<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 10, 1997
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------------
HEARTLAND WIRELESS COMMUNICATIONS, INC.
(Exact Name of Registrant as Specified in Its Charter)
<TABLE>
<S> <C> <C>
DELAWARE 4841 73-1435149
(State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation or Organization) Classification Code Number) Identification Number)
</TABLE>
---------------------
200 CHISHOLM PLACE, SUITE 200
PLANO, TEXAS 75075
(972) 423-9494
(Address, Including Zip Code, and Telephone Number,
Including Area Code, of Registrant's Principal Executive Offices)
---------------------
JOHN R. BAILEY
SENIOR VICE PRESIDENT -- FINANCE AND
CHIEF FINANCIAL OFFICER
HEARTLAND WIRELESS COMMUNICATIONS, INC.
200 CHISHOLM PLACE, SUITE 200
PLANO, TEXAS 75075
(972) 423-9494
(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent for Service)
---------------------
COPY TO:
VICTOR B. ZANETTI, ESQ.
ARTER & HADDEN
1717 MAIN STREET, SUITE 4100
DALLAS, TEXAS 75201
(214) 761-2100
---------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------
PROPOSED PROPOSED
MAXIMUM MAXIMUM
AMOUNT OFFERING AGGREGATE
TITLE OF EACH CLASS OF TO BE PRICE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED PER NOTE PRICE(1) REGISTRATION FEE
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
14% Series B Senior Notes due
2004............................. $125,000,000 100% $125,000,000 $37,879
- ------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(f) promulgated under the Securities Act.
---------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
PROSPECTUS SUBJECT TO COMPLETION, DATED FEBRUARY 10, 1997
HEARTLAND WIRELESS COMMUNICATIONS, INC.
OFFER TO EXCHANGE UP TO $125,000,000 OF ITS
14% SERIES B SENIOR NOTES DUE 2004
FOR ANY AND ALL OF ITS OUTSTANDING
14% SENIOR NOTES DUE 2004
------------------------
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
MARCH , 1997, UNLESS EXTENDED.
------------------------
Heartland Wireless Communications, Inc. (the "Company") hereby offers, upon
the terms and subject to the conditions set forth in this Prospectus and the
accompanying Letter of Transmittal (which together constitute the "Exchange
Offer"), to exchange $1,000 principal amount of 14% Series B Senior Notes due
2004 (the "New Notes") of the Company for each $1,000 principal amount of the
issued and outstanding 14% Senior Notes due 2004 (the "Old Notes" and the Old
Notes and the New Notes, collectively, the "Notes") of the Company from the
Holders (as defined herein) thereof. As of the date of this Prospectus, there is
$125,000,000 aggregate principal amount of the Old Notes outstanding. The terms
of the New Notes are identical in all material respects to the Old Notes, except
that the New Notes have been registered under the Securities Act of 1933, as
amended (the "Securities Act"), and therefore will not bear legends restricting
their transfer and will not contain certain provisions providing for an increase
in the interest rate on the Old Notes under certain circumstances relating to
the Registration Rights Agreement (as defined herein), which provisions will
terminate as to all of the Notes upon the consummation of the Exchange Offer.
Interest on the New Notes will accrue from December 20, 1996 and will be
payable semi-annually on April 15 and October 15 of each year, commencing April
15, 1997. No interest will be payable on the Old Notes accepted for exchange.
The New Notes will be senior obligations of the Company ranking pari passu
in right of payment to all existing and future indebtedness of the Company,
other than indebtedness that is expressly subordinated to the New Notes. The
Company has no senior indebtedness, other than $115.0 million principal amount
of 13% Senior Notes due 2003 (the "Existing Notes"), and $15.8 million payable
to the Federal Communications Commission for the Company's purchase of licenses
for certain "Basic Trading Areas" ("BTAs") secured by a lien on such licenses
(the "BTA Obligation"). In addition, the Company is a holding company that
conducts substantially all of its business through its subsidiaries. The New
Notes, therefore, will be effectively subordinated to all liabilities of the
Company's subsidiaries, including trade payables. The outstanding liabilities of
the Company's consolidated subsidiaries (including all liabilities of
consolidated subsidiaries that are not wholly-owned by the Company) were
approximately $12.1 million at September 30, 1996. Subject to certain
limitations set forth in the Indenture (as defined herein), the Company and its
subsidiaries may incur additional indebtedness which is secured by assets of the
Company and its subsidiaries.
The Old Notes were not registered under the Securities Act in reliance upon
an exemption from the registration requirements thereof. In general, the Old
Notes may not be offered or sold unless registered under the Securities Act,
except pursuant to an exemption from, or in a transaction not subject to, the
Securities Act. The New Notes are being offered hereby in order to satisfy
certain obligations of the Company contained in the Registration Rights
Agreement. Based on interpretations by the staff of the Securities and Exchange
Commission (the "Commission") set forth in no-action letters issued to third
parties, the Company believes that the New Notes issued pursuant to the Exchange
Offer in exchange for Old Notes may be offered for resale, resold or otherwise
transferred by any holder thereof (other than any such holder that is an
"affiliate" of the Company within the meaning of Rule 405 promulgated under the
Securities Act) without compliance with the registration and prospectus delivery
provisions of the Securities Act, provided that such New Notes are acquired in
the ordinary course of such holder's business, such holder has no arrangement
with any person to participate in the distribution of such New Notes and neither
such holder nor any such other person is engaging in or intends to engage in a
distribution of such New Notes. Notwithstanding the foregoing, each
broker-dealer that receives New Notes for its own account pursuant to the
Exchange Offer must acknowledge that it will deliver a prospectus in connection
with any resale of such New Notes. 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 such broker-dealer in connection with any resale of New Notes received
in exchange for such Old Notes where such Old Notes were acquired by such
broker-dealer as a result of market-making activities or other trading
activities (other than Old Notes acquired directly from the Company). The
Company has agreed that, for a period of 120 days after the date of this
Prospectus, it will make this Prospectus available to any broker-dealer for use
in connection with any such resale.
The Old Notes are designated for trading in the Private Offerings, Resales
and Trading through Automated Linkages ("PORTAL") market. There is no
established trading market for the New Notes. The Company does not currently
intend to list the New Notes on any securities exchange or to seek approval for
quotation through any automated quotation system. Accordingly, there can be no
assurance as to the development or liquidity of any market for the New Notes.
The Company will pay all of the expenses incident to the Exchange Offer.
Tenders of Old Notes pursuant to the Exchange Offer may be withdrawn as provided
herein at any time prior to the Expiration Date (as defined herein). The
Exchange Offer is subject to certain customary conditions.
SEE "RISK FACTORS" BEGINNING ON PAGE 11 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY HOLDERS PRIOR TO TENDERING OLD NOTES IN THE
EXCHANGE OFFER.
------------------------
THE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE 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 February , 1997.
<PAGE> 3
AVAILABLE INFORMATION
The Company has filed with the Commission a Registration Statement on Form
S-4 (together with all amendments, exhibits, schedules and supplements thereto,
the "Registration Statement") under the Securities Act with respect to the New
Notes being offered hereby. This Prospectus does not contain all of the
information set forth in the Registration Statement, certain portions of which
have been omitted pursuant to the rules and regulations promulgated by the
Commission. Statements made in this Prospectus as to the contents of any
contract, agreement or other document are not necessarily complete. With respect
to each such contract, agreement or other document filed or incorporated by
reference as an exhibit to the Registration Statement, reference is made to such
exhibit for a more complete description of the matter involved, and each such
statement is qualified in its entirety by such reference.
The Registration Statement may be inspected by anyone without charge at the
Public Reference Section of the Commission at Room 1024, Judiciary Plaza, 450
Fifth Street, N.W., Washington, D.C. 20549, and at the regional offices of the
Commission located at Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661 and 7 World Trade Center, Suite 1300, New York, New York
10048. Copies of such material may also be obtained at the Public Reference
Section of the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, upon payment of prescribed fees. In addition, the
Company is required to file electronic versions of such material with the
Commission through the Commission's Electronic Data Gathering, Analysis and
Retrieval (EDGAR) system. The Commission maintains a World Wide Web site at
http://www.sec.gov. that contains information regarding registrants that file
electronically with the Commission.
The Company is subject to the information reporting requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy and information statements and other
information with the Commission. Such material filed by the Company with the
Commission may be inspected, and copies thereof obtained, at the places, and in
the manner, set forth above.
In the event that the Company ceases to be subject to the informational
reporting requirements of the Exchange Act, the Company has agreed that, so long
as the Notes remain outstanding, it will file with the Commission and distribute
to holders of the Notes copies of the financial information that would have been
contained in annual reports and quarterly reports, including management's
discussion and analysis of financial condition and results of operations, that
the Company would have been required to file with the Commission pursuant to the
Exchange Act. Such financial information shall include annual reports containing
consolidated financial statements and notes thereto, together with an opinion
thereon expressed by an independent public accounting firm, as well as quarterly
reports containing unaudited condensed consolidated financial statements for the
first three quarters of each fiscal year. The Company will also make such
reports available to holders considering exchanging their Old Notes in the
Exchange Offer, prospective purchasers of the Notes, securities analysts and
broker-dealers upon their request.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents of the Company which have been filed with the
Commission are hereby incorporated by reference in this Prospectus: (i) the
Company's Annual Report on Form 10-K for the year ended December 31, 1995; (ii)
the Company's Quarterly Reports on Form 10-Q for the quarters ended March 31,
June 30 and September 30, 1996; and (iii) the Company's Current Reports on Form
8-K dated (A) February 23, 1996, as amended by Form 8-K/A dated February 23,
1996 (filed with the Commission on April 8, 1996) and Form 8-K/A2 dated February
23, 1996 (filed with the Commission on April 29, 1996), (B) July 1, 1996 (C)
November 22, 1996 and (D) and December 20, 1996.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to February 10, 1997 and prior to the
termination of the Exchange Offer shall be deemed to be incorporated by
reference into this Prospectus and to be a part hereof from the respective dates
of filing of such documents. Any statement contained herein or in a document all
or part of which is incorporated or deemed to be incorporated by reference
herein shall be deemed to be modified or superseded for purposes of this
Prospectus to the extent that a statement contained herein or in any
subsequently filed document which
2
<PAGE> 4
also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
Prospectus.
This Prospectus incorporates documents by reference which are not presented
herein or delivered herewith. The Company will provide without charge to any
person to whom this Prospectus is delivered, upon the written or oral request of
such person, a copy of any and all of the foregoing documents incorporated
herein by reference (excluding exhibits unless specifically incorporated
therein). Such documents are available upon request from J. Curtis Henderson,
Vice President and General Counsel, Heartland Wireless Communications, Inc., 200
Chisholm Place, Suite 200, Plano, Texas 75075, (972) 423-9494. In order to
ensure timely delivery of such documents, any request should be made by March
, 1997 (five business days prior to the Expiration Date).
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES
LITIGATION REFORM ACT OF 1995
Certain of the matters discussed in this Prospectus include forward-looking
statements that involve risks and uncertainties. Among the risks and
uncertainties to which the Company is subject are the risks inherent in the
Company's limited operating history, the fact that the Company has recorded net
losses since inception, the Company's substantial indebtedness and its historic
inability to realize earnings to cover its fixed charges, the significant risks
associated with managing the Company's growth and the Company's need for
additional financing. As a result, the actual results realized by the Company
could differ materially from the statements made herein. Holders of the Old
Notes considering whether to exchange their Old Notes in the Exchange Offer are
cautioned not to place undue reliance on the forward-looking statements made in
this Prospectus which speak only as of the date hereof.
3
<PAGE> 5
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and consolidated financial statements (including the notes thereto)
appearing elsewhere in this Prospectus or in the documents incorporated herein
by reference. This Prospectus contains forward-looking statements which involve
risks and uncertainties. The Company's actual results may differ significantly
from the results discussed in the forward-looking statements. Factors that might
cause such a difference include, but are not limited to, those discussions in
"Risk Factors." See "Safe Harbor Statement Under the Private Securities
Litigation Reform Act of 1995." Unless the context otherwise requires, (i) all
references in this Prospectus to the "Company" refer collectively to Heartland
Wireless Communications, Inc., its predecessors and its majority-owned
subsidiaries and (ii) all information in this Prospectus includes the "Recent
Acquisitions" and assumes consummation of the "Pending Acquisitions" and
"Pending Divestiture" (each as defined herein). See "Recent Events.
THE COMPANY
Heartland Wireless Communications, Inc. develops, owns and operates
wireless cable television systems, primarily in small to mid-size markets
located in the central United States. At December 31, 1996, the Company had
wireless cable channel rights in 95 markets representing approximately 10.3
million households, approximately 9.2 million of which the Company believes can
be served by line-of-sight ("LOS") transmissions (which generally require a
direct, unobstructed transmission path from the central transmitting antenna to
the antenna located on the subscriber's premises).
At December 31, 1996, the Company's 95 markets included 56 markets in which
the Company has systems in operation (the "Existing Systems") and 39 future
launch markets in which the Company has aggregated sufficient wireless cable
channel rights to commence construction of a system or the Company has leases
with or options from applicants for channel licenses that the Company expects to
be granted by the Federal Communications Commission (the "FCC"). At December 31,
1996, the 56 Existing Systems were providing wireless cable service to
approximately 240,700 subscribers.
In addition, the Company owns approximately 21% of the outstanding common
stock of Wireless One, Inc. ("Wireless One") and approximately 37% of the
outstanding common stock of CS Wireless Systems, Inc. ("CS Wireless"). At
December 31, 1996, Wireless One (and a limited liability company which holds
channel rights in 10 markets and in which Wireless One owns a 50% interest) had
channel rights in 80 markets, representing an estimated 7.3 million LOS
households and serving approximately 69,800 subscribers. At December 31, 1996,
CS Wireless had channel rights in 11 markets, representing an estimated 6.0
million LOS households and serving approximately 65,500 subscribers.
BUSINESS STRATEGY
The Company's primary business objective is to develop, own and operate
wireless cable television systems in markets in which the Company believes it
can achieve positive System EBITDA (as defined herein) rapidly after system
launch and then expand such system while ultimately increasing such system's
cash flow.
The Company targets small to mid-size markets with significant numbers of
LOS households that are unpassed by traditional hard-wire cable. Many of these
households, particularly in rural areas, have limited access to local off-air
VHF/UHF channels (such as ABC, NBC, CBS and Fox), and typically do not have
access to pay television service except via satellite receivers. As a result,
the Company believes that its wireless cable television service is an attractive
alternative to existing choices for such households. The Company estimates that,
within its 95 wireless cable markets, approximately 3.7 million households, or
approximately 36% of the Company's total households, are unpassed by traditional
hard-wire cable systems. The Company believes that it will ultimately achieve a
penetration rate of the unpassed households in its markets that is comparable to
the average penetration rate achieved by traditional hard-wire cable operators
nationally, which Paul Kagan Associates, Inc. estimates to be approximately 64%
as of December 31, 1995.
4
<PAGE> 6
Rural Market Focus. The Company aggregates wireless cable channel rights
and locates operations in geographic clusters of small to mid-size markets that
have a substantial number of households not currently passed by traditional
hard-wire cable. The Company believes that this size market typically has a
stable economic base, less competition from alternative forms of entertainment
and other conditions conducive to wireless cable transmissions. Within the rural
areas of these small to mid-size markets, the Company's subscribers consist
primarily of single family households, as compared to the non-rural areas of
these markets that are typically passed by hard-wire cable and in which multiple
dwelling units ("MDUs") comprise a much larger percentage of the Company's
subscribers. The Company focuses its marketing primarily on rural, unpassed
single family households because they generate a higher revenue per subscriber
than MDU subscribers. As of December 31, 1995, the Company's subscriber base
consisted of approximately 90% single family units and 10% MDUs. However, in
1996, the Company's MDU subscribers have increased to approximately 18% of the
Company's total subscribers as a result of the substantial existing MDU
penetration of several of the markets acquired by the Company in February 1996.
The Company expects that the percentage of MDU subscribers will decline as the
Company maintains its focus on adding subscribers in rural, unpassed areas.
Managed Subscriber Penetration. The Company attempts to manage system
launch and subscriber growth in order to contain system launch costs and to
achieve positive cash flow rapidly. Typically, the Company's operating systems
achieve positive System EBITDA upon obtaining an average of approximately 1,500
single family household subscribers. Within a system, the Company initially
directs its marketing at unpassed households, which typically have limited
access to local off-air VHF/UHF broadcast channels. Once a system achieves
positive System EBITDA, the Company may expand the channel offering and add
subscribers. "System EBITDA" means net income (loss) plus interest expense,
income tax expense, depreciation and amortization expense and all other non-cash
charges, less any non-cash items which have the effect of increasing net income
or decreasing net loss, for a system and includes all selling, general and
administrative expenses attributable to employees employed in the system. System
EBITDA is not a financial measure determined under generally accepted accounting
principles and should not be considered as an alternative to net income as a
measure of operating results or to cash flows as a measure of funds available
for discretionary or other liquidity purposes.
Low Cost Structure. Wireless cable systems typically cost significantly
less to build and operate than traditional hard-wire cable systems. While both
traditional hard-wire cable operators and wireless cable operators must
construct a transmission facility ("head-end"), traditional hard-wire cable
operators must also install an extensive network of coaxial cable and amplifiers
in order to transmit signals from the head-end to subscribers. Once the head-end
is constructed, the Company estimates that each additional single family
household subscriber currently requires an incremental capital expenditure by
the Company of approximately $410 to $465, consisting of, on average, $225 to
$280 of material (depending upon the type and sophistication of the equipment),
$145 of installation labor and overhead charges and $40 of direct commission,
all of which capital expenditures are variable costs. The Company has recently
launched systems utilizing a more sophisticated type of equipment that costs
approximately $225 per installation and therefore it believes that the average
cost of materials will continue to decline as more systems are launched or
Existing Systems are converted to this equipment. Typically, an MDU subscriber
requires an incremental capital expenditure by the Company lower than that of a
single family household subscriber. Also, without an extensive cable network,
wireless cable operators typically incur lower system maintenance costs and
depreciation expense. Finally, by locating its operations in geographic
clusters, the Company can further contain costs by taking advantage of economies
of scale in management, sales and customer service.
Low Churn Rate. The Company currently experiences a low rate of subscriber
turnover of on average approximately 2% to 2.5% per month. The Company believes
that its churn rate is lower than the industry standard because a majority of
its markets are characterized by (i) limited or no access to affordable pay
television alternatives, (ii) less competition from alternative forms of
entertainment and (iii) a stable population base. All of these factors
contribute to a low level of subscriber disconnects which helps the Company
quickly achieve positive System EBITDA as it reduces installation and marketing
expenses.
5
<PAGE> 7
Quality, Value and Customer Service. The Company believes that the key
factors that determine the attractiveness of its service offerings are the
following: (i) programming, (ii) price, (iii) picture quality and reliability
and (iv) customer service.
Programming. In the Existing Systems, the Company believes it has
assembled sufficient channel rights and program agreements to provide
programming competitive with that offered by traditional hard-wire cable
operators and direct broadcast satellite ("DBS") providers. The Company
offers its subscribers a programming package of off-air VHF/UHF channels,
satellite networks and premium programming. In the Existing Systems, the
Company focuses on LOS households that are unpassed by traditional
hard-wire cable, many of which have limited access to local off-air VHF/UHF
channels. These households do not have access to traditional hard-wire
cable service and the Company believes subscribers are likely to focus on
the current inability of DBS operators to offer local off-air channels.
