otherwise refuse to grant applications filed by the Company or its subsidiaries
for any such licenses pending at the time.
Geotek Germany owns all of the Capital Stock of DBF Bundelfunk GmbH
("DBF") and approximately 49% of the Capital Stock of Preussag Bundelfunk GmbH
("PBG"). DBF and PBG hold interests in licenses authorized by the Federal
Ministry for Post and Telecommunications and the Federal Office for Post and
Telecommunications. In the event that the Company fails to meet its obligations
under the Indenture and the Notes and the Trustee exercises its rights of
foreclosure under the Pledge Agreements, the Trustee would seek to transfer the
shares of Geotek Germany in order to satisfy in part the obligations under the
Exchange Notes. The terms of the licenses held by DBF and PBG provide that DBF
and PBG may be transferred only upon the approval of the applicable regulatory
authority. Although the German courts have not addressed the issue of whether
the transfer of the parent company of a license holder requires regulatory
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approval, there exists the possibility that a transfer of shares of Geotek
Germany without the receipt of any applicable regulatory approvals by the
Trustee could result in a revocation of DBF and/or PBG's licenses.
In the event that a foreclosure of the Collateral consisting of capital
stock of NB3 occurs, a change in control of NB3 will be deemed to have occurred
under applicable United Kingdom telecommunication laws. Accordingly, licenses
currently held by NB3 would be subject to possible revocation unless the consent
of the relevant U.K. governmental agencies is obtained following such a change
of control. In the event of a revocation of such licenses, NB3 would be required
to apply for new licenses and the Secretary of State for Trade and Industry (now
known as the President of the Board of Trade) would have discretion over whether
or not to grant such licenses.
Termination of Collateral Arrangements; Release of Collateral
Upon the full and final payment and performance of all obligations of
the Company under the Notes and the Indenture or upon a defeasance of the Notes
in accordance with the terms of the Indenture, the Pledge Agreements and the
subsidiary guarantees, and any other security arrangements described herein (the
"Collateral Arrangements") shall terminate and the Collateral shall be released.
In addition, the Collateral Arrangements will be terminated and the Collateral
will be released upon the prior written consent of the holders of at least
662/3% of the aggregate principal amount of the Notes then outstanding (the
"Requisite Vote") pursuant to a request (a "Collateral Release Request") made by
the Company to the holders. In the event that the Company does not receive the
Requisite Vote pursuant to any such Collateral Release Request, the Company may,
at its option, within five business days after the latest date on which such
consents are required to be delivered to the Company pursuant to the terms of
the Collateral Release Request, make an offer to purchase (a "Collateral Release
Repurchase Offer") all of the outstanding Notes at a purchase price of 101.5% of
the Accreted Value thereof, plus accrued and unpaid interest, if any, to the
date of repurchase. Upon the consummation of such Collateral Release Repurchase
Offer, the Collateral Arrangements automatically shall terminate and the
Collateral shall be released. If the Company shall at any time make a Collateral
Release Request, the Company shall pay to the voting holders an amount in cash
equal to .50% of the Accreted Value on such date as provided in the Indenture.
Any Collateral Release Request shall be made as provided in the Indenture.
In addition, in the event (a) that any Collateral is sold and the Net
Cash Proceeds thereof are applied in accordance with the terms of the covenant
in the Indenture entitled "Disposition of Proceeds of Asset Sales" and the next
paragraph, (b) any Collateral is transferred to a subsidiary of the Company in
accordance with the covenant described under "Additional Subsidiary Pledges" or
(c) the Company sells Collateral consisting of up to 75,000 shares of the common
stock of EGAC owned by it in conjunction with the exercise of options to
purchase such common stock to be issued to certain management of EGAC, the
Trustee shall release the liens in favor of the Trustee in the Collateral so
sold or transferred; provided, that the Trustee shall have received from the
Company an officers' certificate and an opinion of counsel that such Collateral
has been sold or transferred in accordance with the terms of the Indenture. To
the extent that any Collateral is sold and the Net Cash Proceeds thereof are
applied in accordance with the terms of the covenant in the Indenture entitled
"Disposition of Proceeds of Asset Sales," the Net Cash Proceeds resulting from
the sale or other disposition of such Collateral shall, to the extent permitted
by law (including any necessary FCC approval in regard to any radio licenses),
be immediately deposited in an account (the "Collateral Account") subject to a
first priority perfected Lien in favor of the Trustee, and the Company shall
cause any non-cash proceeds from such sale or other disposition (including
securities) received by the Company or a Subsidiary to immediately become
subject to a first priority perfected Lien in favor of the Trustee.
Within 180 days after consummation of any sale or disposition of
Collateral, the Company shall apply 100.0% of the Net Cash Proceeds resulting
from such sale or disposition to (i) the purchase of Replacement Assets (as
defined herein), provided, that, when acquired, such Replacement Assets are
subject to a first priority perfected Lien in favor of the Trustee, or (ii) the
acquisition or formation of a Subsidiary, provided, that, when acquired or
formed, all of the outstanding Capital Stock of such Subsidiary is subject to a
first priority perfected Lien in favor of the Trustee; provided, that if the
Company does not apply such Net Cash Proceeds in accordance with (i) or (ii)
above, such Net Cash Proceeds shall remain in the Collateral Account and not be
released until the obligations of the Company under the Indenture and the Notes
have been discharged, the Pledge Agreements shall have otherwise been terminated
or until distributed to the holders of the Notes as Excess Proceeds. See "-
Covenants - Disposition of Proceeds of Asset Sales." Subject to the proviso in
the preceding sentence, amounts in the Collateral Account shall be released (i)
upon the purchase of Replacement Assets, (ii) upon the acquisition or formation
of a Subsidiary, all of whose Capital Stock has been pledged to the Trustee or
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(iii) until distributed to the holders of the Notes as Excess Proceeds. Any such
actions by the Trustee to release the Collateral will be taken in accordance
with the TIA, including Section 314 thereunder.
Holding Company Structure
The Exchange Notes are obligations exclusively of the Company, which is
a holding company, and the Guarantors. Since the operations of the Company
currently are conducted principally through subsidiaries, the cash flow of the
Company and its ability to service its debt, including the Exchange Notes, are
dependent upon the earnings of such subsidiaries and the distribution of those
earnings to the Company, or upon loans or other payments of funds by such
subsidiaries to the Company. The Company's subsidiaries are separate and
distinct legal entities and, except for the guarantees of the Guarantors, have
no obligation, contingent or otherwise, to pay any amounts due pursuant to the
Exchange Notes or to make any funds available therefor, whether by dividends,
loans or other payments. In addition, the payment of dividends and certain loans
and advances to the Company by such subsidiaries may be subject to certain
statutory or contractual restrictions, are contingent upon the earnings of such
subsidiaries and are subject to various business considerations.
The Exchange Notes will be effectively subordinated to all Indebtedness
and other liabilities and commitments (including trade payables and lease
obligations) of the Company's subsidiaries that are not Guarantors. Any right of
the Company to receive assets of any such subsidiary upon the liquidation or
reorganization of any such subsidiary (and the consequent right of the holders
of the Exchange Notes to participate in those assets) will be effectively
subordinated to the claims of that subsidiary's creditors, except to the extent
that the Company is itself recognized as a creditor of such subsidiary, in which
case the claims of the Company would still be subordinate to any security in the
assets of such subsidiary and any Indebtedness of such subsidiary senior to that
held by the Company. As of June 30, 1995, the Company's subsidiaries that are
not Guarantors had approximately $33.5 million of liabilities (excluding
intercompany indebtedness). See "Risk Factors - Holding Company Structure."
Certain Covenants
The Indenture contains the following covenants, among others:
Limitation on Indebtedness. The Company will not, and will not permit
any of its Subsidiaries to, directly or indirectly, create, incur, issue,
assume, guarantee or in any manner become directly or indirectly liable,
contingently or otherwise, for the payment of (in each case, to "incur") any
Indebtedness (including, without limitation, any Acquired Indebtedness);
provided, however, that the Company or any of its Subsidiaries, other than
Subsidiaries that are Pledged Companies or their direct or indirect
subsidiaries, will be permitted to incur Indebtedness (including, without
limitation, Acquired Indebtedness) if (a) at the time of such incurrence, no
Default or Event of Default shall have occurred and be continuing and (b) at the
time of such incurrence and after giving pro forma effect thereto, the
Consolidated Indebtedness to Annualized Operating Cash Flow Ratio would not
exceed 7.0 to 1.0 in the case of any such incurrence of Indebtedness on or
before January 1, 1999, or 4.5 to 1.0 in the case of any such incurrence of
Indebtedness thereafter.
Notwithstanding the foregoing, the Company and its Subsidiaries may, to
the extent specifically set forth below, incur each and all of the following:
(a) Indebtedness of the Company and the Subsidiaries evidenced by the
Notes and the Guarantees;
(b) Indebtedness of the Company and its Subsidiaries outstanding on the
date the Initial Notes were issued or July 6, 1995 (the "Initial Issue Date");
(c) (i) Interest Rate Protection Obligations of the Company covering
Indebtedness of the Company or a Subsidiary of the Company and (ii) Interest
Rate Protection Obligations of any Subsidiary of the Company covering
Indebtedness of such Subsidiary; provided, however, that, in the case of either
clause (i) or (ii), (A) any Indebtedness to which any such Interest Rate
Protection Obligation relates bears interest at a fluctuating interest rate and
(B) the notional principal amount of any such Interest Rate Protection
Obligation does not exceed the principal amount of the Indebtedness to which
such Interest Rate Protection Obligation relates;
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(d) Indebtedness of a Subsidiary of the Company owed to and held by the
Company or another Subsidiary, except that (i) any transfer of such Indebtedness
by the Company or a Subsidiary (other than to the Company or to another
Subsidiary of the Company) and (ii) the sale, transfer or other disposition by
the Company or any Subsidiary of the Company of Capital Stock of a Subsidiary of
the Company which is owed Indebtedness of another Subsidiary of the Company such
that the first such Subsidiary ceases to be a Subsidiary of the Company shall,
in each case, be an incurrence of Indebtedness by the second such Subsidiary,
subject to the other provisions of this covenant;
(e) Indebtedness of the Company owed to and held by a Subsidiary of the
Company which is unsecured and subordinated in right of payment to the payment
and performance of the Company's obligations under the Indenture and the Notes
except that (i) any transfer of such Indebtedness by a Subsidiary of the Company
(other than to another Subsidiary of the Company) and (ii) the sale, transfer or
other disposition by the Company or any Subsidiary of the Company of Capital
Stock of a Subsidiary which holds Indebtedness of the Company such that it
ceases to be a Subsidiary shall, in each case, be an incurrence of Indebtedness
by the Company, subject to the other provisions of this covenant;
(f) Indebtedness under Currency Agreements; provided that in the case
of Currency Agreements which relate to Indebtedness, such Currency Agreements do
not increase the Indebtedness of the Company and its Subsidiaries outstanding
other than as a result of fluctuations in foreign currency exchange rates or by
reason of fees, indemnities and compensation payable thereunder;
(g) Indebtedness arising from the honoring by a bank or other financial
institution of a check, draft or similar instrument inadvertently (except in the
case of daylight overdrafts) drawn against insufficient funds in the ordinary
course of business, provided that such Indebtedness is extinguished within two
business days of incurrence;
(h) Indebtedness of the Company or any of its Subsidiaries represented
by standby letters of credit or trade letters of credit entered into in the
ordinary course of business;
(i) International Vendor Indebtedness;
(j) guarantees of Indebtedness by the Company of companies in the
Communications Products Group, in an aggregate principal amount at any time not
exceeding $10,000,000;
(k) guarantees of Indebtedness by the Company or any of its
Subsidiaries of Indebtedness permitted to be incurred by any of them hereunder,
to the extent that the guaranteeing party could otherwise incur such debt
pursuant to the Indenture;
(l) Indebtedness issued to finance the acquisition of
Telecommunications Assets to be used in the United States by the Company or one
of its Subsidiaries, to the extent incurred by the Company or one of its
Subsidiaries that does not hold, or hold any rights in, any Licenses for U.S.
900 MHZ radio channels;
(m) Indebtedness of the Company or any Subsidiary of the Company in
addition to that described in clauses (a) through (l) above in an aggregate
principal amount outstanding at any time not exceeding $20,000,000;
(n) (i) Indebtedness of the Company the proceeds of which are used
solely to refinance (whether by amendment, renewal, substitution, replacement,
extension or refunding) Indebtedness (plus reasonable fees and expenses directly
associated with such financing) of the Company or any of its Subsidiaries and
(ii) Indebtedness of any Subsidiary of the Company the proceeds of which are
used solely to refinance (whether by amendment, renewal, substitution,
replacement, extension or refunding) Indebtedness (plus reasonable fees and
expenses directly associated with such financing) of such Subsidiary, in each
case other than Indebtedness refinanced, redeemed or retired under clause (j),
(k) or (m) of this covenant; provided, however, that (A) the principal amount of
Indebtedness incurred pursuant to this clause (n) (or, if such Indebtedness
provides for an amount less than the principal amount thereof to be due and
payable upon a declaration of acceleration of the maturity thereof, the original
issue price of such Indebtedness) shall not exceed the sum of the principal
amount of Indebtedness so refinanced, plus the amount of any premium required to
be paid in connection with such refinancing pursuant to the terms of such
Indebtedness or the amount of any premium reasonably determined by the Board of
Directors of the Company as necessary to accomplish such refinancing by means of
a tender offer or privately negotiated purchase, plus the amount of expenses in
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connection therewith and (B) in the case of Indebtedness incurred by the Company
pursuant to this clause (n) to refinance Indebtedness subordinated in right of
payment to the Notes, such Indebtedness (I) has an Average Life to Stated
Maturity equal to or greater than the remaining Average Life to Stated Maturity
of the Indebtedness being refinanced and (II) is subordinated to the Notes in
the same manner and to the same extent that the Indebtedness being refinanced is
subordinated to the Notes.
For purposes of determining compliance with the "Limitation of
Indebtedness" covenant, in the event that an item of Indebtedness meets the
criteria of more than one of the types of Indebtedness described in the above
clauses, the Company, in its sole discretion, shall classify such item of
Indebtedness and only shall be required to include the amount and type of such
Indebtedness in one of such clauses.
The Pledge Agreements further restrict the Pledged Companies' ability
to incur Indebtedness. See "- Security."
Limitation on Restricted Payments. The Company will not, and will not
permit any of its Subsidiaries to, directly or indirectly:
(a) declare or pay any dividend or make any other distribution or
payment on or in respect of Capital Stock of the Company or any of its
Subsidiaries or any payment made to the direct or indirect holders (in their
capacities as such) of Capital Stock of the Company or any of its Subsidiaries
(other than (i) dividends or distributions payable solely in Capital Stock of
the Company (other than Redeemable Capital Stock) or in options, warrants or
other rights to purchase Capital Stock of the Company (other than Redeemable
Capital Stock), (ii) the declaration or payment of dividends or other
distributions to the extent declared or paid to the Company or any Wholly-Owned
Subsidiary of the Company and (iii) the declaration or payment of dividends or
other distributions by any Subsidiary of the Company to all holders of Common
Stock of such Subsidiary on a pro rata basis);
(b) purchase, redeem, defease or otherwise acquire or retire for value
any Capital Stock of the Company or any of its Subsidiaries (other than any such
Capital Stock owned by a Wholly-Owned Subsidiary of the Company);
(c) make any principal payment on, or purchase, defease, repurchase,
redeem or otherwise acquire or retire for value, prior to any scheduled
maturity, scheduled repayment, scheduled sinking fund payment or other Stated
Maturity, any Indebtedness that is subordinated in right of payment to the Notes
(other than any such Indebtedness owned by the Company or a Wholly-Owned
Subsidiary of the Company); or
(d) make any Investment (other than any Permitted Investment) in any
person (such payments or Investments described in the preceding clauses (a),
(b), (c) and this clause (d) are collectively referred to as "Restricted
Payments");
provided, however, that the Company or any Subsidiary thereof may make a
Restricted Payment if, at the time of and after giving effect to the proposed
Restricted Payment (the amount of any such Restricted Payment, if other than
cash, shall be the Fair Market Value on the date of such Restricted Payment of
the asset(s) proposed to be transferred by the Company or such Subsidiary, as
the case may be, pursuant to such Restricted Payment), (i) no Default or Event
of Default shall have occurred and be continuing, (ii) after giving effect to
such Restricted Payment, the Company would be able to incur $1.00 of additional
Indebtedness pursuant to clause (b) of the first paragraph of the covenant
described under "- Limitation on Indebtedness" above (assuming a market rate of
interest with respect to such additional Indebtedness) and (iii) the aggregate
amount of all Restricted Payments declared or made from and after the Initial
Issue Date would not exceed the sum of (A) 50% of the aggregate Consolidated Net
Income of the Company accrued on a cumulative basis during the period beginning
on July 1, 1995 and ending on the last day of the fiscal quarter of the Company
immediately preceding the date of such proposed Restricted Payment, which period
shall be treated as a single accounting period (or, if such aggregate cumulative
Consolidated Net Income of the Company for such period shall be a deficit, minus
100% of such deficit) plus (B) the aggregate net proceeds, including the fair
market value of property other than cash, received by the Company either (I) as
capital contributions to the Company after the Initial Issue Date from any
person (other than a Subsidiary of the Company) or (II) from the issuance or
sale of Capital Stock (excluding Redeemable Capital Stock and Capital Stock
issued pursuant to clause (j) of the definition of "Permitted Investments," but
including Capital Stock issued upon the conversion of convertible Indebtedness
(including Indebtedness that is Redeemable Capital Stock) or from the exercise
of options, warrants or rights to purchase Capital Stock (other than Redeemable
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Capital Stock and Capital Stock issued pursuant to clause (j) of the definition
of "Permitted Investments")) of the Company to any person (other than to a
Subsidiary of the Company) after the Initial Issue Date plus (C) in the case of
the disposition or repayment of any Investment constituting a Restricted Payment
made after the Initial Issue Date (excluding any Investment described in clause
(i) of the following paragraph), an amount equal to the lesser of the return of
capital with respect to such Investment and the cost of such Investment, in
either case, less the cost of the disposition of such Investment. For purposes
of the preceding clause (iii)(B), (x) the value of the aggregate net cash
proceeds received by the Company upon the issuance of Capital Stock upon the
conversion of convertible Indebtedness (including Indebtedness that is
Redeemable Capital Stock) or upon the exercise of options, warrants or rights
will be the net cash proceeds received upon the issuance of such Indebtedness,
options, warrants or rights plus the incremental cash amount received by the
Company upon the conversion or exercise thereof and (y) the fair market value of
property other than cash shall be determined by the Board of Directors of the
Company, whose good faith determination shall be conclusive and evidenced by (i)
a resolution filed with the Trustee and (ii) in the case of fair market value in
excess of $20 million, a written opinion as to such fair market value issued by
an Independent Financial Adviser.
None of the foregoing provisions will prohibit (a) the payment of any
dividend within 60 days after the date of its declaration, if at the date of
declaration such payment would be permitted by the foregoing paragraph; (b) so
long as no Default or Event of Default shall have occurred and be continuing,
the redemption, repurchase or other acquisition or retirement of any shares of
any class of Capital Stock of the Company in exchange for, or out of the net
cash proceeds of, a substantially concurrent (i) capital contribution to the
Company from any person (other than a Subsidiary of the Company) or (ii) issue
and sale of other shares of Capital Stock (other than Redeemable Capital Stock)
of the Company to any person (other than to a Subsidiary of the Company),
provided, however, that the amount of any such net cash proceeds that are
utilized for any such redemption, repurchase or other acquisition or retirement
shall be excluded from clause (iii)(B) of the preceding paragraph; (c) so long
as no Default or Event of Default shall have occurred and be continuing, any
redemption, repurchase or other acquisition or retirement of Indebtedness that
is subordinated in right of payment to the Notes by exchange for, or out of the
net cash proceeds of, a substantially concurrent (i) capital contribution to the
Company from any person (other than a Subsidiary of the Company) or (ii) issue
and sale of (A) Capital Stock (other than Redeemable Capital Stock) of the
Company to any person (other than to a Subsidiary of the Company), provided,
however, that the amount of any such net cash proceeds that are utilized for any
such redemption, repurchase or other acquisition or retirement shall be excluded
from clause (iii)(B) of the preceding paragraph, or (B) Indebtedness of the
Company issued to any person (other than a Subsidiary of the Company), so long
as such Indebtedness is Indebtedness that is subordinated in right of payment to
the Notes which (I) has an Average Life to Stated Maturity equal to or greater
than the remaining Average Life to Stated Maturity of the Indebtedness so
redeemed, repurchased, acquired or retired and (II) is subordinated to the Notes
in the same manner and at least to the same extent as the Indebtedness so
purchased, exchanged, redeemed, acquired or retired; (d) the payment of
dividends on Preferred Stock (other than Redeemable Capital Stock that requires
the payment of cash upon any mandatory redemption or sinking fund obligation
exercisable at the option of the holder thereof) of the Company issued
subsequent to the date of the Indenture to any person who purchases, in a single
transaction or series of related transactions, for no less than $50,000,000,
shares of such Preferred Stock, provided that the rate of dividends on such
Preferred Stock does not exceed, as of the date the issuance thereof is approved
by the Company's Board of Directors, the prime rate of interest most recently
published in The Wall Street Journal and the aggregate amount of such dividends
payable in any fiscal year does not exceed $10,000,000; (e) the repurchase of
Capital Stock of the Company (including options, warrants or other rights to
acquire such Capital Stock) from employees or former employees of the Company or
any Subsidiary thereof for consideration not to exceed $500,000 in the aggregate
in any fiscal year; (f) the payment by the Company of any required dividends on
or prior to July 15, 2000 on its Preferred Stock outstanding, or issuable
pursuant to an agreement in effect, on the date of the Indenture in accordance
with the terms thereof as in effect on the date of the Indenture; (g) so long as
no Default or Event of Default shall have occurred and be continuing, the
distribution by the Company to its shareholders of the Capital Stock of an
Unrestricted Subsidiary in the Company's Communications Products Group; (h) so
long as no Default or Event of Default shall have occurred and be continuing,
required payments by the Company or any of its Subsidiaries pursuant to
Acquisition Put Obligations in existence on the date of the Indenture; (i)
Investments constituting Restricted Payments made as a result of the receipt of
non-cash consideration from any Asset Sale made pursuant to and in compliance
with the covenant described under "- Disposition of Proceeds of Asset Sales"
below and (j) any payments made in connection with a Repurchase Event under the
Warrant Agreement. In computing the amount of Restricted Payments previously
made for purposes of clause (iii) of the preceding paragraph, Restricted
Payments made under clauses (d), (e), (f), (g), (h), and (i) of this paragraph
shall be included and payments made under clauses (a), (b), (c) and (j) of this
paragraph shall not be so included.
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Any cash Investment by the Company made on or after the date hereof in
any wholly-owned subsidiary thereof organized under the laws of and doing
business in the United States shall be required to be made in the form of a
loan, which shall be required to be evidenced by an Intercompany Note. All
Intercompany Notes shall be required to be pledged by the Company to the Trustee
as Collateral.
Limitation on Liens. The Company will not, and will not permit any of
its Subsidiaries to, create, incur, assume or suffer to exist any Liens of any
kind against or upon any of its property or assets, or any proceeds therefrom,
other than Liens securing Indebtedness that is subordinated in right of payment
to the Notes, so long as the Notes are secured by a Lien on such property,
assets or proceeds that is senior in priority to such Liens; provided, however,
that the foregoing shall not prohibit (i) Liens existing as of the Initial Issue
Date, including Liens securing indebtedness under the Defeased Notes; (ii) Liens
securing the Notes; (iii) Liens in favor of the Company or one or more of its
Subsidiaries, other than any Lien on any property or assets of the Company or
any of its Subsidiaries securing Indebtedness to one or more Subsidiaries; (iv)
any Lien securing only Indebtedness of a Subsidiary of the Company, to the
extent that the incurrence of such Indebtedness is permitted under the Indenture
and such Indebtedness is not subordinated in right of payment to the Notes; (v)
Liens securing Indebtedness which is incurred to refinance Indebtedness which
has been secured by a Lien permitted under the Indenture and which has been
incurred in accordance with the provisions of the Indenture, provided that such
Liens do not extend to or cover any property or assets of the Company or any of
its Subsidiaries not securing the Indebtedness so refinanced; and (vi) Permitted
Liens.
The Pledge Agreements further restrict the Company's and the Pledged
Companies' ability to create, incur, assume or suffer to exist Liens. See "-
Security."
Change of Control. Upon the occurrence of a Change of Control, the
Company shall be obligated to make an offer to purchase (a "Change of Control
Offer"), and shall purchase, on a business day (the "Change of Control Purchase
Date") not more than 60 nor less than 30 days following the occurrence of the
Change of Control, all of the then outstanding Notes at a purchase price (the
"Change of Control Purchase Price") equal to 101% of the Accreted Value thereof
plus accrued and unpaid interest, if any, to the Change of Control Purchase
Date. The Company shall be required to purchase all Notes properly tendered into
the Change of Control Offer and not withdrawn. The Change of Control Offer is
required to remain open for at least 20 business days and until the close of
business on the Change of Control Purchase Date.
In order to effect such Change of Control Offer, the Company shall, not
later than the 30th day after the occurrence of the Change of Control, mail to
each holder of Notes notice of the Change of Control Offer, which notice shall
govern the terms of the Change of Control Offer and shall state, among other
things, the procedures that holders of Notes must follow to accept the Change of
Control Offer.
The Company shall not be required to make a Change of Control Offer
upon a Change of Control if a third party makes the Change of Control Offer in
the manner, at the times and otherwise in compliance with the requirements
applicable to a Change of Control Offer made by the Company and purchases all
Notes validly tendered and not withdrawn under such Change of Control Offer.
The Company will comply with Rule 14e-1 under the Exchange Act and any
other securities laws and regulations thereunder to the extent such laws and
regulations are applicable in the event that a Change of Control occurs and the
Company is required to purchase Notes as described above.
Disposition of Proceeds of Asset Sales. The Company will not, and will
not permit any of its Subsidiaries to, make any Asset Sale unless (a) the
Company or such Subsidiary, as the case may be, receives consideration at the
time of such Asset Sale at least equal to the Fair Market Value of the shares or
assets sold or otherwise disposed of and (b) at least 85% of such consideration
consists of cash or Cash Equivalents or the assumption of Indebtedness of the
Company or such Subsidiary or other obligations relating to such assets and
release from all liability on the Indebtedness or other obligations assumed,
unless, in the case of clause (b), the remainder of such consideration consists
of (i) property or assets that will be owned by the Company or a Subsidiary of
the Company and are to be used in a telecommunications business or related
activities or services that thereafter will be conducted by the Company or such
Subsidiary or (ii) Capital Stock or other securities issued by a party to the
transaction or an Affiliate thereof, which Capital Stock or other securities are
freely tradeable and which are sold for cash within 90 days of the consummation
of the Asset Sale in connection with which they were acquired. The Company or
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such Subsidiary, as the case may be, may, within 180 days of such Asset Sale,
apply such Net Cash Proceeds (or enter into a binding agreement within such
180-day period to apply such Net Cash Proceeds within 45 days of the date of
such agreement) to (a) an investment in properties and assets that replace the
properties and assets that were the subject of such Asset Sale or in properties
and assets that will be used in the business of the Company and its Subsidiaries
existing on the Initial Issue Date or in businesses reasonably related thereto
("Replacement Assets") or (b) in the case of an Asset Sale by a Subsidiary of
the Company, the repayment of any Indebtedness of such Subsidiary. Any Net Cash
Proceeds from any Asset Sale that are not invested in Replacement Assets within
the 180-day period described above constitute "Excess Proceeds" subject to
disposition as provided below.