Price. The Company can offer a price to its subscribers for basic
pay-television service that is typically less than traditional hard-wire
cable operators and DBS providers because of lower capital and operating
costs. The Company has greater latitude in pricing its service to
households that are unpassed by traditional hard-wire cable.
Picture Quality and Reliability. Wireless cable subscribers enjoy
substantially outage-free, highly reliable picture quality because there is
no coaxial cable, amplifiers or processing and filtering equipment between
the head-end and the subscriber's household, as in the case of traditional
hard-wire cable. Within the signal range of the Existing Systems, the
picture quality of the Company's service is at least as good as that
typically received by traditional hard-wire cable subscribers because,
absent any line-of-sight obstruction, there is less opportunity for signal
degradation between the Company's head-end and the subscriber.
Customer Service. The Company has established the goal of maintaining
high levels of customer satisfaction. In furtherance of that goal, the
Company emphasizes responsiveness and convenient installation scheduling.
The Company has established customer retention and referral programs in an
effort to obtain and retain new subscribers.
------------------------
The executive offices of the Company are located at 200 Chisholm Place,
Suite 200, Plano, Texas 75075. The telephone number of the executive offices is
(972) 423-9494. The Company's operational headquarters are located in Durant,
Oklahoma.
6
<PAGE> 8
THE EXCHANGE OFFER
Registration Rights
Agreement.................. The Old Notes were sold by the Company on December
20, 1996 to BT Securities Corporation, Alex. Brown
& Sons, Incorporated and Gerard Klauer Mattison &
Co., LLC (the "Initial Purchasers"), who placed the
Old Notes with institutional investors. In
connection therewith, the Company and the Initial
Purchasers executed and delivered for the benefit
of the holders of the Old Notes a registration
rights agreement (the "Registration Rights
Agreement") providing, among other things, for the
Exchange Offer.
The Exchange Offer......... New Notes are being offered in exchange for a like
principal amount of Old Notes. As of the date
hereof, $125,000,000 aggregate principal amount of
Old Notes are outstanding. The Company will issue
the New Notes to Holders (as defined herein)
promptly following the Expiration Date. See "Risk
Factors -- Consequences of Failure to Exchange."
Expiration Date............ 5:00 p.m., New York City time, on March , 1997,
unless the Exchange Offer is extended as provided
herein, in which case the term "Expiration Date"
means the latest date and time to which the
Exchange Offer is extended.
Interest................... Each New Note will bear interest from December 20,
1996, the date of original issuance. No interest
will be paid on the Old Notes accepted for
exchange.
Conditions to the Exchange
Offer.................... The Exchange Offer is subject to certain customary
conditions, which may be waived by the Company. The
Company reserves the right to amend, terminate or
extend the Exchange Offer at any time prior to the
Expiration Date upon the occurrence of any such
condition. See "The Exchange Offer -- Conditions."
Procedures for Tendering
Old Notes.................. Each Holder of Old Notes wishing to accept the
Exchange Offer must complete, sign and date the
Letter of Transmittal, or a facsimile thereof, in
accordance with the instructions contained herein
and therein, and mail or otherwise deliver such
Letter of Transmittal, or such facsimile, or an
Agent's Message (as defined herein) together with
the Old Notes and any other required documentation
to the exchange agent (the "Exchange Agent") at the
address set forth herein. By executing the Letter
of Transmittal or delivering an Agent's Message,
each Holder will represent to the Company, among
other things, that (i) the New Notes acquired
pursuant to the Exchange Offer by the Holder and
any beneficial owners of Old Notes are being
obtained in the ordinary course of business of the
person receiving such New Notes, (ii) neither the
Holder nor such beneficial owner has an arrangement
with any person to participate in the distribution
of such New Notes, (iii) neither the Holder nor
such beneficial owner nor any such other person is
engaging in or intends to engage in a distribution
of such New Notes and (iv) neither the Holder nor
such beneficial owner is an "affiliate," as defined
under Rule 405 promulgated under the Securities
Act, of the Company. Each broker-dealer that
receives New Notes for its own account in exchange
for Old Notes, where such Old Notes were acquired
by such broker-dealer as a result of market-making
activities or other trading activities (other than
Old Notes acquired directly from the Company), may
participate in the Exchange Offer but may be deemed
an "underwriter" under the Securities Act and,
therefore, must acknowledge in the Letter of
Transmittal that it will deliver a prospectus in
connection with any resale of such New Notes. The
Letter of Transmittal states that by so
acknowledging and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it
is an "underwriter" within the meaning of the
Securities Act. See "The Exchange
Offer -- Procedures for Tendering" and "Plan of
Distribution."
7
<PAGE> 9
Special Procedures for
Beneficial Owners.......... Any beneficial owner whose Old Notes are registered
in the name of a broker, dealer, commercial bank,
trust company or other nominee and who wishes to
tender should contact such registered Holder
promptly and instruct such registered Holder to
tender on such beneficial owner's behalf. If such
beneficial owner wishes to tender on such
beneficial owner's own behalf, such beneficial
owner must, prior to completing and executing the
Letter of Transmittal or delivering an Agent's
Message and delivering his Old Notes, either make
appropriate arrangements to register ownership of
the Old Notes in such beneficial owner's name or
obtain a properly completed bond power from the
registered Holder. The transfer of registered
ownership may take considerable time. See "The
Exchange Offer -- Procedures for Tendering."
Guaranteed Delivery
Procedures............... Holders of Old Notes who wish to tender their Old
Notes and whose Old Notes are not immediately
available or who cannot deliver their Old Notes,
the Letter of Transmittal or an Agent's Message or
any other documents required by the Letter of
Transmittal to the Exchange Agent prior to the
Expiration Date must tender their Old Notes
according to the guaranteed delivery procedures set
forth in "The Exchange Offer -- Guaranteed Delivery
Procedures."
Withdrawal Rights.......... Tenders may be withdrawn as provided herein at any
time prior to 5:00 p.m., New York City time, on the
Expiration Date. See "The Exchange
Offer -- Withdrawal of Tenders."
Acceptance of Old Notes and
Delivery of New Notes.... The Company will accept for exchange any and all
Old Notes which are properly tendered in the
Exchange Offer prior to 5:00 p.m., New York City
time, on the Expiration Date. The New Notes issued
pursuant to the Exchange Offer will be delivered
promptly following the Expiration Date. See "The
Exchange Offer -- Terms of the Exchange Offer."
Exchange Agent............. Bankers Trust Company is serving as Exchange Agent
in connection with the Exchange Offer. See "The
Exchange Offer -- Exchange Agent."
Use of Proceeds............ There will be no cash proceeds to the Company from
the exchange pursuant to the Exchange Offer.
Federal Income Tax
Consequences............. The exchange of Old Notes for New Notes will not be
a taxable exchange for Federal income tax purposes.
See "Certain Federal Income Tax Considerations."
Consequences of Failure to
Exchange................. Holders of Old Notes who do not exchange their Old
Notes for New Notes pursuant to the Exchange Offer
will continue to be subject to the restrictions on
transfer of such Old Notes as set forth in the
legend thereon as a consequence of the issuance of
the Old Notes pursuant to exemptions from, or in
transactions not subject to, the registration
requirements of the Securities Act and applicable
state securities laws. In general, Old Notes may
not be offered or sold unless registered under the
Securities Act, except pursuant to an exemption
from, or in a transaction not subject to, the
Securities Act and applicable state securities
laws.
8
<PAGE> 10
SUMMARY DESCRIPTION OF THE NEW NOTES
The Exchange Offer applies to $125,000,000 aggregate principal amount of
Old Notes. The terms of the New Notes are identical in all material respects to
the Old Notes, except that the New Notes have been registered under the
Securities Act and, therefore, will not bear legends restricting their transfer
and will not contain certain provisions providing for an increase in the
interest rate on the Old Notes under certain circumstances relating to the
Registration Rights Agreement, which provisions will terminate as to all of the
Notes upon the consummation of the Exchange Offer. The New Notes will evidence
the same debt as the Old Notes and, except as set forth in the immediately
preceding sentence, will be entitled to the benefits of the Indenture, under
which both the Old Notes were, and the New Notes will be, issued. See
"Description of Notes."
The New Notes.............. $125,000,000 aggregate principal amount 14% Series
B Senior Notes due 2004.
Maturity Date.............. October 15, 2004
Interest Rate and
Payment Dates............ The New Notes will bear interest at the rate of 14%
per annum from December 20, 1996 (the "Issue
Date"). Interest on the New Notes will accrue from
the Issue Date and will be payable semi-annually on
October 15 and April 15 of each year, commencing on
April 15, 1997.
Escrow and Disbursement
Agreement................ The Company placed approximately $22.0 million of
the net proceeds realized from the sale of the Old
Notes to the Initial Purchasers, representing funds
sufficient to pay the first three interest payments
on the Notes, into an Escrow Account (as defined
herein) to be held by the Escrow Agent (as defined
herein) for the benefit of the holders of the
Notes. Until disbursed in accordance with the
Escrow and Disbursement Agreement (as defined
herein), the Escrow Account is designed to secure a
portion of the Company's obligations under the
Notes. Funds will be disbursed from the Escrow
Account only to pay interest on the Notes and, upon
certain repurchases or redemptions of the Notes, to
pay principal of and premium, if any, thereon.
Pending such disbursement, all funds contained in
the Escrow Account will be invested in Marketable
Securities (as defined herein). See "Description of
Notes -- Disbursement of Funds -- Escrow Account"
and "Description of Notes -- Security."
Optional Redemption........ The New Notes will be redeemable, in whole or in
part, at the option of the Company at any time on
or after October 15, 2002 at the redemption prices
set forth herein plus accrued and unpaid interest
thereon, if any, to the redemption date. See
"Description of Notes -- Optional Redemption."
Repurchase Upon Sale of
Capital Stock to Strategic
Equity Investor.......... In the event of a sale by the Company prior to
October 15, 1999 of at least $25.0 million of its
Capital Stock (as defined herein) (other than
Disqualified Stock (as defined herein)) to a
Strategic Equity Investor (as defined herein) in a
single transaction, up to 35% of the Notes may be
redeemed at the option of the Company upon not less
than 30 nor more than 45 days' prior notice given
within 30 days after such sale from the net cash
proceeds thereof at the redemption price set forth
herein plus accrued and unpaid interest thereon, if
any, to the date of redemp-
9
<PAGE> 11
tion, provided that at least 65% in aggregate
principal amount of the Notes originally issued
remains outstanding immediately after the
occurrence of such redemption. See "Description of
Notes -- Optional Redemption."
Ranking.................... The New Notes will be senior obligations of the
Company ranking pari passu in right of payment to
all existing and future indebtedness of the
Company, other than indebtedness that is expressly
subordinated to the Notes; provided, that in the
event of certain asset sales, the Company will be
required to make an offer to purchase some or all
of the Existing Notes before making an offer to
purchase any Notes. The Company has no senior
indebtedness, other than (i) the Existing Notes and
(ii) the BTA Obligation. The Notes are senior in
right of payment to the Convertible Notes (as
defined herein), which are expressly subordinated
to the Notes. In addition, the Company is a holding
company that conducts substantially all of its
business through its subsidiaries. The Notes,
therefore, are effectively subordinated to all
liabilities of the Company's subsidiaries,
including trade payables. The outstanding
liabilities of the Company's consolidated
subsidiaries (including subsidiaries that are not
wholly-owned by the Company) were approximately
$12.1 million at September 30, 1996. Subject to
certain limitations set forth in the Indenture
governing the Notes (the "Indenture"), the Company
and its subsidiaries may incur additional
indebtedness which is secured by assets of the
Company and its subsidiaries. See "Description of
Notes -- General" and "Description of
Notes -- Certain Covenants -- Limitation on
Indebtedness."
Change of Control.......... In the event of a Change of Control, the Company
will be required to make an offer to purchase all
outstanding Notes at a price equal to 101% of the
principal amount thereof plus accrued and unpaid
interest thereon, if any, to the date of
repurchase. See "Description of Notes -- Offer to
Purchase Upon Change of Control."
Certain Covenants.......... The Indenture contains certain covenants that,
among other things, limit the ability of the
Company and its subsidiaries to make restricted
payments, to incur additional indebtedness, to
create liens, to issue preferred or other capital
stock of subsidiaries, to consummate certain asset
sales, to permit restrictions on dividends and
other payments by subsidiaries to the Company, to
consolidate, merge or sell all or substantially all
of its assets, to engage in transactions with
affiliates or to engage in certain businesses. See
"Description of Notes -- Certain Covenants."
For additional information regarding the Notes, see "Description of Notes."
RISK FACTORS
SEE "RISK FACTORS" FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE
CONSIDERED BY HOLDERS PRIOR TO TENDERING THE OLD NOTES IN THE EXCHANGE OFFER.
10
<PAGE> 12
RISK FACTORS
Holders should carefully consider the following risk factors, as well as
the other information included or incorporated by reference in this Prospectus,
prior to making a decision to tender their Old Notes in the Exchange Offer.
CONSEQUENCES OF FAILURE TO EXCHANGE
Holders of Old Notes who do not exchange the Old Notes for New Notes
pursuant to the Exchange Offer will continue to be subject to the restrictions
on transfer of such Old Notes as set forth in the legend thereon as a
consequence of the issuance of the Old Notes pursuant to exemptions from, or in
transactions not subject to, the registration requirements of the Securities Act
and applicable state securities laws. In general, the Old Notes may not be
offered or sold unless registered under the Securities Act, except pursuant to
an exemption from, or in a transaction not subject to, the Securities Act and
applicable state securities laws. The Company does not currently anticipate that
it will register the Old Notes under the Securities Act. Based on
interpretations by the staff of the Commission set forth in no-action letters
issued to third parties, the Company believes that the New Notes issued pursuant
to the Exchange Offer in exchange for Old Notes may be offered for resale,
resold or otherwise transferred by any holder thereof (other than any such
holder that is an "affiliate" of the Company within the meaning of Rule 405
promulgated under the Securities Act) without compliance with the registration
and prospectus delivery provisions of the Securities Act, provided that such New
Notes are acquired in the ordinary course of such holder's business, such holder
has no arrangement with any person to participate in the distribution of such
New Notes and neither such holder nor any such other person is engaging in or
intends to engage in a distribution of such New Notes. Notwithstanding the
foregoing, each broker-dealer that receives New Notes for its own account
pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such New Notes. 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 any resale of New Notes received in exchange for Old Notes where such Old
Notes were acquired by such broker-dealer as a result of market-making
activities or other trading activities (other than Old Notes acquired directly
from the Company). The Company has agreed that, for a period of 120 days from
the date of this Prospectus, it will make this Prospectus available to any
broker-dealer for use in connection with any such resale. See "Plan of
Distribution." However, the ability of any Holder to resell the New Notes is
subject to applicable state securities laws as described in "Risk
Factors -- Blue Sky Restrictions on Resale of New Notes."
NECESSITY TO COMPLY WITH EXCHANGE OFFER PROCEDURES
To participate in the Exchange Offer, and to avoid the restrictions on
transfer of the Old Notes, Holders of Old Notes must transmit a properly
completed Letter of Transmittal or an Agent's Message, including all other
documents required by such Letter of Transmittal, to the Exchange Agent at one
of the addresses set forth below under "The Exchange Offer -- Exchange Agent" on
or prior to the Expiration Date. In addition, either (i) certificates for such
Old Notes must be received by the Exchange Agent along with the Letter of
Transmittal or (ii) a timely confirmation of a book-entry transfer of such Old
Notes, if such procedure is available, into the Exchange Agent's account at The
Depository Trust Company pursuant to the procedure for book-entry transfer
described herein, must be received by the Exchange Agent prior to the Expiration
Date or (iii) the Holder must comply with the guaranteed delivery procedures
described herein. See "The Exchange Offer."
SUBSTANTIAL INDEBTEDNESS OF THE COMPANY; INSUFFICIENCY OF EARNINGS TO COVER
FIXED CHARGES
The Company has a substantial amount of indebtedness. As of September 30,
1996, after giving effect to the issuance of the Old Notes, the Company would
have had approximately $315.2 million of Indebtedness (as defined herein) and
the Company's consolidated subsidiaries would have had approximately $12.1
million of total liabilities. The Indenture limits, but does not prohibit, the
incurrence of additional indebtedness, secured or unsecured, by the Company and
its subsidiaries. As a result, although funds sufficient to pay the
11
<PAGE> 13
first three interest payments on the Notes will be placed into the Escrow
Account, future interest payments on the Notes and Existing Notes will be
payable from the Company's cash flow. Therefore, a substantial portion of the
Company's future cash flow will be devoted to debt service. In addition,
although the Company's 9% Convertible Subordinated Discount Notes due 2004 (the
"Convertible Notes") accrete to face value and no cash interest is payable
thereunder prior to the earlier of November 30, 1999 and the occurrence of
certain events of default (the "Applicable Date"), a substantial portion of the
Company's earnings will be reduced by non-cash debt service. A portion of the
proceeds from the Offering will be used to repay borrowings under the Bank
Facility secured by a lien on the Company's assets. The debt service
requirements of any additional indebtedness could make it more difficult for the
Company to make principal and interest payments on the Notes. For the years
ended December 31, 1991, 1992, 1993, 1994 and 1995 and for the nine months ended
September 30, 1995 and 1996, earnings were insufficient to cover fixed charges
by $66,000, $51,000, $0.4 million, $4.6 million, $20.2 million, $12.5 million
and $35.9 million, respectively. The ability of the Company to make payments of
principal and interest will be largely dependent upon its future financial
performance. Many factors, some of which will be beyond the Company's control
(such as prevailing economic conditions), will affect its financial performance.
There can be no assurance that the Company will be able to generate sufficient
cash flow to cover required interest and principal payments. If the Company is
unable to meet interest and principal payments in the future, it may, depending
upon the circumstances which then exist, seek additional equity or debt
financing, attempt to refinance its existing indebtedness or sell all or part of
its business or assets to raise funds to repay its indebtedness. There can be no
assurance that sufficient equity or debt financing will be available, or, if
available, that it will be on terms acceptable to the Company, that the Company
will be able to refinance its existing indebtedness or that sufficient funds
could be raised through asset sales.
The Company's high level of indebtedness has several important
consequences, including, but not limited to: (i) significant interest expense
and principal repayment obligations resulting in substantial annual fixed
charges; (ii) significant limitations on the Company's ability to obtain
financing, make capital expenditures and acquisitions and take advantage of
other business opportunities that may arise; and (iii) increased vulnerability
to adverse general economic and industry conditions. There can be no assurance
that the Company will be profitable in the future. See "Risk Factors -- Holding
Company Structure; Dependence of Company on Subsidiaries for Repayment of New
Notes," "Risk Factors -- Ranking of Notes," and "Description of Notes."
NET LOSSES SINCE INCEPTION
As of September 30, 1996, the Company had recorded net losses of
approximately $43.6 million since inception in April 1992, due primarily to
start-up costs, interest expense and charges for depreciation and amortization
of capital expenditures to develop its wireless cable systems. Until such time
as the Company substantially increases its subscriber base, resulting in higher
subscription fee revenues, it will continue to experience losses. Because of the
costs associated with launching a wireless cable television system and expanding
its subscriber base, continued growth by the Company is anticipated to reduce
net income, if any, or increase net losses. As a result, the Company expects to
continue to experience net losses for an indefinite period while it develops and
expands its wireless cable systems even if mature individual systems of the
Company are profitable.
HOLDING COMPANY STRUCTURE; DEPENDENCE OF COMPANY ON SUBSIDIARIES FOR REPAYMENT
OF NEW NOTES
The New Notes will be obligations of the Company exclusively. Substantially
all of the operations of the Company are conducted through direct and indirect
subsidiaries. The Company's cash flow and, consequently, its ability to service
debt, including the New Notes, is dependent upon the cash flow of its
subsidiaries and the payment of funds by those subsidiaries to the Company in
the form of loans, dividends or otherwise. The subsidiaries are separate and
distinct legal entities and have no obligation, contingent or otherwise, to pay
any amounts due pursuant to the New Notes or to make any funds available
therefor, whether in the form of loans, dividends or otherwise. In addition,
certain of the Company's subsidiaries may become parties to credit agreements,
which may contain limitations on the ability of such subsidiaries to pay
dividends or to make
12
<PAGE> 14
loans or advances to the Company. The Indenture limits the ability of the
Company to create or permit restrictions on dividends and other payments by its
subsidiaries. See "Description of Notes -- Certain Covenants -- Dividend and
Other Payment Restrictions Affecting Subsidiaries."
Because the Company is a holding company that conducts its business through
its subsidiaries, all existing and future liabilities of the Company's
subsidiaries, including trade payables, will be effectively senior to the New
Notes. As of September 30, 1996, the Company's consolidated subsidiaries,
including those that are not wholly-owned by the Company, had aggregate
liabilities of approximately $12.1 million. The Indenture limits, but does not
prohibit, the incurrence of additional indebtedness by the Company and its
subsidiaries. See "Description of Notes -- Certain Covenants -- Limitation on
Indebtedness."
RANKING OF NOTES
The New Notes will not be secured by any of the assets of the Company
except to the limited extent provided for by the Escrow and Disbursement
Agreement and will become general unsecured obligations of the Company upon
disbursement in full of the funds in the Escrow Account. The Company's
obligation to pay future installments of its bid amount in the FCC's recently
concluded auction ("BTA Auction") of licenses for certain BTAs is secured by a
lien on the licenses purchased in the BTA Auction. Any holders of secured
indebtedness of the Company would be entitled to payment of their indebtedness
out of the proceeds of their collateral prior to the holders of any general
unsecured obligations of the Company, including the New Notes.
The New Notes will be senior obligations of the Company ranking pari passu
in right of payment as to all existing and future indebtedness of the Company,
other than indebtedness that is expressly subordinated to the New Notes. The
Company has no senior indebtedness, other than the Existing Notes and the BTA
Obligation. The New Notes will be senior in right of payment to the Convertible
Notes, which are expressly subordinated to the New Notes. However, the Company
and its subsidiaries may incur additional indebtedness which is secured by
assets of the Company and its subsidiaries. In the event of any distribution or
payment of the assets of the Company in any foreclosure, dissolution,
winding-up, liquidation or reorganization, holders of secured indebtedness will
have a secured prior claim to the assets of the Company that constitute their
collateral. In the event of bankruptcy, liquidation or reorganization of the
Company, except to the extent assets are available to holders of the New Notes
under the Escrow and Disbursement Agreement, holders of the New Notes will
participate ratably with all holders of indebtedness of the Company which is
unsecured and all other general creditors of the Company, based upon the
respective amounts owed to each holder or creditor, in the remaining assets of
the Company, and there is no assurance that there will be sufficient assets to
pay amounts due on the New Notes.
NEED FOR ADDITIONAL FINANCING FOR GROWTH
The growth of the Company's business requires substantial investment on a
continuing basis to finance capital expenditures and expenses related to
subscriber growth and system development. The Company believes that its cash and
cash equivalent assets and cash generated from operations and available bank
financing will be sufficient to fund the Company's operations and expansion at
least through the end of 1997. Additional funds will be necessary to complete
the launch, build-out and expansion of all of the Company's wireless cable
systems and to bring such systems to a mature state. These activities may be
financed in whole or in part directly by the Company and/or by its existing or
future subsidiaries, through debt or equity financings, joint ventures or other
arrangements. As in the past, the Company may also finance its system
construction, development, launch and expansion activities or the acquisition of
additional markets through the sale and/or exchange of its existing portfolio of
wireless cable channel rights. Although the Company believes that cash provided
by operating activities, the sale of wireless cable channel rights that are not
a part of the Company's current strategic plan and proceeds from additional
public or private debt or equity offerings will be sufficient for the Company to
complete its planned system construction, development, launch and expansion
activities in 1997 and beyond, there can be no assurance that the Company will
achieve positive cash flow from operations, that the Company will consummate the
sale of any wireless cable channel rights or that sufficient debt or equity
financing will be available on satisfactory terms and conditions, if at all. In
addition, there is also no assurance that, subject to certain limitations set
forth in the Indenture, the Company
13
<PAGE> 15
will not pursue, from time to time, other opportunities to acquire additional
wireless cable channel rights and businesses that may utilize the capital
currently expected to be available for its current markets. The amount and
timing of the Company's future capital requirements will depend upon a number of
factors, including programming costs, equipment costs, marketing expenses,
staffing levels, subscriber growth and competitive conditions, many of which are
not within the Company's control. Failure to obtain any required additional
financing could materially adversely affect the growth, cash flow or earnings of
the Company.
MANAGEMENT OF GROWTH
The Company has experienced rapid growth in the number of its employees and
the scope of its operating and financial systems. This growth has resulted in an
increased level of responsibility for both existing and new management personnel
and an additional strain on the Company's operating and financial systems. In
particular, certain subscribers in recently acquired systems and in systems
recently converted to new hardware were not billed during portions of the third
quarter due to a billing software problem. The Company has corrected this
problem and is continuing to develop methods to improve its billing systems. To
manage its growth effectively, the Company will be required to implement and
improve its operating and financial systems and controls and to expand, train
and manage its employee base. There can be no assurance that the management,
systems and controls currently in place or any steps taken to improve such
management, systems and controls will be adequate in the future.
COMPETITION
The subscription television industry is highly competitive. Wireless cable
television systems face or may face competition from several sources, such as
traditional hard-wire cable companies, Satellite Master Antenna Television
systems, Direct Broadcast Satellites and other alternative methods of
distributing and receiving television transmissions. In areas where several
local off-air VHF/UHF broadcast signals can be received without the benefit of
subscription television, cable television systems also have experienced
competition from the availability of broadcast signals generally and have found
market penetration to be more difficult. Legislative, regulatory and
technological developments may result in additional and significant competition,
including competition from local telephone companies, from a proposed new
wireless service known as local multi-point distribution and from emerging
trends and technologies. As the telecommunications industry continues to evolve,
the Company may face additional competition from new providers of entertainment
and data services. In particular, there are a rapidly growing number of
information and data service providers serving consumers via on-line services
and communications networks, such as the Internet and World Wide Web. Although
the Company is unaware of any such provider delivering programming like that
available on wireless cable television, there can be no assurance that
continuing advances in technology will not make such delivery possible. Even if
such direct competition does not exist in the future, however, the Company's
services will compete, indirectly, with entertainment services generally,
including those provided by operators using evolving technology. Many actual and
potential competitors have greater financial, marketing and other resources than
the Company. No assurance can be given that the Company will compete
successfully.
GOVERNMENT REGULATION
The right to transmit on wireless cable channels is regulated by the FCC
and the copyright for the retransmission of local off-air VHF/UHF broadcasts is
regulated by the United States Copyright Office (the "U.S. Copyright Office")
pursuant to the Copyright Act of 1976, as amended (the "Copyright Act").
Federal Legislation. Pursuant to the Cable Television Consumer Protection
and Competition Act of 1992, as amended (the "Cable Act"), the FCC adopted rate
regulations exclusively for traditional hard-wire cable systems. Pursuant to the
Telecommunications Act of 1996 (the "Act"), which was enacted in February 1996,
all cable rate regulation will be eliminated after three years, and for "small
systems" as defined in the Act, and under certain other circumstances, rate
regulation will be eliminated immediately. The Company cannot predict precisely
what effect these regulations or other governmental regulations may have on
traditional hard-wire cable operators as to price and service. While current FCC
regulations are intended to
14
<PAGE> 16
promote the development of a competitive pay television industry, the rules and
regulations affecting the wireless cable industry may change, and any future
changes in FCC rules, regulations, policies and procedures could have an adverse
effect on the industry as a whole and on the Company in particular.
Copyright Act. Secondary transmission of a broadcast signal is permissible
only if approved by the copyright holder or if subject to compulsory licensing
under the Copyright Act. The United States Congress has adopted legislation
extending the compulsory copyright licensing system to include wireless cable
systems. As a result of this action, wireless cable operators may engage in
secondary transmissions of distant programming without the copyright holder's
approval, provided that such operators file certain reports and pay certain fees
set by copyright arbitration royalty panels.
Regulation of Retransmission. Effective October 6, 1993, pursuant to the
Cable Act, local broadcasters (other than super-stations) may require that cable
operators obtain their consent before retransmitting local off-air VHF/UHF
broadcasts. The FCC has exempted wireless cable operators from the
retransmission consent rules if the receive-site antenna is either owned by the
subscriber or within the subscriber's control and available for purchase by the
subscriber upon the termination of service. In all other cases, wireless cable
operators must obtain consent to retransmit local broadcast signals. The Company
has obtained such consents in each of its Existing Systems where the Company is
retransmitting broadcast signals on a wireless cable channel. Such consents will
be required in the Company's other markets. There can be no assurance that the
Company will be able to obtain such consents on terms satisfactory to the
Company.
Other Regulations. Wireless cable operators are also subject to regulation
by the Federal Aviation Administration (the "FAA") with respect to the
construction of transmission towers and to certain local zoning regulations
affecting construction of towers and other facilities. There may also be
restrictions imposed by local authorities. There can be no assurance that the
Company will not be required to incur additional costs in complying with such
regulations and restrictions. No assurance can be given that new regulations
will not be imposed or that existing regulations will not be changed. Any such
new or modified regulations could have a material adverse effect on the wireless
cable industry as a whole and on the Company in particular.
DEPENDENCE ON CHANNEL LEASES; LOSS OF LICENSES BY LESSORS
The Company is dependent on leases with unaffiliated third parties for most
of its wireless cable channel rights. The Company has entered into leases for
substantially all of its wireless cable channel rights with channel license
holders, applicants for channel licenses and applicants that have had
previously-filed applications returned without prejudice by the FCC and which
will be refiled. The Company's channel leases typically cover four ITFS and one
to four MDS channels each. Generally, ITFS channels may only be owned by
qualified non-profit educational organizations and in general must use a minimum
of 20 hours per week per channel for educational programming. The remaining
excess ITFS channel air time, other than 20 hours per channel per week of
reserved recapture time, may be leased to wireless cable operators for
commercial use without further restriction. MDS channels may be owned by
commercial entities and allow full-time usage without programming restrictions.
Under the rules of the FCC, the term of an ITFS channel lease cannot exceed ten
years. There is no such restriction for MDS channel leases. ITFS licenses
generally are granted for a term of ten years and are subject to renewal by the
FCC. MDS licenses granted prior to mid-1996 will expire on May 1, 2001, unless
renewed. The use of such channels by the license holders is subject to
regulation by the FCC and the Company's ability to continue to enjoy the
benefits of its leases with channel license holders is dependent upon the
continuing compliance by the channel license holders with applicable regulations
including the requirement that ITFS license holders must meet certain
educational use requirements in order to lease transmission capacity to wireless
cable operators. The remaining initial terms of most of the Company's channel
leases are approximately 5 to 10 years, although certain of the Company's
channel leases have initial terms expiring during the next several years. Most
of the Company's leases grant the Company a right of first refusal to purchase
the channels after the expiration of the lease if FCC rules and regulations so
permit, provide for automatic renewal of the lease term upon FCC renewal of the
license and/or require the parties to negotiate lease renewals in good faith.
The termination of or failure to renew a channel lease or termination of the
channel license, or the denial by the FCC of an application for an extension of
time to construct an authorized station, would result in the Company being
unable to deliver television programming
15
<PAGE> 17
on such channel(s). Although the Company does not believe that the termination
of or failure to renew a single channel lease or license would adversely affect
the Company, several of such terminations or failures in one or more markets
that the Company actively serves could have a material adverse effect on the
Company. Additionally, FCC licenses also specify construction deadlines, which,
if not met, could result in the loss of the license. Requests for additional
time to construct may be filed and are subject to review pursuant to FCC rules.
Certain of the Company's channel rights are subject to pending extension
requests and it is anticipated that additional extensions will be required.
There can be no assurance that the FCC will grant any particular extension
request or license renewal request. There can also be no assurance that the FCC
will not change its current policies regarding such extension application to
require a greater showing or limit the number of extensions one license holder
may request.
UNCERTAINTY OF GRANT OF PENDING APPLICATIONS
Applications for wireless cable licenses are subject to approval by the
FCC. Applicants with whom the Company has entered into leases have filed a
series of applications with the FCC for a number of wireless cable channels and
the Company has entered into leases for additional channels with applicants that
have had previously-filed applications returned without prejudice by the FCC and
which will be refiled. The vast majority of such leases are in the form of lease
agreements with qualified non-profit educational organizations for ITFS
channels. ITFS applications undergo review by the FCC's engineering and legal
staff, and there is no limit on the time that may elapse between filing an
application with the FCC for a modification or new license and action thereon by
the FCC. Once the FCC staff determines that an application meets certain basic
technical and legal qualifications, the staff will then determine whether each
application is proximate to the transmit and receive-site locations of other
applications. Those applications that would result in signal interference to
other pending applications ("Competing Applications") must then undergo a
comparative selection process. The FCC's ITFS application selection process is
based on a set of objective criteria that includes whether an applicant is
located in the community to be served, whether the applicant is an accredited
institution and how many hours of formal educational programming the applicant
proposes to transmit on the channels. The FCC employs a tie-breaking procedure
if two or more applicants receive the same number of points in the initial
comparative review. The tie-break process involves determining the number of
students who will receive the applicant's educational programming. Thus, the
outcome of the selection process when two or more qualified applicants are
competing for the same channels lends itself to a degree of predictability that
varies according to the circumstances. Most of the Company's lease agreements
with applicants for channel licenses involve channel licenses for which
Competing Applications have been filed. In each market, the Company has
carefully considered the FCC's selection criteria in choosing the educational
entities with which it has entered into lease agreements. However, because the
FCC's application review process does not lend itself to complete certainty, and
given the considerable number of applications involved, no assurance can be
given as to the precise number of applications that will be granted. A number of
competing applicants for channel licenses have filed with the FCC petitions to
deny the applications in which the Company has acquired channel rights, based
upon alleged substantive defects in the applicant or in technical or other
aspects of the application. The Company anticipates that the FCC will deny most
of the currently pending petitions to deny the applications in which the Company
has acquired channel rights. However, no assurance can be given as to the
precise number of such petitions that will be granted or denied. Although the
Company does not believe that any single award of a channel license to an
applicant that has filed a Competing Application or the granting of any single
petition to deny an application in which the Company has acquired channel rights
would adversely affect the Company, several of such awards or grants could have
a material adverse effect on the Company.
UNCERTAINTY OF ABILITY TO OBTAIN FCC AUTHORIZATIONS
Wireless cable systems transmit programming over wireless cable channels
that are licensed by the FCC. Generally, the Company believes that a minimum of
12 wireless cable channels is necessary to offer a commercially viable wireless
cable system in most rural markets and that more channels are required in more
competitive markets, such as those well served by traditional cable television
systems. In some of its long-term launch markets, the Company does not currently
have the right to operate 12 channels from the same
16
<PAGE> 18
transmitter site. In those markets, the Company is dependent upon (i) the grant
of pending applications for modification of existing licenses for unbuilt ITFS
stations, (ii) the grant of such license modification applications which have
not yet been filed and/or (iii) the grant of applications for new ITFS licenses,
some of which were filed during the FCC's October 1995 filing window but have
not yet been granted, and some of which have not yet been filed. There can be no
assurance that any or all of the modification applications and new license
applications actually made or anticipated to be made by the Company will be
granted by the FCC. Although the Company does not believe that the denial of any
single modification or new license application will adversely affect it, the
denial of several such applications, particularly if concentrated in one or a
few of the Company's markets, could have a material adverse effect on its
growth.
INTERFERENCE ISSUES
Under current FCC regulations, a wireless cable operator may install
receive-site equipment and serve any point where its signal can be received,
subject to the interference protection rights of certain other wireless cable
systems. Interference from other wireless cable systems can limit the ability of
a wireless cable system to serve particular points, in the same manner that
interference from one television station limits the ability of a viewer to
receive another television station broadcasting on the same frequency. In
licensing ITFS and MDS stations, a primary concern of the FCC is avoiding
situations where proposed stations are predicted to cause interference to the
reception of existing or previously proposed station signals. Pursuant to
current FCC regulations, a wireless cable license holder is generally protected
from interference within a 35-mile radius of the transmission site. In September
1995, the 35-mile protected service area of MDS stations became fixed and will
not change if a licensee modifies its facilities to a new transmission location.
The Company's business plan involves moving the authorized transmitter site of
various of its MDS and ITFS licensed stations and obtaining the grant of
licenses to new stations that the Company will use in its wireless cable
systems. The FCC interference protection standards may make one or more of those
proposed relocations or new grants unavailable. In any such event, it may be
necessary to negotiate interference agreements with the licensees of stations
which would otherwise block such relocations or new grants. There can be no
assurance that the Company will be able to negotiate any required interference
agreements on terms acceptable to it. In the event that the Company cannot
obtain interference agreements required to implement its plans for a given
market, the Company may have to curtail or modify operations in that market. Any
substantial modification or curtailment of the Company's operations in its
markets could have a material adverse effect on its growth or financial
performance. In addition, the Company's leases with MDS and ITFS licensees
require their cooperation, it is possible that one or more of the Company's
channel lessors may hinder or delay the Company's efforts to use the channels in
accordance with its plans for a particular market.
DEPENDENCE ON PROGRAM MATERIAL AGREEMENTS
In connection with its distribution of television programming, the Company
is dependent on fixed-term contracts with various program suppliers. Generally,
the terms of the Company's material programming contracts are for periods of one
to five years. Although the Company has no reason to believe that any such
contracts will be cancelled or will not be renewed upon expiration, if such
contracts are cancelled or not renewed, the Company will have to seek program
material from other sources. There is no assurance that other program material
will be available to the Company on acceptable terms or at all or, if so
available, that such material will be acceptable to the Company's subscribers.
The likelihood that program material will be unavailable to the Company is
significantly mitigated by the Cable Act and various FCC regulations issued
thereunder, which, among other things, impose limits on exclusive programming
contracts and generally prohibit cable programmers in which a cable operator has
an attributable interest from discriminating against cable competitors with
respect to the price and terms and conditions of sale of programming. Only a few
of the major cable television programming services carried by the Company are
not currently directly owned by a vertically integrated cable operator, and the
Company historically has not had difficulty in arranging satisfactory contracts
for these services. The Cable Act is the subject of various legal challenges and
if it were found to be unconstitutional, program suppliers might raise their
prices or make their program material unavailable to the Company.
17
<PAGE> 19
PHYSICAL LIMITATIONS OF WIRELESS CABLE TRANSMISSION
Wireless cable programming is transmitted through the air via microwave
frequencies from a transmission facility to a small receiving antenna at each
subscriber's location, which generally requires a direct, unobstructed
line-of-sight from the transmission facility to the subscriber's receiving
antenna. Therefore, in communities with tall trees, hilly terrain, tall
buildings or other obstructions in the transmission path, wireless cable
transmission can be difficult or impossible to receive at certain locations
without the use of signal boosters. Consequently, the Company may not be able to
supply services to certain potential subscribers. In addition, in limited
circumstances, extremely adverse weather can damage transmission and receiving
antennas as well as transmit site equipment.