When the aggregate amount of Excess Proceeds exceeds $10.0 million, the
Company will make an offer (an "Asset Sale Offer") to all holders of Notes and
Other Qualified Senior Notes, not more than 40 business days thereafter, to
purchase the maximum principal amount of Notes and Other Qualified Senior Notes,
on a pro rata basis according to the Accreted Value or principal amount, as the
case may be, of the Notes and the Other Qualified Senior Notes that may be
purchased out of the Excess Proceeds (x) with respect to the Other Qualified
Senior Notes, based on the terms set forth in the instrument related to each
issue of the Other Qualified Senior Notes and (y) with respect to the Notes, at
an offer price in cash in an amount equal to 100% of the Accreted Value on the
date fixed for closing of such offer plus accrued and unpaid interest, if any,
to the date fixed for the closing of such offer in accordance with the
procedures set forth in the Indenture. To the extent that the aggregate Accreted
Value or principal amount, as the case may be, of Notes and Other Qualified
Senior Notes tendered pursuant to an Asset Sale Offer is less than the Excess
Proceeds, the Company may use such deficiency in the business of the Company and
its Subsidiaries on the Initial Issue Date or in businesses reasonably related
thereto (including for general corporate purposes). If the aggregate Accreted
Value or principal amount, as the case may be, of Notes and Other Qualified
Senior Notes surrendered by holders thereof exceeds the amount of Excess
Proceeds, then the Excess Proceeds will be allocated pro rata according to
Accreted Value or principal amount, as the case may be, to the Notes and each
issue of the Other Qualified Senior Notes and the Trustee will select the Notes
to be purchased from the amount allocated to the Notes on the basis set forth in
the Indenture. Upon completion of such offer to purchase, the amount of Excess
Proceeds will be reset at zero.
The Company will comply with Rule 14e-1 under the Exchange Act and any
other securities laws and regulations thereunder to the extent such laws and
regulations are applicable, in the event that an Asset Sale occurs and the
Company is required to purchase Notes as described above.
Limitation on Issuances and Sale of Preferred Stock by Subsidiaries.
The Company (a) will not permit any of its Subsidiaries to issue any Preferred
Stock (other than to the Company or a Wholly-Owned Subsidiary of the Company)
and (b) will not permit any person (other than the Company or a Wholly-Owned
Subsidiary of the Company) to own any Preferred Stock of any Subsidiary of the
Company; provided that the terms of this covenant shall not be violated by the
acquisition by the Company of any person that will be a Subsidiary of the
Company upon the consummation of such acquisition and that had Preferred Stock
outstanding prior to such acquisition that was not issued in anticipation of
such acquisition.
Limitation on Transactions with Interested Persons. The Company will
not, and will not permit any of its Subsidiaries to, directly or indirectly,
enter into or suffer to exist any transaction or series of related transactions
(including, without limitation, the sale, transfer, disposition, purchase,
exchange or lease of assets, property or services) with, or for the benefit of,
any Affiliate of the Company or any beneficial owner (determined in accordance
with the Indenture) of 10% or more of the Company's Common Stock at any time
outstanding (in each case, an "Interested Person"), unless (a) such transaction
or series of related transactions is on terms that are no less favorable to the
Company or such Subsidiary, as the case may be, than those which could have been
obtained in a comparable transaction at such time from persons who are not
Affiliates of the Company or Interested Persons, (b) with respect to the sale of
Capital Stock of the Company (other than Redeemable Capital Stock) involving
aggregate payments or value equal to or greater than $5,000,000, such
transaction must have been approved in good faith by a majority of the Company's
Board of Directors and a majority of its Disinterested Directors as evidenced by
a resolution filed with the Trustee, (c) with respect to a transaction or series
of related transactions involving aggregate payments or value equal to or
greater than $5,000,000, (i) such transaction must have been approved in good
faith by a majority of the Company's Board of Directors and a majority of its
Disinterested Directors, as evidenced by a resolution of the Company's
Disinterested Directors filed with the Trustee and (ii) other than a transaction
provided for in clause (b) above, the Company has obtained a written opinion
from an Independent Financial Advisor stating that the terms of such transaction
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or series of transactions are fair to the Company or the applicable Subsidiary,
as the case may be, from a financial point of view and (d) with respect to a
transaction or series of transactions involving aggregate payments or value
equal to or greater than $500,000, the Company shall have delivered an officer's
certificate to the Trustee certifying that such transaction or series of
transactions complies with the preceding clause (a) and, if applicable,
certifying that the opinion referred to in the preceding clause (c) (ii) has
been delivered or that such transaction or series of transactions have been
approved by a majority of the Board of Directors of the Company and by a
majority of the Disinterested Directors; provided, however, that this covenant
will not restrict the Company or its Subsidiaries from (i) paying dividends in
respect of their Capital Stock to the extent permitted under the covenant
described under "- Limitation on Restricted Payments" above, (ii) paying
reasonable and customary fees to directors of the Company who are not employees
of the Company, (iii) making loans or advances to officers, employees or
consultants of the Company and its Subsidiaries (including travel and moving
expenses) in the ordinary course of business for bona fide business purposes of
the Company or such Subsidiary not in excess of $1,000,000 in the aggregate at
any one time outstanding, (iv) engaging in any transaction effected pursuant to
an agreement existing on the date of the Indenture, pursuant to the terms of
such agreement as in effect on the date of the Indenture, (v) engaging in any
transaction between the Company and any Subsidiary or between Subsidiaries or
(vi) entering into any employment or consulting agreement or compensation
arrangement with any natural person in the ordinary course of business
consistent with past practice. For purposes of this covenant, any transaction or
series of related transactions between the Company or any Subsidiary and an
Affiliate of the Company that is approved in the manner described in clause (b),
(c) or (d) of the preceding sentence will be deemed to be on terms as favorable
as those that might be obtained at the time of such transaction (or series of
transactions) from a person that is not such an Affiliate.
Limitation on Dividends and Other Payment Restrictions Affecting
Subsidiaries. The Company will not, and will not permit any of its Subsidiaries
to, directly or indirectly, create or otherwise cause or suffer to exist or
become effective any encumbrance or restriction on the ability of any Subsidiary
of the Company to (a) pay dividends, in cash or otherwise, or make any other
distributions on or in respect of its Capital Stock or any other interest or
participation in, or measured by, its profits, (b) pay any Indebtedness owed to
the Company or any other Subsidiary of the Company, (c) make loans or advances
to, or any investment in, the Company or any other Subsidiary of the Company or
(d) transfer any of its properties or assets to the Company or any other
Subsidiary of the Company, except for such encumbrances or restrictions existing
under or by reason of (i) any other provision of the Indenture or any provision
of any of the Pledge Agreements, (ii) applicable law, (iii) customary
non-assignment provisions of any contract or any lease governing a leasehold
interest of the Company or any Subsidiary of the Company, (iv) customary
restrictions on transfers of property subject to a Lien permitted under the
Indenture which could not materially adversely affect the Company's ability to
satisfy its obligations under the Indenture and the Notes, (v) any agreement or
other instrument of a person acquired by the Company or any Subsidiary of the
Company (or a Subsidiary of such acquired person) in existence at the time of
such acquisition (but not created in contemplation thereof), which encumbrance
or restriction is not applicable to any person, or the properties or assets of
any person, other than the person, or the properties or assets of the person, so
acquired, (vi) provisions contained in agreements or instruments relating to
Indebtedness which prohibit the transfer of all or substantially all of the
assets of the obligor thereunder unless the transferee shall assume the
obligations of the obligor under such agreement or instrument, (vii)
restrictions imposed under agreements governing International Vendor
Indebtedness, provided that such restrictions terminate no later than July 15,
2000, (viii) any restrictions with respect to a Subsidiary imposed pursuant to
an agreement which has been entered into for the sale or disposition of all or
substantially all of the Capital Stock or assets of such Subsidiary, (ix)
customary restrictions pursuant to any agreement relating to Indebtedness of any
Subsidiary permitted by the "Limitation on Indebtedness" covenant and incurred
for working capital purposes, provided that such restrictions terminate no later
than July 15, 2000, (x) encumbrances and restrictions under Indebtedness in
effect on the Initial Issue Date and encumbrances and restrictions in permitted
refinancings or replacements thereof which are no less favorable to the holders
of the Notes than those contained in the Indebtedness so refinanced or replaced,
(xi) provisions contained in agreements or instruments governing Indebtedness
permitted pursuant to clause (l) of the "Limitation on Indebtedness" covenant,
provided that such restrictions terminate no later than July 15, 2000, and (xii)
any such encumbrance or restriction pursuant to any agreement that amends,
extends, refinances, refunds, renews or replaces any agreement described in
clauses (i), (iii), (v), (vi), (vii), (ix) or (xi) whether or not by or among
the same parties, provided that the terms and conditions of any such
encumbrances of restrictions are no less favorable to the holders of the Notes
than those under or pursuant to the agreement amended, extended, refinanced,
refunded, renewed or replaced.
Limitation on Sale-Leaseback Transactions. The Company will not, and
will not permit any of its Subsidiaries to, enter into any Sale-Leaseback
Transaction with respect to any property of the Company or any of its
Subsidiaries (other than Sale-Leaseback Transactions between the Company and any
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of its Wholly-Owned Subsidiaries or between any such Wholly-Owned Subsidiaries).
Notwithstanding the foregoing, the Company and its Subsidiaries may enter into
Sale-Leaseback Transactions with respect to property acquired or constructed
after the Initial Issue Date, provided that (a) the Attributable Value of such
Sale-Leaseback Transaction shall be deemed to be Indebtedness of the Company or
such Subsidiary, as the case may be, and (b) after giving pro forma effect to
any such Sale-Leaseback Transaction and the foregoing clause (a), the Company
would be able to incur $1.00 of additional Indebtedness pursuant to the first
paragraph of the covenant described under "- Limitation on Indebtedness" above
(assuming a market rate of interest with respect to such additional
Indebtedness).
Activities of the Company and its Subsidiaries. The Indenture will
provide that the Company will not, and will not permit any of its Subsidiaries
to, engage in any business other than the telecommunications business and
related activities and services, and such businesses, activities and services as
the Company and its Subsidiaries are engaged in on the date of the Indenture.
Reporting Requirements. The Company will file with the Commission the
annual reports, quarterly reports and other documents required to be filed with
the Commission pursuant to Sections 13 and 15 of the Exchange Act, whether or
not the Company has a class of securities registered under the Exchange Act. The
Company will be required to file with the Trustee and provide to each holder of
Notes within 15 days after it files them with the Commission (or if any such
filing is not permitted under the Exchange Act, 15 days after the Company would
have been required to make such filing) copies of such reports and documents.
Merger, Sale of Assets, Etc.
The Company will not, in any transaction or series of transactions,
merge or consolidate with or into, or sell, assign, convey, transfer, lease or
otherwise dispose of all or substantially all of its properties and assets as an
entirety to, any person or persons, and the Company will not permit any of its
Subsidiaries to enter into any such transaction or series of transactions if
such transaction or series of transactions, in the aggregate, would result in a
sale, assignment, conveyance, transfer, lease or other disposition of all or
substantially all of the properties and assets of the Company or the Company and
its Subsidiaries, taken as a whole, to any other person or persons, unless at
the time of and after giving effect thereto (a) either (i) if the transaction or
series of transactions is a merger or consolidation, the Company shall be the
surviving person of such merger or consolidation, or (ii) the person formed by
such consolidation or into which the Company or such Subsidiary is merged or to
which the properties and assets of the Company or such Subsidiary, as the case
may be, are transferred (any such surviving person or transferee person being
the "Surviving Entity") shall be a corporation organized and existing under the
laws of the United States of America, any state thereof or the District of
Columbia and shall expressly assume by a supplemental indenture executed and
delivered to the Trustee, in form reasonably satisfactory to the Trustee, all
the obligations of the Company under the Notes and the Indenture, and in each
case, the Indenture shall remain in full force and effect; (b) immediately
before and immediately after giving effect to such transaction or series of
transactions on a pro forma basis (including, without limitation, any
Indebtedness incurred or anticipated to be incurred in connection with or in
respect of such transaction or series of transactions), no Default or Event of
Default shall have occurred and be continuing and the Company or the Surviving
Entity, as the case may be, after giving effect to such transaction or series of
transactions on a pro forma basis (including, without limitation, any
Indebtedness incurred or anticipated to be incurred in connection with or in
respect of such transaction or series of transactions), could incur $1.00 of
additional Indebtedness pursuant to the first paragraph of the covenant
described under "- Certain Covenants - Limitation on Indebtedness" above
(assuming a market rate of interest with respect to such additional
Indebtedness); and (c) immediately after giving effect to such transaction or
series of transactions on a pro forma basis (including, without limitation, any
Indebtedness incurred or anticipated to be incurred in connection with or in
respect of such transaction or series of transactions), the Consolidated Net
Worth of the Company or the Surviving Entity, as the case may be, is at least
equal to the Consolidated Net Worth of the Company immediately before such
transaction or series of transactions.
In connection with any consolidation, merger, transfer, lease,
assignment or other disposition contemplated hereby, the Company shall deliver,
or cause to be delivered, to the Trustee, in form and substance reasonably
satisfactory to the Trustee, an officer's certificate and an opinion of counsel,
each stating that such consolidation, merger, transfer, lease, assignment or
other disposition and the supplemental indenture in respect thereof comply with
the requirements under the Indenture; provided, however, that solely for
purposes of computing amounts described in subclause (d)(iii) of the covenant
described under "- Certain Covenants - Limitation on Restricted Payments" above,
any such successor person shall only be deemed to have succeeded to and be
substituted for the Company with respect to periods subsequent to the effective
time of such merger, consolidation or transfer of assets.
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Upon any consolidation or merger or any transfer of all or
substantially all of the assets of the Company in accordance with the foregoing
in which the Company is not the continuing corporation, the successor
corporation formed by such a consolidation or into which the Company is merged
or to which such transfer is made shall succeed to, and be substituted for, and
may exercise every right and power of, the Company under the Indenture and the
Notes with the same effect as if such successor corporation had been named as
the Company therein; provided however, that solely for purposes of computing
amounts described in subclause (c) of the section "Limitation on Restricted
Payments", any such successor person shall be deemed to have succeeded to and be
substituted for the Company with respect to periods subsequent to the effective
time of such merger, consolidation or transfer of such assets.
Events of Default
The following will be "Events of Default" under the Indenture:
(a) a default in the payment of the principal of or premium, if any, on
any Note when the same becomes due and payable (upon Stated Maturity,
acceleration, optional redemption, required purchase, scheduled principal
payment or otherwise); or
(b) a default in the payment of an installment of interest on any of
the Notes, when the same becomes due and payable, which default continues for a
period of 30 days; or
(c) a failure to perform or observe any other term, covenant or
agreement contained in the Notes, the Indenture or any of the Pledge Agreements
(other than a default specified in clause (a) or (b) above) which failure
continues for a period of 30 days after written notice thereof requiring the
Company to remedy the same shall have been given (i) to the Company by the
Trustee or (ii) to the Company and the Trustee by holders of at least 25% in
aggregate principal amount of the Notes then outstanding; or
(d) a default or defaults under one or more agreements, instruments,
mortgages, bonds, debentures or other evidences of Indebtedness under which the
Company or any Subsidiary of the Company then has outstanding Indebtedness in
excess of $5,000,000, individually or in the aggregate, and either (i) such
Indebtedness is already due and payable in full other than by reason of an
acceleration or (ii) such default or defaults have resulted in the acceleration
of the maturity of such Indebtedness and such acceleration has not been
rescinded within a period of 15 days; or
(e) one or more judgments, orders or decrees of any court or regulatory
or administrative agency of competent jurisdiction for the payment of money in
excess of $5,000,000, either individually or in the aggregate, shall be entered
against the Company or any Subsidiary of the Company or any of their respective
properties and shall not be discharged or fully bonded and there shall have been
a period of 60 days after the date on which any period for appeal has expired
and during which a stay of enforcement of such judgment, order or decree shall
not be in effect; or
(f) certain events of bankruptcy, insolvency or reorganization with
respect to the Company or any Significant Subsidiary of the Company shall have
occurred.
If an Event of Default (other than as specified in clause (f) above)
shall occur and be continuing, the Trustee, by written notice to the Company, or
the holders of at least 25% in aggregate principal amount of the Notes then
outstanding, by written notice to the Trustee and the Company, may accelerate
the Accreted Value of, premium, if any, and accrued and unpaid interest, if any,
on all of the outstanding Notes due and payable immediately, upon which
declaration, all amounts payable in respect of the Notes shall be immediately
due and payable. If an Event of Default specified in clause (f) above occurs and
is continuing, then the Accreted Value of, premium, if any, and accrued and
unpaid interest, if any, on all of the outstanding Notes shall ipso facto become
and be immediately due and payable without any declaration or other act on the
part of the Trustee or any holder of Notes.
After a declaration of acceleration under the Indenture, but before a
judgment or decree for payment of the money due has been obtained by the
Trustee, the holders of a majority in aggregate principal amount of the
outstanding Notes, by written notice to the Company and the Trustee, may rescind
such declaration if (a) the Company has paid or deposited with the Trustee a sum
sufficient to pay (i) all sums paid or advanced by the Trustee under the
Indenture and the reasonable compensation, expenses, disbursements and advances
of the Trustee, its agents and counsel, (ii) all overdue interest on all Notes,
(iii) the Accreted Value of and premium, if any, on any Notes which have become
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due otherwise than by such declaration of acceleration and interest thereon at
the rate borne by the Notes, and (iv) to the extent that payment of such
interest is lawful, interest upon overdue interest at the rate borne by the
Notes which has become due otherwise than by such declaration of acceleration;
(b) the rescission would not conflict with any judgment or decree of a court of
competent jurisdiction; and (c) all Events of Default, other than the
non-payment of Accreted Value of, premium, if any, and interest on the Notes
that have become due solely by such declaration of acceleration, have been cured
or waived pursuant to the terms of the Indenture.
The holders of not less than a majority in aggregate principal amount
of the outstanding Notes may on behalf of the holders of all the Notes waive any
past defaults under the Indenture, except a default in the payment of the
principal of, premium, if any, or interest on any Note, or in respect of a
covenant or provision which under the Indenture cannot be modified or amended
without the consent of the holder of each Note outstanding.
No holder of any of the Notes has any right to institute any proceeding
with respect to the Indenture or the Notes or any remedy thereunder, unless the
holders of at least 25% in aggregate principal amount of the outstanding Notes
have made written request, and offered reasonable indemnity, to the Trustee to
institute such proceeding as Trustee under the Notes and the Indenture, the
Trustee has failed to institute such proceeding within 60 days after receipt of
such notice and the Trustee, within such 60-day period, has not received
directions inconsistent with such written request by holders of a majority in
aggregate principal amount of the outstanding Notes. Such limitations do not
apply, however, to a suit instituted by a holder of a Note for the enforcement
of the payment of the principal of, premium, if any, or interest on such Note on
or after the respective due dates expressed in such Note, subject to applicable
grace periods.
During the existence of an Event of Default, the Trustee is required to
exercise such rights and powers vested in it under the Indenture and use the
same degree of care and skill in its exercise thereof as a prudent person would
exercise under the circumstances in the conduct of such person's own affairs.
Subject to the provisions of the Indenture relating to the duties of the
Trustee, whether or not an Event of Default shall occur and be continuing, the
Trustee under the Indenture is not under any 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
security or indemnity. Subject to certain provisions concerning the rights of
the Trustee, the holders of not less than a majority in aggregate principal
amount of the outstanding Notes 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 under the Indenture.
If a Default or an Event of Default occurs and is continuing and is
known to the Trustee, the Trustee shall mail to each holder of the Notes notice
of the Default or Event of Default within 30 days after obtaining knowledge
thereof. Except in the case of a Default or an Event of Default in payment of
principal of, premium, if any, or interest on any Notes, the Trustee may
withhold the notice to the holders of such Notes if a committee of its trust
officers in good faith determines that withholding the notice is in the interest
of the holders of the Notes.
The Company is required to furnish to the Trustee annual and quarterly
statements as to the performance by the Company of its obligations under the
Indenture and as to any default in such performance. The Company also is
required to notify the Trustee within ten days of any event which is, or after
notice or lapse of time or both would become, an Event of Default.
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Defeasance or Covenant Defeasance of Indenture
The Company may, at its option and at any time, terminate the
obligations of the Company with respect to the outstanding Notes ("defeasance"),
including, without limitation, all of the Company's obligations under the Pledge
Agreements. Such defeasance means that the Company shall be deemed to have paid
and discharged the entire Indebtedness represented by the outstanding Notes,
except for (a) the rights of holders of outstanding Notes to receive payment in
respect of the principal of, premium, if any, and interest on such Notes when
such payments are due, (b) the Company's obligations to issue temporary Notes,
register the transfer or exchange of any Notes, replace mutilated, destroyed,
lost or stolen Notes and maintain an office or agency for payments in respect of
the Notes, (c) the rights, powers, trusts, duties and immunities of the Trustee
and (d) the defeasance provisions of the Indenture. In addition, the Company
may, at its option and at any time, elect to terminate the obligations of the
Company with respect to certain covenants that are set forth in the Indenture,
some of which are described under "- Certain Covenants" above (including the
covenant described under "- Certain Covenants - Change of Control" above) and
with respect to its obligations under the Pledge Agreements and any subsequent
failure to comply with any of such obligations shall not constitute a Default or
Event of Default with respect to the Notes ("covenant defeasance").
In order to exercise either defeasance or covenant defeasance, (a) the
Company must irrevocably deposit with the Trustee, in trust, for the benefit of
the holders of the Notes, cash in United States dollars, U.S. Government
Obligations (as defined in the Indenture), or a combination thereof, in such
amounts as will be sufficient, in the opinion of a nationally recognized firm of
independent public accountants, to pay the principal of, premium, if any, and
interest on the outstanding Notes to redemption or maturity (except lost, stolen
or destroyed Notes which have been replaced or paid); (b) the Company shall have
delivered to the Trustee an opinion of counsel to the effect that the holders of
the outstanding Notes will not recognize income, gain or loss for federal income
tax purposes as a result of such defeasance or covenant defeasance and will be
subject to federal income tax on the same amounts, in the same manner and at the
same times as would have been the case if such defeasance or covenant defeasance
had not occurred (in the case of defeasance, such opinion must refer to and be
based upon a ruling of the Internal Revenue Service or a change in applicable
federal income tax laws); (c) no Default or Event of Default shall have occurred
and be continuing on the date of such deposit; (d) such defeasance or covenant
defeasance shall not cause the Trustee to have a conflicting interest with
respect to any securities of the Company; (e) such defeasance or covenant
defeasance shall not result in a breach or violation of, or constitute a default
under, any material agreement or instrument to which the Company is a party or
by which it is bound; (f) the Company shall have delivered to the Trustee an
opinion of counsel to the effect that after the 91st day following the deposit,
the trust funds will not be subject to the effect of any applicable bankruptcy,
insolvency, reorganization or similar laws affecting creditors' rights
generally; and (g) the Company shall have delivered to the Trustee an officers'
certificate and an opinion of counsel, each stating that all conditions
precedent under the Indenture to either defeasance or covenant defeasance, as
the case may be, have been complied with.
Satisfaction and Discharge
The Indenture will be discharged and will cease to be of further effect
(except as to surviving rights or registration of transfer or exchange of the
Notes, as expressly provided for in the Indenture) as to all outstanding Notes
when (a) either (i) all the Notes theretofore authenticated and delivered
(except lost, stolen or destroyed Notes which have been replaced or repaid and
Notes for whose payment money has theretofore been deposited in trust or
segregated and held in trust by the Company and thereafter repaid to the Company
or discharged from such trust) have been delivered to the Trustee for
cancellation or (ii) all Notes not theretofore delivered to the Trustee for
cancellation (except lost, stolen or destroyed Notes which have been replaced or
paid) have been called for redemption pursuant to the terms of the Notes or have
otherwise become due and payable and the Company has irrevocably deposited or
caused to be deposited with the Trustee funds in an amount sufficient to pay and
discharge the entire Indebtedness on the Notes not theretofore delivered to the
Trustee for cancellation, for principal of, premium, if any, and interest on the
Notes to the date of deposit together with irrevocable instructions from the
Company directing the Trustee to apply such funds to the payment thereof at
maturity or redemption, as the case may be; (b) the Company has paid all other
sums payable under the Indenture by the Company; (c) there exists no Default or
Event of Default under the Indenture; and (d) the Company has delivered to the
Trustee an officers' certificate and an opinion of counsel stating that all
conditions precedent under the Indenture relating to the satisfaction and
discharge of the Indenture have been complied with.
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Amendments and Waivers
From time to time, the Company, when authorized by a resolution of its
Board of Directors, and the Trustee may, without notice to or the consent of the
holders of any outstanding Notes, amend, waive or supplement the Indenture or
the Notes for certain specified purposes, including, among other things, curing
ambiguities, defects or inconsistencies, qualifying, or maintaining the
qualification of, the Indenture under the TIA or making any other change that
does not adversely affect the rights of any holder of Notes, provided that the
Company has delivered to the Trustee an opinion of counsel stating that such
change does not adversely affect the rights of any holder of Notes. Other
amendments and modifications of the Indenture or the Notes may be made by the
Company and the Trustee with the consent of the holders of at least a majority
of the 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) reduce the principal amount of,
extend the fixed maturity of or alter the redemption provisions of, the Notes,
(b) change the currency in which any Notes or any premium or the interest
thereon is payable or make the principal of, premium, if any, or interest on any
Note payable in money other than that stated in the Note, (c) reduce the
percentage in principal amount of outstanding Notes that must consent to an
amendment, supplement or waiver or consent to take any action under the
Indenture or the Notes, (d) impair the right to institute suit for the
enforcement of any payment on or with respect to the Notes, (e) waive a default
in payment with respect to the Notes or (f) reduce or change the rate or time
for payment of interest on the Notes.
The Trustee
The Indenture provides that, except during the continuance of an Event
of Default, the Trustee thereunder will perform only such duties as are
specifically set forth in the Indenture. If an Event of Default has occurred and
is continuing, 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.
The Indenture and provisions of the TIA incorporated by reference
therein contain limitations on the rights of the Trustee thereunder, 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 claims,
as security or otherwise. The Trustee is permitted to engage in other
transactions; provided, however, that if it acquires any conflicting interest
(as defined in the TIA) it must eliminate such conflict or resign.
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Governing Law
The Indenture and the Exchange Notes will be governed by the laws of
the State of New York, without regard to the principles of conflicts of law.
Certain Definitions
"Accreted Value" is defined to mean, for any Specified Date, the amount
provided below for each $1,000 principal amount at maturity of the Notes:
(a) if the Specified Date occurs on one of the following dates (each a
"Semi-Annual Accrual Date"), the Accreted Value will equal the amount set forth
below for such Semi-Annual Accrual Date:
Accreted
Semi-Annual Accrual Date Value
------------------------ ----------
January 15, 1996 ....................................... $ 521.58
July 15, 1996 .......................................... 560.70
January 15, 1997 ....................................... 602.75
July 15, 1997 .......................................... 647.96
January 15, 1998 ....................................... 696.56
July 15, 1998 .......................................... 748.80
January 15, 1999 ....................................... 804.96
July 15, 1999 .......................................... 865.33
January 15, 2000 ....................................... 930.23
July 15, 2000 .......................................... 1,000.00
(b) if the Specified Date occurs before the first Semi-Annual Accrual
Date, the Accreted Value will equal the sum of (i) the original issue price of
the Notes and (ii) an amount equal to the product of (A) the Accreted Value for
the first Semi-Annual Accrual Date less the original issue price multiplied by
(B) a fraction, the numerator of which is the number of days from the Initial
Issue Date to the Specified Date, using a 360-day year of twelve 30-day months,
and the denominator of which is the number of days elapsed from the Initial
Issue Date to the first Semi-Annual Accrual Date, using a 360-day year of twelve
30-day months;
(c) if the Specified Date occurs between two Semi-Annual Accrual Dates,
the Accreted Value will equal the sum of (i) the Accreted Value for the
Semi-Annual Accrual Date immediately preceding such Specified Date and (ii) an
amount equal to the product of (A) the Accreted Value for the immediately
following Semi-Annual Accrual Date less the Accreted Value for the immediately
preceding Semi-Annual Accrual Date multiplied by (B) a fraction, the numerator
of which is the number of days from the immediately preceding Semi-Annual
Accrual Date to the Specified Date, using a 360-day year of twelve 30-day
months, and the denominator of which is 180; or
(d) if the Specified Date occurs after the last Semi-Annual Accrual
Date, the Accreted Value will equal $1,000.