WIRELESS ONE AND CS WIRELESS MINORITY INVESTMENTS
The Company owns approximately 21% of the outstanding common stock of
Wireless One and approximately 37% of the outstanding common stock of CS
Wireless. Although the Company has the right to designate two directors of each
of Wireless One and CS Wireless, the Company cannot exercise unfettered control
over these substantial investments. The Company does not control the management
of either Wireless One or CS Wireless, and is dependent upon the skill,
expertise and managerial efforts of the management of their respective
management teams to achieve a return on the Company's substantial investment in
each entity. To the extent that Wireless One or CS Wireless proves unsuccessful
in its business, the value of the Company's investment therein will be adversely
affected.
AGREEMENT TO VOTE FOR BOARD DESIGNEE OF JUPITER; CO-SALE RIGHT
David E. Webb, a Director, co-founder and principal stockholder of the
Company, L. Allen Wheeler, interim President, interim Chief Executive Officer,
Vice Chairman of the Board of Directors of the Company, and Hunt Capital Group,
L.L.C. ("Hunt Capital"), a principal stockholder of the Company and affiliate of
J. R. Holland, Jr., the Chairman of the Board of the Company, collectively own
approximately 40.8% of the outstanding Common Stock. Pursuant to the terms of a
Stockholders' Agreement (the "Stockholders' Agreement"), for so long as Jupiter,
the purchaser of $40.0 million gross proceeds of the Convertible Notes, retains
a 25% interest in the Convertible Notes originally purchased by it and/or the
shares of Common Stock issued or issuable upon conversion thereof (the
"Conversion Shares") originally issuable to it, each of Hunt Capital, David E.
Webb and L. Allen Wheeler, have agreed to vote their shares (i) in favor of the
election to the Company's Board of Directors of one designee of Jupiter and (ii)
in favor of the Company's Board of Directors consisting of at least three and
not more than seven members. The agreement of such stockholders to elect
Jupiter's designee to the Board of Directors may restrict the ability of such
stockholders to elect their preferred slate of directors to manage the Company,
which may result in a member of the Board of Directors having interests that
conflict with those of the other stockholders of the Company. In addition, under
the terms of the Stockholders' Agreement, each of Hunt Capital, David E. Webb
and L. Allen Wheeler have agreed that, for so long as Jupiter holds such 25%
interest, in the event of any proposed sale or series of sales of Common Stock
by any such stockholder to a non-affiliate for aggregate consideration greater
than $15.0 million or representing in excess of 5% of the outstanding Common
Stock at such time, such stockholder shall not effect such sale unless Jupiter
is permitted to participate in such sale on a pro rata basis with such
stockholder. The co-sale right may reduce the likelihood of a change in control
of the Company, because any potential purchaser of stock held by the controlling
stockholders may also be required to purchase shares by Jupiter.
FUTURE ACQUISITIONS
The Company anticipates that it will continue to acquire additional channel
rights and systems, both in its existing markets and in other markets, both
directly and indirectly by acquiring other wireless cable television providers.
Such acquisitions may be in geographic areas or markets outside of the Company's
traditional focus of small to mid-size markets principally in the central United
States. Subject to the limitations set forth in the Existing Indentures or the
Indenture, any such acquisitions may be made for Common Stock, cash, notes or
other evidences of indebtedness, property or a combination thereof. The
incurrence of indebtedness in connection with such acquisitions could adversely
affect the liquidity, results of operations and financial
18
<PAGE> 20
condition of the Company. On October 22, 1996, the Company registered 1,250,000
shares of Common Stock to be issued from time to time to acquire additional
wireless cable channel rights and businesses.
LACK OF PUBLIC MARKET FOR THE NEW NOTES
The Old Notes are designated for trading in the PORTAL market. There is no
established trading market for the New Notes. Although the Initial Purchasers
have advised the Company that they currently intend to make a market in the New
Notes, they are not obligated to do so and it may discontinue such market-making
at any time without notice. The Company does not currently intend to list the
New Notes on any securities exchange or to seek approval for quotation through
any automated quotation system. Accordingly, there can be no assurance as to the
development of any market or the liquidity of any market that may develop for
the New Notes. If such a market were to exist, no assurance can be given as to
the trading prices of the New Notes. Future trading prices of the New Notes will
depend on many factors, including, among other things, prevailing interest
rates, the Company's operating results and the market for similar securities.
POSSIBLE VOLATILITY OF PRICE OF THE NEW NOTES
The market price of the Common Stock could be subject to wide fluctuations
in response to quarterly variations in the Company's results of operations,
changes in earnings estimates by analysts, conditions in the wireless cable
industry or general market or economic conditions. In addition, in recent years
the stock market has experienced extreme price and volume fluctuations. These
fluctuations have had a substantial effect on the market prices for many
emerging growth companies, often unrelated to the operating performance of the
specific companies. Such market fluctuations could adversely affect the price of
the Common Stock and, to the extent that the Company's business requires
additional financing, the price of the New Notes.
RECENT EVENTS
COOPERATIVE PURCHASING
The Company, CS Wireless, Wireless One and CAI Wireless Systems, Inc.
recently formed a cooperative organization to negotiate and obtain volume-based
programming contracts at a discount from rates currently paid by each of the
parties. The organization may expand its purposes upon approval of each party to
include mutually advantageous endeavors such as volume-based purchases of
equipment and other services. There can be no assurance that any such benefits
will be realized.
RECENT ACQUISITIONS; PENDING ACQUISITIONS AND DIVESTITURE
On January 13, 1997, the Company consummated the acquisition of two
wireless cable operating systems in Oklahoma for an aggregate of approximately
$1.75 million in cash (collectively, the "Recent Acquisitions"). In addition,
the Company has reached an agreement in principle to acquire one wireless cable
operating system in Iowa and wireless cable assets in one market in each of
Nebraska and Montana from CS Wireless for an aggregate of approximately $4.6
million to be paid by an equivalent reduction of the principal balance of a
$15.0 million note payable by CS Wireless to the Company (collectively, the
"Pending Acquisitions"). As part of such agreement in principle, the Company
will sell to CS Wireless for approximately $1.4 million certain channel rights
in Grand Rapids, Michigan which the Company expects to receive from a third
party in exchange for certain existing channel rights of the Company. Such sum
may be paid in cash or the principal balance of the CS Wireless note may be
reduced by $3.2 million rather than $4.6 million. In addition, a subsidiary of
the Company has agreed to sell to CAI Wireless Systems, Inc. ("CAI") certain
wireless cable assets in Portsmouth, New Hampshire (the "Pending Divesture").
The Company will receive approximately 267,000 shares of common stock of CS
Wireless as its portion of the consideration for such assets. Each agreement for
the three markets to be acquired and for the divestiture of the Portsmouth, New
Hampshire market is subject to customary closing conditions. The Company
anticipates that these agreements will be consummated on or before March 31,
1997, although there can be no assurance that any of these transactions will be
consummated.
19
<PAGE> 21
RESIGNATION OF DAVID E. WEBB
Effective January 22, 1997, David E. Webb resigned as President and Chief
Executive Officer of the Company to become the President and CEO of CS Wireless.
L. Allen Wheeler has been named as interim President and interim Chief Executive
Officer of the Company. Mr. Webb will continue to serve as a Director of, and
will provide consulting services to, the Company.
THE EXCHANGE OFFER
PURPOSE AND EFFECT OF THE EXCHANGE OFFER
The Old Notes were sold by the Company on December 20, 1996 to the Initial
Purchasers who placed the Old Notes with institutional investors. In connection
therewith, the Company and the Initial Purchasers entered into the Registration
Rights Agreement, pursuant to which the Company agreed, for the benefit of the
Holders of the Old Notes, that the Company would, at its sole cost, (i) within
120 days following the original issuance of the Old Notes, file with the
Commission the Registration Statement (of which this Prospectus is a part) under
the Securities Act with respect to an issue of a series of new notes of the
Company identical in all material respects to the series of Old Notes (except
that such New Notes would not contain terms with respect to transfer
restrictions) and (ii) cause such Registration Statement to be declared
effective under the Securities Act within 180 days following the original
issuance of the Old Notes. Upon the effectiveness of the Registration Statement,
the Company will offer, pursuant to this Prospectus, to the Holders of the Old
Notes the opportunity to exchange their Old Notes for a like principal amount of
New Notes, to be issued without a restrictive legend and which may, generally,
be reoffered and resold by the holder without restrictions or limitations under
the Securities Act. The term "Holder" with respect to the Exchange Offer means
any person in whose name Old Notes are registered on the books of the Company or
any other person who has obtained a properly completed bond power from the
registered holder.
The Company has not requested, and does not intend to request, an
interpretation by the staff of the Commission with respect to whether the New
Notes issued pursuant to the Exchange Offer in exchange for the Old Notes may be
offered for sale, resold or otherwise transferred by any holder without
compliance with the registration and prospectus delivery provisions of the
Securities Act. Instead, based on interpretations by the staff of the Commission
set forth in no-action letters issued to third parties, the Company believes
that New Notes issued pursuant to the Exchange Offer in exchange for Old Notes
may be offered for resale, resold and otherwise transferred by any holder of
such New Notes (other than any such holder that is an "affiliate" of the Company
within the meaning of Rule 405 promulgated under the Securities Act) without
compliance with the registration and prospectus delivery provisions of the
Securities Act, provided that such New Notes are acquired in the ordinary course
of such Holder's business, such Holder has no arrangement or understanding with
any person to participate in the distribution of such New Notes and neither such
Holder nor any other such person is engaging in or intends to engage in a
distribution of such New Notes. Since the Commission has not considered the
Exchange Offer in the context of a no-action letter, there can be no assurance
that the staff of the Commission would make a similar determination with respect
to the Exchange Offer. Any Holder who is an affiliate of the Company or who
tenders in the Exchange Offer for the purpose of participating in a distribution
of the New Notes cannot rely on such interpretations by the staff of the
Commission and must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with a resale transaction.
Each broker-dealer that receives New Notes for its own account pursuant to
the Exchange Offer must acknowledge that it will deliver a prospectus in
connection with any resale of such New Notes. 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 New Notes
received in exchange for Old Notes where such Old Notes were acquired by such
broker-dealer as a result of market-making activities or other trading
activities (other than Old Notes acquired directly from the Company). The
Company has agreed that, for a period of 120 days after the date of this
Prospectus, it will
20
<PAGE> 22
make this Prospectus available to any broker-dealer for use in connection with
any such resale. See "Plan of Distribution."
In the event that (i) any changes in law or the applicable interpretations
of the staff of the Commission do not permit the Company to effect the Exchange
Offer, (ii) the Exchange Offer is not consummated within 210 days of the Issue
Date, (iii) in certain circumstances, the Initial Purchaser so requests within
180 days after the consummation of the Exchange Offer or (iv) in the case of any
Holder that participates in the Exchange Offer, such Holder does not receive New
Notes on the date of the exchange that may be sold without restriction under
state and Federal securities laws (other than due solely to the status of such
Holder as an affiliate of the Company within the meaning of the Securities Act)
and so notifies the Company within 60 days after such Holder first becomes aware
of such restriction and provides the Company with a reasonable basis for its
conclusion, in the case of each of clauses (i)-(iv) of this sentence, then the
Company will promptly deliver to the Holders and the Trustee written notice
thereof (the "Shelf Notice") and, at its cost, (a) as promptly as practicable,
file a shelf registration statement covering resales of the Notes (the "Shelf
Registration Statement"), (b) use all reasonable efforts to cause the Shelf
Registration Statement to be declared effective under the Securities Act by the
60th day after the delivery of the Shelf Notice (or promptly in the event of a
request by the Initial Purchaser) and (c) use all reasonable efforts to keep the
Shelf Registration Statement effective until three years after its effective
date, or such shorter period ending when (i) all Notes covered by the Shelf
Registration Statement have been sold in the manner set forth and as
contemplated therein or (ii) a subsequent Shelf Registration Statement covering
all unregistered Old Notes has been declared effective under the Securities Act.
The Company will, in the event of the filing of a Shelf Registration Statement,
provide to each Holder of the Old Notes copies of the prospectus which is a part
of the Shelf Registration Statement, notify each such Holder when the Shelf
Registration Statement for the Old Notes has become effective and take certain
other actions as are required to permit unrestricted resales of the Old Notes. A
Holder of Old Notes that sells such Old Notes pursuant to the Shelf Registration
Statement generally will be required to be named as a selling securityholder in
the related prospectus and to deliver a prospectus to purchasers, will be
subject to certain of the civil liability provisions under the Securities Act in
connection with such sales and will be bound by the provisions of the
Registration Rights Agreement which are applicable to such a Holder (including
certain indemnification obligations). In addition, each Holder of the Old Notes
will be required to deliver information to be used in connection with the Shelf
Registration Statement and to provide comments on the Shelf Registration
Statement within the time periods set forth in the Registration Rights Agreement
in order to have its Old Notes included in the Shelf Registration Statement and
to benefit from the provisions regarding liquidated damages set forth in the
following paragraph.
In the event that either (i) the Registration Statement is not filed with
the Commission on or prior to the 120th calendar day following the Issue Date,
(ii) the Registration Statement is not declared effective on or prior to the
180th calendar day following the Issue Date, or (iii) (A) the Exchange Offer is
not consummated, (B) the Shelf Registration Statement is not declared effective
on or prior to the 60th calendar day following the delivery of the Shelf Notice
or (C) the Shelf Registration Statement ceases to be effective (each such event
referred to in clauses (i) through (iii), a "Registration Default"), the Company
will pay increased cash interest to each Holder of the Old Notes during the
first 90 day period immediately following the occurrence of such Registration
Default in an amount equal to 0.50% per annum on the Old Notes. The amount of
the cash interest will increase by an additional 0.50% per annum for each
subsequent 90 day period until the Registration Statement is filed, the
Registration Statement is declared effective, the Exchange Offer is consummated
or the Shelf Registration Statement is declared effective or again became
effective, as the case may be, up to a maximum amount of additional cash
interest of 2.00% per annum. All accrued cash interest shall be paid to record
holders of the Old Notes by wire transfer of immediately available funds or by
federal funds check by the Company on each Interest Payment Date. Upon (x) the
filing of the Registration Statement in the case of clause (i) above, (y) the
effectiveness of the Registration Statement in the case of clause (ii) above or
(z) the consummation of the Exchange Offer or the effectiveness of a Shelf
Registration Statement, as the case may be, in the case of clause (iii) above,
and provided that none of the conditions set forth in clauses (i), (ii) and
(iii) above continues to exist, such additional interest shall cease to accrue
on the Old Notes from the date of such filing, effectiveness or consummation.
21
<PAGE> 23
The summary herein of certain provisions of the Registration Rights
Agreement does not purport to be complete and is subject to, and is qualified in
its entirety by reference to, all the provisions of the Registration Rights
Agreement, a copy of which has been filed as an exhibit to the Registration
Statement of which this Prospectus forms a part.
The Old Notes are designated for trading in the PORTAL market. To the
extent Old Notes are tendered and accepted in the Exchange Offer, the principal
amount of outstanding Old Notes will decrease with a resulting decrease in the
liquidity in the market therefor. Following the consummation of the Exchange
Offer, Holders of Old Notes who were eligible to participate in the Exchange
Offer but who did not tender their Old Notes will not be entitled to certain
rights under the Registration Rights Agreement and such Old Notes will continue
to be subject to certain restrictions on transfer. Accordingly, the liquidity of
the market for the Old Notes could be adversely affected.
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth in this Prospectus
and in the Letter of Transmittal, the Company will accept any and all Old Notes
validly tendered and not withdrawn prior to 5:00 p.m., New York City time, on
the Expiration Date. The Company will issue $1,000 principal amount of New Notes
in exchange for each $1,000 principal amount of outstanding Old Notes accepted
in the Exchange Offer. Holders may tender some or all of their Old Notes
pursuant to the Exchange Offer. However, Old Notes may be tendered only in
integral multiples of $1,000.
The form and terms of the New Notes will be identical in all material
respects to the form and terms of the Old Notes, except that the New Notes have
been registered under the Securities Act and therefore will not bear legends
restricting their transfer and will not contain certain provisions providing for
an increase in the interest rate on the Old Notes under certain circumstances
relating to the Registration Rights Agreement, which provisions will terminate
upon the consummation of the Exchange Offer. The New Notes will evidence the
same debt as the Old Notes and will be entitled to the benefits of the Indenture
under which the Old Notes were, and the New Notes will be, issued.
As of the date of this Prospectus, $125,000,000 aggregate principal amount
of the Old Notes are outstanding. The Company has fixed the close of business on
February 10, 1997 as the record date for the Exchange Offer for purposes of
determining the persons to whom this Prospectus, together with the Letter of
Transmittal, will initially be sent. As of such date, there were
registered Holders of the Old Notes.
Holders of the Old Notes do not have any appraisal or dissenters' rights
under the Delaware General Corporation Law (the "DGCL") or the Indenture in
connection with the Exchange Offer. The Company intends to conduct the Exchange
Offer in accordance with the applicable requirements of the Exchange Act and the
rules and regulations of the Commission promulgated thereunder.
The Company shall be deemed to have accepted validly tendered Old Notes
when, as and if the Company has given oral notice (confirmed in writing) oral or
written notice thereof to the Exchange Agent. The Exchange Agent will act as
agent for the tendering Holders for the purpose of the exchange of Old Notes.
If any tendered Old Notes are not accepted for exchange because of an
invalid tender, the occurrence of certain other events set forth herein or
otherwise, any such unaccepted Old Notes will be returned, without expense, to
the tendering Holder thereof as promptly as practicable after the Expiration
Date.
Holders who tender Old Notes in the Exchange Offer will not be required to
pay brokerage commissions or fees or, subject to the instructions in the Letter
of Transmittal, transfer taxes with respect to the exchange of Old Notes
pursuant to the Exchange Offer. The Company will pay all charges and expenses,
other than certain applicable taxes, in connection with the Exchange Offer. See
"The Exchange Offer -- Fees and Expenses."
22
<PAGE> 24
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term "Expiration Date" shall mean 5:00 p.m., New York City time, on
March , 1997, unless the Company, in its sole discretion, extends the Exchange
Offer, in which case the term "Expiration Date" shall mean the latest date and
time to which the Exchange Offer is extended.
In order to extend the Exchange Offer, the Company will notify the Exchange
Agent of any extension by oral notice (confirmed in writing) or written notice
and will make a public announcement thereof prior to 9:00 a.m., New York City
time, on the next business day after each previously scheduled expiration date.
The Company reserves the right, in its sole discretion, (i) to delay
accepting any Old Notes, to extend the Exchange Offer or, if any of the
conditions set forth below under "The Exchange Offer -- Conditions" shall not
have been satisfied, to terminate the Exchange Offer, by giving oral notice
(confirmed in writing) or written notice of such delay, extension or termination
to the Exchange Agent or (ii) to amend the terms of the Exchange Offer in any
manner. Any such delay in acceptance, extension, termination or amendment will
be followed as promptly as practicable by a public announcement thereof. If the
Exchange Offer is amended in a manner determined by the Company to constitute a
material change, the Company will promptly disclose such amendment by means of a
prospectus supplement that will be distributed to the registered Holders, and
the Company will extend the Exchange Offer for a period of five to 10 business
days, depending upon the significance of the amendment and the manner of
disclosure to the registered Holders, if the Exchange Offer would otherwise
expire during such five- to 10-business-day period.
Without limiting the manner in which the Company may choose to make public
announcement of any delay, extension, termination or amendment of the Exchange
Offer, the Company shall have no obligation to publish, advertise or otherwise
communicate any such public announcement, other than by making a timely release
to the Dow Jones News Service.
INTEREST ON THE NEW NOTES
The New Notes will bear interest from December 20, 1996, the Issue Date. No
interest will be paid on the Old Notes accepted for exchange.
PROCEDURES FOR TENDERING
The tender of Old Notes by a Holder thereof pursuant to one of the
procedures set forth below and the acceptance thereof by the Company will
constitute a binding agreement between such Holder and the Company in accordance
with the terms and subject to the conditions set forth herein and in the Letter
of Transmittal. This Prospectus, together with the Letter of Transmittal, will
first be sent on or about February , 1997, to all Holders of Old Notes known
to the Company and the Exchange Agent.
Only a Holder of the Old Notes may tender such Old Notes in the Exchange
Offer. A Holder who wishes to tender any Old Notes for exchange pursuant to the
Exchange Offer must transmit a properly completed and duly executed Letter of
Transmittal, or a facsimile thereof, or an Agent's Message, including any other
required documents, to the Exchange Agent prior to 5:00 p.m., New York City
time, on the Expiration Date. In addition, either (i) the certificates for such
Old Notes must be received by the Exchange Agent along with the Letter of
Transmittal or (ii) a timely confirmation of a book-entry transfer (a
"Book-Entry Confirmation") of such Old Notes, if such procedure is available,
into the Exchange Agent's account at The Depository Trust Company (the
"Book-Entry Transfer Facility") pursuant to the procedure for book-entry
transfer described below, must be received by the Exchange Agent prior to the
Expiration Date or (iii) the Holder must comply with the guaranteed delivery
procedures described below. To be tendered effectively, the Old Notes, Letter of
Transmittal or Agent's Message and other required documents must be received by
the Exchange Agent at the address set forth below under "Exchange Agent" prior
to 5:00 p.m., New York City time, on the Expiration Date.
The term "Agent's Message" means a message, transmitted by the Book-Entry
Transfer Facility to, and received by, the Exchange Agent and forming a part of
a Book-Entry Confirmation, which states that such Book-Entry Transfer Facility
has received an express acknowledgment from the participant in such Book-
23
<PAGE> 25
Entry Transfer Facility tendering Old Notes which are the subject of such
Book-Entry Confirmation that such participant has received and agrees to be
bound by the terms of the Letter of Transmittal, and that the Company may
enforce such agreement against such participant.
The method of delivery of Old Notes and the Letter of Transmittal and all
other required documents to the Exchange Agent is at the election and risk of
the Holder. Instead of delivery by mail, it is recommended that Holders use an
overnight or hand delivery service. If sent by mail, it is recommended that
registered mail, return receipt requested, be used and proper insurance be
obtained. In all cases, sufficient time should be allowed to assure delivery to
the Exchange Agent before the Expiration Date. No Letter of Transmittal or Old
Notes should be sent to the Company.
Any beneficial owner whose Old Notes are registered in the name of a
broker, dealer, commercial bank, trust company or other nominee and who wishes
to tender should contact the registered Holder promptly and instruct such
registered Holder to tender on such beneficial owner's behalf. If such
beneficial owner wishes to tender on such beneficial owner's own behalf, such
beneficial owner must, prior to completing and executing the Letter of
Transmittal or delivering an Agent's Message and delivering such beneficial
owner's Old Notes, either make appropriate arrangements to register ownership of
the Old Notes in such beneficial owner's name or obtain a properly completed
bond power from the registered Holder. The transfer of registered ownership may
take considerable time.
Signatures on a Letter of Transmittal or a notice of withdrawal, as the
case may be, must be guaranteed by an Eligible Institution (as defined herein)
unless the Old Notes tendered pursuant thereto are tendered (i) by a registered
Holder who has not completed the box entitled "Special Registration
Instructions" or "Special Delivery Instructions" on the Letter of Transmittal or
(ii) for the account of an Eligible Institution. In the event that signatures on
a Letter of Transmittal or a notice of withdrawal, as the case may be, are
required to be guaranteed, such guarantee must be by a member firm of a
registered national securities exchange or of the National Association of
Securities Dealers, Inc., a commercial bank or trust company having an office or
correspondent in the United States or an "eligible guarantor institution" within
the meaning of Rule 17Ad-15 promulgated under the Exchange Act (an "Eligible
Institution").
If the Letter of Transmittal is signed by a person other than the
registered Holder of any Old Notes listed therein, such Old Notes must be
endorsed or accompanied by a properly completed bond power, signed by such
registered Holder as such registered Holder's name appears on such Old Notes.
If the Letter of Transmittal or any Old Notes or bond powers are signed by
trustees, executors, administrators, guardians, attorneys-in-fact, officers of
corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and unless waived by the Company,
evidence satisfactory to the Company of their authority to so act must be
submitted with the Letter of Transmittal.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance and withdrawal of tendered Old Notes will be determined by
the Company in its sole discretion, which determination will be final and
binding. The Company reserves the absolute right to reject any and all Old Notes
not properly tendered or any Old Notes the Company's acceptance of which would,
in the opinion of counsel for the Company, be unlawful. The Company also
reserves the right to waive any defects, irregularities or conditions of tender
as to particular Old Notes. The Company's interpretation of the terms and
conditions of the Exchange Offer (including the instructions in the Letter of
Transmittal) will be final and binding on all parties. Unless waived, any
defects or irregularities in connection with tenders of Old Notes must be cured
within such time as the Company shall determine. Although the Company intends to
notify Holders of defects or irregularities with respect to tenders of Old
Notes, neither the Company, the Exchange Agent nor any other person shall incur
any liability for failure to give such notification. Tenders of Old Notes will
not be deemed to have been made until such defects or irregularities have been
cured or waived. Any Old Notes received by the Exchange Agent that the Company
determines are not properly tendered and as to which the defects or
irregularities have not been cured or waived will be returned by the Exchange
Agent to the tendering Holders, unless otherwise provided in the Letter of
Transmittal, as soon as practicable following the Expiration Date.
24
<PAGE> 26
By tendering, each Holder will represent to the Company, among other
things, that (i) the New Notes acquired by the Holder and any beneficial owners
of Old Notes pursuant to the Exchange Offer are being obtained in the ordinary
course of business of the persons receiving such New Notes, (ii) neither the
Holder nor such beneficial owner has an arrangement with any person to
participate in the distribution of such New Notes, (iii) neither the Holder nor
such beneficial owner nor any such other person is engaging in or intends to
engage in a distribution of such New Notes and (iv) neither the Holder nor any
such other person is an "affiliate," as defined under Rule 405 promulgated under
the Securities Act, of the Company. Each broker-dealer that receives New Notes
for its own account in exchange for Old Notes, where such Old Notes were
acquired by such broker-dealer as a result of market-making activities or other
trading activities (other than Old Notes acquired directly from the Company),
may participate in the Exchange Offer but may be deemed an "underwriter" under
the Securities Act and, therefore, must acknowledge in the Letter of Transmittal
that it will deliver a prospectus in connection with any resale of such New
Notes. The Letter of Transmittal states that by so acknowledging and by
delivering a prospectus, a broker-dealer will not be deemed to admit that it is
an "underwriter" within the meaning of the Securities Act. See "Plan of
Distribution."
BOOK-ENTRY TRANSFER
The Exchange Agent will make a request to establish an account with respect
to the Old Notes at the Book-Entry Transfer Facility for purposes of the
Exchange Offer within two business days after the date of this Prospectus, and
any financial institution that is a participant in the Book-Entry Transfer
Facility's system may make book-entry delivery of Old Notes by causing the Book-
Entry Transfer Facility to transfer such Old Notes into the Exchange Agent's
account at the Book-Entry Transfer Facility in accordance with such Book-Entry
Transfer Facility's procedures for transfer. However, although delivery of Old
Notes may be effected through book-entry transfer at the Book-Entry Transfer
Facility, the Letter of Transmittal or facsimile thereof, or an Agent's Message,
with any required signature guarantees and any other required documents, must,
in any case, be transmitted to and received by the Exchange Agent at one of the
addresses set forth below under "The Exchange Offer -- Exchange Agent" on or
prior to the Expiration Date or the guaranteed delivery procedures described
below must be complied with.
GUARANTEED DELIVERY PROCEDURES
Holders who wish to tender their Old Notes and (i) whose Old Notes are not
immediately available or (ii) who cannot deliver their Old Notes, the Letter of
Transmittal or any other required documents to the Exchange Agent prior to the
Expiration Date may effect a tender if:
(a) the tender is made through an Eligible Institution;
(b) prior to the Expiration Date, the Exchange Agent receives from
such 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 Holder, the certificate number(s)
of such Old Notes and the principal amount of Old Notes tendered, stating
that the tender is being made thereby and guaranteeing that, within three
New York Stock Exchange trading days after the Expiration Date, the Letter
of Transmittal (or facsimile thereof) or an Agent's Message, together with
the certificate(s) representing the Old Notes, or a Book-Entry
Confirmation, and any other documents required by the Letter of Transmittal
will be deposited by the Eligible Institution with the Exchange Agent; and
(c) such properly completed and executed Letter of Transmittal (or
facsimile thereof) or an Agent's Message, as well as the certificate(s)
representing all tendered Old Notes in proper form for transfer, or a
Book-Entry Confirmation, as the case may be, and all other document
required by the Letter of Transmittal are received by the Exchange Agent
within three New York Stock Exchange trading days after the Expiration
Date.
Upon request to the Exchange Agent, a Notice of Guaranteed Delivery will be
sent to Holders who wish to tender their Old Notes according to the guaranteed
delivery procedures set forth above.
25
<PAGE> 27
WITHDRAWAL OF TENDERS
To withdraw a tender of Old Notes in the Exchange Offer, a written or
facsimile transmission notice of withdrawal must be received by the Exchange
Agent at its address set forth herein prior to 5:00 p.m., New York City time, on
the Expiration Date. Any such notice of withdrawal must (i) specify the name of
the person having deposited the Old Notes to be withdrawn (the "Depositor"),
(ii) identify the Old Notes to be withdrawn (including the certificate number or
numbers and principal amount of such Old Notes), (iii) be signed by the Holder
in the same manner as the original signature on the Letter of Transmittal by
which such Old Notes were tendered (including any required signature guarantees)
or be accompanied by documents of transfer sufficient to have the Trustee with
respect to the Old Notes register the transfer of such Old Notes into the name
of the persons withdrawing the tender and (iv) specify the name in which any
such Old Notes are to be registered, if different from that of the Depositor. If
certificates for Old Notes have been delivered or otherwise identified to the
Exchange Agent, then, prior to the release of such certificates, the withdrawing
Holder must also submit the serial numbers of the particular certificates to be
withdrawn and a signed notice of withdrawal with signatures guaranteed by an
Eligible Institution unless such Holder is an Eligible Institution. If Old Notes
have been tendered pursuant to the procedure for book-entry transfer described
above, any notice of withdrawal must specify the name and number of the account
at the Book-Entry Transfer Facility to be credited with the withdrawn Old Notes
and otherwise comply with the procedures of such facility. 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, which determination
shall be final and binding on all parties. Any Old Notes so withdrawn will be
deemed not to have been validly tendered for purposes of the Exchange Offer and
no New Notes will be issued with respect thereto unless the Old Notes so
withdrawn are validly retendered. Properly withdrawn Old Notes may be retendered
by following one of the procedures described above under "The Exchange
Offer -- Procedures for Tendering" at any time prior to the Expiration Date.
Any Old Notes which have been tendered but which are not accepted for
payment due to withdrawal, rejection of tender or termination of the Exchange
Offer will be returned as soon as practicable to the Holder thereof without cost
to such Holder (or, in the case of Old Notes tendered by book-entry transfer
into the Exchange Agent's account at the Book-Entry Transfer Facility pursuant
to the book-entry transfer procedures described above, such Old Notes will be
credited to an account maintained with such Book-Entry Transfer Facility for the
Old Notes).
CONDITIONS
Notwithstanding any other term of the Exchange Offer, the Company shall not
be required to accept for exchange, or exchange New Notes for, any Old Notes,
and may terminate the Exchange Offer as provided herein before the acceptance of
such Old Notes, if:
(a) the Exchange Offer shall violate applicable law or any applicable
interpretation of the staff of the Commission; or
(b) any action or proceeding is instituted or threatened in any court
or by any governmental agency that might materially impair the ability of
the Company to proceed with the Exchange Offer or any material adverse
development has occurred in any existing action or proceeding with respect
to the Company; or
(c) any governmental approval has not been obtained, which approval
the Company shall deem necessary for the consummation of the Exchange
Offer.
If the Company determines in its sole discretion that any of the conditions
are not satisfied, the Company may (i) refuse to accept any Old Notes and return
all tendered Old Notes to the tendering Holders (or, in the case of Old Notes
tendered by book-entry transfer into the Exchange Agent's account at the
Book-Entry Transfer Facility pursuant to the book-entry transfer procedures
described above, such Old Notes will be credited to an account maintained with
such Book-Entry Transfer Facility), (ii) extend the Exchange Offer and retain
all Old Notes tendered prior to the expiration of the Exchange Offer, subject,
however, to the rights of Holders to withdraw such Old Notes (see "The Exchange
Offer -- Withdrawal of Tenders") or (iii) waive
26
<PAGE> 28
such unsatisfied conditions with respect to the Exchange Offer and accept all
properly tendered Old Notes which have not been withdrawn. If such waiver
constitutes a material change to the Exchange Offer, the Company will promptly
disclose such waiver by means of a prospectus supplement that will be
distributed to the registered Holders, and the Company will extend the Exchange
Offer for a period of five to 10 business days, depending upon the significance
of the waiver and the manner of disclosure to the registered Holders, if the
Exchange Offer would otherwise expire during such five- to 10-business-day
period.
EXCHANGE AGENT
Bankers Trust Company has been appointed as Exchange Agent for the Exchange
Offer. Questions and requests for assistance, requests for additional copies of
this Prospectus or of the Letter of Transmittal and requests for Notices of
Guaranteed Delivery should be directed to the Exchange Agent addressed as
follows:
<TABLE>
<S> <C> <C>
To: Bankers Trust Company
By Mail: By Hand: By Overnight Mail or Courier:
BT Services Tennessee, Inc. Bankers Trust Company BT Services Tennessee, Inc.
Reorganization Unit Corporate Trust and Agency Corporate Trust and Agency
P.O. Box 292737 Group Group
Nashville, TN 37229-2737 Receipt & Delivery Window Reorganization Unit
123 Washington St., 1st Floor 648 Grassmere Park Road
New York, NY 10006 Nashville, TN 37211
For information call:
(800) 735-7777
Confirm: (615) 835-3572
Facsimile: (615) 835-3701
</TABLE>
FEES AND EXPENSES
The expenses of soliciting tenders will be borne by the Company. The
principal solicitation is being made by mail; however, additional solicitation
may be made by telegraph, telephone or in person by officers and regular
employees of the Company and its affiliates.
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 acceptances of the Exchange Offer. The Company, however, will pay the
Exchange Agent reasonable and customary fees for its services and will reimburse
it for its reasonable out-of-pocket expenses in connection therewith.
The cash expenses to be incurred in connection with the Exchange Offer will
be paid by the Company. Such expenses include fees and expenses of the Exchange
Agent and Trustee, accounting and legal fees and printing costs, among others.
The Company will pay all transfer taxes, if any, applicable to the exchange
of Old Notes pursuant to the Exchange Offer. If, however, certificates
representing New Notes or Old Notes for principal amounts not tendered or
accepted for exchange are to be delivered to, or are to be issued in the name
of, any person other than the registered Holder of the Old Notes tendered, or if
tendered Old Notes are registered in the name of any person other than the
person signing the Letter of Transmittal, or if a transfer tax is imposed for
any reason other than the exchange of Old Notes pursuant to the Exchange Offer,
then the amount of any such transfer taxes (whether imposed on the registered
Holder or any other person) will be payable by the tendering Holder. If
satisfactory evidence of payment of such taxes or exemption therefrom is not
submitted with the Letter of Transmittal, the amount of such transfer taxes will
be billed directly to such tendering Holder.
ACCOUNTING TREATMENT
The New Notes will be recorded at the same carrying value as the Old Notes,
which is face value, as reflected in the Company's accounting records on the
date of the exchange. Accordingly, no gain or loss for
27
<PAGE> 29
accounting purposes will be recognized. The expenses of the Exchange Offer and
the unamortized expenses related to the issuance of the Old Notes will be
amortized over the term of the New Notes.
DESCRIPTION OF NOTES
GENERAL
The Old Notes were, and the New Notes will be, issued under an Indenture,
as supplemented (the "Indenture"), between the Company and First Trust of New
York, National Association, as trustee (the "Trustee"). The terms of the New
Notes are identical in all material respects to the Old Notes, except that the
New Notes have been registered under the Securities Act and, therefore, will not
bear legends restricting their transfer and will not contain certain provisions
providing for an increase in the interest rate on the Old Notes under certain
circumstances relating to the Registration Rights Agreement, which provisions
will terminate upon the consummation of the Exchange Offer. Collectively, the
Old Notes and New Notes are referred to herein as the "Notes." The Indenture
will be qualified under the Trust Indenture Act of 1939, as amended, (the "Trust
Indenture Act") upon effectiveness of the Registration Statement of which this
Prospectus forms a part.
The terms of the Notes include those stated in the Indenture and those made
part of the Indenture by reference to the Trust Indenture Act as in effect on
the date of the qualification of the Indenture under the Trust Indenture Act.
The Notes are subject to all such terms, and holders of Notes (the "Holders")
are referred to the Indenture and the Trust Indenture Act for a statement
thereof. The following summary of certain provisions of the Indenture does not
purport to be complete and is subject to, and is qualified in its entirety by
reference to, the Indenture, including the definitions therein of certain terms
used below. The definitions of certain terms used in the following summary are
set forth below under "Certain Definitions." As used in this section, the term
"Company" refers only to Heartland Wireless Communications, Inc. and not to its
subsidiaries and the term "Holder" refers to a holder of a Note.
The Old Notes are, and the New Notes will be, secured by a first priority
security interest in the Escrow Account described under "Disbursement of
Funds -- Escrow Account." The Notes are senior obligations of the Company
ranking pari passu in right of payment to all existing and future Indebtedness
of the Company, other than Indebtedness that is expressly subordinated to the
Notes. The Company has no senior Indebtedness, other than the Existing Notes and
the BTA Obligation. The Notes are senior in right of payment to the Convertible
Notes, which are expressly subordinated to the Notes. In addition, the
operations of the Company are conducted through its Subsidiaries and, therefore,
the Company will be dependent upon the cash flow of its Subsidiaries to meet its
obligations under the Notes. As a result, the Notes will be effectively
subordinated to all existing liabilities and future Indebtedness and other
liabilities and commitments of the Company's Subsidiaries. The outstanding
liabilities of the Company's consolidated Subsidiaries (including all
liabilities of consolidated Subsidiaries that are not wholly-owned by the
Company) were approximately $12.1 million at September 30, 1996. Subject to
certain limitations set forth in the Indenture, the Company and its Subsidiaries
may incur Indebtedness which is secured by assets of the Company and its
Subsidiaries. Any right of the Company to receive assets of the Company's
Subsidiaries or any future Subsidiaries of the Company, upon the latter's
liquidation or reorganization (and the consequent right of the Holders 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, although other creditors of such
Subsidiary may be secured by certain assets of such Subsidiary.
The New Notes will constitute a new issue of securities for which there is
currently no trading market. See "Risk Factors -- Lack of Public Market for the
New Notes."