"Acquired Indebtedness" means Indebtedness of a person (a) assumed in
connection with an Asset Acquisition from such person or (b) existing at the
time such person becomes a Subsidiary of any other person.
"Acquisition Put Obligation" of any person means any obligation to
purchase, redeem, retire, defease or otherwise acquire for value any interest in
any other person pursuant to an agreement in effect on the date of the Indenture
under which one party has the right to require the other party thereto to make
such purchase, redemption, retirement, defeasance or acquisition; provided, that
for purposes of the definition of the term "Indebtedness," the term "Acquisition
Put Obligation" shall not include any obligation which, by its terms, can be
satisfied solely by delivery of Capital Stock (other than Redeemable Capital
Stock) of such person.
"Affiliate" means, with respect to any specified person, any other
person directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified person. For purposes of this
definition, the term "control," when used with respect to any specified person,
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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.
"Annualized Operating Cash Flow" means, for any fiscal quarter,
Operating Cash Flow for such fiscal quarter multiplied by four.
"Asset Acquisition" means (a) an Investment by the Company or any
Subsidiary of the Company in any other person pursuant to which such person
shall become a Subsidiary of the Company, or shall be merged with or into the
Company or any Subsidiary of the Company, (b) the acquisition by the Company or
any Subsidiary of the Company of the assets of any person (other than a
Subsidiary of the Company) which constitute all or substantially all of the
assets of such person or (c) the acquisition by the Company or any Subsidiary of
the Company of any division or line of business of any person (other than a
Subsidiary of the Company).
"Asset Sale" means any direct or indirect sale, issuance, conveyance,
transfer, lease or other disposition to any person other than the Company or a
Wholly-Owned Subsidiary of the Company, in one or a series of related
transactions, of (a) any Capital Stock of any Subsidiary of the Company (other
than in respect of director's qualifying shares or investments by foreign
nationals mandated by applicable law), (b) all or substantially all of the
properties and assets of any division or line of business of the Company or any
Subsidiary of the Company or (c) any other properties or assets of the Company
or any Subsidiary of the Company other than in the ordinary course of business.
For the purposes of this definition, the term "Asset Sale" shall not include (a)
any sale, issuance, conveyance, transfer, lease or other disposition of
properties or assets that is governed by the provisions described under "-
Merger, Sale of Assets, Etc." above, (b) disposition by the Company to a
Wholly-Owned Subsidiary or by a Subsidiary of the Company to the Company or a
Wholly-Owned Subsidiary, (c) distribution by the Company to its shareholders of
the Capital Stock of a Subsidiary in the Company's Communications Products Group
to the extent that such distribution is permitted pursuant to clause (h) of the
second paragraph of the covenant described under "- Certain Covenants -
Limitation on Restricted Payments" above, (d) any sale issuance, conveyance,
transfer, lease or other disposition of properties or assets that constitute a
Permitted Investment or a Restricted Payment that is permitted under the
covenant entitled "Restricted Payments", (e) any transfer of assets pursuant to
any binding written agreement in existence on the date of the Indenture, (f) any
sale of any of the assets of Geotest or (g) any transaction or series of related
transactions in connection with which the Company or a Subsidiary, as the case
may be, receives aggregate consideration of $75,000 or less.
"Attributable Value" means, as to any particular lease under which any
person is at the time liable other than a Capitalized Lease Obligation, and at
any date as of which the amount thereof is to be determined, the total net
amount of rent required to be paid by such person under such lease during the
initial term thereof as determined in accordance with GAAP, discounted from the
last date of such initial term to the date of determination at a rate per annum
equal to the discount rate which would be applicable to a Capitalized Lease
Obligation with a like term in accordance with GAAP. The net amount of rent
required to be paid under any such lease for any such period shall be the
aggregate amount of rent payable by the lessee with respect to such period after
excluding amounts required to be paid on account of insurance, taxes,
assessments, utility, operating and labor costs and similar charges. In the case
of any lease which is terminable by the lessee upon the payment of a penalty,
such net amount shall also include the amount of such penalty, but no rent shall
be considered as required to be paid under such lease subsequent to the first
date upon which it may be so terminated. "Attributable Value" means, as to a
Capitalized Lease Obligation under which any person is at the time liable and at
any date as of which the amount thereof is to be determined, the capitalized
amount thereof that would appear on the face of a balance sheet of such person
in accordance with GAAP.
"Average Life to Stated Maturity" means, with respect to any
Indebtedness, as at any date of determination, the quotient obtained by dividing
(a) the sum of the products of (i) the number of years (or any fraction thereof)
from such date to the date or dates of each successive scheduled principal
payment (including, without limitation, any sinking fund requirements) of such
Indebtedness multiplied by (ii) the amount of each such principal payment by (b)
the sum of all such principal payments.
"Capital Stock" means, with respect to any person, any and all shares,
interests, participations, rights in or other equivalents (however designated)
of such person's capital stock, and any rights (other than debt securities
convertible into capital stock), warrants or options exchangeable for or
convertible into such capital stock.
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"Capitalized Lease Obligation" means any obligation under a lease of
(or other agreement conveying the right to use) any property (whether real,
personal or mixed) that is required to be classified and accounted for as a
capital lease obligation under GAAP, and, for the purpose of the Indenture, the
amount of such obligation at any date shall be the capitalized amount thereof at
such date, determined in accordance with GAAP.
"Cash Equivalents" means, at any time, (a) any evidence of Indebtedness
with a maturity of 360 days or less issued or directly and fully guaranteed or
insured by the United States of America or any agency or instrumentality thereof
(provided that the full faith and credit of the United States of America is
pledged in support thereof); (b) any money market fund sponsored by a registered
broker-dealer or mutual fund distributor or time deposit accounts, certificates
of deposit or acceptances and money market deposits with a maturity of 270 days
or less of (i) any financial institution that is organized under the laws of the
United States, any state thereof, the District of Columbia or any foreign
country recognized by the United States and which financial institution has
capital, surplus and undivided profits aggregating in excess of $50.0 million
(or the foreign currency equivalent thereof) or (ii) any other financial
institution that is organized under the laws of the United States, any state
thereof, the District of Columbia or any foreign country recognized by the
United States, in an amount not to exceed $2.0 million at any one time; (c) any
evidence of Indebtedness maturing, or otherwise payable without penalty, not
more than l2 months after the date of the acquisition thereof issued by a
corporation and rated at least A-2 by Moody's or at least A by S&P; (d)
repurchase agreements and reverse repurchase agreements relating to marketable
direct obligations issued or unconditionally guaranteed by the government of the
United States of America or issued by any agency thereof and backed by the full
faith and credit of the United States of America, in each case maturing within
180 days from the date of acquisition, provided that the terms of such
agreements comply with the guidelines set forth in the Federal Financial
Agreements of Depository Institutions With Securities Dealers and Others, as
adopted by the Comptroller of the Currency on October 31,1985; and (e)
commercial paper maturing not more than 90 days after the date of acquisition
thereof that is issued by a corporation (other than an Affiliate or Subsidiary
of the Company) organized and existing under the laws of the United States of
America or any jurisdiction thereof with a rating, at the time as of which any
Investment therein is made, of at least P-1 by Moody's or at least A-1 by S&P.
"Change of Control" means the occurrence of any of the following
events: (a) any "person" or "group" (as such terms are used in Sections 13(d)
and 14(d) of the Exchange Act), is or becomes the "beneficial owner" (as defined
in Rules 13d-3 and 13d-5 under the Exchange Act, except that a person shall be
deemed to have "beneficial ownership" of all securities that such person has the
right to acquire, whether such right is exercisable immediately or only after
the passage of time, upon the happening of an event or otherwise), directly or
indirectly, of more than 50% of the total Voting Stock of the Company; (b) the
Company consolidates with, or merges with or into, another person or sells,
assigns, conveys, transfers, leases or otherwise disposes of all or
substantially all of its assets to any person, or any person consolidates with,
or merges with or into, the Company, in any such event pursuant to a transaction
in which the outstanding Voting Stock of the Company is converted into or
exchanged for cash, securities or other property, other than any such
transaction where (i) the outstanding Voting Stock of the Company is converted
into or exchanged for (A) Voting Stock (other than Redeemable Capital Stock) of
the surviving or transferee corporation or (B) cash, securities and other
property in an amount which could then be paid by the Company as a Restricted
Payment under the Indenture, or a combination thereof, and (ii) immediately
after such transaction, the persons who, immediately prior to such transaction,
beneficially owned the Voting Stock of the Company, beneficially own, in the
aggregate, more than 50% of the total Voting Stock of the surviving or
transferee corporation ("beneficially owned" shall have a meaning correlative to
that of "beneficial owner" as defined in Rules 13d-3 and 13d-5 under the
Exchange Act, except that a person shall be deemed to have "beneficial
ownership" of all securities that such person has the right to acquire, whether
such right is exercisable immediately or only after the passage of time, upon
the happening of an event or otherwise), provided, however, that no Change of
Control will be deemed to occur pursuant to this clause (b) if (i) the surviving
or transferee corporation has outstanding debt securities having a maturity at
original issuance of at least one year and if such debt securities are rated
Investment Grade by S&P or Moody's for a period of at least 90 consecutive days,
beginning on the date of such event (which period will be extended up to 90
additional days to the extent that the rating of such debt securities is under
publicly announced consideration for possible downgrading by the applicable
rating agency), or (ii) the surviving or transferee corporation (A) does not
have any outstanding debt securities that are, rated by S&P, Moody's or any
other rating agency of national standing at any time during a period of 90
consecutive days beginning on the date of such event (which period will be
extended up to 90 additional days to the extent that any such rating agency has
publicly announced that such corporation or debt thereof will be rated), after
such date but during such period debt securities of such corporation having a
maturity at original issuance of at least one year are rated Investment Grade by
S&P or Moody's and remain so rated for the remainder of the period referred to
in clause (i) of this proviso, and (B) as of the Trading Day immediately before
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and the Trading Day immediately after the date of such event, has Total Common
Equity of at least $10,000,000,000 (provided that, solely for the purpose of
calculating Total Common Equity as of such later Trading Day, the average
Closing Price of Common Stock of such corporation will be deemed to equal the
Closing Price of such Common Stock on such later Trading Day, subject to the
last sentence of the definition of "Total Common Equity"); or (c) at any time
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 new
directors whose election by such Board of Directors or whose nomination for
election by the stockholders of the Company was approved by a vote of at least
662/3% 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.
"Closing Price" on any Trading Day with respect to the per share price
of any shares of Capital Stock means the last reported sale price regular way
or, in case no such reported sale takes place on such day, the average of the
reported closing bid and asked prices regular way, in either case on the New
York Stock Exchange or, if such shares of Capital Stock are not listed or
admitted to trading on such exchange, on the principal national securities
exchange on which such shares are listed or admitted to trading or, if not
listed or admitted to trading on any national securities exchange, on The Nasdaq
National Market or, if such shares are not listed or admitted to trading on any
national securities exchange or quoted on such automated quotation system but
the issuer is a Foreign Issuer (as defined in Rule 3b-4(b) under the Exchange
Act) and the principal securities exchange on which such shares are listed or
admitted to trading is a Designated Offshore Securities Market (as defined in
Rule 902(a) under the Securities Act), the average of the reported closing bid
and asked prices regular way on such principal exchange, or, if such shares are
not listed or admitted to trading on any national securities exchange or quoted
on such automated quotation system and the issuer and principal securities
exchange do not meet such requirements, the average of the closing bid and asked
prices in the over-the-counter market as furnished by any New York Stock
Exchange member firm that is selected from time to time by the Company for that
purpose and is reasonably acceptable to the Trustee.
"Collateral" means the Capital Stock of the Pledged Companies owned or
hereinafter acquired by the Company, and any other collateral to secure the
obligations of the Company under the Indenture and the Notes.
"Common Stock" means, with respect to any person, any and all shares,
interests or other participations in, and other equivalents (however designated
and whether voting or nonvoting) of, such person's common stock, whether
outstanding at the Initial Issue Date or issued after the Initial Issue Date,
and includes, without limitation, all series and classes of such common stock,
in each case, to the extent that such series or class of common stock 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.
"Commission" means the U.S. Securities and Exchange Commission.
"Communications Products Group" means European Gateway Acquisition
Corporation, Bogen Corporation and Speech Design GmbH and their respective
subsidiaries in existence from time to time and their respective successors.
"Consolidated Indebtedness to Annualized Operating Cash Flow Ratio"
means, as at any date of determination, the ratio of (a) the aggregate amount of
Indebtedness of the Company and its Subsidiaries on a consolidated basis
outstanding as at the date of determination to (b) the Annualized Operating Cash
Flow of the Company, and its Subsidiaries for the most recently completed fiscal
quarter of the Company.
"Consolidated Net Income" means, with respect to any person, for any
period, the consolidated net income (or loss) of such person and its
Subsidiaries for such period as determined in accordance with GAAP, adjusted, to
the extent included in calculating such net income, by excluding, without
duplication, (a) all extraordinary gains or losses, (b) the portion of net
income (but not losses) of such person and its Subsidiaries allocable to
minority interests in unconsolidated persons to the extent that cash dividends
or distributions have not actually been received by such person or one of its
Subsidiaries, (c) net income (or loss) of any person combined with such person
or one of its Subsidiaries on a "pooling of interests" basis attributable to any
period prior to the date of combination, (d) any gain or loss realized upon the
termination of any employee pension benefit plan, on an after-tax basis, (e)
gains (or losses) in respect of any Asset Sales by such person or one of its
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Subsidiaries, on an after-tax basis, (f) any gain resulting from the write-up of
assets and any loss resulting from the write-down of assets, on an after-tax
basis, and (g) the net income of any Subsidiary of such person to the extent
that the declaration of dividends or similar distributions by that Subsidiary of
that income is not at the time permitted, directly or indirectly, by operation
of the terms of its charter or any agreement, instrument, judgment, decree,
order, statute, rule or governmental regulation applicable to that Subsidiary or
its stockholders; provided that with respect to any person other than the
Company, references herein to Subsidiaries shall be deemed to refer to
subsidiaries of such person.
"Consolidated Net Worth" means, with respect to any person at any date,
the consolidated stockholders' equity of such person less the amount of such
stockholders' equity attributable to Redeemable Capital Stock of such person and
its Subsidiaries, as determined in accordance with GAAP; provided that with
respect to any person other than the Company, references herein to Subsidiaries
shall be deemed to refer to subsidiaries of such person.
"Currency Agreement" means any foreign exchange contract, currency swap
agreement or other similar agreement or arrangement designed to protect the
Company or any of its Subsidiaries against fluctuations in currency values.
"Default" means any event that is, or after notice or passage of time
or both would be, an Event of Default.
"Defeased Notes" means the Senior Secured Convertible Notes due 1998 of
the Company.
"Disinterested Director" means, with respect to any proposed
transaction between the Company and an Affiliate thereof, a member of the
Company's Board of Directors who is not an officer or employee of the Company,
would not be a party to, or have a financial interest in, such transaction and
is not an officer, director or employee of, and does not have a financial
interest in (other than by virtue of ownership of less than 10% of the Capital
Stock of the Company or such Affiliate) such Affiliate.
"Event of Default" has the meaning set forth under "- Events of
Default" herein.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"FCC" means the U.S. Federal Communications Commission.
"Fair Market Value" means, with respect to any assets, the price, as
determined by the Board of Directors of the Company acting in good faith, which
could be negotiated in an arms'-length free market transaction, for cash,
between a willing seller and a willing buyer, neither of which is under pressure
or compulsion to complete the transaction; provided, however, that, with respect
to any transaction which involves an asset or assets in excess of $1,000,000,
such determination shall be evidenced by written resolutions of the Board of
Directors of the Company delivered to the Trustee.
"Final Maturity Date" means July 15, 2005.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as may be approved by a significant segment of the accounting
profession of the United States of America, which are applicable from time to
time.
"guarantee" means, as applied to any obligation, (a) a guarantee (other
than by endorsement of negotiable instruments for collection in the ordinary
course of business), direct or indirect, in any manner, of any part or all of
such obligation and (b) an agreement, direct or indirect, contingent or
otherwise, the practical effect of which is to assure in any way the payment or
performance (or payment of damages in the event of non-performance) of all or
any part of such obligation, including, without limiting the foregoing, the
payment of amounts drawn down by letters of credit.
"Indebtedness" means, with respect to any person, without duplication,
(a) all liabilities of such person for borrowed money or for the deferred
purchase price of property or services, excluding any trade payables and other
accrued current liabilities incurred in the ordinary course of business, but
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including, without limitation, all obligations, contingent or otherwise, of such
person in connection with any letters of credit, banker's acceptance or other
similar credit transaction, (b) all obligations of such person evidenced by
bonds, notes, debentures or other similar instruments, (c) all indebtedness
created or arising under any conditional sale or other title retention agreement
with respect to property acquired by such person (even if the rights and
remedies of the seller or lender under such agreement in the event of default
are limited to repossession or sale of such property), but excluding trade
accounts payable arising in the ordinary course of business and lease
obligations that are not Capitalized Lease Obligations, (d) all Capitalized
Lease Obligations of such person, (e) all Indebtedness referred to in the
preceding clauses of other persons and all dividends of other persons, the
payment of which is secured by (or for which the holder of such Indebtedness has
an existing right, contingent or otherwise, to be secured by) any Lien upon
property (including, without limitation, accounts and contract rights) owned by
such person, even though such person has not assumed or become liable for the
payment of such Indebtedness (the amount of such obligation being deemed to be
the lesser of the value of such property or asset or the amount of the
obligation so secured), (f) all guarantees of Indebtedness referred to in this
definition by such person, (g) all Redeemable Capital Stock of such person,
valued at the greater of its voluntary or involuntary maximum fixed repurchase
price plus accrued dividends that are due and payable, (h) all obligations under
or in respect of Currency Agreements and Interest Rate Protection Obligations of
such person, (i) any Acquisition Put Obligation, (j) all Acquired Indebtedness
and (k) any amendment, supplement, modification, deferral, renewal, extension or
refunding of any liability of the types referred to in clauses (a) through (j)
above. For purposes hereof, the "maximum fixed repurchase price" of any
Redeemable Capital Stock which does not have a fixed repurchase price shall be
calculated in accordance with the terms of such Redeemable Capital Stock as if
such Redeemable Capital Stock were purchased on any date on which Indebtedness
shall be required to be determined pursuant to the Indenture, and if such price
is based upon, or measured by, the fair market value of such Redeemable Capital
Stock, such fair market value shall be determined in good faith by the board of
directors of the issuer of such Redeemable Capital Stock. Notwithstanding the
foregoing, the Defeased Notes shall not constitute "Indebtedness" so long as the
indebtedness represented by the Defeased Notes is defeased in accordance with
the terms thereof.
"Independent Financial Advisor" means a firm (a) which does not, and
whose directors, officers and employees or Affiliates do not, have a direct or
indirect financial interest in the Company and (b) which, in the judgment of the
Board of Directors of the Company, is otherwise independent and qualified to
perform the task for which it is to be engaged.
"Interest Rate Protection Agreement" means any arrangement with any
other person whereby, directly or indirectly, such person is entitled to receive
from time to time periodic payments calculated by applying either a floating or
a fixed rate of interest on a stated notional amount in exchange for periodic
payments made by such person calculated by applying a fixed or a floating rate
of interest on the same notional amount and shall include without limitation,
interest rate swaps, caps, floors, collars and similar agreements.
"Interest Rate Protection Obligations" means the obligations of any
person pursuant to an Interest Rate Protection Agreement.
"International Vendor Indebtedness" means Indebtedness incurred by the
Company or a Subsidiary of the Company (a) to finance the construction or
acquisition of Telecommunications Assets for use outside of the United States by
the Company or a Subsidiary of the Company, provided, however, that at the time
of incurrence, the aggregate outstanding principal amount of such Indebtedness
does not exceed 15% of the Total Market Capitalization of the Company or (b) to
fund the working capital needs of the Company or a Subsidiary of the Company in
connection with the provision of telecommunication systems or services outside
of the United States.
"Investment" means, with respect to any person, any direct or indirect
loan or other extension of credit or capital contribution to (by means of any
transfer of cash or other property to others or any payment for property or
services for the account or use of others), or any purchase or acquisition by
such person of any Capital Stock, bonds, notes, debentures or other securities
or evidences of Indebtedness issued by, any other person; provided that a
transaction will not be an Investment by the Company if the Company's payment
therefor consists exclusively of shares of the Company's Capital Stock (other
than Redeemable Capital Stock) or options, warrants or other rights to acquire
Capital Stock of the Company (other than Redeemable Capital Stock). The Fair
Market Value of the assets of any Subsidiary of the Company, less the aggregate
liabilities of such Subsidiary, determined at the time that such Subsidiary is
designated as an Unrestricted Subsidiary shall be deemed to be an Investment
made by the Company in such Unrestricted Subsidiary at such time. "Investments"
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shall exclude extensions of trade credit by the Company and its Subsidiaries in
the ordinary course of business in accordance with normal trade practices of the
Company or the applicable Subsidiary, as the case may be.
"Investment Grade" means a rating of at least BBB-, in the case of S&P,
or Baa3, in the case of Moody's.
"Licenses" means (a) SMR licenses granted by the FCC or any similar
governmental agency that entitle the holder to use the radio channels covered
thereby, subject to compliance with FCC rules and regulations, in connection
with its SMR business, (b) other similar licenses granted by the FCC or any
similar governmental agency that entitle the holder to use the radio channels
covered thereby, subject to compliance with FCC rules and regulations, in
connection with its other telecommunications business and (c) licenses for
technology used or usable in the telecommunications business.
"Lien" means any mortgage, charge, pledge, lien (statutory or other),
security interest, hypothecation, assignment for security, claim, preference,
priority or other encumbrance upon or with respect to any property of any kind.
A person shall be deemed to own subject to a Lien any property which such person
has acquired or holds subject to the interest of a vendor or lessor under any
conditional sale agreement, capital lease or other title retention agreement.
"Maturity Date" means, with respect to any security, the date on which
any principal of such security becomes due and payable as therein or herein
provided, whether at the Stated Maturity with respect to such principal or by
declaration of acceleration, call for redemption or purchase or otherwise.
"Minority Interest" means a financial interest representing 50% or less
of the total voting power of the outstanding Voting Stock of any person that is
not otherwise a Subsidiary of the Company and that is engaged primarily in the
telecommunications business and related activities and services.
"Moody's" means Moody's Investors Service, Inc. and its successors.
"Net Cash Proceeds" means, with respect to any Asset Sale, the proceeds
thereof in the form of cash or Cash Equivalents, including payments in respect
of deferred payment obligations when received in the form of cash or Cash
Equivalents (except to the extent that such obligations are financed or sold
with recourse to the Company or any Subsidiary of the Company), net of (a)
brokerage commissions and other fees and expenses (including, without
limitation, fees and expenses of legal counsel and investment bankers) related
to such Asset Sale, (b) provisions for all taxes payable as a result of such
Asset Sale, (c) amounts required to be paid to any person (other than the
Company or any Subsidiary of the Company) owning a beneficial interest in the
assets subject to the Asset Sale and (d) appropriate amounts to be provided by
the Company or any Subsidiary of the Company, as the case may be, as a reserve
required in accordance with GAAP against any liabilities associated with such
Asset Sale and retained by the Company or any Subsidiary of the Company, as the
case may be, after such Asset Sale, including, without limitation, pension and
other post-employment benefit liabilities, liabilities related to environmental
matters and liabilities under any indemnification obligations associated with
such Asset Sale, all as reflected in an officers' certificate delivered to the
Trustee.
"Operating Cash Flow" means, for any fiscal quarter, (a) the Company's
Consolidated Net Income plus depreciation and amortization in respect thereof
for such fiscal quarter, plus (b) all amounts deducted in calculating
Consolidated Net Income for such fiscal quarter in respect of interest expense
and other financing costs and all income taxes, whether or not deferred,
applicable to such income period, and other non-cash items reducing Consolidated
Net Income, minus (c) other non-cash items increasing Consolidated Net Income,
all as determined on a consolidated basis in accordance with GAAP. For purposes
of calculating Operating Cash Flow for the fiscal quarter most recently
completed prior to any date on which an action is taken that requires a
calculation of the Consolidated Indebtedness to Annualized Operating Cash Flow
Ratio, (a) any person that is a Subsidiary or an operating business of the
Company on such date (or would become a Subsidiary or an operating business of
the Company in connection with the transaction that requires the determination
of such ratio) will be deemed to have been a Subsidiary or an operating business
of the Company at all times during such fiscal quarter, (b) any person that is
not a Subsidiary or an operating business of the Company on such date (or would
cease to be a Subsidiary or an operating business of the Company in connection
with the transaction that requires the determination of such ratio) will be
deemed not to have been a Subsidiary or an operating business of the Company at
any time during such fiscal quarter and (c) if the Company or any Subsidiary
will have in any manner acquired (including through commencement of activities
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constituting such operating business) or disposed (including through termination
or discontinuance of activities constituting such operating business) of any
operating business during or subsequent to the most recently completed fiscal
quarter, such calculation will be made on a pro forma basis on the assumption
that such acquisition or disposition had been completed on the first day of such
completed fiscal quarter.
"Other Qualified Senior Notes" means any outstanding senior
indebtedness of the Company issued pursuant to an instrument having a provision
substantially similar to the Asset Sale Offer provision contained in the
Indenture.
"Permitted Investments" means any of the following: (a) Investments in
any Wholly-Owned Subsidiary of the Company (including any person that pursuant
to such Investment becomes a Wholly-Owned Subsidiary of the Company) and any
person that is merged or consolidated with or into, or transfers or conveys all
or substantially all of its assets to, the Company or any Wholly-Owned
Subsidiary of the Company at the time such Investment is made; (b) Investments
in Cash Equivalents; (c) Investments in the Notes; (d) Investments in Currency
Agreements on commercially reasonable terms entered into by the Company or any
of its Subsidiaries in the ordinary course of business in connection with the
operations of the business of the Company or its Subsidiaries to hedge against
fluctuations in foreign exchange rates; (e) loans or advances to officers,
employees or consultants of the Company and its Subsidiaries in the ordinary
course of business for bona fide business purposes of the Company and its
Subsidiaries (including travel and moving expenses) not in excess of $1,000,000
in the aggregate at any one time outstanding; (f) Investments in evidences of
Indebtedness, securities or other property received from another person by the
Company or any of its Subsidiaries in connection with any bankruptcy proceeding
or by reason of a composition or readjustment of debt or a reorganization of
such person or as a result of foreclosure, perfection or enforcement of any Lien
in exchange for evidences of Indebtedness, securities or other property of such
person held by the Company or any of its Subsidiaries, or for other liabilities
or obligations of such other person to the Company or any of its Subsidiaries
that were created in accordance with the terms of the Indenture; (g) Investments
in Interest Rate Protection Agreements on commercially reasonably terms entered
into by the Company or any of its Subsidiaries in the ordinary course of
business in connection with the operations of the business of the Company or its
Subsidiaries to hedge against fluctuations in interest rates; (h) non-cash
Investments by the Company or any Subsidiary made with respect to the licensing
of rights with respect to the Company's telecommunications technology, excluding
any Investment to be made through the contribution of Licenses in such markets
in any jurisdiction in which the Company or any of its Subsidiaries has any
license as of the date of the Indenture of the type described in clause (a) of
the definition of "Licenses," (i) the making of any Investment in any
Subsidiary, Unrestricted Subsidiary or Minority Interest, provided that at the
time of and after giving effect to any such Investment, the Fair Market Value
(measured at the time of each such Investment) of all such Investments made
after the date of the Indenture does not exceed the greater of $50,000,000 and
10% of the Total Market Value of Equity of the Company plus the cash proceeds
realized upon disposition of any Investment (or portion thereof) permitted by
this clause (i), (j) the making of any Investment in any Subsidiary,
Unrestricted Subsidiary or Minority Interest, in each case that is not
wholly-owned, to the extent that such Investment is funded entirely from Capital
Stock sold specifically to fund such Investment, (k) the contribution by the
Company to a newly-formed joint venture of the Capital Stock or the assets
(including, without limitation, Licenses) of a Subsidiary of the Company that
derives substantially all of its revenue outside of the United States and the
contribution to such joint venture of Indebtedness of such Subsidiary held by
the Company or any Subsidiary of the Company (provided, however, that the amount
of such Indebtedness shall not exceed an amount equal to the aggregate principal
amount of such Indebtedness held by the Company or any Subsidiary of the Company
on the date of the Indenture) in exchange for Capital Stock of such joint
venture, provided that, immediately prior to the contribution by the Company to
such joint venture of the Capital Stock or assets of any such Subsidiary, the
other party (or an entity that directly or indirectly controls such party) to
such joint venture shall have Total Market Capitalization of at least
$5,000,000,000, total revenues of at least $500,000,000 for its four most
recently completed fiscal quarters or shall be, or shall have been prior to its
privatization, a state-owned provider of voice telephony services, (l)
Investments in the Communications Products Group, after the date of the
Indenture in an aggregate amount not to exceed $5,000,000, (m) loans or advances
to directors, officers, employees, or consultants of the Company or of any of
its Subsidiaries to finance the exercise of options to purchase Capital Stock of
the Company, to the extent that such loans or advances are secured by the
Capital Stock underlying the options so exercised and such loans or advances are
required to be repaid out of the proceeds of the sale of any such Capital Stock,
(n) any amount deposited in trust prior to the execution and delivery of the
Indenture specifically for the purpose of defeasing the Defeased Notes, to the
extent necessary to defease the Defeased Notes and (o) Investments in the form
of Indebtedness permitted to be incurred by the Company or any of its
Subsidiaries pursuant to clause (d) or (e) of the second paragraph of the
covenant entitled "Limitation on Indebtedness." For purposes of determining
whether an Investment constitutes a Permitted Investment, in the event that an
Investment meets the criteria of more than one of the types of Permitted
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Investments described in the above clauses, the Company, in its sole discretion,
shall classify such Investment and only be required to include the amount and
type of such Permitted Investment in one of such clauses.