The New Notes will be issued in fully registered form only, without
coupons, in denominations of $1,000 and integral multiples thereof. Initially,
Bankers Trust Company will act as Paying Agent and Registrar for the Notes. The
New Notes may be presented for registration or transfer and exchange at the
offices of the Registrar, which will be the Registrar's corporate trust office.
The Company may change any Paying Agent and Registrar without notice to the
Holders. The Company will pay principal (and premium, if any) on the
28
<PAGE> 30
New Notes at the Paying Agent's corporate office in New York, New York. At the
Company's option, interest may be paid by check mailed to the registered
addresses of Holders.
PRINCIPAL, MATURITY AND INTEREST
The Notes are limited in aggregate principal amount to $125.0 million and
will mature on October 15, 2004. Interest on the Notes will accrue at the rate
of 14% per annum and will be payable semi-annually in cash on each October 15
and April 15, commencing on April 15, 1997, to the Persons who are registered
Holders at the close of business on the October 1 and April 1 immediately
preceding the applicable interest payment date. Interest on the Notes will
accrue from the most recent date to which interest has been paid or, if no
interest has been paid, from the date of issuance.
OPTIONAL REDEMPTION
Optional Redemption. The Notes will not be redeemable at the Company's
option prior to October 15, 2002. Thereafter, the Notes will be subject to
redemption at the option of the Company, in whole or in part, upon not less than
30 nor more than 60 days' notice, at the redemption prices (expressed as
percentages of principal amount) set forth below plus accrued and unpaid
interest thereon to the applicable redemption date, if redeemed during the
twelve-month period beginning on October 15 of the years indicated below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
---- ----------
<S> <C>
2002........................................................ 102.333%
2003 and thereafter......................................... 100.000%
</TABLE>
Optional Redemption Upon Sale of Equity to Strategic Equity Investor.
Notwithstanding the foregoing, in the event of the sale by the Company prior to
October 15, 1999 of at least $25.0 million of its Capital Stock (other than
Disqualified Stock) to a Strategic Equity Investor in a single transaction, the
Company may, at its option, use the net cash proceeds of such sale of Capital
Stock to redeem up to 35% of the Notes at a redemption price equal to 114% of
the principal amount thereof plus accrued and unpaid interest thereon, if any,
to the date of redemption; provided that at least 65% of the initial principal
amount of the Notes remains outstanding immediately after such redemption. In
order to effect the foregoing redemption with the proceeds of any such sale of
Capital Stock (other than Disqualified Stock), the Company shall make such
redemption not more than 120 days after the consummation of any such sale of
Capital Stock.
MANDATORY REDEMPTION
Except as set forth below under "Offer to Purchase Upon Change of Control"
and "Certain Covenants -- Limitation on Asset Sales," the Company will not be
required to make mandatory redemption or sinking fund payments with respect to
the Notes.
SELECTION AND NOTICE
If less than all of the Notes are to be redeemed at any time, selection of
Notes for redemption will be made by the Trustee or Registrar in compliance with
the requirements of the principal national securities exchange, if any, on which
the Notes are listed, or, if the Notes are not so listed, on a pro rata basis,
by lot or by such method as the Trustee shall deem fair and appropriate,
provided that no Notes with a principal amount of $1,000 or less shall be
redeemed 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 to be redeemed. A new Note in principal amount
equal to the unredeemed portion will be issued in the name of the Holder thereof
upon cancellation of the original Note. On and after the redemption date,
interest will cease to accrue on the Notes or portions of the Notes called for
redemption.
29
<PAGE> 31
OFFER TO PURCHASE UPON CHANGE OF CONTROL
The Indenture provides that upon the occurrence of a Change of Control,
each Holder will have the right to require that the Company purchase all or a
portion of such Holder's Notes pursuant to the offer described below (the
"Change of Control Offer"), at a purchase price equal to 101% of the principal
amount thereof plus accrued and unpaid interest thereon, if any, to the date of
purchase.
Within 30 days following the date upon which a Change of Control occurs,
the Company must send, by first class mail, a notice to each Holder, with a copy
to the Trustee and Paying Agent, which notice shall govern the terms of the
Change of Control Offer. Such notice shall state, among other things, the
purchase date, which must be no earlier than 30 days nor later than 45 days from
the date such notice is mailed, other than as may be required by law (the
"Change of Control Payment Date"). Holders electing to have a Note purchased
pursuant to a Change of Control Offer will be required to surrender the Note,
with the form entitled "Option of Holder to Elect Purchase" on the reverse of
the Note completed, to the Paying Agent at the address specified in the Note
prior to the close of business on the third Business Day prior to the Change of
Control Payment Date.
If a Change of Control Offer is made, there can be no assurance that the
Company will have available funds sufficient to pay the Change of Control
purchase price for all the Notes that might be delivered by Holders seeking to
accept the Change of Control Offer. In the event the Company is required to
purchase outstanding Notes pursuant to a Change of Control Offer, the Company
expects that it would seek third party financing to the extent it does not have
available funds to meet its purchase obligations. However, the Indenture limits
the Company's ability to incur Indebtedness (see "Certain
Covenants -- Limitation on Indebtedness") and there can be no assurance that the
Company would be able to obtain such financing.
The definition of "Change of Control" includes a disposition of all or
substantially all of the property and assets of the Company. With respect to the
disposition of property or assets, the phrase "all or substantially all" as used
in the Indenture (including as set forth under "Certain Covenants -- Merger,
Consolidation or Sale of Assets" below) varies according to the facts and
circumstances of the subject transaction, has no clearly established meaning
under New York law (which is the governing law under the Indenture) and is
subject to judicial interpretation. Accordingly, in certain circumstances there
may be a degree of uncertainty in ascertaining whether a particular transaction
would involve a disposition of "all or substantially all" of the property or
assets of the Company, and therefore it may be unclear as to whether a Change of
Control has occurred and whether the Company is required to make a Change of
Control Offer.
Neither the Board of Directors of the Company nor the Trustee may waive the
covenant relating to a Holder's right to redemption upon a Change of Control.
Restrictions in the Indenture described herein on the ability of the Company and
its Subsidiaries to incur additional Indebtedness, to grant liens on its
property, to make Restricted Payments and to make Asset Sales may also make more
difficult or discourage a takeover of the Company, whether favored or opposed by
the management or Permitted Holders of the Company. Consummation of any such
transaction in certain circumstances may require redemption or repurchase of the
Notes, and there can be no assurance that the Company or the acquiring party
will have sufficient financial resources to effect such redemption or
repurchase. Such restrictions and the restrictions on transactions with
Affiliates may, in certain circumstances, make more difficult or discourage any
leveraged buyout of the Company or any of its Subsidiaries by the management or
Permitted Holders of the Company. While such restrictions cover a wide variety
of arrangements which have traditionally been used to effect highly leveraged
transactions, the Indenture may not afford the Holders of Notes protection in
all circumstances from the adverse aspects of a highly leveraged transaction,
reorganization, restructuring, merger or similar transaction.
The Company will comply with the requirements of 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 connection with the
repurchase of Notes pursuant to a Change of Control Offer. To the extent that
the provisions of any securities laws or regulations conflict with the "Change
of Control" provisions of the Indenture, the Company shall comply with the
applicable securities law and regulations and shall not be deemed to have
breached its obligations under the "Change of Control" provisions of the
Indenture by virtue thereof.
30
<PAGE> 32
DISBURSEMENT OF FUNDS -- ESCROW ACCOUNT
The Company placed approximately $22.0 million of the net proceeds realized
from the sale of the Old Notes, representing funds sufficient to pay the first
three interest payments on the Notes, in an escrow account (the "Escrow
Account") held by the Escrow Agent for the benefit of the Trustee under the
Indenture in accordance with the Escrow and Disbursement Agreement. The Company
entered into the Escrow and Disbursement Agreement, which provides, among other
things, that funds may be disbursed from the Escrow Account only to pay interest
on the Notes (or, if a portion of the Notes has been retired by the Company,
funds representing the interest payment on the retired Notes may be paid to the
Company) and, upon certain repurchases or redemptions thereof, to pay principal
of and premium, if any, thereon. Pending such disbursement, the Company will
cause all funds contained in the Escrow Account to be invested in Marketable
Securities. Interest earned on these Marketable Securities will be added to the
Escrow Account.
The Notes are secured by a first priority security interest in the Escrow
Account. See "Security" below.
CERTAIN COVENANTS
Limitation on Restricted Payments. The Indenture provides that the Company
and its Subsidiaries may not, directly or indirectly (i) declare or pay any
dividend or make any distribution on account of any Equity Interests of the
Company or any of its Subsidiaries other than dividends or distributions payable
(A) in Equity Interests of the Company that are not Disqualified Stock or (B) to
the Company or any Wholly-Owned Subsidiary of the Company; (ii) purchase, redeem
or otherwise acquire or retire for value any Equity Interests of the Company or
any of its Subsidiaries (other than any such Equity Interests owned by the
Company or a Wholly-Owned Subsidiary); (iii) purchase, redeem, defease or
otherwise acquire or retire for value any Indebtedness that is pari passu or
subordinated in right of payment to the Notes, except in accordance with the
scheduled repayment provisions set forth in the original documentation governing
such Indebtedness; or (iv) in a single transaction or a series of related
transactions, until the date on which the ratio of Annualized EBITDA to
Consolidated Interest Expense equals or exceeds 1.75 to 1.00, make Investments
subsequent to November 30, 1996 in a cumulative amount for the Company and all
of its Subsidiaries, in excess of (A) the sum of (1) $15.0 million, and (2) 100%
of the Net Proceeds received by the Company from the issue or sale of Equity
Interests of the Company subsequent to November 30, 1996 (other than Equity
Interests sold to a Subsidiary of the Company or to an employee stock ownership
plan or similar trust and other than Disqualified Stock) less (B) the cumulative
amount of Net Proceeds received by the Company from the issue or sale of Equity
Interests of the Company that has been applied to make Restricted Payments (all
such payments and other actions set forth in clauses (i) through (iv) above
being collectively referred to as "Restricted Payments"), unless, at the time of
such Restricted Payment: (a) no Default or Event of Default shall have occurred
and be continuing or would occur as a consequence thereof; (b) after giving
effect to such Restricted Payment on a pro forma basis as if such Restricted
Payment had been made at the beginning of the applicable fiscal quarter, the
Company could incur $1.00 of additional Indebtedness pursuant to the Annualized
Cash Flow Ratio test described below under "Certain Covenants -- Limitation on
Indebtedness"; and (c) such Restricted Payment, together with the aggregate of
all other Restricted Payments made by the Company and its Subsidiaries after the
Issue Date, is less than the sum of: (x) 50% of the Consolidated Net Income (or
if Consolidated Net Income shall be a loss, minus 100% of such loss) of the
Company earned from the first day of the fiscal quarter during which the Issue
Date occurs to the end of the most recent fiscal quarter ending prior to the
date of such Restricted Payment, plus (y) 100% of the aggregate Net Cash
Proceeds received by the Company from the issue or sale of Equity Interests of
the Company (other than Equity Interests sold to a Subsidiary of the Company or
to an employee stock ownership plan or similar trust and other than Disqualified
Stock or the Net Proceeds from the sale of Equity Interests applied to make
Investments in accordance with this covenant) since the Issue Date.
Notwithstanding the foregoing, the Company and its Subsidiaries may not,
directly or indirectly, make any Investment in Wireless Cable Related Assets
other than Permitted Assets, except as permitted under clause (x) of the
following paragraph.
Notwithstanding the foregoing, the provisions set forth in the immediately
preceding paragraph do not prohibit (i) the payment of any dividend within 60
days after the date of declaration thereof, if at such date of declaration such
payment would have complied with the provisions of the Indenture; (ii) so long
as no Default
31
<PAGE> 33
or Event of Default shall have occurred and be continuing, the redemption,
repurchase, retirement or other acquisition of any Equity Interests of the
Company in exchange for, or out of the net proceeds of, the substantially
concurrent sale for cash or Marketable Securities (other than to a Subsidiary of
the Company) of other Equity Interests of the Company that are not Disqualified
Stock; (iii) so long as no Default or Event of Default shall have occurred and
be continuing, the purchase 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 pursuant to any employment
agreement, management equity subscription agreement or stock option plan or
similar agreement in effect as of the Issue Date or entered into in the ordinary
course of business for consideration which, when added to all loans made
pursuant to clause (iv) below during the fiscal year and then outstanding, does
not exceed $0.5 million in the aggregate in any fiscal year or $2.5 million in
the aggregate over the life of the Notes; (iv) so long as no Default or Event of
Default shall have occurred and be continuing, the making of loans and advances
to employees of the Company or any Subsidiary thereof in the ordinary course of
business which, when added to the aggregate consideration paid pursuant to
clause (iii) above during the same fiscal year, does not exceed $0.5 million in
any fiscal year or $2.5 million in the aggregate over the life of the Notes;
provided that upon repayment of such loans or advances made after the Issue
Date, such repaid amounts shall no longer be included in the principal amount of
loans and advances made to employees; (v) so long as no Default or Event of
Default shall have occurred and be continuing, a Permitted Refinancing; (vi) so
long as no Default or Event of Default shall have occurred and be continuing,
the redemption, repurchase, retirement or other acquisition of Equity Interests
of a Subsidiary of the Company for (A) Equity Interests of the Company that are
not Disqualified Stock or (B) up to $1.0 million in the aggregate over the life
of the Notes of cash consideration; (vii) the payment of dividends on Preferred
Stock of Subsidiaries outstanding on the Issue Date; (viii) Investments in
Wireless Cable Related Assets made with the Net Cash Proceeds from an Asset Sale
made in compliance with the first paragraph of the "Limitation on Asset Sales"
covenant (whether such Asset Sale shall have been consummated prior to or after
the Issue Date) or otherwise permitted by the "Limitation on Asset Sales"
covenant, provided that if such Investment had been acquired in a simultaneous
swap or exchange for the assets disposed of in such Asset Sale, such swap or
exchange would have complied with the provisions of the third paragraph under
the "Limitation on Asset Sales" covenant; (ix) Investments that constitute part
of an Asset Sale transaction consummated in compliance with or otherwise
permitted by the provisions of the third paragraph under the "Limitation on
Asset Sales" covenant; and (x) Investments in the Wireless Cable Business
acquired in consideration for the issuance of Equity Interests of the Company
(other than Disqualified Stock) and cash paid in lieu of the issuance of
fractional shares and in satisfaction of any applicable dissenter's or appraisal
rights (provided that such Investments need not be in Permitted Assets). The
amounts referred to in clauses (i), (ii), (iii), (iv) and (vi) shall be included
as Restricted Payments in any computation made pursuant to clause (c) above.
Restricted Payments shall be deemed not to include Permitted Payments and
Permitted Investments.
Not later than the making of any Restricted Payment, the Company shall
deliver to the Trustee an Officers' Certificate (as defined in the Indenture)
stating that such Restricted Payment is permitted and setting forth the basis
upon which the calculations required by the covenant "Restricted Payments" were
computed.
Limitation on Indebtedness. The Indenture provides that the Company will
not, and will not permit any of its Subsidiaries to, directly or indirectly,
create, incur, assume, Guarantee, acquire, become liable, contingently or
otherwise, with respect to, or otherwise become responsible for payment of
(collectively, "incur") any Indebtedness; provided that the Company (but not its
Subsidiaries) may incur Indebtedness if (i) no Default or Event of Default shall
have occurred and be continuing and (ii) the Annualized Cash Flow Ratio of the
Company as of the date of such incurrence or issuance shall not exceed (x) 7.0
to 1.0 if such incurrence or issuance occurs on or prior to the second
anniversary of the Issue Date and (y) 5.0 to 1.0 if such incurrence or issuance
occurs thereafter.
The foregoing limitation will not apply to: (i) Indebtedness evidenced by
the Notes and the Indenture; (ii) the incurrence by the Company and its
Subsidiaries of the Existing Indebtedness; (iii) the incurrence by the Company
and its Subsidiaries of Bank Indebtedness in an aggregate principal amount at
any one time
32
<PAGE> 34
outstanding not to exceed $50.0 million (less the amount of any then-outstanding
Preferred Stock of Subsidiaries issued to refinance Indebtedness to the extent
such amount has not been applied to reduce the amount of Indebtedness permitted
under clause (vii) below), as such amount may be permanently reduced as
specified in the "Limitation on Asset Sales" covenant described below; provided
that no Default or Event of Default shall have occurred and be continuing at the
time of such incurrence; (iv) the Guarantee by the Subsidiaries of Bank
Indebtedness permitted to be incurred by the Company pursuant to clause (iii)
above; (v) Indebtedness of the Company issued to any Wholly-Owned Subsidiary;
provided that (a) any such Indebtedness is unsecured and is subordinated to the
Notes and (b) that any subsequent issuance or transfer of any Capital Stock
which results in any Wholly-Owned Subsidiary ceasing to be a Wholly-Owned
Subsidiary or any transfer of such Indebtedness to a Person not a Wholly-Owned
Subsidiary will be deemed an incurrence of such Indebtedness; (vi) Indebtedness
of a Subsidiary issued to and held by the Company or any Wholly-Owned Subsidiary
of the Company; provided that any subsequent issuance or transfer of any Capital
Stock which results in a Wholly-Owned Subsidiary ceasing to be a Wholly-Owned
Subsidiary or any transfer of such Indebtedness to a Person not a Wholly-Owned
Subsidiary of the Company will be deemed an incurrence of such Indebtedness;
(vii) the incurrence by the Company or its Subsidiaries of additional
Indebtedness subsequent to November 30, 1996 in an aggregate principal amount
not to exceed $15.0 million at any one time outstanding (less the amount of any
then-outstanding Preferred Stock of the Subsidiaries issued to refinance
Indebtedness to the extent such amount has not been applied to reduce the amount
of Indebtedness permitted under clause (iii) above); (viii) the incurrence (a
"Permitted Refinancing") by the Company and its Subsidiaries of Indebtedness
issued in exchange for, or the proceeds of which are used to extend, refinance,
renew, replace or refund Indebtedness incurred pursuant to the Annualized Cash
Flow Ratio test above or pursuant to clauses (ii), (iii), (iv), (v) and (vii)
above ("Refinancing Indebtedness"), provided that: (a) the net proceeds of such
Refinancing Indebtedness shall not exceed the principal amount of and required
premium, if any, and accrued interest on the Indebtedness so extended,
refinanced, renewed, replaced, substituted or refunded (or if such Indebtedness
was issued at an original issue discount, the original issue price plus
amortization of the original issue discount at the time of the repayment of such
Indebtedness) and reasonable expenses incurred in connection therewith; (b) the
Refinancing Indebtedness shall have a final maturity later than, and a Weighted
Average Life to Maturity equal to or greater than, the final maturity and
remaining Weighted Average Life to Maturity of the Indebtedness being extended,
refinanced, renewed, replaced or refunded; and (c) if the Indebtedness being
extended, refinanced, renewed, replaced or refunded is subordinated in right of
payment to the Notes, the Refinancing Indebtedness shall be subordinated in
right of payment to the Notes on terms at least as favorable to the Holders of
Notes as those contained in the documentation governing the Indebtedness being
so extended, refinanced, renewed, replaced or refunded; (ix) the incurrence by
the Company or its Subsidiaries of obligations in respect of Interest Rate
Agreements relating to Indebtedness to the extent that the notional principal
amount of such obligation does not exceed the aggregate principal amount of the
Indebtedness to which such Interest Rate Agreement relates; or (x) the
incurrence by the Company or any of its Subsidiaries of Indebtedness owing to a
Federal governmental authority relating to the purchase of wireless cable
channels in an auction or other sale (or Indebtedness satisfying the
requirements of (viii)(b) above issued in exchange for, or the proceeds of which
are used to extend, refinance, renew, replace or refund, such Indebtedness) in
an amount not to exceed in the aggregate $30.0 million at any one time
outstanding. The Company and its Subsidiaries may incur Acquired Debt only in
compliance with this covenant.