"Permitted Liens" means the following types of Liens:
(a) Liens for taxes, assessments or governmental charges or claims
either (i) not delinquent or (ii) contested in good faith by appropriate
proceedings and as to which the Company or any of its Subsidiaries shall have
set aside on its books such reserves as may be required pursuant to GAAP;
(b) statutory Liens of landlords and other Liens imposed by law and
Liens of carriers, warehousemen, mechanics, suppliers, materialmen and repairmen
incurred in the ordinary course of business for sums not yet delinquent or being
contested in good faith, if such reserve or other appropriate provision, if any,
as shall be required by GAAP shall have been made in respect thereof;
(c) Liens incurred or deposits made in the ordinary course of business
in connection with workers' compensation, unemployment insurance and other types
of social security, or to secure the performance of tenders, statutory
obligations, surety and appeal bonds, bids, leases, governmental contracts,
performance and return-of-money bonds and other similar obligations (exclusive
of obligations for the payment of borrowed money);
(d) judgment Liens not giving rise to an Event of Default if such
reserve or other appropriate provision, if any, as shall be required by GAAP
shall have been made in respect thereof and any appropriate legal proceedings
which may have been duly initiated for the review of such judgment shall not
have been finally terminated or the period within which such proceedings may be
initiated shall not have expired;
(e) easements, rights-of-way, zoning restrictions and other similar
charges or encumbrances in respect of real property not interfering in any
material respect with the ordinary conduct of the business of the Company or any
of its Subsidiaries;
(f) any interest or title of a lessor under any Capitalized Lease
Obligation or operating lease;
(g) Liens securing International Vendor Indebtedness; provided,
however, that (i) such International Vendor Indebtedness shall not be secured by
any property or assets of the Company or any Subsidiary of the Company other
than the Telecommunications Assets so constructed or acquired with such
International Vendor Indebtedness and (ii) the Lien securing such Indebtedness
either (A) exists at the time of such acquisition or construction or (B) shall
be created within 90 days thereof;
(h) Liens in favor of customs and revenue authorities arising as a
matter of law to secure payment of customs duties in connection with the
importation of goods;
(i) any Lien covering property or assets acquired by the Company from a
person other than a Subsidiary of the Company that secured Indebtedness of such
person assumed by the Company in connection with such acquisition, that exists
immediately prior to and is not incurred in anticipation of such acquisition and
that does not thereafter cover any other property or assets or secure any other
Indebtedness;
(j) Liens secured solely by Capital Stock of the Company or a
Subsidiary of the Company with respect to any Acquisition Put Obligation of the
Company, provided that such Lien is released when such Acquisition Put
Obligation is satisfied by payment by the Company or a Subsidiary in accordance
with its terms or terminates without any continuing obligation on the part of
the Company or any Subsidiary;
(k) Liens securing Indebtedness, other than Indebtedness that is
subordinated in right of payment to the Notes, in the aggregate principal amount
of up to $10,000,000 at any time outstanding, provided that such Indebtedness is
permitted to be incurred under the terms of the Indenture;
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(l) Liens securing Indebtedness of PowerSpectrum incurred in connection
with government sponsored programs, to the extent incurred by PowerSpectrum;
(m) Liens, to the extent that such liens do not cover any assets of the
Company other than the assets so financed and are created within 90 days after
the acquisition of the equipment to which the Lien relates, on equipment arising
with respect to Indebtedness incurred to purchase such equipment; and
(n) Liens on Collateral permitted pursuant to the Pledge Agreements.
"Permitted Pledge Agreement Indebtedness" means any of the following:
(a) Indebtedness permitted to be incurred pursuant to clauses (b), (c), (e),
(f), (g), (h) and (n) of the second paragraph of the "Limitation on
Indebtedness" covenant contained in the Indenture; (b) Indebtedness of a Pledged
Company owed to and held by the Company or another Pledged Company, to the
extent provided for in clause (d) of the "Limitation on Indebtedness" covenant
contained in the Indenture; (c) Indebtedness incurred to finance the
construction or acquisition of Telecommunications Assets to be utilized in
Germany in an aggregate amount not exceeding DM 15,000,000 at any time on or
prior to the second anniversary of the Indenture and, thereafter, DM 30,000,000;
(d) Indebtedness existing or incurred pursuant to lines of credit in existence
on the date of the Indenture; (e) Indebtedness of PowerSpectrum incurred in
connection with government sponsored programs, in an aggregate outstanding
amount at any time not exceeding $10,000,000; (f) Indebtedness incurred by a
joint venture contemplated by clause (k) of the definition of "Permitted
Investments"; and (g) Indebtedness incurred to finance the construction or
acquisition of Telecommunications Assets, to the extent used in connection with
the construction or operation of a digital network, to be utilized in the United
Kingdom in an aggregate amount at any time not exceeding (pound)8,000,000. For
purposes of determining whether Indebtedness constitutes Permitted Pledge
Agreement Indebtedness, in the event that Indebtedness meets the criteria of
more than one of the types of Permitted Pledge Agreement Indebtedness described
in the above clauses, the Company, in its sole discretion, shall classify such
Indebtedness and only be required to include the amount and type of such
Permitted Pledge Agreement Indebtedness in one of such clauses.
"Permitted Pledge Agreement Liens" shall mean (a) Liens permitted by
the "Limitation on Liens" covenant contained in the Indenture, other than Liens
permitted by clauses (iv), (v) and (vi) of the proviso thereto; (b) Liens
contemplated by clauses (iv) and (v) of the proviso to the "Limitation on Liens"
covenant contained in the Indenture, except that references therein to the
Indenture shall be deemed, for purposes of the Pledge Agreements, to refer only
to the Pledge Agreements and references therein to Subsidiaries shall be deemed,
for purposes of the Pledge Agreements, to refer only to the Pledged Companies;
(c) Liens contemplated by clauses (a), (b), (c), (d), (e), (f), (g), (h), (j),
(l), (m) and (n) of the definition of "Permitted Liens" contained in the
Indenture; and (d) Liens contemplated by clause (i) of the definition of
"Permitted Liens" contained in the Indenture, to the extent incurred by a
Pledged Company, to the extent that such property or assets are first
transferred to such Pledged Company.
"person" means any individual, corporation, limited liability company,
partnership, joint venture, association, joint-stock company, trust, charitable
foundation, unincorporated organization, government or any agency or political
subdivision thereof or any other entity.
"Pledged Companies" means (a) NB3, (b) all of the Company's
subsidiaries that, on the date of the Pledge Agreement, directly or indirectly
hold U.S. 900 MHz licenses, including, without limitation, PSI, (c) Geotek
Germany, (d) all of the Company's subsidiaries that own the Company's indirect
interest in Bogen, including, without limitation, USI Venture Corp., Geotek
Subsidiary Industries and Geotek Acquisition Corp., (e) EGAC and (f) any
subsidiary, the Capital Stock of which is required to be pledged as security for
the Notes pursuant to the covenant contained in the Pledge Agreements described
under "Additional Subsidiary Pledges."
"Preferred Stock" means, as applied to the Capital Stock of any person,
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.
"Qualified GEONET Subscriber" means a user of GEONET services who
generates at least $28.00 in monthly billings for the two most recently
completed consecutive billing months.
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"Redeemable Capital Stock" means any shares of any class or series of
Capital Stock (other than Preferred Stock of the Company outstanding on the date
of the Indenture), that, either by the terms thereof, by the terms of any
security into which it is convertible or exchangeable or by contract or
otherwise, is, or upon the happening of an event or passage of time would be,
required to be redeemed for cash or other assets (other than Capital Stock)
prior to the Stated Maturity with respect to the principal of any Note or is
redeemable at the option of the holder thereof at any time prior to any such
Stated Maturity, or is convertible into or exchangeable for debt securities at
any time prior to any such Stated Maturity; provided, however, that any Capital
Stock that would not constitute Redeemable Capital Stock but for provisions
thereof giving holders thereof the right to require the Company to repurchase or
redeem such Capital Stock upon the occurrence of a change in control or an event
of default occurring prior to the final maturity of the Notes shall not
constitute Redeemable Capital Stock if such Capital Stock specifically provides
that the Company will not repurchase or redeem any such stock pursuant to such
provisions prior to the Company's repurchase of the Notes as are required to be
purchased under "Change of Control" above or the Company's payment of the Notes
as may be required under "- Events of Default."
"Sale-Leaseback Transaction" means, with respect to any person, an
arrangement with any lender or investor or to which such lender or investor is a
party providing for the leasing by such person of any property or asset of such
person which has been or is being sold or transferred by such person after the
acquisition thereof or the completion of construction or commencement of
operation thereof to such lender or investor or to any person to whom funds have
been or are to be advanced by such lender or investor on the security of such
property or asset. The stated maturity of such arrangement shall be the date of
the last payment of rent or any other amount due under such arrangement prior to
the first date on which such arrangement may be terminated by the lessee without
payment of a penalty.
"Securities Act" means the Securities Act of 1933, as amended.
"Significant Subsidiary" shall have the same meaning as in Rule 1.02(v)
of Regulation S-X under the Securities Act.
"S&P" means Standard & Poor's Corporation and its successors.
"SMR" means a mobile radio communications system that is operated as
described in this Offering Memorandum.
"Specified Date" means, with respect to a given calculation of Accreted
Value, the date as of which such calculation is made.
"Stated Maturity" means, when used with respect to any Note or any
installment of interest thereon, the date specified in such Note as the fixed
date on which the principal of such Note or such installment of interest is due
and payable, and when used with respect to any other Indebtedness, means the
date specified in the instrument governing such Indebtedness as the fixed date
on which the principal of such Indebtedness, or any installment of interest
thereon, is due and payable.
"Strategic Equity Investor" means, with respect to any sale of the
Company's Capital Stock, any person engaged in the telecommunications business
which, both as of the Trading Day immediately before the day of such sale and
immediately after the Trading Day of such sale, has a Total Market
Capitalization of at least $5,000,000,000 or any Subsidiary of any such person.
In calculating Total Market Capitalization for the purpose of this definition,
the consolidated Indebtedness of such person, solely when calculated as of the
Trading Day immediately after the day of such sale, will be calculated after
giving effect to such sale (including any Indebtedness incurred in connection
with such sale) and the Closing Price of the Common Stock of such person, solely
when calculated as of the Trading Date immediately after the day of such sale,
will be deemed to be the Closing Price of such Common Stock on such succeeding
Trading Day, subject to the last sentence of the definition of "Total Market
Capitalization."
"Subsidiary" means, with respect to any person, a corporation 50% or
more of whose Voting Stock is at the time, directly or indirectly, owned by such
person, by one or more Subsidiaries of such person or by such person and one or
more Subsidiaries thereof and over which such person exercises control, directly
or indirectly, through one or more Subsidiaries. For purposes of this
definition, any directors' qualifying shares or investments by foreign nationals
mandated by applicable law shall be disregarded in determining the ownership of
a Subsidiary. Notwithstanding the foregoing, an Unrestricted Subsidiary shall
not be deemed a Subsidiary of the Company under the Indenture, other than for
purposes of the definition of an "Unrestricted Subsidiary" and the definition of
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"Communications Products Group," unless the Company shall have designated an
Unrestricted Subsidiary as a "Subsidiary" by written notice to the Trustee under
the Indenture, accompanied by an Officers' Certificate as to compliance with the
Indenture; provided, however, that the Company shall not be permitted to
designate any Unrestricted Subsidiary as a Subsidiary unless, after giving pro
forma effect to such designation, (a) the Company would be permitted to incur
$1.00 of additional Indebtedness (other than Indebtedness permitted to be
incurred under clauses (a) through (n) of the second paragraph of the covenant
described under " - Certain Covenants - Limitation on Indebtedness" above) under
clauses (a) and (b) of the first paragraph of the covenant described under "-
Certain Covenants - Limitation on Indebtedness" above (assuming a market rate of
interest with respect to such Indebtedness) and (b) all Indebtedness and Liens
of such Unrestricted Subsidiary would be permitted to be incurred by a
Subsidiary of the Company under the Indenture. A designation of an Unrestricted
Subsidiary as a Subsidiary may not thereafter be rescinded.
"Telecommunications Assets" means, with respect to any person, any
tangible or intangible asset (including, without limitation, subscriber units)
that is utilized by such person, directly or indirectly, for the design,
development, installation, integration, management or provision of
telecommunications systems and/or services, including, without limitation, any
business or services in which the Company currently is engaged.
"Total Common Equity" of any person means, as of any day of
determination (and as modified for purposes of the definition of "Change of
Control"), the product of (a) the aggregate number of outstanding primary shares
of Common Stock of such person on such day (which shall not include any options
or warrants on, or securities convertible or exchangeable into, shares of Common
Stock of such person) and (b) the average Closing Price of such Common Stock
over the 20 consecutive Trading Days immediately preceding such day. If no such
Closing Price exists with respect to shares of any such class, the value of such
shares for purposes of clause (b) of the preceding sentence shall be determined
by the Board of Directors of the Company in good faith and evidenced by a
written opinion as to such value issued by an investment banking firm of
recognized national standing.
"Total Market Capitalization" of any person means, as of any day of
determination, the sum of (a) the consolidated Indebtedness of such person and
its Subsidiaries on such day, plus (b) the product of (i) the aggregate number
of outstanding primary shares of Common Stock of such person on such day (which
shall not include any options or warrants on, or securities convertible or
exchangeable into, shares of Common Stock of such person other than, in the case
of the Company, any shares of Preferred Stock of the Company, that, as of the
day of determination, cannot, pursuant to the terms thereof as in effect on the
date of the Indenture, be required to be redeemed by the Company in cash), and
(ii) the average Closing Price of such Common Stock over the 20 consecutive
Trading Days immediately preceding such day, plus (c) the liquidation value of
any outstanding shares of Preferred Stock of such person on such day. If no such
Closing Price exists with respect to shares of any such class, the value of such
shares for purposes of clause (b) for the preceding sentence shall be determined
by the Company's Board of Directors in good faith and evidenced by a written
opinion as to such value issued by an investment banking firm of recognized
national standing.
"Total Market Value of Equity" of any person means, as of any day of
determination, the sum of (a) the product of (i) the aggregate number of
outstanding primary shares of Common Stock of such person (which shall not
include any options or warrants on, or securities convertible or exchangeable
into, shares of Common Stock of such person) and (ii) the average Closing Price
of such Common Stock over the 20 consecutive Trading Days immediately preceding
such day, plus (b) the liquidation value of any outstanding shares of Preferred
Stock of such person on such day. If no such Closing Price exists with respect
to shares of any such class, the value of such shares for purposes of clause (a)
of the preceding sentence shall be determined by the Board of Directors of the
Company in good faith and evidenced by a written opinion as to such value issued
by an investment banking firm of recognized national standing.
"Trading Day" means, with respect to a securities exchange or automated
quotation system, a day on which such exchange or system is open for a full day
of trading.
"Unrestricted Subsidiary" means a Subsidiary of the Company (a) that is
a Subsidiary in the Company's Communications Products Group or (b) (i) none of
whose properties or assets were owned by the Company or any of its Subsidiaries
prior to the Initial Issue Date, other than any such assets as are transferred
to such Unrestricted Subsidiary in accordance with the covenant described under
"- Certain Covenants - Limitation on Restricted Payments," (ii) whose properties
and assets, to the extent that they secure Indebtedness, secure only
Non-Recourse Indebtedness and (iii) which has no Indebtedness other than
Non-Recourse Indebtedness. As used above, "Non- Recourse Indebtedness" means
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Indebtedness as to which (a) neither the Company nor any of its Subsidiaries
(other than the relevant Unrestricted Subsidiary or another Unrestricted
Subsidiary) (i) provides credit support (including any undertaking, agreement or
instrument which would constitute Indebtedness), (ii) guarantees or is otherwise
directly or indirectly liable or (iii) constitutes the lender (in each case,
other than pursuant to and in compliance with the covenant described under "-
Certain Covenants - Limitation on Restricted Payments") and (b) no default with
respect to such Indebtedness (including any rights which the holders thereof may
have to take enforcement action against the relevant Unrestricted Subsidiary or
its assets) would permit (upon notice, lapse of time or both) any holder of any
other Indebtedness of the Company or its Subsidiaries (other than Unrestricted
Subsidiaries) to declare a default on such other Indebtedness or cause the
payment thereof to be accelerated or payable prior to its stated maturity.
"Voting Stock" means any class or classes of Capital Stock pursuant to
which the holders thereof have the general voting power under ordinary
circumstances to elect a least a majority of the board of directors, managers or
trustees of any person (irrespective of whether or not, at the time, Capital
Stock of any other class or classes shall have, or might have, voting power by
reason of the happening of any contingency).
"Wholly-Owned Subsidiary" means any Subsidiary of the Company of which
100% of the outstanding Capital Stock is owned by the Company, one or more
Wholly-Owned Subsidiaries of the Company or by the Company and one or more
Wholly-Owned Subsidiaries of the Company. For purposes of this definition, any
directors' qualifying shares or investments by foreign nationals mandated by
applicable law shall be disregarded in determining the ownership of a
Subsidiary. For purposes of clause (a) of the definition of "Permitted
Investments," PowerSpectrum shall be deemed to be a Wholly-Owned Subsidiary of
the Company for so long as PowerSpectrum shall be a Subsidiary of the Company
and for so long as PowerSpectrum shall not materially engage in a line of
business other than (i) the line of business in which it is engaged on the date
of the Indenture or (ii) a line of business involving exploitation of FHMA
technology.
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CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following summary of certain federal income tax considerations
represents the opinion of Klehr, Harrison, Harvey, Branzburg & Ellers, counsel
to the Company, as to the material federal income tax consequences to Eligible
Holders who exchange Initial Notes for Exchange Notes ("Holders") pursuant to
the Exchange Offer and of the ownership and disposition of the Exchange Notes. A
ruling from the Internal Revenue Service (the "IRS") on the matters discussed
below has not been requested. An opinion of counsel represents only such
counsel's best legal judgment and does not bind the IRS or the courts. Thus, no
assurance can be provided that the statements set forth herein would be
sustained by a court if contested by the IRS. The costs of any contest with the
IRS will be borne directly by each Holder or prospective Holder. Moreover, there
can be no assurance that any of the statements made below will not be
significantly modified by future legislative or administrative changes or court
decisions. Any such modifications may be or may not be retroactively applied.
The following discussion is based upon laws, including the Internal
Revenue Code of 1986, as amended (the "Code"), regulations promulgated and
proposed thereunder, administrative rulings and judicial decisions in effect as
of the date hereof, all of which are subject to change possibly with retroactive
effect. The following discussion does not consider all aspects of federal income
taxation that may be relevant to a Holder's particular circumstances or to
certain types of Holders subject to special treatment under the federal income
tax laws (for example, dealers in securities, banks, tax-exempt organizations,
insurance companies, foreign corporations and non-resident alien individuals),
nor does it address the consequences to a holder under state, local or foreign
tax laws.
EACH PROSPECTIVE HOLDER SHOULD CONSULT HIS, HER OR ITS OWN TAX ADVISOR
WITH RESPECT TO THE PARTICULAR TAX CONSEQUENCES TO HIM, HER OR IT OF HOLDING AND
DISPOSING OF THE EXCHANGE NOTES, INCLUDING THE APPLICABILITY AND EFFECT OF
FEDERAL, STATE, LOCAL AND FOREIGN TAX LAWS AND OF CHANGES IN APPLICABLE TAX
LAWS.
Exchange Offer
The exchange of Initial Notes for Exchange Notes pursuant to the
Exchange Offer (the "Exchange") should not constitute a material modification of
the terms of the Initial Notes and, accordingly, such exchange should not
constitute an "exchange" for federal income tax purposes. Accordingly, each
Exchange Note should be viewed as a continuation of the corresponding Initial
Note, the issuance of the Exchange Notes should be disregarded, and an Eligible
Holder exchanging an Initial Note for an Exchange Note (as well as a
non-exchanging Eligible Holder) should not recognize any gain or loss as a
result of the Exchange or the Exchange Offer. Except as set forth in the next
paragraph, the balance of this discussion assumes that the Exchange will not
constitute an "exchange" for federal income tax purposes.
If, contrary to the above conclusion, the Exchange constitutes an
"exchange" for federal income tax purposes, the federal income tax consequences
of the Exchange depend primarily on whether the Exchange constitutes a
"recapitalization" under the Code. The determination of whether the Exchange
will constitute a recapitalization for federal income tax purposes depends upon
whether the Initial Notes and Exchange Notes are "securities" for federal income
tax purposes. The term "security" is not defined in the Code or in the
regulations, and has not been clearly defined by judicial decisions. One of the
most significant factors considered in determining whether a particular debt
issue is a "security" is the original term thereof. In general, the longer the
term of an instrument, the greater the likelihood that it will be considered a
"security." The Company's view is that the Initial Notes and Exchange Notes will
be treated as "securities" for federal income tax purposes. Accordingly, the
Exchange should constitute a recapitalization for federal income tax purposes.
Eligible Holders exchanging Initial Notes for Exchange Notes pursuant to such a
recapitalization should not recognize any gain or loss upon the Exchange. If the
Initial Notes or Exchange Notes did not constitute securities, a Holder would
realize gain or loss for federal income tax purposes in an amount equal to the
difference between (i) the issue price of the Exchange Notes determined on the
date of the Exchange and (ii) the Holder's adjusted tax basis in the Initial
Notes exchanged therefor. Subject to the discussions below under "-Market
Discount," (a) gain or loss, if any, recognized by a Holder on the Exchange
generally would be short-term capital gain or loss (if the Initial Notes were
held as capital assets), (b) a Holder's initial tax basis in the Exchange Notes
would be equal to their issue price and (c) a Holder's holding period for the
Exchange Notes would begin on the day after the date of Exchange. In each case,
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a Holder would be required to include original issue discount in gross income
for federal income tax purposes based on the issue price of the Exchange Notes
determined on the date of the Exchange, which could be more or less than the
amount of original issue discount to be included in income in respect of the
Initial Notes.
Original Issue Discount
As discussed under "Certain Federal Income Tax Considerations -
Exchange Offer," the Exchange Notes should be viewed as a continuation of the
Initial Notes. Therefore, any Original Issue Discount ("OID") attributable to
the Initial Notes should carry over to the Exchanges Notes. In general, OID on a
debt instrument is equal to the excess of (i) its "stated redemption price at
maturity over (ii) its "issue price." In the case of the Initial Notes, the
stated redemption price at maturity is equal to the sum of all payments to be
made on the Initial Notes, regardless of whether denominated as interest or
principal. The Company has determined that the original issue price of each
Initial Note was $342.09 per $1,000 principal amount. Accordingly, the OID on
each Initial Note, which carries over to each Exchange Note, is equal to the
excess of (x) the sum of the principal amount and all stated interest payments
over (y) the issue price of $342.09.
A Holder generally will be required to include OID in income
periodically over the term of such Exchange Note before receipt of the cash
attributable to such income. In general, a Holder must include in gross income
for Federal income tax purposes the sum of the daily portions of OID with
respect to the Exchange Note for each day during the taxable year or portion of
a taxable year on which such Holder holds the Exchange Note ("Accrued OID"). The
daily portion is determined by allocating to each day of any accrual period
within a taxable year a pro rata portion of an amount equal to the adjusted
issue price of the Exchange Note at the beginning of the accrual period
multiplied by the yield to maturity of the Exchange Note.
A Holder may make an election to include in gross income all interest
that accrues on an Exchange Note (including stated interest, acquisition
discount, OID, de minimis OID, market discount, de minimis market discount, and
unstated interest, as adjusted by any amortizable bond premium or acquisition
premium) in accordance with a constant yield method calculated by treating the
Exchange Note as being issued on the Holder's acquisition date at an issue price
equal to the Holder's adjusted basis in the Exchange Note immediately after its
acquisition.
Acquisition Premium. If a person purchases an Exchange Note at a price
in excess of its adjusted issue price (i.e., the issue price of the Exchange
Notes plus all accrued OID with respect to the instrument) at the time of
acquisition ("Acquisition Premium"), such purchaser may be entitled to a
reduction in the amount of any OID includible in such purchaser's income for
such Acquisition Premium.
Tax Basis
Generally, a Holder's tax basis in Exchange Notes will be increased by
the amount of OID, if any, that is included in the Holder's income pursuant to
the foregoing rules through the day preceding the date of disposition and will
be decreased by the amount of any cash payments received by the Holder.
Sale, Exchange or Redemption of Exchange Notes
Upon the sale, redemption or other disposition of an Exchange Note, a
Holder will recognize gain or loss equal to the difference between the amount of
sale or redemption proceeds and the Holder's adjusted tax basis in the Exchange
Note. Generally, and subject to the discussion under "-Market Discount" below,
any gain or loss recognized by a Holder of an Exchange Note upon a sale,
redemption or other disposition of the Exchange Note would be capital gain or
loss (if the Exchange Notes were held as capital assets) and would be long-term
capital gain or loss if the Holder's holding period in such Exchange Note
exceeds one year.
Market Discount
"Market discount" in the case of a debt obligation having OID is
defined generally as the excess, if any, of (i) the "revised issue price"
(defined as the sum of the issue price of the obligation plus the aggregate
amount of the OID includible, if any, without regard to the rules for
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acquisition premium, in the gross income of all previous holders of the
obligation) of a debt obligation over (ii) the tax basis of the debt obligation
in the hands of the holder immediately after its acquisition. An Exchange Note
held by a Holder who acquired the Initial Note at the original issuance will not
have market discount. In addition, under a de minimis exception, there is no
market discount if the excess of the revised issue price of the obligation over
the holder's tax basis therein is less than 0.25% of the revised issue price
multiplied by the number of complete years to maturity after the acquisition
date. Market discount generally will accrue ratably during the period from the
date of the acquisition to the maturity date unless the holder elects, which
election is irrevocable, to accrue such discount on the basis of the constant
interest method.
In general, and subject to the de minimis exception, gain recognized
upon the disposition of an Exchange Note having accrued market discount
(including accrued market discount, if any, carried over thereto from the
Initial Note) would be treated as ordinary income and not capital gain to the
extent of accrued market discount. A holder of an Exchange Note having market
discount also may be required to defer the deduction of all or a portion of the
interest on any indebtedness incurred or maintained to purchase or carry the
Exchange Note until it is disposed of in a taxable transaction.
A holder of an Exchange Note having market discount may elect to
include market discount in income as it accrues, in which case the foregoing
rules would not apply. The election would apply to all market discount bonds
acquired by the electing holder on or after the first day of the first taxable
year to which the election applies. The election may be revoked only with the
consent of the IRS.
Certain Federal Income Tax Consequences to the Company and to Corporate
Holders. The Initial Notes constitute "applicable high yield discount
obligations" ("AHYDOs") and, because the Exchange Notes should be viewed as a
continuation of the Initial Notes, the Exchange Notes will constitute AHYDOs. As
a result, a portion of the tax deductions with respect to original issue
discount that otherwise would be available to the Company in respect of the
Exchange Notes will be deferred and a portion will be permanently disallowed,
which, in turn, may reduce the after-tax cash flows of the Company. The Initial
Notes constitute AHYDOs because (i) the yield to maturity of such Initial Notes,
which the Company has determined to be 19.335%, is equal to or greater than the
sum of the relevant long-term applicable federal rate (the "AFR") in the month
of issue (which is 6.65% compounded semi-annually for July 1995, assuming a
weighted average maturity of the Exchange Notes in excess of nine years), plus
five percentage points, and (ii) the Initial Notes are issued with "significant
OID." A debt instrument is issued with "significant OID" if the aggregate amount
includible in income of a holder in respect of such instrument before the close
of any accrual period ending after the fifth anniversary of its issuance exceeds
the sum of (a) the aggregate amount of interest to be paid under the instrument
before such date and (b) the product of the issue price of the such instrument
and its yield to maturity.
Under the AHYDO rules, the Company will not be entitled to deduct OID
that accrues with respect to the Exchange Notes until amounts attributable to
OID are paid in cash or property (other than stock or debt instruments of the
Company or of a related party). In addition, because the yield to maturity of
the Exchange Notes exceeds the sum of the relevant AFR plus six percentage
points (the "Excess Yield"), the "disqualified portion" of the OID accruing on
the Exchange Notes will be permanently non-deductible. In general, the
"disqualified portion" of OID for any accrual period is equal to the product of
(i) a percentage determined by dividing the Excess Yield by the yield to
maturity and (ii) the OID for the accrual period. Subject to otherwise
applicable limitations, a corporate Holder generally will be entitled to a 70%
dividends received deduction with respect to the disqualified portion of the
accrued OID if the Company has sufficient current or accumulated earnings and
profits. To the extent that the Company's earnings and profits are insufficient,
any portion of the OID that otherwise would have been recharacterized as a
dividend for purposes of the dividends received deduction will continue to be
treated as interest income.
Backup Withholding
A Holder may be subject, under certain circumstances, to backup
withholding at the rate of 31% with respect to amounts received on the Exchange
Notes, unless such Holder (a) is a corporation or comes within certain other
exempt categories and, when required, demonstrates this fact or (b) provides a
correct taxpayer identification number, certifies as to not having lost his, her
or its exemption from backup withholding and otherwise complies with applicable
requirements of the backup withholding rules. A Holder who does not provide the
Company with its correct taxpayer identification number may be subject to
penalties imposed by the IRS. Any amount withheld from a payment under the
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backup withholding rules is allowable as a credit against the holder's federal
income tax liability.
PLAN OF DISTRIBUTION
Each broker-dealer that receives Exchange Notes that were acquired for
its own account in exchange for Initial Notes that were acquired by such
broker-dealer as a result of market-making or other trading activities (other
than Initial Notes acquired directly from the Company), may exchange the Initial
Notes for Exchange Notes in the Exchange Offer. However, any such broker-dealer
may be deemed to be an "underwriter" within the meaning of such term under the
Securities Act and must, therefore, acknowledge that it will deliver a
prospectus in connection with any resale of Exchange Notes received in the
Exchange Offer. This prospectus delivery requirement may be satisfied by the
delivery by such broker-dealer of the Prospectus, as it may be amended or
supplemented from time to time. The Company has agreed that, for a period of one
year after the last Exchange date, it will make this Prospectus as amended or
supplemented, available to any broker-dealer for use in connection with any such
sale.
The Company will not receive any proceeds from any sales of Exchange
Notes by broker-dealers. Any resale of Exchange Notes by broker-dealers may be
made directly to purchasers or to or through brokers or dealers who may receive
compensation in the form of commissions or concessions from any such
broker-dealer and/or the purchasers of any such Exchange Notes. Any
broker-dealer that resells Exchange 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 Exchange Notes may be deemed to be an
"underwriter" within the meaning of the Securities Act and any profit on any
such resale of Exchange 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.
For a period of one year after the last Exchange Date, the Company will
promptly send additional copies of this Prospectus and any amendment or
supplement of this Prospectus to any broker-dealer that requests such documents
in the Letter of Transmittal. The Company has agreed to pay all expenses
incident to the Exchange Offer other than commissions or concessions of any
brokers or dealers and will indemnify the holders of the Initial Notes
(including any broker-dealers) against certain liabilities, including
liabilities under the Securities Act.
LEGAL MATTERS
The validity of the Exchange Notes and the Indenture will be passed
upon for the Company by Klehr, Harrison, Harvey, Branzburg & Ellers,
Philadelphia, Pennsylvania. Klehr, Harrison, Harvey, Branzburg & Ellers may rely
as to matters of New York law upon the opinion of Andrew Siegel, Esquire,
General Counsel and Secretary of the Company. Klehr, Harrison, Harvey, Branzburg
& Ellers and certain members thereof, beneficially own, in the aggregate,
155,363 shares of common stock of the Company.
EXPERTS
The consolidated balance sheets of the Company as of December 31, 1994
and 1993 and the consolidated statements of operations, shareholders' equity,
and cash flows for each of the three years in the period ended December 31,
1994, incorporated by reference in this Prospectus, have been incorporated by
reference herein in reliance on the report of Coopers & Lybrand L.L.P.,
independent accountants, given on the authority of that firm as experts in
accounting and auditing.
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===============================================================================
All tendered Initial Notes, executed Letters of Transmittal and other
related documents should be directed to the Exchange Agent. Questions and
requests for assistance and requests for additional copies of the Prospectus,
the Letter of Transmittal and other related documents should be addressed to the
Exchange Agent as follows:
By Mail:
IBJ Schroder Bank & Trust Company
P.O. Box 84
Bowling Green Station
New York, New York 10274-0084
Attention: Reorganization Operations Department
By Hand:
IBJ Schroder Bank & Trust Company
One State Street
New York, New York 10274-0084
Attention: Securities Processing Window, Subcellar One, (SC-1)
By Overnight Courier:
IBJ Schroder Bank & Trust Company
One State Street
New York, New York 10274-0084
Attention: Securities Processing Window, Subcellar One, (SC-1)
By Facsimile:
(212) 858-2611
To confirm Facsimile Transmission call:
(212) 858-2103
(Originals of all documents submitted by facsimile should be sent promptly by
hand, overnight courier, or registered or certified mail).
No person has been authorized to give any information or to make any
representations other than those contained in this Prospectus and the
accompanying Letter of Transmittal, and, if given or made, such information or
representation must not be relied upon as having been authorized. Neither this
Prospectus nor the accompanying Letter of Transmittal nor both together
constitute an offer to sell or the solicitation of an offer to buy any
securities other than the securities to which the Prospectus relates or an offer
to sell or the solicitation of an offer to buy such securities in any
circumstances in which such offer or solicitation is unlawful. Neither the
delivery of this Prospectus or the Letter of Transmittal or both together nor
any exchange made hereunder shall, under any circumstances, create any
implication that there has been no change in the affairs of the Company since
the date hereof or that the information contained herein is correct as of
anytime subsequent to its date.
Until _____ __, 1995 all dealers effecting transactions in the Exchange
Notes, whether or not participating in this offering, may be required to deliver
a Prospectus.
-------------------
TABLE OF CONTENTS
-------------------
Available Information ...................................................... 4
Incorporation of Certain Information by Reference .......................... 5
The Company ................................................................ 6
Summary .................................................................... 8
Risk Factors ............................................................... 14
Selected Historical and Pro Forma Consolidated Financial Data .............. 25
The Exchange Offer ......................................................... 27
Description of Exchange Notes .............................................. 35
Certain Federal Income Tax Considerations .................................. 66
Plan of Distribution ....................................................... 69
Legal Matters .............................................................. 69
Experts .................................................................... 69
================================================================================
<PAGE>
===============================================================================
Offer to Exchange
all outstanding
15% Series A Senior Secured
Discount Notes
due 2005
($227,700,000 aggregate
principal amount at maturity)
for
15% Series B Senior Secured
Discount
Notes due 2005
($227,700,000 aggregate
principal amount at maturity)
of
GEOTEK
COMMUNICATIONS, INC.
--------------------
PROSPECTUS
--------------------
Dated: ____________ __, 1995
===============================================================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
Item 20. Indemnification of Directors and Officers.
A. The Delaware Corporation Law provides that, to the extent that any
director, officer, employee or agent of the Company has been successful on the
merits or otherwise in defense of any action, suit or proceeding, whether civil,
criminal, administrative or investigative (including an action by or in the
right of the Company) which he was a party to by reason of the fact that he is
or was a director, officer, employee or agent of the Company or is or was
serving at the request of the Company as a director, officer, employee or agent
of another corporation, partnership, joint venture, trust or other enterprise,
the Company shall indemnify any such person against expenses (including
attorneys' fees) actually and reasonably incurred by him in connection
therewith.
B. In addition, the Company has the power to indemnify any of the
persons referred to above in connection with any such actions against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred in connection with any such actions, suit or
proceeding, if such person acted in good faith and in a manner he reasonably
believed to be or not opposed to the best interests of the Company, and, with
respect to any criminal action or proceeding, had no reasonable cause to believe
his conduct was unlawful.
Notwithstanding the foregoing, in connection with any action or suit by
or in the right of the Company to procure a judgment in its favor, the Company
shall not make any indemnification as described above in respect of any claim,
issue or matter as to which such person shall have been adjudged to be liable to
the Company unless or only to the extent that the Court of Chancery (in the
State of Delaware) or the court in which such action or suit was brought shall
determine, upon application, that, despite 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 which the Court of Chancery or such
other court shall deem proper.
C. The Company also has the power, under the Delaware Corporation Law,
to purchase and maintain insurance on behalf of any person who is or was a
director, officer, employee or agent of the Company, or is or was serving at the
request of the Company as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against any
other liability asserted against him and incurred by him in any such capacity,
or arising out of his status as such, whether or not the Company would have the
power to indemnify him against such liability under the provisions of this
Section.
D. The indemnification provided by or allowable pursuant to the
Delaware Corporation Law shall or may, as applicable, continue as to a person
who has ceased to be a director, officer, employee or agent of the Company and
shall inure to the benefit of the heirs, executors and administrators of such a
person.
Item 21. Exhibits and Financial Statement Schedules.
(a) Schedule of Exhibits.
Exhibit
Number Exhibit
------ -------
4.1 Indenture dated as of June 30, 1995 by and between the Company
and the Trustee (the "Indenture"). (1)
4.2 Form of Series B Senior Secured Discount Note to be issued
pursuant to the Indenture is included as an exhibit to the
Indenture.
4.3 Supplemental Indenture dated August 28, 1995 by and between the
Company and the Trustee.
4.4 Pledge Agreement dated July 6, 1995 by and between the Company
and the Trustee. (1)
4.5 Charge Over Shares dated July 6, 1995 by and between the
Company and the Trustee. (1)
4.6 Share Transfer Agreement dated July 6, 1995 by and between the
Company and the Trustee. (1)
4.7 Notes Registration Rights Agreement dated July 6, 1995 by and
between the Company and Smith Barney, Inc. (1)
*5 Opinion and consent of Klehr, Harrison, Harvey, Branzburg &
Ellers.
II-1
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*8 The opinion of Klehr, Harrison, Harvey, Branzburg & Ellers with
respect to tax matters is included in its opinion filed as
Exhibit 5 to this Registration Statement.
12 Statements re: Computation of ratios.
23.1 Consent of Coopers & Lybrand L.L.P. - Geotek Communications,
Inc.
23.2 Consent of Shachak & Co. - PowerSpectrum Technology Ltd.
Consent of Shachak & Co. - Oram Power Supplies (1990) Ltd.
Consent of Shachak & Co. - Oram Electric Industries Ltd.
23.3 Consent of Touche Ross & Co. - National Band Three Limited and
predecessor companies
23.4 Consent of KPMG - Band Three Radio Limited
23.5 Consent of Coopers & Lybrand GmbH - Preussag Bundelfunk GmbH
23.6 Consent of Dusseldorfer Treuhand-Gesellschaft Altenburg & Tewes
AG - DBF Bundelfunk GmbH & Co. Betriebs-KG.
*23.7 The consent of Klehr, Harrison, Harvey, Branzburg & Ellers to
all references made to them in the Prospectus contained in this
Registration Statement is included in its opinion filed as
Exhibit 5 to this Registration Statement.
24 The powers of attorney contained on the signature pages of this
Registration Statement are hereby incorporated by reference.
25 Statement of Eligibility and Qualification under the Trust
Indenture Act of 1939 on Form T-1.
99 Form of Letter of Transmittal.
------------------------
*To be filed by amendment.
(1) Incorporated by reference from the Company's Current Report on Form
8-K filed on July 18, 1995.
(c) Financial Data Schedules.
The following financial data schedule is incorporated by reference from
the Company's Annual Report on Form 10-K for the year ended December 31, 1994:
Schedule II Valuation and Qualifying Accounts
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;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the registration
statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
II-2
<PAGE>
(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 to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 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 the 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 the registration statement when it became effective.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
For purposes of determining any liability under the Securities Act of
1933, each filing of the registrant's annual report pursuant to Section 13(a) or
15(d) of the Securities Exchange Act of 1934 that is incorporated by reference
in this registration statement shall be deemed to be a new registration
statement relating to the securities offered herein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
II-3
<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 Montvale, New
Jersey, on August 31, 1995.
GEOTEK COMMUNICATIONS, INC.
By: /s/ Yaron I. Eitan
----------------------------
Yaron I. Eitan
President, Chief Executive Officer
and Director
KNOW ALL MEN BY THESE PRESENTS, that each person whose
signature appears below hereby constitutes and appoints Yaron Eitan, President,
and Yoram Bibring, Executive Vice President, and each of them, his true and
lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any or all amendments, including any 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 Exchange Commission, granting unto said attorneys-in-fact and agents,
and each of them, full power and authority to do and perform each and every act
and thing requisite and necessary to be done in and about the above premises, as
fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents or either of
them or his substitute or substitutes, may lawfully do or cause to be done by
virtue hereof.
This Power of Attorney may be executed in multiple
counterparts, each of which shall be deemed an original, but which taken
together shall constitute one instrument.
Pursuant to the requirements of the Securities Act of 1933,
this Registration Statement has been duly signed below by the following persons
in the capacities indicated on August 31, 1995.
Signatures Title
---------- -----
/s/ Winston J. Churchill Chairman of the Board;
-------------------------- Director
Winston J. Churchill
/s/ Yaron I. Eitan President and Chief
-------------------------- Executive Officer (Principal
Yaron I. Eitan Executive Officer); Director
/s/ Walter E. Auch Director
--------------------------
Walter E. Auch
/s/ George Calhoun Director
--------------------------
George Calhoun
<PAGE>
Signatures Title
---------- -----
/s/ Purnendu Chatterjee Director
--------------------------
Purnendu Chatterjee
/s/ Haynes G. Griffin Director
--------------------------
Haynes G. Griffin
/s/ Richard Krants Director
--------------------------
Richard Krants
/s/ Richard T. Liebhaber Director
--------------------------
Richard T. Liebhaber
/s/ Haim Rosen Director
--------------------------
Haim Rosen
/s/ Kevin W. Sharer Director
--------------------------
Kevin W. Sharer
/s/ William Spier Director
--------------------------
William Spier
/s/ Michael McCoy Chief Financial Officer
-------------------------- (Principal Financial Officer)
Michael McCoy
/s/ Michael Carus Chief Accounting Officer
-------------------------- (Principal Accounting
Michael Carus Officer
<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 Montvale, New Jersey,
on August 31, 1995.
CLW COMMUNICATIONS, INC.
CUMULOUS HOLDING CORP., INC.
METRO NET SYSTEMS, INC.
MOBILE MESSAGE SERVICE OF TEXAS, INC.
OAK HILL COMMUNICATIONS, INC.
POWERSPECTRUM, INC.
POWERSPECTRUM OF ATLANTA, INC.
POWERSPECTRUM OF BOSTON, INC.
POWERSPECTRUM OF BUFFALO, INC.
POWERSPECTRUM OF CHARLOTTE, INC.
POWERSPECTRUM OF CHICAGO, INC.
POWERSPECTRUM OF CINCINNATI, INC.
POWERSPECTRUM OF D.C., INC.
POWERSPECTRUM OF DALLAS, INC.
POWERSPECTRUM OF DENVER, INC.
POWERSPECTRUM OF GREENSBORO, INC.
POWERSPECTRUM OF HARTFORD, INC.
POWERSPECTRUM OF INDIANAPOLIS, INC.
POWERSPECTRUM OF JACKSONVILLE, INC.
POWERSPECTRUM OF KANSAS CITY, INC.
POWERSPECTRUM OF MEMPHIS, INC.
POWERSPECTRUM OF MIAMI, INC.
POWERSPECTRUM MICROWAVE, INC.
POWERSPECTRUM OF MINNEAPOLIS, INC.
POWERSPECTRUM OF NASHVILLE, INC.
POWERSPECTRUM OF NEW ORLEANS, INC.
POWERSPECTRUM OF NEW YORK, INC.
POWERSPECTRUM OF ORLANDO, INC.
POWERSPECTRUM OF PHILADELPHIA, INC.
POWERSPECTRUM OF PHOENIX, INC.
POWERSPECTRUM OF ROCHESTER, INC.
POWERSPECTRUM OF SALT LAKE CITY, INC.
POWERSPECTRUM OF SAN FRANCISCO, INC.
POWERSPECTRUM OF SEATTLE, INC.
POWERSPECTRUM OF TAMPA, INC.
By:/s/ Yaron I. Eitan
---------------------------------
Yaron I. Eitan, Chairman
KNOW ALL MEN BY THESE PRESENTS, that each person whose
signature appears below hereby constitutes and appoints Yaron Eitan, Chairman,
and Yoram Bibring, Treasurer and each of them, his true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution,
for him and in his name, place and stead, in any and all capacities, to sign any
or all amendments, including any 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 Exchange Commission, granting unto
said attorneys-in-fact and agents, and each of them, full power and authority to
do and perform each and every act and thing requisite and necessary to be done
in and about the above premises, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that
<PAGE>
said attorneys-in-fact and agents or either of them or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
This Power of Attorney may be executed in multiple
counterparts, each of which shall be deemed an original, but which taken
together shall constitute one instrument.
Pursuant to the requirements of the Securities Act of 1933,
this Registration Statement has been duly signed below by the following persons
in the capacities indicated on August 31, 1995.
Signatures Title
---------- -----
/s/ Yaron I. Eitan Director and Chairman (principal executive officer)
---------------------
Yaron I. Eitan
/s/ Yoram Bibring Director and Treasurer (principal financial and
--------------------- accounting officer)
Yoram Bibring
/s/ Andrew Siegel Director
---------------------
Andrew Siegel
<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 Montvale, New Jersey,
on August 31, 1995.
U.S.I. VENTURE CORP.
GEOTEK ACQUISITION CORP.
GEOTEK SUBSIDIARY INDUSTRIES, INC.
By:/s/ Yaron I. Eitan
-------------------------------------
Yaron I. Eitan, Chairman
KNOW ALL MEN BY THESE PRESENTS, that each person whose
signature appears below hereby constitutes and appoints Yaron Eitan, Chairman,
and Yoram Bibring, Treasurer and each of them, his true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution,
for him and in his name, place and stead, in any and all capacities, to sign any
or all amendments, including any 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 Exchange Commission, granting unto
said attorneys-in-fact and agents, and each of them, full power and authority to
do and perform each and every act and thing requisite and necessary to be done
in and about the above premises, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or either of them or his substitute or substitutes,
may lawfully do or cause to be done by virtue hereof.
This Power of Attorney may be executed in multiple
counterparts, each of which shall be deemed an original, but which taken
together shall constitute one instrument.
Pursuant to the requirements of the Securities Act of 1933,
this Registration Statement has been duly signed below by the following persons
in the capacities indicated on August 31, 1995.
Signatures Title
--------- ------
/s/ Yaron I. Eitan Director and Chairman (principal executive officer)
-------------------
Yaron I. Eitan
/s/ Yoram Bibring Director and Treasurer (principal financial and
------------------- accounting officer)
Yoram Bibring
<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 Montvale, New Jersey,
on August 31, 1995.
ANSA COMMUNICATIONS, INC.
By:/s/ Yaron I. Eitan
------------------------------
Yaron I. Eitan, Chairman
KNOW ALL MEN BY THESE PRESENTS, that each person whose
signature appears below hereby constitutes and appoints Yaron Eitan, Chairman,
and Yoram Bibring, Treasurer and each of them, his true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution,
for him and in his name, place and stead, in any and all capacities, to sign any
or all amendments, including any 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 Exchange Commission, granting unto
said attorneys-in-fact and agents, and each of them, full power and authority to
do and perform each and every act and thing requisite and necessary to be done
in and about the above premises, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or either of them or his substitute or substitutes,
may lawfully do or cause to be done by virtue hereof.
This Power of Attorney may be executed in multiple
counterparts, each of which shall be deemed an original, but which taken
together shall constitute one instrument.
Pursuant to the requirements of the Securities Act of 1933,
this Registration Statement has been duly signed below by the following persons
in the capacities indicated on August 31, 1995.
Signatures Title
---------- -----
/s/ Yaron I. Eitan Director and Chairman (principal executive officer)
----------------------
Yaron I. Eitan
/s/ Yoram Bibring Director and Treasurer (principal financial and
---------------------- accounting officer)
Yoram Bibring
/s/ John Egidio Director
----------------------
John Egidio
<PAGE>
EXHIBIT INDEX
Exhibit
Number Exhibit
------ -------
4.3 Supplemental Indenture dated August 28, 1995 by and between the Company
and the Trustee.
12 Statements re: Computation of ratios.
23.1 Consent of Coopers & Lybrand L.L.P. - Geotek Communications, Inc.
23.2 Consent of Shachak & Co. - PowerSpectrum Technology Ltd.
Consent of Shachak & Co. - Oram Power Supplies (1990) Ltd.
Consent of Shachak & Co. - Oram Electric Industries Ltd.
23.3 Consent of Touche Ross & Co. - National Bank Three Limited and
predecessor companies
23.4 Consent of KPMG - Band Three Radio Limited
23.5 Consent of Coopers & Lybrand GmbH - Preussag Bundelfunk GmbH
23.6 Consent of Dusseldorfer Trehand-Gesellschaft Altenburg & Tewes AG - DBF
Bundelfunk GmbH & Co. Betriebs-KG
25 Statement of Eligibility and Qualificaton under the Trust Indenture Act
of 1939 on Form T-1.
99 Form of Letter of Transmittal.
<PAGE>
GRAPHIC MATERIAL APPENDIX
The following narrative of the ownership structure of the Company and its
subsidiaries sets forth the information contained in the organizational chart of
the Company which has been omitted from this EDGAR filing.
The Company owns 100% of PowerSpectrum, Inc, Geotek Communications GmbH, Geotek
Asia, Inc., U.S.I. Venture Corp., Geotek Subsidiary Industries, Inc., Geotek
Acquisition Corp., Metro Net Systems, Inc., National Band Three Limited and
Cumulous Holding Corp., Inc.
The Company indirectly owns 100% of: (i) ANSA Communications, Inc.,
PowerSpectrum, Inc., CLW Communications, Inc., Mobile Me ssage Service of Texas,
Inc., Oak Hill Communications, Inc., PowerSpectrum Microwave, Inc.,
PowerSpectrum of Atlanta, Inc., PowerSpectrum of Boston, Inc., PowerSpectrum of
Buffalo, Inc., PowerSpectrum of Charlotte, Inc., PowerSpectrum of Chicago, Inc.,
PowerSpectrum of Cincinnati, Inc., PowerSpectrum of D.C., Inc., PowerSpectrum of
Dallas, Inc., PowerSpectrum of Denver, Inc., PowerSpectrum of Greensboro, Inc.,
PowerSpectrum of Hartford, Inc., PowerSpectrum of Indianapolis, Inc.,
PowerSpectrum of Jacksonville, Inc., PowerSpectrum of Kansas City, Inc.,
PowerSpectrum of Memphis, Inc., PowerSpectrum of Miami, Inc., PowerSpectrum of
Minneapolis, Inc., PowerSpectrum of Nashville, Inc., PowerSpectrum of New
Orleans, Inc., PowerSpectrum of New York City, Inc., PowerSpectrum of Orlando,
Inc., PowerSpectrum of Philadelphia, Inc., PowerSpectrum of Phoenix, Inc.,
PowerSpectrum of Rochester, Inc., PowerSpectrum of San Francisco, Inc.,
PowerSpectrum of Salt Lake City, Inc., PowerSpectrum of Seattle, Inc. and
PowerSpectrum of Tampa, Inc. through PowerSpectrum, Inc.; (ii) DBF Bundelfunk
Gmbhand Geotek Beteiligungs GmbH i.G. through Geotek Communications GmbH; and
(iii) DBF Bundlfunk GmbH & Co. K.G. (partnership) through Geotek Beteiligungs
Gmbh i.G.
The Company directly owns: (i) 50% of MIS Holdings Ltd.; (ii) 50% of Mobile
information Systems Ltd.; (iii) 76% of GMSI, Inc.; and (iv) 60% of Geotest, Inc.
In addition: (i) PowerSpectrum, Inc. owns 56% of PowerSpectrum Technology
Limited; (ii) Geotek Communications GmbH owns 49.8% of Preussag Bundelfunk GmbH;
(iii) U.S.I. Venture Corp., Geotek Subsidiary Industries, Inc. and Geotek
Acquisition Corp. own 64% of European Gateway Acquisition Corporation ("EGAC");
(iv) EGAC owns 67% of Speech Design, which owns 66% of Satelco AG, and 99% of
Bogen Corporation, which owns 100% of Bogen Communications, Inc.; and (v)
Cumulous Holding Corp., Inc. owns 25% of Cumulous Communications Corporation
(partnership).
<PAGE>
Exhibit 4.3
SUPPLEMENTAL INDENTURE
This SUPPLEMENTAL INDENTURE is dated as of August 28, 1995 and
made by Geotek Communications, Inc., a Delaware corporation (the "Company" or
"Borrower") and each of the entities signing this Supplemental Indenture as a
Guarantor (each a "Guarantor") to IBJ SCHRODER BANK & TRUST COMPANY, a banking
company organized under the laws of the State of New York, as trustee (the
"Trustee") and for the equal and ratable benefit of the holders of the Company's
15% Senior Secured Discount Notes due 2005 (the "Notes"). This Supplemental
Indenture is being entered into pursuant to Section 4.18 of that certain
Indenture governing the Notes (the "Indenture") dated as of June 30, 1995 by and
between the Company and the Trustee. Unless otherwise defined herein, words,
terms and/or phrases which are defined in the Indenture and used herein are so
used as so defined.