Limitation on Liens. The Indenture provides that neither the Company nor
any of its Subsidiaries may directly or indirectly create, incur, assume or
suffer to exist any Lien on any asset now owned or hereafter acquired, or on any
income or profits therefrom, or assign or convey any right to receive income
therefrom, except Permitted Liens.
The Indenture also provides that if the Company or any of its Subsidiaries
shall create, incur, assume or suffer to exist any Lien, other than a Permitted
Lien, on any assets or other property to secure Indebtedness in violation of
this covenant, the Company or such Subsidiary, as the case may be, shall make
effective provision for securing the Notes equally and ratably with such
Indebtedness as to such assets or other property for so long as such
Indebtedness shall be so secured; provided that the provision of such equal and
ratable security in
33
<PAGE> 35
favor of the Notes shall not cure any Default or Event of Default arising from
such violation of the provisions of this covenant.
Limitation on Issuance and Sale of Capital Stock of Subsidiaries. The
Indenture provides that the Company will not sell any Capital Stock of a
Subsidiary, and will not permit any Subsidiary to issue or sell any Capital
Stock, or permit any Person, other than the Company and its Subsidiaries, to own
or hold any such interest, other than (i) any interest owned or held on the
Issue Date by, or issuable as of the Issue Date to, a Person other than the
Company and its Subsidiaries in any Capital Stock of any Subsidiary or (ii) any
interest owned or held by a Person at the time that such Subsidiary became a
Subsidiary (other than any such interest created or issued in anticipation of
the acquisition of such Subsidiary by the Company); provided that the foregoing
limitation shall not apply to (i) the sale of 100% of the Capital Stock of any
Subsidiary made in accordance with "Limitation on Asset Sales" and (ii)
issuances of Preferred Stock permitted pursuant to clauses (i) or (iii) of
"Limitation on Preferred Stock of Subsidiaries."
Limitation on Preferred Stock of Subsidiaries. The Indenture provides that
the Company will not permit any of its Subsidiaries to issue, directly or
indirectly, any Preferred Stock, except (i) Preferred Stock of Subsidiaries
outstanding on the Issue Date, (ii) Preferred Stock issued to and held by the
Company or a Subsidiary, except that any subsequent issuance or transfer of any
Capital Stock which results in any Wholly-Owned Subsidiary ceasing to be a
Wholly-Owned Subsidiary or any transfer of such Preferred Stock to a Person not
a Wholly-Owned Subsidiary will be deemed an issuance of Preferred Stock; (iii)
Preferred Stock issued by a Person prior to the time (a) such Person became a
Subsidiary, (b) such Person merges with or into a Subsidiary or (c) another
Person merges with or into such Person (in a transaction in which such Person
becomes a Subsidiary), in each case if such Preferred Stock was not issued in
anticipation of such transaction; and (iv) Preferred Stock issued in exchange
for, or the proceeds of which are used to refund Indebtedness or refinance
Preferred Stock referred to in clause (i) or issued pursuant to clauses (ii) or
(iii) (other than Preferred Stock which by its terms (or by the terms of any
security into which it is convertible or for which it is exchangeable) is
redeemable at the option of the holder thereof or is otherwise redeemable,
pursuant to sinking fund obligations or otherwise, prior to the date of
redemption or maturity of the Preferred Stock or Indebtedness being so refunded
or refinanced); provided that (a) the liquidation value of such Preferred Stock
so issued shall not exceed the principal amount or the liquidation value of the
Indebtedness or Preferred Stock, as the case may be, so refunded or refinanced
and (b) the Preferred Stock so issued (1) shall have a stated maturity not
earlier than the stated maturity of the Indebtedness or Preferred Stock being
refunded or refinanced and (2) shall have a Weighted Average Life to Maturity
equal to or greater than the remaining Weighted Average Life to Maturity of the
Indebtedness or Preferred Stock being refunded or refinanced.
Limitation on Asset Sales. The Indenture provides that the Company will
not, and will not permit any of its Subsidiaries to, consummate an Asset Sale
unless (i) the Company or the applicable 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 assets sold or otherwise disposed of (as determined in good
faith by the Company's Board of Directors or if the Fair Market Value of such
assets exceeds $20.0 million, the Company shall receive from an investment
banking firm of national standing a written opinion in customary form as to the
fairness, to the Company, of such Asset Sale) and (ii) at least 80% of the
consideration received by the Company or the Subsidiary, as the case may be,
from such Asset Sale shall be cash or Marketable Securities and is received at
the time of such disposition. Upon the consummation of an Asset Sale, the
Company may apply, or cause such Subsidiary to apply, the Net Cash Proceeds
relating to such Asset Sale within 270 days of receipt thereof either to (A)
prepay any Bank Indebtedness and, in the case of any Bank Indebtedness under any
revolving credit facility, to effect a permanent reduction in the availability
under such revolving credit facility, (B) prepay the Existing Notes (to the
extent required by the Existing Indentures), (C) reinvest in Wireless Cable
Related Assets that are Permitted Assets or (D) a combination of prepayment and
investment permitted by the foregoing clauses (A), (B) and (C). On the 271st day
after an Asset Sale or such earlier date, if any, as the Board of Directors of
the Company or of such Subsidiary determines not to apply the Net Cash Proceeds
relating to such Asset Sale as set forth in clauses (A), (B), (C) or (D) of the
preceding sentence (each, a "Net Proceeds Offer Trigger Date"), such aggregate
amount of Net Cash Proceeds which have not been
34
<PAGE> 36
applied on or before such Net Proceeds Offer Trigger Date as permitted in
clauses (A), (B), (C) or (D) of the preceding sentence (each a "Net Proceeds
Offer Amount") shall be applied by the Company to make an offer to purchase (the
"Net Proceeds Offer") on a date (the "Net Proceeds Offer Payment Date") not less
than 30 nor more than 45 days following the applicable Net Proceeds Offer
Trigger Date, from all Holders on a pro rata basis that amount of Notes equal to
the Net Proceeds Offer Amount at a price equal to 100% of the principal amount
of the Notes to be purchased, plus accrued and unpaid interest thereon, if any,
to the date of purchase; provided, however, that if at any time any non-cash
consideration received by the Company or any Subsidiary of the Company, as the
case may be, in connection with any Asset Sale is converted into or sold or
otherwise disposed of for cash (other than interest received with respect to any
such non-cash consideration), then such conversion or disposition shall be
deemed to constitute an Asset Sale under the Indenture and the Net Cash Proceeds
thereof shall be applied in accordance with this covenant.
Notwithstanding the foregoing, if a Net Proceeds Offer Amount is less than
$5.0 million, the application of the Net Cash Proceeds constituting such Net
Proceeds Offer Amount to a Net Proceeds Offer may be deferred until such time as
such Net Proceeds Offer Amount plus the aggregate amount of all Net Proceeds
Offer Amounts arising subsequent to the Net Proceeds Offer Trigger Date relating
to such initial Net Proceeds Offer Amount from all Asset Sales by the Company
and its Subsidiaries aggregates at least $5.0 million, at which time the Company
shall apply all Net Cash Proceeds constituting all Net Proceeds Offer Amounts
that have been so deferred to make a Net Proceeds Offer (the first date the
aggregate of all such deferred Net Proceeds Offer Amounts is equal to $5.0
million or more shall be deemed to be a Net Proceeds Offer Trigger Date).
Notwithstanding the two immediately preceding paragraphs, the Company and
its Subsidiaries will be permitted to consummate an Asset Sale without complying
with such paragraphs to the extent (i) at least 95% of the consideration for
such Asset Sale, other than cash consideration, constitutes assets used in the
business of the Company and its Subsidiaries on the date of such transaction
that are Permitted Assets and (ii) such Asset Sale is for Fair Market Value (as
determined in good faith by the Company's Board of Directors or if the Fair
Market Value of such Assets exceeds $20.0 million, the Company shall receive
from an investment banking firm of national standing a written opinion in
customary form as to the fairness, to the Company, of such Asset Sale); provided
that any consideration received by the Company or its Subsidiaries, as the case
may be, in an Asset Sale permitted to be consummated under this paragraph that
does not constitute assets to be used in the operations of the Company or its
Subsidiaries shall constitute Net Cash Proceeds which are subject to the
provisions of the two preceding paragraphs. In addition, notwithstanding the two
immediately preceding paragraphs, the Company will be permitted (i) to sell the
Call Markets to Wireless One without complying with such paragraphs, (ii) to
sell any or all of the assets acquired in the AWS Transaction, the CableMaxx
Transaction or the TechniVision Transaction on or prior to the first anniversary
of the consummation of each such Transaction without complying with such
paragraphs, (iii) to sell any or all of the assets acquired by way of an
Investment permitted by clause (x) of the second paragraph of the "Limitation on
Restricted Payments" covenant on or prior to the first anniversary of the
consummation of such acquisition without complying with such paragraphs and (iv)
to sell after November 30, 1996, in a single transaction or a series of
transactions, assets for up to $25 million of non-cash consideration without
complying with such paragraphs; provided, in the case of clauses (ii), (iii) and
(iv) that the Company receives consideration at the time of such Asset Sale at
least equal to the Fair Market Value of the assets sold or otherwise disposed of
(as determined in good faith by the Company's Board of Directors or if the Fair
Market Value of such assets exceeds $20.0 million, the Company shall receive
from an investment banking firm of national standing a written opinion in
customary form as to the fairness, to the Company, of such Asset Sale).
Each Net Proceeds Offer will be mailed within 25 days following the Net
Proceeds Offer Trigger Date to the record Holders as shown on the register of
Holders, with a copy to the Trustee, and shall comply with the procedures set
forth in the Indenture. Upon receiving notice of the Net Proceeds Offer, Holders
may elect to tender their Notes in whole or in part in integral multiples of
$1,000 in exchange for cash. To the extent Holders properly tender Notes in an
amount exceeding the Net Proceeds Offer Amount, Notes of tendering Holders will
be purchased on a pro rata basis (based on amounts tendered). A Net Proceeds
Offer shall remain open for a period of 20 Business Days or such longer period
as may be required by law.
35
<PAGE> 37
The Company will comply with the requirements of 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 connection with the
repurchase of Notes pursuant to a Net Proceeds Offer. To the extent that the
provisions of any securities laws or regulations conflict with the "Asset Sale"
provisions of the Indenture, the Company shall comply with the applicable
securities laws and regulations and shall not be deemed to have breached its
obligations under the "Asset Sale" provisions of the Indenture by virtue
thereof.
Dividend and Other Payment Restrictions Affecting Subsidiaries. The
Indenture provides that the Company and its Subsidiaries may not, directly or
indirectly, create or otherwise cause or suffer to exist or become effective any
encumbrance or restriction on the ability of any such Subsidiary (i) to pay
dividends or make any other distributions to the Company or any of its
Subsidiaries on or in respect of its Capital Stock or with respect to any other
interest or participation in, or measured by, its profits, or pay any
Indebtedness or other obligation owed to the Company or any of its Subsidiaries;
(ii) to make loans or advances to the Company or any of its Subsidiaries or
Investments in Subsidiaries; or (iii) to transfer any of its properties or
assets to the Company or any of its Subsidiaries, except for such encumbrances
or restrictions existing under or by reason of: (a) any encumbrance or
restriction pursuant to the Notes or the Indenture; (b) applicable law; (c)
Existing Indebtedness; (d) any instrument governing Acquired Debt as in effect
at the time of acquisition (except to the extent such Indebtedness was incurred
in connection with, or in contemplation of, such acquisition), which encumbrance
or restriction is not applicable to any Person, or the properties or assets of
any Person, other than the Person, or the property or assets of the Person, so
acquired; (e) any encumbrance or restriction pursuant to an agreement effecting
a refinancing of Indebtedness pursuant to an agreement referred to in clause (c)
or (d) or contained in any amendment to an agreement referred to in clause (c)
or (d); provided, however, that the encumbrances and restrictions contained in
any such refinancing agreement or amendment are no more restrictive than
encumbrances or restrictions contained in the refinanced or amended agreements;
(f) with respect to clause (iii) above, by reason of customary non-assignment
provisions in leases entered into in the ordinary course of business; (g) with
respect to clause (iii) above, purchase money obligations for property acquired
in the ordinary course of business, which obligations do not cover any asset
other than the asset acquired; or (h) Bank Indebtedness or Guarantees of such
Bank Indebtedness incurred pursuant to clauses (iii) or (iv) of the second
paragraph of the "Limitation on Indebtedness" covenant.
Merger, Consolidation or Sale of Assets. The Indenture provides that the
Company will not, in a single transaction or a series of related transactions,
(i) consolidate with or merge with or into any other Person, (ii) permit any
other Person to consolidate with or merge into (a) the Company or (b) any of its
Subsidiaries in a transaction in which such Subsidiary (or successor Person)
remains (or becomes) a Subsidiary or (iii) directly or indirectly, sell, assign,
transfer, lease, convey or otherwise dispose of all or substantially all of its
assets to another Person or Persons or adopt a plan of liquidation, (iv)
directly or indirectly, purchase, lease or otherwise acquire all or
substantially all of the property and assets of any Person or any existing
business (whether existing as a separate entity, subsidiary, division, unit or
otherwise) of any Person or acquire Equity Interests or other ownership
interests of any other Person such that such Person becomes a Subsidiary or (v)
permit any of its Subsidiaries to enter into any such transaction unless (i)
either (A) the Company or such Subsidiary shall be the survivor of such merger
or consolidation or (B) the surviving Person (if not the Company or such
Subsidiary) is a corporation, partnership or trust organized and existing under
the laws of the United States, any state thereof or the District of Columbia and
such surviving Person shall expressly assume all the obligations of the Company
or such Subsidiary, as the case may be, under the Notes and the Indenture; (ii)
immediately after giving effect to such transaction (on a pro forma basis,
including any Indebtedness incurred or anticipated to be incurred in connection
with such transaction), the Company or the surviving Person is able to incur at
least $1.00 of additional Indebtedness under the Annualized Cash Flow Ratio test
in compliance with the "Limitation on Indebtedness" covenant; (iii) immediately
before and immediately after giving effect to such transaction (including any
Indebtedness incurred or anticipated to be incurred in connection with the
transaction), no Default or Event of Default shall have occurred and be
continuing; and (iv) the Company has delivered to the Trustee an Officers'
Certificate and Opinion of Counsel, each stating that such consolidation, merger
or transfer complies with the Indenture, that the surviving Person agrees to be
bound thereby and that all conditions precedent in the Indenture relating to
such
36
<PAGE> 38
transaction have been satisfied. For purposes of the foregoing, the transfer (by
lease, assignment, sale or otherwise, in a single transaction or series of
transactions) of all or substantially all of the properties and assets of one or
more Subsidiaries of the Company, the Capital Stock of which constitutes all or
substantially all of the properties and assets of the Company, shall be deemed
to be the transfer of all or substantially all of the properties and assets of
the Company. The foregoing will not be deemed to apply to Permitted Investments
or Investments permitted under the covenant "Limitation on Restricted Payments"
above.
The Indenture provides that upon any consolidation, combination or merger
or any transfer of all or substantially all of the assets of the Company in
accordance with the foregoing, the surviving entity 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 surviving entity had
been named as such; provided that solely for purposes of computing amounts
described in clause (c) of the first paragraph of the covenant "Limitation on
Restricted Payments" above, any such surviving entity to the Company 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,
combination or transfer of assets.
Transactions with Affiliates. The Indenture provides that the Company and
its Subsidiaries may not sell, lease, transfer or otherwise dispose of any of
their respective properties or assets to, or purchase any property or assets
from, or enter into any contract, agreement, understanding, loan, advance or
Guarantee with, or for the benefit of, any Affiliate of the Company or any legal
or beneficial owner of 5% or more of any class of Capital Stock of the Company
or with an Affiliate of any such owner (each of the foregoing, an "Affiliate
Transaction"), unless: (i) such Affiliate Transaction is on terms that are no
less favorable to the Company or the relevant Subsidiary than those that would
have been obtained in a comparable transaction by the Company or such Subsidiary
with an unrelated Person; and (ii) the Company delivers to the Trustee: (x) with
respect to any Affiliate Transaction involving aggregate payments in excess of
$250,000 but less than $3.0 million, a resolution of the Board of Directors of
the Company set forth in an Officers' Certificate certifying that such Affiliate
Transaction complies with clause (i) above, (y) with respect to any Affiliate
Transaction involving aggregate payments equal to or greater than $3.0 million
but less than $20.0 million, a resolution of the Board of Directors of the
Company set forth in an Officers' Certificate certifying that such Affiliate
Transaction complies with clause (i) above and that such Affiliate Transaction
has been approved by a majority of the disinterested directors of the Board of
Directors of the Company, and (z) with respect to any Affiliate Transaction
involving aggregate payments equal to or greater than $20.0 million, a
resolution of the Board of Directors of the Company set forth in an Officers'
Certificate and certifying to the matters referred to in (i) above and a written
opinion as to the fairness to the Company or such Subsidiary from a financial
point of view issued by an independent investment banking firm of national
standing with respect to any such Affiliate Transaction. Notwithstanding the
foregoing, the following shall not be deemed Affiliate Transactions: (a) any
employment or option agreement entered into by the Company or any of its
Subsidiaries in the ordinary course of business that is approved by the
Compensation Committee of the Board of Directors of the Company; (b) the payment
by the Company of annual fees to Unity Hunt, Inc. for the provision of Mr.
Holland's services to the Company in an amount equal to Mr. Holland's annual
base compensation from the Company, which amount is approved by the Compensation
Committee of the Board of Directors of the Company; (c) transactions between or
among the Company and one or more of its Wholly Owned Subsidiaries provided that
such transactions are not otherwise prohibited; (d) Restricted Payments,
Permitted Payments and Permitted Investments; (e) Affiliate Transactions in
existence on the Issue Date, including, without limitation, channel leases and
options between the Company and any of its Subsidiaries, on the one hand, and
Messrs. Webb and Wheeler and their respective Affiliates, on the other hand, and
the lease with respect to the Company's operating offices in Durant, Oklahoma as
in effect on the Issue Date; (f) channel leases and options with Affiliates
entered into after the Issue Date; provided such leases are no less beneficial
to the Company or the applicable Subsidiary than any such leases in effect on
the Issue Date, meet the standard described in clause (i) above and are approved
by a majority of the disinterested directors of the Board of Directors of the
Company; (g) amendments to or renewals of the agreements and leases referred to
in clauses (d) and (e) above; provided that any such amendments or renewals are
no less beneficial to the Company or the applicable Subsidiary than the
agreement or lease being amended or renewed, meet the standard described in
clause (i) above and are approved by a majority of the disinterested directors
of the
37
<PAGE> 39
Board of Directors of the Company; (h) payment of reasonable and customary
compensation for director and Board of Director observer fees, meeting expenses,
insurance premiums and indemnities to the extent permitted by law; and (i) the
issuance of stock options (and shares of stock upon the exercise thereof)
pursuant to any stock option plan approved by the Board of Directors and
stockholders of the Company and loans or advances to employees for relocation or
travel related expenses consistent with ordinary past practices.
Conduct of Business. The Indenture provides that the Company and its
Subsidiaries may not, directly or indirectly, engage in any business other than
the Wireless Cable Business; provided that in the event a Change of Control
occurs in which a Strategic Equity Investor gains control of the Company this
covenant shall no longer be of force or effect.