NOW, THEREFORE, for good and valuable consideration received,
the receipt and sufficiency of which are hereby acknowledged, each Guarantor
hereto jointly and severally agrees as follows:
I. Guaranty. Guarantor hereby, unconditionally and irrevocably,
guaranties to each Holder of a Security authenticated and delivered by the
Trustee and to the Trustee and its successors, and assigns, irrespective of the
validity and enforceability of the Indenture, the Securities, the Pledge
Agreements, the Note Pledge Agreements, the Security Agreements or any other
security arrangements or the obligations of the Company thereunder, that: (a)
the Accreted Value of and interest on the Securities will be promptly paid in
full when due, whether at Stated Maturity, by acceleration, redemption or
otherwise, and interest on the overdue principal of and interest on the
Securities, if any, if lawful, and all other obligations of the Company to the
Holders or the Trustee thereunder or under the Securities, the Indenture, the
Pledge Agreements, the Note Pledge Agreements, the Security Agreements or any
other security arrangements pursuant to any supplements to the Indenture will be
promptly paid in full or performed, all in accordance with the terms thereof;
and (b) in case of any extension of time of payment or renewal of any Securities
or any of such other obligations, that same will be promptly paid in full when
due or performed in accordance with the terms of the extension or renewal,
whether at Stated Maturity, by acceleration or otherwise. Failing payment when
due of any amount guaranteed hereunder or any performance so guaranteed
hereunder for whatever reason, Guarantor shall be jointly and severally
obligated to pay the same immediately. Each Guarantor agrees that its
obligations hereunder shall be unconditional, irrespective of the validity,
regularity or enforceability of the Securities, the Indenture, the Pledge
Agreements, the Note Pledge Agreements, the Security Agreements or any other
security arrangements, the absence of any action to enforce the same, any waiver
or consent by any Holder of the Securities with respect to any provisions
thereof, the recovery of any judgment against the Company, any action to enforce
the same or any other circumstance which might otherwise constitute a legal or
equitable discharge or defense of such Guarantor. Each Guarantor hereby waives
diligence, presentment, demand of payment, filing of claims with a court in the
event of insolvency or bankruptcy of the Company, any right to require a
proceeding first against the Company, protest, notice and all demands whatsoever
and covenant that its guaranty under this Supplemental Indenture will not be
discharged except by complete performance of the obligations contained in the
Securities, the Indenture, the Pledge Agreements, the Note Pledge Agreements,
the Security Agreements and any other security arrangements pursuant to any
supplements to the Indenture or in accordance with Section 10.12 and Section
4.18(f) of the Indenture. If any Holder or the Trustee is required by any court
or otherwise to return to the Company or any Guarantor, or any Custodian,
-1-
<PAGE>
Trustee, liquidator or other similar official acting in relation to either the
Company or any Guarantor, any amount paid by either to the Trustee or such
Holder, such Guarantor's guarantee, to the extent theretofore discharged, shall
be reinstated in full force and effect. Each Guarantor hereby agrees that it
shall not be entitled to any right of subrogation in relation to the Holders in
respect of any obligations guaranteed hereunder. Each Guarantor further agrees
that, as between such Guarantor, on the one hand, and the Holders and the
Trustee, on the other hand, (x) the maturity of the obligations guaranteed
hereunder may be accelerated as provided in Article Six of the Indenture for the
purposes of this Guarantee, notwithstanding any stay, injunction or other
prohibition preventing such acceleration in respect of the obligations
guaranteed, and (y) in the event of any declaration of acceleration of such
obligations as provided in Article Six of the Indenture, such obligations
(whether or not due and payable) shall forthwith become due and payable by
Guarantor for the purpose of this Guarantee. Notwithstanding anything herein to
the contrary, in the event that this Guarantee by any Guarantor would constitute
or result in a violation of any applicable fraudulent conveyance or similar law
of any relevant jurisdiction, the liability of the applicable Guarantor under
its Guarantee hereunder shall be reduced to the maximum amount permissible under
such fraudulent conveyance or similar law.
II. Subordination.
1. The obligations of each Guarantor pursuant to this
Supplemental Indenture is subordinated in right of payment, to the
extent and in the manner provided in this Section 2, to the prior
payment in full of any and all Indebtedness outstanding on the date
hereof or hereafter incurred by such Guarantor to finance the
construction or acquisition of Telecommunications Assets by such
Guarantor for use by such Guarantor in the United States ("Senior
Financing Indebtedness").
2. a. Upon any payment or distribution of assets of any
any Guarantor of any kind or character, whether in cash,
property or securities, to creditors upon (A) any dissolution
or winding-up or total or partial liquidation or
reorganization of such Guarantor, whether voluntary or
involuntary and whether or not involving insolvency or
bankruptcy or (B) any bankruptcy or insolvency case or
proceeding in connection therewith, relative to Guarantor or
its assets, (C) any assignment for the benefit of creditors or
any other marshalling of assets of such Guarantor, all
obligations due, or to become due, in respect of Senior
Financing Indebtedness shall first indefeasibly be paid in
full, or provision shall have been made for such payment, in
cash, cash equivalents or otherwise in a manner satisfactory
to the holders of Senior Financing Indebtedness, before any
payment is made on account of the Guaranty of such Guarantor
hereunder, except that Securityholders may receive securities
that are subordinated to at least the same extent as the
Securities are to (A) Senior Financing Indebtedness and (B)
any securities issued in exchange for Senior Financing
Indebtedness. Upon any such dissolution, winding-up,
liquidation or reorganization, any payment or distribution of
assets of Guarantor of any kind or character, whether in cash,
property or securities, to which the Holders of the Securities
or the Trustee would be entitled, except for the provisions
hereof, shall be paid by such Guarantor or by any receiver,
-2-
<PAGE>
trustee in bankruptcy, liquidating trustee, agent or other
person making such payment or distribution, or by the Holders
of the Securities or by the Trustee if received by them,
directly to the holders of Senior Financing Indebtedness of
such Guarantor (pro rata to such holders on the basis of the
amounts of Senior Financing Indebtedness of such Guarantor
held by such holders) or to the trustee or trustees under any
indenture pursuant to which any of such Senior Financing
Indebtedness may have been issued, as their interests may
appear, for application to the payment of Senior Financing
Indebtedness of such Guarantor remaining unpaid until all such
Senior Financing Indebtedness has been indefeasibly paid in
full, or provisions shall have been made for such payment, in
cash, cash equivalents or otherwise in a manner satisfactory
to the holders of such Senior Financing Indebtedness, after
giving effect to any concurrent payment, distribution or
provision therefor to or for the holders of such Senior
Financing Indebtedness.
b. Prior to any payment by a Guarantor under this
Agreement, all obligations due and owing prior to such payment
in respect of Senior Financing Indebtedness shall first
indefeasibly be paid in full, or provision shall have been
made for such payment, in cash, cash equivalents or otherwise
in a manner satisfactory to the holders of such Senior
Financing Indebtedness, except that Securityholders may
receive securities that are subordinated to at least the same
extent as the Securities are to (A) Senior Financing
Indebtedness and (B) any securities issued in exchange for
Senior Financing Indebtedness.
c. For purposes of this Section 2, the words "cash,
property or securities" shall not be deemed to include
securities of any Guarantor or any other corporation provided
for by a plan or reorganization or readjustment which are
subordinated, to at least the same extent as the Securities,
to the payment of all Senior Financing Indebtedness of such
Guarantor then outstanding or to the payment of all securities
issued in exchange therefor to the holders of Senior Financing
Indebtedness at the time outstanding. The consolidation of a
Guarantor with, or the merger of a Guarantor with or into,
another corporation or the liquidation or dissolution of a
Guarantor following the conveyance or transfer of its property
as an entirety, or substantially as an entirety to another
corporation upon the terms and conditions provided in Section
3 hereof shall not be deemed a dissolution, winding-up,
liquidation or reorganization for the purposes of this Section
if such other corporation shall, as part of such
consolidation, merger, conveyance or transfer, comply with the
conditions stated in Section 3 hereof.
3. If the Trustee or any Securityholder receives any payment
from a Guarantor with respect to the Securities, whether in cash,
property or securities (other than securities that are subordinated to
at least the same extent as the Securities are to (i) Senior Financing
Indebtedness and (ii) any securities issued in exchange for Senior
Financing Indebtedness), at a time when such payment is prohibited by
<PAGE>
this Section 2, such payment shall be held by the Trustee or such
Securityholder, in trust for the benefit of, and shall be paid
forthwith over and delivered to, the holders of Senior Financing
Indebtedness of such Guarantor then entitled to payment hereunder (pro
rata to such holders on the basis of the amount of Senior Financing
Indebtedness of such Guarantor then due hereunder held by such holders)
for application to the payment of all obligations with respect to such
Senior Financing Indebtedness remaining unpaid to the extent necessary
to pay such obligations in full, in cash, cash equivalents or otherwise
in a manner satisfactory to the holders of such Senior Financing
Indebtedness, in accordance with the terms of such Senior Financing
Indebtedness, after giving effect to any concurrent payment or
distribution to or for the holders of such Senior Financing
Indebtedness.
With respect to the holders of Senior Financing Indebtedness,
the Trustee undertakes to perform only such obligations on the part of
the Trustee as are specifically set forth in this Section 2, and no
implied covenants or obligations with respect to the holders of Senior
Financing Indebtedness shall be read into this Supplemental Indenture
against the Trustee. The Trustee shall not be deemed to owe any
fiduciary duty to the holders of Senior Financing Indebtedness, and
shall not be liable to any such holders if the Trustee shall pay over
or distribute to or on behalf of Securityholders or the Company or any
other person money or assets to which any holders of Senior Financing
Indebtedness shall be entitled by virtue of this Section 2, except if
such payment is made as a result of the willful misconduct or gross
negligence of the Trustee.
4. This Section defines the relative rights of Securityholders
and holders of Senior Financing Indebtedness. Nothing in this
Supplemental Indenture shall:
a. impair, as between the Company, the Guarantors and
Securityholders, the obligations of the Company and the
Guarantors, which are absolute and unconditional (except as
set forth in Section 1 hereof), to pay principal of and
interest on the Securities in accordance with their terms;
b. affect the relative rights of Securityholders and
creditors of the Company and the Guarantors other than their
rights in relation to holders of Senior Financing
Indebtedness; or
c. prevent the Trustee or any Securityholder from
exercising its available remedies upon a Default or Event of
Default, subject to the rights of holders and owners of Senior
Financing Indebtedness to receive distributions and payments
otherwise payable to Securityholders.
If a Guarantor fails because of this Section to pay
principal of or interest on a Security on the due date, the
failure is still a Default or Event of Default.
5. No right of any present or future holder of Senior
Financing Indebtedness to enforce the subordination of the Indebtedness
evidenced by the Securities and the obligations related thereto shall
-4-
<PAGE>
be prejudiced or impaired by any act or failure to act by any such
holder or by the Company or any Guarantor, the Trustee or any Agent or
by the failure of the Company or any Guarantor to comply with the
Indenture or this Supplemental Indenture, regardless of any knowledge
thereof which any such holder may have or otherwise be charged with.
Without limiting the effect of the preceding paragraph, any
holder of Senior Financing Indebtedness may at any time and from time
to time without the consent of or notice to any other holder or to the
Trustee, without impairing or releasing any of the rights of any holder
of Senior Financing Indebtedness under this Supplemental Indenture,
upon or without any terms or conditions and in whole or in part:
a. change the manner, place or term of payment, or
change or extend the time of payment of, renew or alter any
Senior Financing Indebtedness or any other liability of a
Guarantor or the Company to such holder, any security
therefor, or any liability incurred directly or indirectly in
respect thereof, and the provisions of this Section 2 shall
apply to the Guaranty as so changed, extended, renewed or
altered;
b. notwithstanding the provisions of Section 3
hereof, sell, exchange, release, surrender, realize upon or
otherwise deal with in any manner and in any order any
property by whomsoever at any time pledged or mortgaged to
secure, or howsoever securing, any Senior Financing
Indebtedness or any other liability of a Guarantor to such
holder or any other liabilities incurred directly or
indirectly in respect thereof or hereof or any offset
thereagainst;
c. exercise or refrain from exercising any rights or
remedies against a Guarantor or others or otherwise act or
refrain from acting or, for any reason, fail to file, record
or otherwise perfect any security interest in or lien on any
property of a Guarantor or any other person; and
d. settle or compromise any Senior Financing
Indebtedness or any other liability of a Guarantor to such
holder, or any security therefor, or any liability incurred
directly or indirectly in respect thereof.
6. Notwithstanding the provisions of this Section 2 or any
other provision of the Indenture or this Supplemental Indenture, the
Trustee shall not be charged with knowledge of the existence of any
facts which would prohibit the making of any payment or distribution by
the Trustee, or the taking of any action by the Trustee, and the
Trustee or Paying Agent may continue to make payments on the Securities
unless it shall have received at its Corporate Trust Office at least 5
Business Days prior to the date of such payment written notice of facts
that would cause the payment of any obligations with respect to the
Securities to violate this Section 2. The Trustee may conclusively rely
on such notice. Only the Company, a Guarantor or a holder of Senior
Financing Indebtedness (which is satisfactorily identified to the
Trustee) may give the notice.
-5-
<PAGE>
7. In case at any time any Paying Agent other than the Trustee
shall have been appointed by the Company and be then acting under the
Indenture, the term "Trustee" as used in this Section 2 shall in such
case (unless the context otherwise requires) be construed as extending
to and including such Paying Agent within its meaning as fully for all
intents and purposes as if such Paying Agent were named in this Section
2 in addition to or in place of the Trustee.
8. The agreements contained in this Section 2 shall continue
to be effective or be reinstated, as the case may be, if at any time
any payment of any of the Senior Financing Indebtedness is rescinded or
must otherwise be returned by any holder of Senior Financing
Indebtedness upon the insolvency, bankruptcy or reorganization of a
Guarantor or otherwise, all as though such payment had not been made.
III. Successor Guarantors.
1. Subject to the terms and conditions of Section 3(c) hereof
and Section 4.18(e) of the Indenture, no Guarantor may consolidate or
merge with or into (whether or not such Guarantor is the surviving
entity), or sell, assign, transfer, lease, convey or otherwise dispose
of all or substantially all of its properties or assets in one or more
related transactions to another person unless:
a. such Guarantor is the surviving person or the
person formed by or surviving any such consolidation or merger
(if other than such Guarantor) or the person to which such
sale, assignment, transfer, lease, conveyance or other
disposition will have been made is a corporation organized or
existing under the laws of the United States, any state
thereof or the District of Columbia;
b. the person formed by or surviving any such
consolidation or merger (if other than such Guarantor) or the
person to which such sale, assignment, transfer, lease,
conveyance or other disposition will have been made assumes
all the obligations of such Guarantor, pursuant to a
supplemental guaranty agreement which shall be in form and
substance reasonably satisfactory to the Trustee and shall be
accompanied by an Opinion of Counsel as to the enforceability
thereof, under the Securities and the Indenture;
c. no Default or Event of Default shall have occurred
and be continuing on the date of such transaction or shall
occur as a result of such transaction; and
d. such Guarantor or the person formed by or
surviving any such consolidation or merger, or the person to
which such sale, assignment, transfer, lease, conveyance or
other disposition will have been made (i) will have
Consolidated Net Worth immediately after the transaction (but
prior to any purchase accounting adjustments or accrual of
deferred tax liabilities resulting from the transaction) not
less than the Consolidated Net Worth of such Guarantor
immediately preceding the transaction and (ii) will have an
Indebtedness to Annualized Operating Cash Flow Ratio
immediately after the transaction that does not exceed such
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<PAGE>
Guarantor's Indebtedness to Annualized Operating Cash Flow
Ratio immediately preceding the transaction in respect of the
same period.
2. In the case of any such consolidation, merger, sale or
conveyance and upon the assumption by the successor corporation, by
supplemental guaranty agreement, executed and delivered to the Trustee
and satisfactory in form to the Trustee, of this Guarantee and the due
and punctual performance of all of the covenants and conditions of the
Indenture to be performed by such Guarantor, such successor corporation
shall succeed to and be substituted for such Guarantor with the same
effect as if it had been named herein as a Guarantor. Such successor
corporation thereupon may cause to be signed any Guarantees to be
endorsed upon the Securities issuable under the Indenture which
heretofore shall not have been signed by the Company and delivered to
the Trustee. This Guarantee shall in all respects have the same legal
rank and benefit under the Indenture and this Supplemental Indenture as
the Guarantees theretofore and thereafter issued in accordance with the
terms of the Indenture and this Supplemental Indenture as though all of
such Guarantees had been issued at the same date.
3. Except as set forth in Articles Four and Five of the
Indenture, nothing contained in the Indenture or this Supplemental
Indenture shall prevent any consolidation or merger of a Guarantor with
or into the Company or shall prevent any sale or conveyance of the
property of a Guarantor as an entirety or substantially as an entirety
to the Company.
4. In the event of a sale or other disposition of all of the
assets of a Guarantor, by way of merger, consolidation or otherwise or
a sale or other disposition of all of the Capital Stock of a Guarantor
(other than to a Subsidiary of the Company), then such Guarantor (in
the event of a sale or other disposition, by way of such merger,
consolidation or otherwise, of all of the Capital Stock of such
Guarantor) or the person acquiring the property (in the event of a sale
or other disposition of all of the assets of such Guarantor) will be
released and relieved of any obligations under its Guarantee hereunder,
provided that the proceeds of such sale or other disposition are
applied in accordance with the provisions of Section 4.12 of the
Indenture. Upon delivery by the Company to the Trustee of an Officers'
Certificate and an Opinion of Counsel to the effect that such sale or
other disposition was made by the Company in accordance with the
provisions of the Indenture, including without limitation Section 4.12
thereof, the Trustee shall execute any documents reasonably required in
order to evidence the release of any Guarantor from its obligations
under its Guarantee hereunder. Any Guarantor not released from its
obligations under its Guarantee shall remain liable for the full amount
of principal of and interest on the Securities and for the other
obligations of any Guarantor under the Indenture.
IV. Representations and Warranties. Each Guarantor represents and warrants
to Trustee and each Holder that:
1. Guarantor (i) is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation and (ii) has all requisite corporate power and authority
to execute, deliver and perform this Supplemental Indenture;
-7-
<PAGE>
2. the execution, delivery and performance of this
Supplemental Indenture by Guarantor has been duly authorized by all
necessary corporate action;
3. this Supplemental Indenture is the legally valid and
binding obligation of Guarantor and is enforceable against Guarantor in
accordance with its terms except as enforceability may be limited by
bankruptcy, insolvency, moratorium, fraudulent conveyance or other
similar laws affecting creditors' rights generally or equitable
principles of general applicability (whether such actions are deemed to
be at law or in equity); and
4. all of the Company's wholly-owned direct and indirect
subsidiaries organized under the laws of a state of the United States
or the District of Columbia and doing business in the United States
(other than such subsidiaries which have assets with an aggregate Fair
Market Value of less than $100,000 and which do not hold any Licenses)
have executed and delivered this Supplemental Indenture as a Guarantor.
V. Amendment.
1. The Trustee and the Guarantors may amend, waive or
supplement this Supplemental Indenture without notice to or the consent
of any Holder:
a. to cure any ambiguity, defect or inconsistency;
b. to comply with Article Five of the Indenture or
Section 3 hereof;
c. to comply with any requirements of the SEC in
order to effect or maintain the qualification of the Indenture
under the TIA;
d. to make any change that would provide any
additional benefit or rights to the Holders or that does not
adversely affect the rights of any Holder.
Notwithstanding the above, the Trustee and the Guarantors may
not make any change that adversely affects the rights of any Holders
hereunder. The Company shall be required to deliver to the Trustee an
Opinion of Counsel stating that any such change made pursuant to
paragraph (i) or (iv) of this Section 5(a) does not adversely affect
the rights of any Holder.
2. The Trustee and the Guarantors may amend this Supplemental
Indenture with the written consent of the Holders of at least a
majority in aggregate principal amount of the Securities then
outstanding, and the Holders of at least a majority in aggregate
principal amount of the Securities then outstanding by written notice
to the Trustee may waive future compliance by the Company with any
provision of this Supplemental Indenture.
-8-
<PAGE>
Notwithstanding the provisions of this Section 5(b), without
the consent of each Holder affected, an amendment or waiver may not (i)
reduce the percentage in principal amount of outstanding Securities the
Holders of which must consent to an amendment or supplement to or
waiver of any provision of or consent to take any action under this
Supplemental Indenture or (ii) impair the right to institute suit for
the enforcement of any payment on or with respect to the Securities. It
shall not be necessary for the consent of the Holders under this
Section 5(b) to approve the particular form of any proposed amendment,
supplement or waiver, but it shall be sufficient if such consent
approves the substance thereof. After an amendment, supplement or
waiver under this Section 5(b) becomes effective, the Guarantors shall
mail to the Holder of each Security affected thereby, with a copy to
the Trustee, a notice briefly describing the amendment, supplement or
waiver. Any failure of the Guarantors to mail such notice, or any
defect therein, shall not, however, in any way impair or affect the
validity of any amendment, supplement or waiver.
VI. Successors and Assigns. This Supplemental Indenture shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns.
VII. Governing Law; Jurisdiction.
This Supplemental Indenture shall be governed by and construed in
accordance with the laws of the State of New York applicable to contracts made
and to be performed in the State of New York. Each Guarantor irrevocably submits
to the jurisdiction of any United States or State court located in the State of
New York in any suit or proceeding based on or arising under this Supplemental
Indenture and irrevocably agrees that all claims in respect of such suit or
proceeding may be determined in any such court. Each Guarantor irrevocably
waives the defense of an inconvenient forum to the maintenance of such suit or
proceeding. Each Guarantor hereby agrees to designate and appoint CT Corporation
System, 1633 Broadway, New York, NY 10019 as an agent upon whom process may be
served in any suit or proceeding based on or arising under this Supplemental
Indenture. Each Guarantor further agrees that service of process upon such
Guarantor, or upon an agent appointed pursuant to the preceding sentence
accompanied with written notice of said service to such Guarantor, as the case
may be, mailed by first class mail shall be deemed in every respect effective
service of process upon such Guarantor in any such suit or proceeding. Nothing
herein shall affect the Trustee's or any Holder's right to serve process in any
other manner permitted by law. Each Guarantor agrees that a final non-appealable
judgment in any such suit or proceeding shall be conclusive and may be enforced
in other jurisdictions by suit on such judgment or in any other lawful manner.
VIII. Notices.
Any notice or communication shall be sufficiently given if in writing and
delivered in person or mailed by first class mail, postage prepaid, addressed as
follows:
-9-
<PAGE>
If to a Guarantor to such Guarantor at:
c/o Geotek Communications, Inc.
20 Craig Road
Montvale, NJ 07645
Attention: General Counsel
If to the Trustee to:
IBJ Schroder Bank & Trust Company
One State Street
New York, NY 10004
Attention: Corporate Trust and Agency
Administration
The parties hereto by notice to the other parties may designate additional
or different addresses for subsequent notices or communications.
Any notice or communication mailed, postage prepaid, to a Holder shall be
mailed by first class mail to such Holder at the address of such Holder as it
appears on the Securities register maintained by the Registrar under the
Indenture and shall be sufficiently given to such Holder if so mailed within the
time prescribed. Copies of any such communication or notice to a Holder shall
also be mailed to the Trustee.
Failure to mail a notice or communication to a Securityholder or any defect
in it shall not affect its sufficiency with respect to other Holders. Except for
a notice to the Trustee, which is deemed given only when received, if a notice
or communication is mailed in the manner provided above, it is duly given,
whether or not the addressee receives it.
IX. Headings. All headings in this Supplemental Indenture are included
herein for convenience of reference only and shall not constitute a part of this
Supplemental Indenture for any other purpose or be given any substantive effect.
X. Termination of Supplemental Indenture. This Supplemental Indenture, and
all obligations of Guarantor hereunder, shall automatically terminate without
any further action being required on the part of the Company or any Guarantor
upon the earlier of (a) full and final payment of all obligations of the Company
under the Securities, the Indenture, the Pledge Agreements, the Note Pledge
Agreements, the Security Agreements and any other security arrangements pursuant
to any supplements to the Indenture; (b) a defeasance of the Notes (whether in
the form of covenant or legal defeasance) in accordance with the terms of the
Indenture; (c) the prior written consent of the holders of at least 66 2/3% of
the aggregate principal amount of the Securities outstanding on a Collateral
Release Request Date; or (d) the consummation of a Collateral Release Offer (in
the case of (c) or (d), in accordance with the terms, conditions and procedures
set forth in Section 10.12 of the Indenture). The Trustee shall return all
originally executed copies of this Supplemental Indenture which the Trustee has
in its possession, and any executed copies of any supplements to the Indenture
hereafter delivered to the Trustee by any subsidiary of the Company which
hereafter becomes a Guarantor, upon any termination of this Supplemental
Indenture. If, at any time, all or part of any payment under the Indenture or
this Supplemental Indenture is rescinded or otherwise must be returned by
Trustee or any Holder for any reason whatsoever (including, without limitation,
the insolvency, bankruptcy or reorganization of a Guarantor or any other
person), this Supplemental Indenture shall continue to be effective or shall
-10-
<PAGE>
be reinstated as to the obligations which were satisfied by the payment to be
rescinded or returned, all as though such payment had not been made.
XI. Counterparts. This Supplemental Indenture and any amendments, waivers,
consents or supplements hereto may be executed in any number of counterparts and
by the different parties in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all of which
counterparts together shall constitute one and the same instrument. This
Supplemental Indenture shall become effective upon the execution of a
counterpart hereof by each of the parties hereto.
-11-
<PAGE>
IN WITNESS WHEREOF, this Supplemental Indenture has been duly executed
as of the date and year first above written by each of the Guarantors listed
below.
ANSA COMMUNICATIONS, INC.
CLW COMMUNICATIONS, INC.
CUMULOUS HOLDING CORP., INC.
GEOTEK ACQUISITION CORP.
GEOTEK SUBSIDIARY INDUSTRIES, INC.
METRO NET SYSTEMS, INC.
MOBILE MESSAGE SERVICE OF TEXAS, INC.
OAK HILL COMMUNICATIONS, INC.
POWERSPECTRUM, INC.
POWERSPECTRUM MICROWAVE, INC.
POWERSPECTRUM OF ATLANTA, INC.
POWERSPECTRUM OF BOSTON, INC.
POWERSPECTRUM OF BUFFALO, INC.
POWERSPECTRUM OF CHARLOTTE, INC.
POWERSPECTRUM OF CHICAGO, INC.
POWERSPECTRUM OF CINCINNATI, INC.
POWERSPECTRUM OF D.C., INC.
POWERSPECTRUM OF DALLAS, INC.
POWERSPECTRUM OF DENVER, INC.
POWERSPECTRUM OF GREENSBORO, INC.
POWERSPECTRUM OF HARTFORD, INC.
POWERSPECTRUM OF INDIANAPOLIS, INC.
POWERSPECTRUM OF JACKSONVILLE, INC.
POWERSPECTRUM OF KANSAS CITY, INC.
POWERSPECTRUM OF MEMPHIS, INC.
POWERSPECTRUM OF MIAMI, INC.
POWERSPECTRUM OF MINNEAPOLIS, INC.
POWERSPECTRUM OF NASHVILLE, INC.
POWERSPECTRUM OF NEW ORLEANS, INC.
POWERSPECTRUM OF NEW YORK CITY, INC.
POWERSPECTRUM OF ORLANDO, INC.
POWERSPECTRUM OF PHILADELPHIA, INC.
POWERSPECTRUM OF PHOENIX, INC.
POWERSPECTRUM OF ROCHESTER, INC.
POWERSPECTRUM OF SALT LAKE CITY, INC.
POWERSPECTRUM OF SAN FRANCISCO, INC.
POWERSPECTRUM OF SEATTLE, INC.
POWERSPECTRUM OF TAMPA, INC.
U.S.I. VENTURE CORP.
By: /s/ Yaron Eitan
---------------------------------
Yaron Eitan, Chairman of each
of the Guarantors
Agreed and Accepted as of this
28th day of August, 1995
IBJ SCHRODER BANK & TRUST COMPANY,
as Trustee
By: /s/ Max Volmer
------------------------------
Name: Max Volmer
Title: Vice President
-12-
<PAGE>
EXHIBIT 12
GEOTEK COMMUNICATIONS, INC.
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(Dollars in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
For the Year Ended December 31, Six Months Ended June 30,
---------------------------------------------------------------- ----------------------------
Pro Forma Pro Forma
1994 1993 1992 1991 1990 1994 1995 1994 1995
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Earnings (Loss) Before
Income Taxes .............. $(41,574) $(51,896) $(2,381) $ (941) $(4,083) $(67,634) $(26,371) $(16,324) $(36,325)
Add Fixed Charges............ 7,300 3,529 2,126 3,103 1,275 34,466 6,303 2,436 17,724
Less Preferred Dividends..... (2,066) (246) (777) (1,155) (521) (4,504) (1,606) (799) (2,559)
-------- -------- ------- ------ ------- -------- -------- -------- --------
Total Earnings (Loss)...... $(36,340) $(48,613) $(1,032) $1,007 $(3,329) $(37,672) $(20,674) $(14,887) $(21,160)
======== ======== ======= ====== ======= ======== ======== ======== ========
Fixed Charges
Total Interest Expenses
Interest................... $ 3,101 $ 2,591 $ 1,099 $ 1,712 $ 627 $ 27,829 $ 3,583 $ 370 $ 14,057
Interest Portion of
Rental Expenses............ 2,133 692 250 236 127 2,133 1,114 1,067 1,114
Preferred Dividends.......... 2,066 246 777 1,155 521 4,504 1,606 999 2,559
------- -------- -------- ------- ------- -------- -------- -------- --------
Total Fixed Charges........ $ 7,300 $ 3,529 $ 2,126 $ 3,103 $ 1,275 $ 34,466 $ 6,303 $ 2,436 $ 17,724
======= ======== ======== ======= ======= ======== ======== ======== ========
Ratio of Earnings to
Fixed Charges.............. * * * .32 * * * * *
</TABLE>
* There was an earnings deficiency of $43,640, $52,142, $3,158, $2,096,
$4,604, $26,977 and $17,323, respectively for the years ended 1994, 1993,
1992 and 1991 and for the six months ended June 30, 1995 and 1994,
respectively. The pro forma ratios show a pro forma earnings deficiency of
$72,138 and $38,884 for the pro forma 1994 and pro forma six months ended
June 30, 1995 periods, respectively.
<PAGE>
Exhibit 23.1
[LETTERHEAD OF COOPERS & LYBRAND]
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this Registration Statement of
Geotek Communications, Inc. (the "Company") on Form S-4 of our report dated
March 30, 1995, on our audits of the consolidated financial statements of the
Company as of December 31, 1994 and 1993, and for the years ended December 31,
1994, 1993 and 1992, which report is included in the Company's Annual Report on
Form 10-K/A. Our report contains an emphasis of a matter paragraph related to
significant transactions with related parties in 1992. We also consent to the
reference to our firm under the caption "Experts" and all other references to
our firm elsewhere in this Registration Statement.
/s/ Coopers & Lybrand
---------------------------
COOPERS & LYBRAND
New York, New York
September 1, 1995
<PAGE>
Exhibit 23.2
[LETTERHEAD OF SHACHAK & CO.]
CONSENT OF INDEPENDENT ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this Registration Statement of Geotek Communications, Inc. (the
"Company") on Form S-4 of our report, dated February 14, 1995, with respect to
the financial statements of PowerSpectrum Technology Ltd. ("PST") as of December
31, 1994 and 1993, and for the year ended December 31, 1994 and the fifteen
month period ended December 31, 1993, and of our report, dated January 17, 1993,
with respect to the financial statements of PST as of September 30, 1992, and
for the three month period then ended, which reports are included in the annual
report of the Company on Form 10-K for the fiscal year ended December 31, 1994.
/s/ Shachak & Co.
------------------------
Shachak & Co.
Certified Public Accountants (Isr.)
August 25, 1995
Tel Aviv, Israel
<PAGE>
[LETTERHEAD OF SHACHAK & CO.]
CONSENT OF INDEPENDENT ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this Registration Statement of Geotek Communications, Inc. (the
"Company") on Form S-4 of our report, dated February 24, 1993, with respect to
the financial statements of Oram Power Supplies (1990) Ltd. as of December 31,
1992 and for the year then ended, included in the annual report of the Company
on Form 10-K for the fiscal year ended December 31, 1992.
/s/ Shachak & Co.
---------------------------
Shachak & Co.
Certified Public Accountants (Isr.)
August 25, 1995
Tel Aviv, Israel
<PAGE>
[LETTERHEAD OF SHACHAK & CO.]
CONSENT OF INDEPENDENT ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this Registration Statement of Geotek Communications, Inc. (the
"Company") on Form S-4 of our report, dated February 24, 1993, with respect to
the financial statements of Oram Electric Industries Ltd. as of December 31,
1992 and for the year then ended, included in the annual report of the Company
on Form 10-K for the fiscal year ended December 31, 1992.
/s/ Shachak & Co.
---------------------------
Shachak & Co.
Certified Public Accountants (Isr.)
August 25, 1995
Tel Aviv, Israel
<PAGE>
Exhibit 23.3
[LETTERHEAD OF TOUCHE ROSS & CO.]
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement on
Form S-4 of Geotek Communications, Inc. (the "Company") of (i) our report dated
June 10, 1993 with respect to the financial statements of National Band Three
Limited, (ii) our report dated November 24, 1992 with respect to the financial
statements of GEC -Marconi Communications Networks Limited and (iii) our report
dated January 27, 1993 with respect to the financial statements of Vodanet
Limited, each appearing in the Current Report on Form 8-K/A of the Company dated
June 18, 1993.
/s/ Touche Ross & Co.
---------------------------
TOUCHE ROSS & CO.
London, England
August 31, 1995
<PAGE>
Exhibit 23.4
[LETTERHEAD OF KPMG]
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors and Stockholders
Band Three Radio Limited
We consent to the incorporation by reference in this Registration Statement on
Form S-4 of Geotek Communications, Inc. (the "Company") of our report dated 15
July 1991, relating to the Band Three Radio Limited statements of the net loss
and cash flows for the year ended 31 March 1991, which report was included in
the Current Report on Form 8-K/A of the Company, dated June 18, 1993.
/s/ KPMG
-------------------------
KPMG
Reading, England
25 August 1995
<PAGE>
Exhibit 23.5
[LETTERHEAD OF COOPERS & LYBRAND GmbH]
CONSENT OF INDEPENDENT AUDITORS RELATING TO
PREUSSAG BUNDELFUNK GMBH, SALZGITTER/GERMANY
As independent auditors, we hereby consent to the incorporation by reference in
this Registration Statement of Geotek Communications, Inc. (the "Company") on
Form S-4 of our report, dated August 30, 1994, relating to the balance sheet of
Preussag Bundelfunk GmbH as of September 30, 1993 and the related statement of
operations, shareholders' equity and cash flow for the year then ended, which
report was included in the Current Report on Form 8-K of the Company, dated July
5, 1994, as amended.
Hannover,
August 28, 1995
/s/ Coopers & Lybrand
---------------------------------------
Coopers & Lybrand GmbH
Wirtschaftsprufungsgesellschaft
<PAGE>
Exhibit 23.6
[LETTERHEAD OF DUSSELDORFER TREUHAND-GESELLSCHAFT
ALTENBURG & TEWES AG]
Consent of Independent Accountants
We consent to the incorporation by reference in this Registration Statement on
Form S-4 of Geotek Communications, Inc. (the "Company") of our report dated
September 6, 1994, on our audit of the financial statements of DBF Bundelfunk
GmbH & Co. Betriebs-KG as of December 31, 1993, and for the year ended December
31, 1993, which report appears in the Company's Current Report on Form 8-K dated
August 2, 1994, as amended.
Dusseldorf, August 25, 1995
DUSSELDORFER TREUHAND-GESELLSCHAFT
ALTENBURG & TEWES AG
WIRTSCHAFTSPRUFUNGSGESELLSCHAFT
STEUERBERATUNGSGESELLSCHAFT
/s/ Berg /s/ Spielberg
---------------- --------------------
Berg Spielberg
Wirtschaftsprufer Wirtschaftsprufer
<PAGE>
-------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
--------
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939, AS AMENDED, OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305 (b) (2)
--------
IBJ SCHRODER BANK & TRUST COMPANY
(Exact name of trustee as specified in its charter)
New York 13-5375195
(State of Incorporation (I.R.S. employer
if not a U.S. national bank) identification No.)
One State Street, New York, New York 10004
(Address of principal executive offices) (Zip code)
Max Volmar, Vice President
IBJ Schroder Bank & Trust Company
One State Street
New York, New York 10004
(212) 858-2000
(Name, Address and Telephone Number of Agent for Service)
GEOTEK COMMUNICATIONS, INC.
(Exact name of obligor as specified in its charter)
See Table of Subsidiary Guarantors on Schedule I hereto
Delaware 22-2358635
(State or jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
20 Craig Road
Montvale, New Jersey 07645
(Address of principal executive office) (Zip code)
--------
15% SENIOR SECURED DISCOUNT NOTES DUE 2005
(Title of Indenture Securities)
-------------------------
<PAGE>
SCHEDULE 1
TABLE OF SUBSIDIARY GUARANTORS
The address and telephone number of the principal executive officers of each of
the Subsidiary Guarantors listed below are the same as set forth for Geotek
Communications, Inc. All of such Subsidiary Guarantors are direct or indirect
subsidiaries of Geotek Communications, Inc.
State or Other Primary Standard
Jurisdiction of I.R.S. Employer
Incorporation or Identification
Name Organization Number
---- ---------------- ----------------
1. Ansa Communications, Inc. California 95-4207737
2. CLW Communications, Inc. Texas 74-2513789
3. Cumulous Holding Corp., Inc. Delaware 22-3245951
4. Geotek Acquisition Corp. Delaware 22-3258551
5. Geotek Subsidiary Industries, Inc. Delaware 22-3392600
6. Metro Net Systems, Inc. New York 11-2986167
7. Mobile Message Service of Texas, Inc. New York 06-1259975
8. Oak Hill Communications, Inc. Texas 76-0262202
9. Powerspectrum, Inc. Delaware 22-3175296
10. Powerspectrum Microwave, Inc. Delaware 22-3392602
11. Powerspectrum of Atlanta, Inc. Delaware 22-3202887
12. Powerspectrum of Boston, Inc. Delaware 22-3202888
13. Powerspectrum of Buffalo, Inc. Delaware 22-3202864
14. Powerspectrum of Charlotte, Inc. Delaware 22-3389704
15. Powerspectrum of Chicago, Inc. Delaware 22-3266310
16. Powerspectrum of Cincinnati, Inc. Delaware 22-3266309
17. Powerspectrum of D.C., Inc. Delaware 22-3202868
18. Powerspectrum of Dallas, Inc. Delaware 22-3266308
19. Powerspectrum of Denver, Inc. Delaware 22-3202869
20. Powerspectrum of Greensboro, Inc. Delaware 22-3389703
21. Powerspectrum of Hartford, Inc. Delaware 22-3202873
22. Powerspectrum of Indianapolis, Inc. Delaware 22-3202875
23. Powerspectrum of Jacksonville, Inc. Delaware 22-3202889
24. Powerspectrum of Kansas City, Inc. Delaware 22-3202892
25. Powerspectrum of Memphis, Inc. Delaware 22-3202894
26. Powerspectrum of Miami, Inc. Delaware 22-3202896
27. Powerspectrum of Minneapolis, Inc. Delaware 22-3202897
28. Powerspectrum of Nashville, Inc. Delaware 22-3202847
29. Powerspectrum of New Orleans, Inc. Delaware 22-3202848
30. Powerspectrum of New York City, Inc. Delaware 22-3266305
31. Powerspectrum of Orlando, Inc. Delaware 22-3202850
32. Powerspectrum of Philadelphia, Inc. Delaware 22-3202851
33. Powerspectrum of Phoenix, Inc. Delaware 22-3202852
34. Powerspectrum of Rochester, Inc. Delaware 22-3202855
35. Powerspectrum of Salt Lake City, Inc. Delaware 22-3202857
36. Powerspectrum of San Francisco, Inc. Delaware 22-3389709
37. Powerspectrum of Seattle, Inc. Delaware 22-3202859
38. Powerspectrum of Tampa, Inc. Delaware 22-3202862
39. U.S.I. Venture Corp. Delaware 13-3123779
<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.
New York State Banking Department
Two Rector Street
New York, New York
Federal Deposit Insurance Corporation
Washington, D.C.
Federal Reserve Bank of New York Second District
33 Liberty Street
New York, New York
(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.
The obligor is not an affiliate of the trustee.
Item 3. Voting securities of the trustee.
Furnish the following information as to each class of voting
securities of the trustee:
As of August 30, 1995
Col. A Col. B
Title of class Amount Outstanding
Not Applicable
2
<PAGE>
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
Not Applicable
(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.
Not Applicable
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:
As of August 30, 1995
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Col A Col. B Col. C Col. D
Name of Owner Title of class Amount owned Percent of voting
beneficially securities represented by
amount given in Col. C
------------- ------------- ----------------------- -------------------------
</TABLE>
Not Applicable
3
<PAGE>
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:
As of August 30, 1995
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Col A Col. B Col. C Col. D
Name of Owner Title of class Amount owned Percent of voting
beneficially securities represented by
amount given in Col. C
------------- ------------- ----------------------- -------------------------
</TABLE>
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:
As of August 30, 1995
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Col A Col. B Col. C Col. D
Name of Owner Title of class Amount owned Percent of voting
beneficially or held as securities represented by
collateral security for amount given in Col. C
obligations in default
------------- ------------- ----------------------- -------------------------
</TABLE>
Not Applicable
4
<PAGE>
Item 9. Securities of underwriters owned 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:
As of August 30, 1995
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Col A Col. B Col. C Col. D
Name of Owner Title of class Amount owned Percent of voting
beneficially or held as securities represented by
collateral security for amount given in Col. C
obligations in default
------------- ------------- ----------------------- -------------------------
</TABLE>
Not Applicable
Item 10. Ownership or holdings by the trustee of voting securities
of certain affiliates or securityholders 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 10 percent 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:
As of August 30, 1995
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Col A Col. B Col. C Col. D
Name of Owner Title of class Amount owned Percent of voting
beneficially or held as securities represented by
collateral security for amount given in Col. C
obligations in default
------------- ------------- ----------------------- -------------------------
</TABLE>
Not Applicable
5
<PAGE>
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
security for obligations in default any securities of a person who,
to the knowledge of the trustee, owns 50 percent or more of the
voting securities of the obligor, furnish the following information
as to each class of securities of such any of which are so owned or
held by the trustee:
As of August 30, 1995
Col. A Col. B Col. C
Nature of Indebtedness Amount Outstanding Date Due
---------------------- ------------------ --------
Not Applicable
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:
As of August 30, 1995
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Col A Col. B Col. C Col. D
Name of Owner Title of class Amount owned Percent of voting
beneficially or held as securities represented by
collateral security for amount given in Col. C
obligations in default
------------- ------------- ----------------------- -------------------------
</TABLE>
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
6
<PAGE>
(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 Trustees.
Identify the order or rule pursuant to which the foreign trustee is
authorized to act as sole trustee under indentures qualified or to be
qualified under the Act.
Not Applicable
Item 16. List of Exhibits.
List below all exhibits filed as part of this statement of
eligibility.
*1. A copy of the Charter of IBJ Schroder Bank & Trust Company as
amended to date. (See Exhibit 1A to Form T-1, Securities and
Exchange Commission File No. 22-18460).
*2. A copy of the Certificate of Authority of the Trustee to Commence
Business (Included in Exhibit I above).
*3. A copy of the Authorization of the Trustee, as amended to date
(See Exhibit 4 to Form T-1, Securities and Exchange Commission
File No. 22-19146).
*4. A copy of the existing By-Laws of the Trustee, as amended to date
(See Exhibit 4 to Form T-1, Securities and Exchange Commission
File No. 22-19146).
5. A copy of each Indenture referred to in Item 4, if the Obligor is
in default. Not Applicable.
6. The consent of the United States institutional trustee required
by Section 321(b) of the Act.
7
<PAGE>
7. A copy of the latest report of condition of the trustee published
pursuant to law or the requirements of its supervising or
examining authority.
* The Exhibits thus designated are incorporated herein by reference as
exhibits hereto. Following the description of such Exhibits is a
reference to the copy of the Exhibit heretofore filed with the
Securities and Exchange Commission, to which there have been no
amendments or changes.
NOTE
In answering any item in this Statement of Eligibility which relates to
matters peculiarly within the knowledge of the obligor and its
directors or officers, the trustee has relied upon information
furnished to it by the obligor.
Inasmuch as this Form T-1 is filed prior to the ascertainment by the
trustee of all facts on which to base responsive answers to Item 2, the
answer to said Item are based on incomplete information.
Item 2, may, however, be considered as correct unless amended by an
amendment to this Form T-1.
Pursuant to General Instruction B, the trustee has responded to Items
1, 2 and 16 of this form since to the best knowledge of the trustee as
indicated in Item 13, the obligor is not in default under any indenture
under which the applicant is trustee.
8
<PAGE>
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as amended,
the trustee, IBJ Schroder Bank & Trust Company, a corporation organized and
existing under the laws of the State of New York, has duly caused this
statement of eligibility & qualification to be signed on its behalf by the
undersigned, thereunto duly authorized, all in the City of New York, and State
of New York, on the 30th day of August, 1995.
IBJ SCHRODER BANK & TRUST COMPANY
By: Max Volmar
-----------------------------------
Max Volmar
Vice President
<PAGE>
Exhibit 6
CONSENT OF TRUSTEE
Pursuant to the requirements of Section 321(b) of the Trust Indenture Act of
1939, as amended, in connection with the issue by Geotek Communications, Inc.
15 Senior Secured Discount Notes due 2005 , we hereby consent that reports of
examinations by Federal, State, Territorial, or District authorities may be
furnished by such authorities to the Securities and Exchange Commission upon
request therefor.
IBJ SCHRODER BANK & TRUST COMPANY
By: Max Volmar
-----------------------------------
Max Volmar
Vice President
Dated: August 30, 1995
<PAGE>
EXHIBIT 7
CONSOLIDATED REPORT OF CONDITION OF
IBJ SCHRODER BANK & TRUST COMPANY
of New York, New York
And Foreign and Domestic Subsidiaries
Report as of June 30, 1995
<TABLE>
<CAPTION>
Dollar Amounts
in Thousands
--------------
ASSETS
<S> <C>
Cash and balance due from depository institutions:
Noninterest-bearing balances and currency and coin ..........................$ 21,627
Interest-bearing balances......................................................$ 327,123
Securities: Held to Maturity.......................................................$ 169,818
Available-for-sale.....................................................$ 32,291
Federal funds sold and securities purchased under
agreements to resell in domestic offices of the bank
and of its Edge and Agreement subsidiaries and in IBFs:
Federal Funds sold.............................................................$ 10,642
Securities purchased under agreements to resell................................$ -0-
Loans and lease financing receivables:
Loans and leases, net of unearned income......................... $2,288,181
LESS: Allowance for loan and lease losses........................ $ 52,831
LESS: Allocated transfer risk reserve............................ $ -0-
Loans and leases, net of unearned income, allowance, and reserve...............$ 2,235,350
Assets held in trading accounts....................................................$ 82
Premises and fixed assets..........................................................$ 7,503
Other real estate owned............................................................$ 397
Investments in unconsolidated subsidiaries and associated companies................$ -0-
Customers' liability to this bank on acceptances outstanding.......................$ 838
Intangible assets..................................................................$ -0-
Other assets.......................................................................$ 67,176
TOTAL ASSETS.......................................................................$ 2,872,847
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
LIABILITIES
<S> <C>
Deposits:
In domestic offices............................................................$ 557,376
Noninterest-bearing........................................................$ 139,729
Interest-bearing...........................................................$ 417,647
In foreign offices, Edge and Agreement subsidiaries, and IBFs..................$ 658,201
Noninterest-bearing........................................................$ 13,065
Interest-bearing...........................................................$ 645,136
Federal funds purchased and securities sold under
agreements to repurchase in domestic offices of the bank and
of its Edge and Agreement subsidiaries, and in IBFs:
Federal Funds purchased........................................................$ 802,700
Securities sold under agreements to repurchase.................................$ -0-
Demand notes issued to the U.S. Treasury...........................................$ 50,000
Trading Liabilities................................................................$ 75
Other borrowed money:
a) With original maturity of one year or less..................................$ 535,023
b) With original maturity of more than one year................................$ 5,000
Mortgage indebtedness and obligations under capitalized leases.....................$ -0-
Bank's liability on acceptances executed and outstanding...........................$ 838
Subordinated notes and debentures..................................................$ -0-
Other liabilities..................................................................$ 62,226
TOTAL LIABILITIES..................................................................$ 2,671,439
Limited life preferred stock and related surplus...................................$ -0-
EQUITY CAPITAL
Perpetual preferred stock..........................................................$ -0-
Common Stock.......................................................................$ 29,649
Surplus............................................................................$ 217,008
Undivided profits and capital reserves.............................................$ (45,233)
Plus: Net unrealized gains (losses) on marketable equity securities.............$ (16)
Cumulative foreign currency translation adjustments................................$ -0-
TOTAL EQUITY CAPITAL...............................................................$ 201,408
TOTAL LIABILITIES AND EQUITY CAPITAL...............................................$ 2,872,847
</TABLE>
<PAGE>
Exhibit 99
LETTER OF TRANSMITTAL
===============================================================================
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE
5:00 P.M., NEW YORK CITY TIME, ON _______ __, 1995 (AS SUCH DATE
MAY BE EXTENDED, THE "EXPIRATION DATE").
===============================================================================
GEOTEK COMMUNICATIONS, INC.
15% Series B Senior Secured Discount Notes due 2005
PLEASE READ CAREFULLY THE ATTACHED INSTRUCTIONS
If you desire to accept the Exchange Offer, this Letter of Transmittal should be
completed, signed, and submitted to:
IBJ SCHRODER BANK & TRUST COMPANY
Exchange Agent
By Mail: By Overnight Courier:
IBJ Schroder Bank & Trust Company IBJ Schroder Bank & Trust Company
P.O.Box 84 One State Street
Bowling Green Station New York, New York 10274-0084
New York, New York 10274-0084 Attention: Securities Processing Window
Attention: Reorganization Operations Subcellar One, (SC-1)
Department
By Hand: By Facsimile:
IBJ Schroder Bank & Trust Company (212) 858-2611
One State Street
New York, New York 10274-0084 Confirm by telephone:
Attention: Securities Processing Window,
Subcellar One, (SC-1) (212) 858-2103
(Originals of all documents sent by facsimile should be sent promptly
by hand, overnight courier or registered or certified mail.)
Delivery of this Letter of Transmittal to an address other than that set
forth above or transmission of instructions via a facsimile number other than
that set forth above will not constitute a valid delivery.
-1-
<PAGE>
The undersigned hereby acknowledges receipt of the Prospectus dated
__________, 1995 (the "Prospectus") of Geotek Communications, Inc., a Delaware
corporation (the "Company"), and this Letter of Transmittal (the "Letter of
Transmittal"), that together constitute the Company's offer (the "Exchange
Offer") to exchange $1,000 in principal amount at maturity of its 15% Series B
Senior Secured Discount Notes due 2005 (the "Exchange Notes") for each $1,000 in
principal amount at maturity of its outstanding 15% Series A Senior Secured
Discount Notes due 2005 (the "Initial Notes"). Hereinafter, the Exchange Notes
and Initial Notes are sometimes collectively referred to as the "Notes".
Capitalized terms used but not defined herein have the meanings ascribed to them
in the Prospectus.
This Letter of Transmittal is to be used by Holders (as defined below)
if certificates representing the Initial Notes are to be physically delivered
herewith. Holders that are participants in the Book-Entry Transfer Facility of
The Depository Trust Company ("DTC") may make book-entry delivery of the Initial
Notes by causing DTC to transfer such Initial Notes into the Exchange Agent's
account in accordance with DTC's procedures for such transfer. In connection
with a book-entry transfer, a Letter of Transmittal need not be transmitted to
the Exchange Agent; however, Holders complying with DTC's book-entry transfer
procedures must agree to be bound by the terms hereof and confirm the
representations and warranties made herein pursuant to such procedures.
"Holder" means the registered owner of any Initial Notes as reflected on
the records of IBJ Schroder Bank & Trust Company, as registrar for the Notes (in
such capacity, the "Registrar"), or any person whose Initial Notes are held of
record by DTC.
The undersigned hereby tenders the Initial Notes described in Box 1
below (the "Tendered Notes") pursuant to the terms and conditions described in
the Prospectus and this Letter of Transmittal. If the undersigned is not the
beneficial owner of all the Tendered Notes (such beneficial owner(s) other than
the undersigned being called herein the "Beneficial Owners"), the undersigned
represents that it has received from each Beneficial Owner a duly completed and
executed form of "Instruction to Registered Holder from Beneficial Owner"
accompanying this Letter of Transmittal (the "Instruction to Registered
Holder"), instructing the undersigned to take the action described in this
Letter of Transmittal.
Subject to, and effective upon, the acceptance for exchange of the
Tendered Notes, the undersigned hereby exchanges, assigns and transfers to, or
upon the order of, the Company all right, title and interest in, to and under
the Tendered Notes.
Unless otherwise indicated under "Special Exchange Instructions" below
(Box 3A), please issue the Exchange Notes exchanged for Tendered Notes in the
name(s) of the undersigned. Similarly, unless otherwise indicated under "Special
Delivery Instructions" below (Box 3B), please send or cause to be sent the
certificates for Exchange Notes (and accompanying documents, as appropriate) to
the undersigned at the address shown below in Box 1.
The undersigned hereby irrevocably constitutes and appoints the Exchange
Agent as the true and lawful agent and attorney-in-fact of the undersigned with
respect to the Tendered Notes, with full power of substitution (such power of
attorney being deemed to be an irrevocable power coupled with an interest) to
(i) deliver the Tendered Notes to the Company or cause ownership of the Tendered
Notes to be transferred to, or upon the order of, the Company, on the books of
the Registrar for the Notes and deliver all accompanying evidences of transfer
and authenticity to, or upon the order of, the Company upon receipt by the
Exchange Agent, as the undersigned's agent, of the Exchange Notes to which the
undersigned is entitled upon the acceptance by the Company of the Tendered Notes
pursuant to the Exchange Offer, and (ii) receive all benefits and otherwise
exercise all rights of beneficial ownership of the Tendered Notes, all in
accordance with the terms of the Exchange Offer.
-2-
<PAGE>
The undersigned understands that tenders of the Initial Notes pursuant
to the procedures described under the caption "The Exchange Offer - Procedures
for Tendering Initial Notes" in the Prospectus and in the instructions hereto
will constitute a binding agreement between the undersigned and the Company upon
the terms and subject to the conditions of the Exchange Offer.
The tender of Tendered Notes made hereby shall be binding on the
undersigned and all future holders and owners of the Tendered Notes, subject
only to withdrawal of such tender on the terms set forth in the Prospectus under
the caption "The Exchange Offer - Withdrawal Rights." All authority herein
conferred or agreed to be conferred shall survive the death or incapacity of the
undersigned and any Beneficial Owner(s), and every obligation of the undersigned
or any Beneficial Owner(s) hereunder shall be binding upon the heirs,
representatives, successors and assigns of the undersigned and such Beneficial
Owner(s).
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, exchange, assign and transfer the Tendered
Notes and that the Company will acquire good and unencumbered title thereto,
free and clear of all liens, restrictions, charges, encumbrances and adverse
claims when the Tendered Notes are acquired by the Company as contemplated
herein. The undersigned and each Beneficial Owner will, upon request, execute
and deliver any additional documents reasonably requested by the Company as
necessary or desirable to complete and give effect to the transactions
contemplated hereby.
The undersigned hereby represents and warrants that the information set
forth in Box 2 is true and correct.
By tendering the Tendered Notes, the undersigned hereby represents to
the Company that (i) the Exchange Notes to be acquired in connection with the
Exchange Offer by the undersigned and each Beneficial Owner of the Tendered
Notes are being acquired by the undersigned and each Beneficial Owner in the
ordinary course of business of the undersigned and each Beneficial Owner, (ii)
the undersigned and each Beneficial Owner are not participating, do not intend
to participate, and have no arrangement or understanding with any person to
participate, in the distribution of the Exchange Notes, (iii) the undersigned
and each Beneficial Owner acknowledge and agree that any person participating in
the Exchange Offer for the purpose of distributing the Exchange Notes must
comply with the registration and prospectus delivery requirements of the
Securities Act in connection with a secondary resale transaction of the Exchange
Notes acquired by such person and cannot rely on the position of the Staff of
the Securities and Exchange Commission set forth in no-action letters that are
discussed in the Prospectus under "The Exchange Offer - Resales of the Exchange
Notes," (iv) that if it is a broker-dealer that acquired Initial Notes as a
result of market-making or other trading activities, it will deliver a
prospectus in connection with any resale of Exchange Notes acquired in the
Exchange Offer, (v) the undersigned and each Beneficial Owner understand that a
secondary resale transaction described in clause (iii) above should be covered
by an effective registration statement containing the selling securityholder
information required by Item 507 of Regulation S-K of the Securities and
Exchange Commission, and (vi) neither the undersigned nor any Beneficial Owner
is an "affiliate," as defined under Rule 405 of the Securities Act, of the
Company except as otherwise disclosed to the Company in writing. In connection
with a book-entry transfer, each participant will confirm that it makes the
representations and warranties contained in this Letter of Transmittal.
-3-
<PAGE>
PLEASE READ THIS ENTIRE LETTER OF TRANSMITTAL
CAREFULLY BEFORE COMPLETING THE BOXES
================================================================================
BOX 1
DESCRIPTION OF INITIAL NOTES TENDERED
(Attach additional signed pages, if necessary)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Name(s) and address(es) of
Holder(s), exactly as name(s)
appear(s) on Initial Note Certificate Aggregate Principal Amount Aggregate Principal
Certificate(s) Number(s) at Maturity Represented Amount at Maturity
(Please fill in, if blank) of Initial Notes by Certificate(s) Tendered*
_________________________________________________________________________________________
_________________________________________________________________________________________
_________________________________________________________________________________________
_________________________________________________________________________________________
_________________________________________________________________________________________
_________________________________________________________________________________________
_________________________________________________________________________________________
Total
=============================================================================================================================
</TABLE>
* The minimum permitted tender is $1,000 in principal amount at maturity
of Initial Notes. All other tenders must be in integral multiples of
$1,000 of principal amount at maturity. Unless otherwise indicated in
this column, the principal amount of all Initial Note Certificates
identified in this Box 1 or delivered to the Exchange Agent herewith
shall be deemed tendered. See Instruction 4.
================================================================================
BOX 2
BENEFICIAL OWNERS(S)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
State of Principal Residence of Each Beneficial Principal Amount at Maturity of Tendered Notes
Owner of Tendered Notes Held for Account of Beneficial Owner
------------------------------------------------------------------------------------------------------
______________________________________________________________________________________________________
______________________________________________________________________________________________________
______________________________________________________________________________________________________
______________________________________________________________________________________________________
______________________________________________________________________________________________________
======================================================================================================
</TABLE>
-4-
<PAGE>
=========================================================
Box 3A
SPECIAL EXCHANGE INSTRUCTIONS
(See Instructions 5, 6 and 7)
To be completed ONLY if Exchange Notes
exchanged for the Initial Notes or Initial Notes (if
any) represented by Initial Note Certificates
delivered to the Exchange Agent herewith, to the
extent not tendered, are to be issued in the name of
someone other than the undersigned.
Issue Exchange Note(s) to and any untendered Initial
Notes to:
Name(s):
_________________________________________________________
(please print)
Address:
_________________________________________________________
_________________________________________________________
_________________________________________________________
(Include Zip Code)
Tax Identification or
Social Security No.:
_________________________________________________________
=========================================================
=========================================================
Box 3B
SPECIAL DELIVERY INSTRUCTIONS
(See Instructions 5, 6 and 7)
To be completed ONLY if the Exchange Notes
exchanged for the Initial Notes or Initial
Notes are to be sent to someone other than the
undersigned, or the undersigned at an address other
than that shown above.
Mail Exchange Note(s) and any untendered Initial
Notes to:
Name:
_________________________________________________________
(please print)
Address:
_________________________________________________________
_________________________________________________________
_________________________________________________________
(Include Zip Code)
Tax Identification or
Social Security No.:
_________________________________________________________
=========================================================
-5-
<PAGE>
================================================================================
BOX 4
USE OF GUARANTEED DELIVERY
|_| CHECK HERE ONLY IF INITIAL NOTES ARE BEING TENDERED BY MEANS OF A
NOTICE OF GUARANTEED DELIVERY. See Instruction 2. If this box is
checked, please provide the following information:
Name(s) of Holder(s):__________________________________________________________
_______________________________________________________________________________
Date of Execution of Notice of Guaranteed Delivery:____________________________
Name of Institution which Guaranteed Delivery:_________________________________
================================================================================
-6-
<PAGE>
<TABLE>
<CAPTION>
========================================================================================================================
BOX 5
TENDERING HOLDER SIGNATURE
(See Instructions 1 and 5)
------------------------------------------------------------------------------------------------------------------------
<S> <C>
Signature Guarantee
X ____________________________________________________ (If required by Instruction 5)
X _____________________________________________________ Authorized Signature
(Signature of Holder(s)
or Authorized Signatory) X ___________________________________
Note: The above lines must be singed by the Name: _______________________________
Holder(s) of Initial Notes exactly as their name(s) (please print)
appear(s) on the Initial Notes or by person(s)
authorized to become Holder(s). If signature by a Title: _______________________________
trustee, executor, administrator, guardian, attorney-
in-fact, officer or other person acting in a fiduciary Name of Firm: ________________________
or representative capacity, such person must set (Must be an Eligible
forth his or her full title below. See Instruction 5. Institution as defined
in Instruction 2)
Name(s): ________________________________________ Address: ____________________________
_________________________________________________ _____________________________________
_____________________________________
_____________________________________
(Include Zip Code)
Capacity: _______________________________________ Area Code and Telephone Number:
_________________________________________________ _____________________________________
Street Address: _________________________________ Date: _______________________________
_________________________________________________
_________________________________________________
(Include Zip code)
_________________________________________________
Area Code and Telephone Number:
_________________________________________________
Tax Identification or Social Security Number:
==================================================================================================
</TABLE>
-7-
<PAGE>
Under the federal income tax laws, the Exchange Agent may be required to
withhold 31% of the amount of any payments made to certain Holders pursuant to
the Exchange Offer. In order to avoid such backup withholding, each tendering
Holder must provide the Exchange Agent with such Holder's correct taxpayer
identification number by completing the Form W-9 attached hereto. In general, if
a Holder is an individual, the taxpayer identification number is the Social
Security number of such individual. If the Exchange Agent is not provided with
the correct taxpayer identification number, the Holder may be subject to a $50
penalty imposed by the Internal Revenue Service. Certain Holders (including,
among others, all corporations and certain foreign individuals) are not subject
to these backup withholding and reporting requirements. In order to satisfy the
Exchange Agent that a foreign individual qualifies as an exempt recipient, such
Holder must submit a statement, signed under penalties of perjury, attesting to
that individual's exempt status. A form for such statements can be obtained from
the Exchange Agent. For further information concerning backup withholding and
instructions for completing the Form W-9 (including how to obtain a tax payer
identification number if you do not have one and how to complete the Form W-9 if
Initial Notes are held in more than one name), consult the Guidelines of the
Internal Revenue Service for Certification of Taxpayer Identification Number on
Form W-9.
Failure to complete the Form W-9 will not, by itself, cause the Initial
Notes to be deemed invalidly tendered, but may require the Exchange Agent to
withhold 31% of the amount of any payments made pursuant to the Exchange Offer.
Backup withholding is not an additional federal income tax. Rather, the federal
income tax liability of a person subject to backup withholding will be reduced
by the amount of tax withheld. If withholding results in an overpayment of
taxes, a refund from the Internal Revenue Service may be obtained.
NOTE: FAILURE TO COMPLETE AND RETURN THE ATTACHED FORM W-9 MAY
RESULT IN BACKUP WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO
THE HOLDER OF EXCHANGE NOTES. PLEASE REVIEW THE ENCLOSED
GUIDELINES OF THE INTERNAL REVENUE SERVICE FOR CERTIFICATION OF
TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR
ADDITIONAL DETAILS.
-8-
<PAGE>
INSTRUCTIONS TO LETTER OF TRANSMITTAL
FORMING PART OF THE TERMS AND CONDITIONS
OF THE EXCHANGE OFFER
1. Delivery of this Letter of Transmittal and Notes. The Tendered Notes,
as well as a properly completed and duly executed copy of this Letter of
Transmittal (including, "Instruction to Registered Holder From Beneficial
Owner," if applicable), and any other documents required by this Letter of
Transmittal 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. Holders
that are participants in DTC's Book-Entry Transfer Facility system may make
book-entry delivery of the Initial Notes by causing DTC to transfer such Initial
Notes into the Exchange Agent's account in accordance with DTC's procedures for
such transfer. In connection with a book-entry transfer, a Letter of Transmittal
need not be transmitted to the Exchange Agent, however the book-entry transfer
procedure must be complied with on or prior to 5:00 p.m., New York City time, on
the Expiration Date. THE METHOD OF DELIVERY OF INITIAL NOTES, LETTERS OF
TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS IS AT THE ELECTION AND RISK OF THE
HOLDER. IF SUCH DELIVERY IS BY MAIL, IT IS RECOMMENDED THAT REGISTERED MAIL,
PROPERLY INSURED, WITH RETURN RECEIPT REQUESTED, BE USED. INSTEAD OF DELIVERY BY
MAIL, IT IS RECOMMENDED THAT THE HOLDER USE AN OVERNIGHT OR HAND DELIVERY
SERVICE. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE TIMELY
DELIVERY.
2. Guaranteed Delivery Procedures. Holders who wish to tender their
Initial Notes and (i) whose Initial Notes are not immediately available, or (ii)
who cannot deliver their Initial Notes or any other documents required by the
Letter of Transmittal to the Exchange Agent prior to the Expiration Date (or
complete the procedure for book-entry transfer on a timely basis), may tender
their Initial Notes according to the guaranteed delivery procedures set forth
below, including completion of Box 4. Pursuant to such procedures: (i) such
tender must be made by or through a firm which is a member of a registered
national security exchange or of the National Association of Securities Dealers,
Inc., or is a commercial bank or trust company having an office or correspondent
in the United States, or is otherwise an "eligible guarantor institution" within
the meaning of Rule 17Ad-15 under the Securities Exchange Act of 1934, as
amended, and a participant in the Security Transfer Agent Medallion Program (an
"Eligible Institution"), and the Notice of Guaranteed Delivery in the form
attached hereto must be signed by the Holder, (ii) prior to the Expiration Date,
the Exchange Agent must have received from the Holder and the Eligible
Institution a properly completed and duly executed Notice of Guaranteed Delivery
(by facsimile transmission, mail, or hand delivery) setting forth the names and
address of the Holder, the certificate number or numbers of the Tendered Initial
Notes, and the principal amount of Tendered Initial Notes, stating that the
Tender is being made thereby and guaranteeing that, within four business days
after the date of delivery of the Notice of Guaranteed Delivery, the Tendered
Initial Notes, a duly executed Letter of Transmittal and any other required
documents will be deposited by the Eligible Institution with the Exchange Agent,
and (iii) such properly completed and executed documents required by this Letter
of Transmittal and the Tendered Initial Notes in proper form for transfer (or
confirmation of a book-entry transfer of such Initial Notes into the Exchange
Agent's account at DTC) must be received by the Exchange Agent within four
business days (for purposes of this Letter of Transmittal, "business day" means
each day which the New York Stock Exchange is open for business) after the
Expiration Date. Any Holder who wishes to tender Initial Notes pursuant to the
guaranteed delivery procedures described above must ensure that the Exchange
Agent receives the Notice of Guaranteed Delivery prior to 5:00 p.m., New York
city time, on the Expiration Date.
3. Beneficial Owner Instructions to Registered Holders. Only a Holder in
whose name the Initial Notes are registered on the books of the Registrar (a
"Registered Holder") (or the legal representative or attorney-in-fact of such
Registered Holder) may execute and deliver this Letter of Transmittal. Any
Beneficial Owner of Initial Notes who is not the Registered Holder must arrange
-9-
<PAGE>
promptly with the Registered Holder to execute and deliver this Letter of
Transmittal on his or her behalf through the execution and delivery to the
Registered Holder of the Instructions to Registered Holder form accompanying
this Letter of Transmittal. If such Beneficial Owner wishes to tender directly,
such Beneficial Owner must, prior to completing and executing this Letter of
Transmittal and tendering the Initial Notes, make appropriate arrangements to
register ownership of the Initial Notes in such Beneficial Owner's name.
Beneficial Owners should be aware that the transfer of registered ownership may
take considerable time.
4. Partial Tenders. Tender of the Initial Notes will be accepted only in
integral multiples of $1,000 in principal amount at maturity. If less than the
entire amount of any Initial Note is tendered, the tendering Holder should fill
in the principal amount at maturity tendered in the column labeled "Aggregate
Principal Amount at Maturity Tendered" of the box entitled "Description of
Initial Notes Tendered" (Box 1) above. The entire principal amount of Initial
Notes delivered to the Exchange Agent will be deemed to have been tendered
unless otherwise indicated. If the entire principal amount at maturity of all
Initial Notes is not tendered, Initial Notes for the principal amount of Initial
Notes not tendered and Exchange Notes exchanged for any Initial Notes tendered
will be sent to the Holder at his or her registered address, unless a different
address is provided in the appropriate box on this Letter to Transmittal,
promptly after the Initial Notes are accepted.
5. Signatures on the Letter of Transmittal; Bond Powers and
Endorsements; Guarantee of Signatures. If this Letter of Transmittal is signed
by the Registered Holder(s) of the Tendered Notes, the signature must correspond
with the name(s) as written on the face of the Tendered Notes without
alteration, enlargement, or any change whatsoever.
If any of the Tendered Notes are owned of record by two or more joint
owners, all such owners must sign this Letter of Transmittal. If any Tendered
Notes are held in different names on several Initial Notes, it will be necessary
to complete, sign, and submit as many separate copies of the Letter of
Transmittal documents as there are names in which Tendered Notes are held.
If this Letter of Transmittal is signed by the Registered Holder(s) of
Tendered Notes and Exchange Notes are to be issued (and any untendered principal
amount at maturity of Initial Notes is to be reissued) to the Registered
Holder(s), the Registered Holder(s) need not and should not endorse any Tendered
Notes nor provide a separate bond power. In any other case, such Registered
Holder(s) must either properly endorse the Initial Notes tendered or transmit a
properly completed separate bond power with this Letter of Transmittal, with the
signature(s) on the endorsement or bond power guaranteed by an Eligible
Institution along with the other documents required upon transfer by the
Registration Rights Agreement.
If this Letter of Transmittal is signed by a person other than the
Registered Holder of the Initial Notes, the Initial Notes surrendered for
exchange must either (i) be endorsed by the Registered Holder, with the
signature thereon guaranteed by an Eligible Institution, or (ii) be accompanied
by a bond power, in satisfactory form as determined by the Company in its sole
discretion, duly executed by the Registered Holder, with the signature thereon
guaranteed by an Eligible Institution.
If this Letter of Transmittal or any endorsement, bond power, power of
attorney or any other document required by this Letter of Transmittal is signed
by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a
corporation or other person acting in a fiduciary or representative capacity,
such person should so indicate when signing, and, unless waived by the Company,
proper evidence satisfactory to the Company, in its sole discretion, of such
person's authority to so act must be submitted.
-10-
<PAGE>
Signatures on this Letter of Transmittal must be guaranteed by an
Eligible Institution unless the Tendered Notes are tendered (i) by a Registered
Holder who has not completed the box set forth herein entitled "Special Exchange
Instructions" (Box 3A) or the box entitled "Special Delivery Instructions" (Box
3B), or (ii) by an Eligible Institution.
6. Special Exchange and Delivery Instructions. Tendering Holders should
indicate, in the applicable box or boxes (Box 3A and/or 3B), the name and
address to which the Exchange Notes and/or substitute Initial Notes for
principal amounts at maturity not tendered or not accepted for exchange are to
be issued or sent, if different from the name and address of the person signing
this Letter of Transmittal. In the case of issuance in a different name, the
taxpayer identification or social security number of the person named must also
be indicated.
7. Transfer Taxes. If a transfer tax is imposed for any reason pursuant
to the Exchange Offer, the amount of any such transfer taxes (whether imposed on
the Registered Holder or any other persons) will be payable by the tendering
holder. If satisfactory evidence of payment of such taxes or exemption is not
submitted with this Letter of Transmittal, the amount of such transfer taxes
will be billed directly to such tendering holder.
8. Validity of Tenders. All questions as to the validity, eligibly
(including time of receipt), acceptance and withdrawal of Initial Notes tendered
for exchange will be determined by the Company in its sole discretion, which
determination shall be final and binding. The Company reserves the absolute
right to reject any and all Initial Notes not properly tendered and to reject
any Initial Notes the Company's acceptance of which might, in the judgment of
the Company or its counsel, be unlawful. The Company also reserves the absolute
right to waive any defect or irregularities or conditions of the Exchange Offer
as to particular Initial Notes either before or after the Expiration Date
(including the right to waive the ineligibility of any holder who seeks to
tender Initial Notes in the Exchange Offer). The interpretation of the terms and
conditions of the Exchange Offer (including the Letter of Transmittal and these
instructions) by the Company shall be final and binding on all parties. Unless
waived, any defects or irregularities in connection with tenders of Initial
Notes for exchange must be cured within such period of time as the Company shall
determine. The Company will use reasonable efforts to give notification of
defects or irregularities with respect to tenders of Initial Notes for exchange
but shall not incur any liability for failure to give such notification. Tenders
of the Initial Notes will not be deemed to have been made until such
irregularities have been cured or waived.
9. Waiver of Conditions. The Company reserves the absolute right to
amend, waive or modify specified conditions in the Exchange Offer in the case of
any tendered Initial Notes.
10. No Conditional Tender. No alternative, conditional, irregular or
contingent tender of Initial Notes or transmittal of this Letter of Transmittal
will be accepted.
11. Mutilated, Lost, Stolen, or Destroyed Initial Notes. Any tendering
Holder whose Initial Notes have been mutilated, lost, stolen or destroyed should
contact the Exchange Agent at the address indicated above for further
instructions.
12. Requests for Assistance or Additional Copies. Questions and requests
for assistance and requests for additional copies of the Prospectus may be
directed to the Exchange Agent at the address specified in the Prospectus.
Holders may also contact their broker, dealer, commercial bank, trust company or
other nominee for assistance concerning the Exchange Offer.
13. Return of Initial Notes. If any Tendered Notes are not exchanged
pursuant to the Exchange Offer for any reason, such unexchanged Initial Notes
will be returned, without expense, to the undersigned at the address
-11-
<PAGE>
shown below or at a different address as may be indicated herein under "Special
Exchange Instructions" (Box 3A) or "Special Delivery Instructions" (Box 3B).
14. Withdrawal. Tenders may be withdrawn only pursuant to the limited
withdrawal rights set forth in the Prospectus under the caption "The Exchange
Offer-Withdrawal Rights."
-12-
<PAGE>
INSTRUCTION TO REGISTERED HOLDER
FROM BENEFICIAL OWNER
OF
GEOTEK COMMUNICATIONS, INC.
15% Series A Senior Secured Discount Notes Due 2005
The undersigned hereby acknowledges receipt of the Prospectus, dated
____________, 1995 (the "Prospectus"), of Geotek Communications, Inc. a Delaware
corporation (the "Company"), and the accompanying Letter of Transmittal (the
"Letter of Transmittal"), that together constitute the Company's offer (the
"Exchange Offer").
This will instruct you, the registered holder, as to the action to be
taken by you relating to the Exchange Offer with respect to the Initial Notes
(as defined in the Letter of Transmittal) held by you for the account of the
undersigned.
The aggregate face amount at maturity of the Initial Notes held by you
for the account of the undersigned is (fill in amount):
$_________ of the 15% Series A Senior Secured Discount Notes
Due 2005
With respect to the Exchange Offer, the undersigned hereby instructs you
(check appropriate box):
|_| TO TENDER the following Initial Notes held by you for the
account of the undersigned (insert principal amount at
maturity of Initial Notes to be tendered, if any):
$__________ of the 15% Series A Senior Secured Discount Notes
due 2005
|_| NOT TO TENDER any Notes held by you for the account of the
undersigned.
If the undersigned instructs you to tender the Initial Notes held by you
for the account of the undersigned, it is understood that you are authorized (i)
to make, on behalf of the undersigned (and the undersigned, by its signature
below, hereby makes to you), the representations and warranties contained in the
Letter of Transmittal that are to be made with respect to the undersigned as a
Beneficial Owner (as defined in the Letter of Transmittal), in the state of
(fill in state) _______________, (b) the Exchange Notes to be acquired in
connection with the Exchange Offer are being acquired by the undersigned in the
ordinary course of business of the undersigned, (c) the undersigned is not
participating, does not intend to participate, and has no arrangement or
understanding with any person to participate, in the distribution of the
Exchange Notes, (d) the undersigned acknowledges and agrees that any person
participating in the Exchange Offer for the purpose of distributing the Exchange
Notes must comply with the registration and prospectus delivery requirements of
the Securities Act of 1933, as amended, in connection with a secondary resale
transaction of the Exchange Notes acquired by such person and cannot rely on the
position of the Staff of the Securities and Exchange Commission set forth in
no-action letters that are discussed in the section of the Prospectus entitled
"The Exchange Offer - Resales of the Exchange Notes," (e) the undersigned
understands that a secondary resale transaction described in clause (d) above
should be covered by an effective registration statement containing the selling
security holder information required by Item 507 of Regulation S-K of the
Securities and Exchange Commission, and (f) the undersigned is not an
I-1
<PAGE>
"affiliate" (as defined in Rule 405 under the Securities Act) of the Company;
(ii) to agree, on behalf of the undersigned, to the covenants and agreements to
be made on behalf of or with respect to the undersigned, as set forth in the
Prospectus and the Letter of Transmittal; and (iii) to take such other action as
necessary under the Prospectus or the Letter of Transmittal to effect the valid
tender of such Notes.
SIGN HERE
Name of Holder: ____________________________________
Signature(s): ____________________________________
Name(s) (please print): ____________________________________
Title: ____________________________________
Capacity: ____________________________________
Address: ____________________________________
____________________________________
Telephone Number: ____________________________________
Taxpayer Identification
or Social Security Number: ____________________________________
Date: ____________________________________________________________
I-2
<PAGE>
NOTICE OF GUARANTEED DELIVERY
With Respect to
GEOTEK COMMUNICATIONS, INC.
15% Series A Senior Secured Discount Notes Due 2005
This form must be used by a Holder of the 15% Series A Senior Secured
Discount Notes Due 2005 (the "Initial Notes") of Geotek Communications, Inc., a
Delaware corporation (the "Company") who wishes to tender Initial Notes to the
Exchange Agent pursuant to the guaranteed delivery procedures described in "The
Exchange Offer-Guaranteed Delivery Procedures" of the Prospectus, dated August
__, 1995 (the "Prospectus"), and in Instruction 2 to the Letter of Transmittal.
Any Holder who wishes to tender Initial Notes pursuant to such guaranteed
delivery procedures must ensure that the Exchange Agent receives this Notice of
Guaranteed Delivery prior to 5:00 p.m., New York City time, on the Expiration
Date of the Exchange Offer. Any Holder providing this Notice of Guaranteed
Delivery must also execute and deliver a Letter of Transmittal at the time of
the tender of the Initial Notes. Capitalized terms not defined herein have the
meanings ascribed to them in the Prospectus or the Letter of Transmittal.
By Mail: By Overnight Courier:
IBJ Schroder Bank & Trust Company IBJ Schroder Bank & Trust Company
P.O.Box 84 One State Street
Bowling Green Station New York, New York 10274-0084
New York, New York 10274-0084 Attention: Securities Processing Window
Attention: Reorganization Operations Subcellar One, (SC-1)
Department
By Hand: By Facsimile:
IBJ Schroder Bank & Trust Company (212) 858-2611
One State Street
New York, New York 10274-0084 Confirm by telephone:
Attention: Securities Processing Window,
Subcellar One, (SC-1) (212) 858-2103
(Originals of all documents sent by facsimile should be sent promptly
by hand, overnight courier or registered or certified mail.)
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE OR TRANSMISSION VIA A FACSIMILE NUMBER OTHER THAN AS SET FORTH ABOVE
WILL NOT CONSTITUTE A VALID DELIVERY.
N-1
<PAGE>
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
The undersigned hereby tenders to the Company, upon the terms and
subject to the conditions set forth in the Prospectus and the related Letter of
Transmittal, the principal amount of Initial Notes specified below pursuant to
the guaranteed delivery procedures set forth in the Prospectus and in
Instruction 2 of the Letter of Transmittal. The undersigned hereby tenders the
Initial Notes listed below:
<TABLE>
<CAPTION>
===========================================================================================================
<S> <C> <C>
Certificate Number(s) Aggregate Principal Amount Aggregate Principal Amount
(if known) at Maturity Represented at Maturity Tendered
-----------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------
===========================================================================================================
</TABLE>
SIGN HERE
Name of Holder: _____________________________________
Signature(s): _____________________________________
Name(s) (please print): _____________________________________
Title: _____________________________________
Capacity: _____________________________________
Address: _____________________________________
_____________________________________
Telephone Number: _____________________________________
Date: _____________________________________________________________
N-2
<PAGE>
GUARANTEE
(Not to be used for signature guaranty)
The undersigned, a firm which is a member of a registered national
securities exchange or of the National Association of Securities Dealers, Inc.,
or which is a commercial bank or trust company having an office or correspondent
in the United States, or which is otherwise an "eligible guarantor institution"
within the meaning of Rule 17Ad-15 under the Securities Exchange Act of 1934, as
amended, and a participant in the Security Transfer Medallion Program guarantees
deposit with the Exchange Agent of the Initial Notes tendered hereby in proper
form for transfer and any other required documents, all by 5:00 p.m., New York
City time, on the fourth business day following the date of delivery of this
Notice of Guaranteed Delivery.
SIGN HERE
Name of Firm:
____________________________________
Authorized Signature:
____________________________________
Name (please print):
Address:
____________________________________
____________________________________
____________________________________
Telephone number: __________________
Date: ______________________________
DO NOT SEND NOTES WITH THIS FORM, ACTUAL SURRENDER OF NOTES MUST BE MADE
PURSUANT TO, AND BE ACCOMPANIED BY, AN EXECUTED LETTER OF TRANSMITTAL.
N-3
<PAGE>
INSTRUCTIONS FOR NOTICE OF GUARANTEED DELIVERY
1. Delivery of this Notice of Guaranteed Delivery. A properly completed
and duly executed copy of this Notice of Guaranteed Delivery and any other
documents required by this Notice of Guaranteed Delivery 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. The method of delivery of this Notice of
Guaranteed Delivery and any other required documents is at the election and risk
of the Holder. If such delivery is by mail, it is recommended that registered
mail, properly insured, with return receipt requested, be used. Instead of
delivery by mail, it is recommended that a Holder use an overnight or hand
delivery service. In all cases, sufficient time should be allowed to assure
timely delivery. For a description of the guaranteed delivery procedures, see
Instruction 2 of the Letter of Transmittal.
2. Signatures on this Notice of Guaranteed Delivery. If this Notice of
Guaranteed Delivery is signed by the registered holder(s) of the Initial Notes
referred to herein, the signature must correspond with the name(s) written on
the face of the Initial Notes without alteration, enlargement, or any change
whatsoever.
If any of the to be tendered Initial Notes are owned of record by two or
more joint owners, all such owners must sign this Notice of Guaranteed Delivery.
If any Initial Notes to be tendered are held in different names on several
Initial Notes, it will be necessary to complete, sign, and submit as many
separate copies of the Notice of Guaranteed Delivery documents as there are
names in which the Initial Notes are held.
If this Notice of Guaranteed Delivery is signed by a person other than
the registered holder(s) of any Initial Notes listed, this Notice of Guaranteed
Delivery must be accompanied by appropriate bond powers, in satisfactory form as
determined by the Company in its sole discretion, duly executed by the
registered holder(s), with the signature thereon guaranteed by an Eligible
Institution.
If this Notice of Guaranteed Delivery or any endorsement, bond power,
power of attorney or any other document required by this Notice of Guaranteed
Delivery is signed by a trustee, executor, administrator, guardian,
attorney-in-fact, officer of a corporation or other person acting in a fiduciary
or representative capacity, such person should so indicate when signing, and,
unless waived by the Company, proper evidence satisfactory to the Company, in
its sole discretion, of such person's authority to so act must be submitted.
3. Requests for Assistance or Additional Copies. Questions and requests
for assistance and requests for additional copies of the Prospectus or Letter of
Transmittal may be directed to the Exchange Agent at the address specified in
the Prospectus. Holders must also contact their broker, dealer, commercial bank,
trust company or other nominee for assistance concerning the Exchange Offer.
N-4