Provision of Information. The Indenture provides that the Company (at its
own expense) shall file with the Trustee within 15 days after it files them with
the Commission copies of the quarterly and annual reports and of the
information, documents and other reports (or copies of such portions of any of
the foregoing as the Commission may by rules and regulations prescribe) to be
filed pursuant to Section 13 or 15(d) of the Exchange Act (without regard to
whether the Company is subject to the requirements of such Section 13 or 15(d)
of the Exchange Act) ("SEC Reports"). Upon qualification of the Indenture under
the Trust Indenture Act, the Company shall also comply with the provisions of
Trust Indenture Act Section 314(a). In the event that the Company is not
required or shall cease to be required to file SEC Reports pursuant to the
Exchange Act, the Company shall nevertheless continue to file such reports with
the Commission and the Trustee. If the Trustee (at the Company's request and
expense) is to mail the foregoing information to the Holders, the Company shall
supply such information to the Trustee at least five days prior thereto. The
Company shall provide to any Holder any information concerning the Company
reasonably requested by such Holder (including financial statements) necessary
in order to permit such Holder to sell or transfer Notes in compliance with Rule
144A promulgated under the Securities Act.
SECURITY
The Notes are secured, pending disbursement pursuant to the Escrow and
Disbursement Agreement, by a pledge of the Escrow Account, which contains
approximately $22.0 million of the net proceeds from the sale of the Old Notes
(the "Collateral"), representing funds sufficient to pay the first three
interest payments on the Notes.
The Company entered into the Escrow and Disbursement Agreement providing
for the grant by the Company to the Trustee for the benefit of the Holders of
security interests in the Collateral. All such security interests will secure
the payment and performance when due of all of the Obligations of the Company
under the Indenture with respect to the Notes and under such Notes, as provided
in the Escrow and Disbursement Agreement. The Liens created by the Escrow and
Disbursement Agreement are first priority security interests in the Collateral.
The ability of Holders to realize upon any such funds or securities may be
subject to certain bankruptcy law limitations in the event of the bankruptcy of
the Company.
Funds will be disbursed from the Escrow Account only to pay interest on the
Notes and, upon certain repurchases or redemptions of the Notes, to pay
principal of and premium, if any, thereon. Pending such disbursements, all funds
contained in the Escrow Account will be invested in Marketable Securities. Upon
the acceleration of the maturity of the Notes or the failure to pay principal at
maturity or upon certain redemptions and repurchases of the Notes, the Escrow
and Disbursement Agreement will provide for the foreclosure by the Trustee upon
the net proceeds of the Escrow Account. Under the terms of the Indenture, the
proceeds of the Escrow Account shall be applied, first, to amounts owing to the
Trustee in respect of fees and expenses of the Trustee and second, to the
Obligations under the Notes and the Indenture.
EVENTS OF DEFAULT AND REMEDIES
The Indenture provides that each of the following constitutes an Event of
Default:
(i) the failure to pay interest on any Notes when the same becomes due
and payable and such default continues for a period of 30 days;
38
<PAGE> 40
(ii)(a) the failure to pay the principal or premium when due on the
Notes at maturity, upon redemption, upon acceleration or otherwise or (b)
the failure to redeem or purchase the Notes when required pursuant to the
Indenture and the Notes (including, without limitation, failure to make
payments when due pursuant to a Change of Control Offer or Net Proceeds
Offer);
(iii) failure by the Company to comply with the provisions described
under "Offer to Purchase Upon Change of Control" or "Certain
Covenants -- Limitation on Asset Sales," or the failure by the Company to
comply with the first sentence of the provision described under
"Disbursement of Funds -- Escrow Account;"
(iv) failure to comply with the covenant described under "Certain
Covenants -- Merger, Consolidation or Sale of Assets;"
(v) failure by the Company for 30 days after notice from the Trustee
or the Holders of at least 25% in principal amount of the Notes then
outstanding to comply with its agreements in the Indenture or the Notes or
in the Escrow and Disbursement Agreement (other than those referred to in
(i), (ii), (iii) or (iv) above);
(vi) a default in the payment of principal at final maturity under any
mortgage, indenture or instrument under which there may be issued or by
which there may be secured or evidenced any Indebtedness of the Company or
any of its Subsidiaries (or the payment of which is Guaranteed now or
hereafter by the Company or any of its Subsidiaries), whether such
Indebtedness or Guarantee now exists or shall be created hereafter, in a
principal amount of at least $3.0 million (after the expiration of any
applicable grace period with respect thereto);
(vii) a default occurs under any mortgage, indenture or instrument
under which there may be issued or by which there may be secured or
evidenced any Indebtedness (including any interest thereon) of the Company
or its Subsidiaries (or the payment of which is Guaranteed now or hereafter
by the Company or any of its Subsidiaries), whether such Indebtedness or
Guarantee now exists or shall be created hereafter, if (i) as a result of
such event of default the maturity of such Indebtedness has been
accelerated prior to its stated maturity and (ii) the principal amount of
such Indebtedness, together with the principal amount of any other
Indebtedness of the Company and its Subsidiaries the maturity of which has
been accelerated, aggregates $3.0 million or more;
(viii) one or more final judgments rendered against the Company or any
of its Subsidiaries (other than any judgment as to which a reputable
insurance company has accepted full liability in writing) aggregating in
excess of $3.0 million which judgments are not stayed within 60 days after
their entry;
(ix) certain events of bankruptcy or insolvency with respect to the
Company or any of its Subsidiaries; and
(x) repudiation by the Company of its obligations under the Escrow and
Disbursement Agreement for any reason.
The Indenture provides that if any Event of Default occurs and is
continuing under the Indenture, the Trustee or the Holders of at least 25% in
principal amount of the then outstanding Notes may declare all the Notes to be
due and payable immediately by notice in writing to the Company and the Trustee
specifying the respective Event of Default and that it is a "notice of
acceleration" (the "Acceleration Notice"). Upon such declaration, the principal
of, and premium, if any, and interest on the Notes shall become due and payable
immediately. Notwithstanding the foregoing, in the case of an Event of Default
arising from certain events of bankruptcy or insolvency with respect to the
Company or any of its Subsidiaries, the foregoing amount shall ipso facto become
due and payable without further action or notice. No premium is payable upon
acceleration of the Notes except that in the case of an Event of Default that is
the result of an action or inaction by the Company or any of its Subsidiaries
intended to avoid premiums related to redemptions of the Notes contained in the
Indenture or the Notes, the amount declared due and payable will include the
premium that would have been applicable on a voluntary prepayment of the Notes
or, if voluntary prepayment is not then permitted, the premium set forth in the
Indenture.
39
<PAGE> 41
No Holder has the right to institute any proceeding with respect to the
Indenture or any remedy thereunder, unless the Holders of at least 25% in
principal amount of the outstanding Notes have made written request, and offered
reasonable indemnity, to the Trustee to institute such proceeding as Trustee,
the Trustee has failed to institute such proceeding within 15 days after receipt
of such notice, and the Trustee has not within such 15-day period received
directions inconsistent with such written request by Holders of a majority in
principal amount of the outstanding Notes. Such limitations do not apply,
however, to suits instituted by a Holder 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 certain limitations,
Holders of a majority in principal amount of the then outstanding Notes may
direct the Trustee in its exercise of any trust or power. In case an Event of
Default shall occur and be continuing, the Trustee will exercise such of its
rights and powers under the Indenture, and use the same degree of care and skill
in their exercise, as a prudent Person would exercise or use under the
circumstances in the conduct of his or her own affairs. Subject to certain
provisions of the Indenture, the Trustee will be under no obligation to exercise
any of its rights or powers under the Indenture at the request of any of the
Holders unless they have offered to the Trustee reasonable security or indemnity
against the costs, expenses and liabilities which might be incurred by it in
compliance with such request. The Trustee may withhold from Holders notice of
any continuing default (except a default in payment) if it determines in good
faith that the withholding of such notice is in the interest of such Holders.
The Indenture provides that, at any time after a declaration of
acceleration with respect to the Notes as described above, the Holders of a
majority in principal amount of the Notes may rescind and cancel such
declaration and its consequences (i) if the rescission would not conflict with
any judgment or decree, (ii) if all existing Events of Default have been cured
or waived except nonpayment of principal or interest that has become due solely
because of the acceleration, (iii) to the extent the payment of such interest is
lawful, interest on overdue installments of interest and overdue principal,
which has become due otherwise than by such declaration of acceleration, has
been paid, (iv) if the Company has paid the Trustee its reasonable compensation
and reimbursed the Trustee for its expenses, disbursements and advances and (v)
in the event of the cure or waiver of an Event of Default of the type described
in clause (viii) of the description above of Events of Default, the Trustee
shall have received an Officer's Certificate and an Opinion of Counsel that such
Event of Default has been cured or waived.
The Holders of a majority in aggregate principal amount of the Notes then
outstanding, by notice to the Trustee, may on behalf of the Holders of all of
the Notes waive any existing Default or Event of Default and its consequences
under the Indenture, except a continuing Default or Event of Default in the
payment of interest or premium on, or the principal of, the Notes, or in respect
of a covenant or a provision which cannot be amended or modified without the
consent of all Holders.
The Indenture provides that the Company is required to deliver to the
Trustee annually a statement regarding compliance with the Indenture and the
Company is required upon becoming aware of any Default or Event of Default to
deliver to the Trustee a statement specifying such Default or Event of Default.
NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES, INCORPORATORS AND
STOCKHOLDERS
No director, officer, employee, incorporator or stockholder of the Company,
as such, shall have any liability for any obligations of the Company under the
Notes or the Indenture or the Escrow and Disbursement Agreement or for any claim
based on, in respect of or by reason of such obligations or their creation. Each
Holder of Notes by accepting a Note waives and releases all such liability. The
waiver and release are part of the consideration for issuance of the Notes. Such
waiver may not be effective to waive liabilities under the Federal securities
laws and it is the view of the Commission that such a waiver is against public
policy.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
The Indenture provides that the Company may, at its option and at any time,
elect to have its obligations discharged with respect to the outstanding Notes
("Legal Defeasance"). Such Legal Defeasance means that
40
<PAGE> 42
the Company shall be deemed to have paid and discharged the entire indebtedness
represented by the outstanding Notes, except for:
(i) the rights of Holders of outstanding Notes to receive solely from
trust funds described below payments in respect of the principal of,
premium, if any, and interest on such Notes when such payments are due, or
on the redemption date, as the case may be;
(ii) the Company's obligations with respect to the Notes concerning
issuing temporary Notes, registration of Notes, mutilated, destroyed, lost
or stolen Notes and the maintenance of an office or agency for payment and
money for security payments held in trust;
(iii) the rights, powers, trust, duties and immunities of the Trustee,
and the Company's obligations in connection therewith; and
(iv) the Legal Defeasance provisions of the Indenture.
In addition, the Company may, at its option and at any time, elect to have
the obligations of the Company released with respect to certain covenants that
are described in the Indenture ("Covenant Defeasance") and thereafter any
omission to comply with such obligations shall not constitute a Default or Event
of Default with respect to the Notes. In the event Covenant Defeasance occurs,
certain events (not including nonpayment, bankruptcy, receivership,
reorganization and insolvency events) described above under "Events of Default"
will no longer constitute Events of Default with respect to the Notes. In the
event of Legal Defeasance or Covenant Defeasance, the security interests
described above under "Security" will be released.
In order to exercise either Legal 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 U.S. dollars,
non-callable U.S. Government Securities or a combination thereof, in such
amounts as will be sufficient, in the opinion of a nationally recognized
firm of independent public accountants, to pay the principal of, premium,
if any, and interest on the outstanding Notes, on the stated maturity or on
the applicable optional redemption date, as the case may be, without
reinvestment of the deposited U.S. Government Securities and other
deposited monies;
(b) in the case of Legal Defeasance, the Company must deliver to the
Trustee an Opinion of Counsel in the United States reasonably satisfactory
to the Trustee confirming that (x) the Company has received from, or there
has been published by, the Internal Revenue Service a ruling or (y) since
the date of the Indenture, there has been a change in the applicable
Federal income tax law, in either case to the effect that, and based
thereon such opinion of counsel shall confirm that, the Holders of the
outstanding Notes will not recognize income, gain or loss for Federal
income tax purposes as a result of such legal 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 Legal Defeasance had
not occurred;
(c) in the case of Covenant Defeasance, the Company must deliver to
the Trustee an Opinion of Counsel in the United States reasonably
satisfactory to the Trustee confirming that the Holders of the outstanding
Notes will not recognize income, gain or loss for Federal income tax
purposes as a result of such 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 Covenant Defeasance had not
occurred;
(d) no Default or Event of Default shall have occurred and be
continuing on the date of such deposit (other than a Default or Event of
Default with respect to the Indenture resulting from the incurrence of
Indebtedness, all or a portion of which will be used to defease the Notes
concurrently with such incurrence) or insofar as Events of Default from
bankruptcy or insolvency events are concerned, at any time in the period
ending on the 123rd day after the date of deposit;
(e) such Legal Defeasance or Covenant Defeasance shall not result in a
breach or violation of, or constitute a default under, the Indenture or any
other material agreement or instrument to which the Company is a party or
by which the Company is bound;
41
<PAGE> 43
(f) the Company shall have delivered to the Trustee an Officers'
Certificate stating that the deposit was not made by the Company with the
intent of preferring the Holders of Notes over the other creditors of the
Company or with the intent of defeating, hindering, delaying or defrauding
creditors of the Company or others;
(g) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel each stating that all conditions
precedent provided for or relating to the Legal Defeasance or the Covenant
Defeasance have been complied with;
(h) the Company shall have delivered to the Trustee an Opinion of
Counsel to the effect that (i) the trust resulting from the deposit does
not constitute, or is qualified as, a regulated investment company under
the Investment Company Act of 1940, (ii) the Holders have a valid first
priority perfected security interest in the trust funds, and (iii) after
passage of 123 days following the deposit (or, with respect to any trust
funds for the account of any Holder who may be deemed to be an "insider"
for purposes of the Bankruptcy Code, after one year following the deposit),
the trust funds will not be subject to the effect of Section 547 of the
Bankruptcy Code or Section 15 of the New York Debtor and Creditor Law in a
case commenced by or against the Company under either such statute, and
either (A) the trust funds will no longer remain the property of the
Company (and therefore, will not be subject to the effect of any applicable
bankruptcy, insolvency, reorganization or similar laws affecting creditors'
rights generally) or (B) if a court were to rule under any such law in any
case or proceeding that the trust funds remained in the possession of the
Trustee prior to such court ruling to the extent not paid to Holders, the
Trustee will hold, for the benefit of the Holders, a valid first priority
perfected security interest in such trust funds that is not avoidable in
bankruptcy or otherwise except for the effect of Section 552(b) of the
Bankruptcy Code on interest on the trust funds accruing after the
commencement of a case under such statute and (y) the Holders will be
entitled to receive adequate protection of their interests in such trust
funds if such trust funds are used in such case or proceeding; and
(i) certain other customary conditions precedent are satisfied.
SATISFACTION AND DISCHARGE
The Indenture will be discharged and will cease to be of further effect
(except as to surviving rights of registration of transfer or exchange of the
Notes, as expressly provided for in the Indenture) as to all outstanding Notes
when (i) either (a) all the Notes theretofore authenticated and delivered
(except lost, stolen or destroyed Notes which have been replaced or paid 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 (b) all Notes not theretofore delivered to the Trustee for
cancellation have become due and payable or will become due and payable within
one year 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; (ii) the Company has paid all other sums payable
under the Indenture by the Company; and (iii) 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.
TRANSFER AND EXCHANGE
A Holder may transfer or exchange Notes in accordance with the Indenture.
The Trustee or Registrar may require a Holder, among other things, to furnish
appropriate endorsements and transfer documents and the Company may require a
Holder to pay any taxes and fees required by law or permitted by the Indenture.
The Company is not required to transfer or exchange any Note selected for
redemption. Also, the Company is not required to transfer or exchange any Note
for a period of 15 days before a selection of Notes to be redeemed.
42
<PAGE> 44
The registered Holder of a Note will be treated as the owner of it for all
purposes.
MODIFICATION OF INDENTURE OR NOTES
From time to time, the Company and the Trustee, without the consent of the
Holders of the Notes, may amend the Indenture for certain specified purposes,
including curing ambiguities, defects or inconsistencies, so long as such change
does not adversely affect the rights of any of the Holders. The Trustee will be
entitled to rely on such evidence as it deems appropriate, including, without
limitation, solely on an Opinion of Counsel in executing any supplemental
indenture. Other modifications and amendments of the Indenture may be made with
the consent of the Holders of a majority in principal amount of the then
outstanding Notes issued under the Indenture, except that, without the consent
of each Holder of the Notes affected thereby, no amendment may:
(i) reduce the principal amount of Notes whose Holders must consent to
an amendment, supplement or waiver;
(ii) reduce the principal of or change or have the effect of changing
the fixed maturity of any Note or change the date on which any Note may be
subject to redemption or repurchase, or reduce the redemption or repurchase
price thereof;
(iii) reduce the rate of or change or have the effect of changing the
time for payment of interest, including defaulted interest, on any Notes;
(iv) waive a Default or Event of Default in the payment of principal
of or premium, if any, or interest on the Notes (except a rescission of
acceleration of the Notes by the Holders of at least a majority in
aggregate principal amount of the Notes and a waiver of the payment default
relating solely to the principal or interest that has become due solely
because of the acceleration);
(v) make any Note payable in money other than that stated in the
Notes;
(vi) make any change in the provisions of the Indenture relating to
waivers of past Defaults or the rights of Holders of Notes to receive
payments of principal of or interest on the Notes on or after the due date
thereof or to bring suit to enforce such payment;
(vii) waive a redemption payment with respect to any Note (other than
a payment required by one of the covenants described above under the
captions "Offer to Purchase Upon Change of Control" and "Certain
Covenants -- Limitation on Asset Sales");
(viii) amend, change or modify in any material respect the obligation
of the Company to make and consummate a Change of Control Offer in the
event of a Change of Control or make and consummate a Net Proceeds Offer
with respect to any Asset Sale that has been consummated or modify any of
the provisions or definitions with respect thereto;
(ix) make any change in the foregoing amendment and waiver provisions;
or
(x) directly or indirectly release Liens on all or substantially all
of the Collateral except as permitted by the Escrow and Disbursement
Agreement.
GOVERNING LAW
The Indenture provides that it and the Notes will be governed by, and
construed in accordance with, the laws of the State of New York but without
giving effect to applicable principles of conflicts of law to the extent that
the application of the law of another jurisdiction would be required thereby.
TRUSTEE
The Indenture provides that, except during the continuance of an Event of
Default, the Trustee will perform only such duties as are specifically set forth
in the Indenture. The Indenture will contain certain limitations on the rights
of the Trustee, should the Trustee become a creditor of the Company, to obtain
43
<PAGE> 45
payment of claims in certain cases, or to realize on certain property received
in respect of any such claim as security or otherwise. The Trustee will be
permitted to engage in other transactions with the Company; however, if the
Trustee acquires any conflicting interest, it must eliminate such conflict
within 90 days, apply to the Commission for permission to continue as Trustee or
resign.
CERTAIN DEFINITIONS
Set forth below are certain defined terms used herein and in the Indenture.
Reference is made to the Indenture for a full disclosure of all such terms, as
well as any other capitalized terms used herein for which no definition is
provided.
"Acquired Debt" means, with respect to any specified Person, Indebtedness
of any other Person existing at the time such other Person merged with or into
or became a Subsidiary of such specified Person or Indebtedness incurred by such
Person in connection with the acquisition of assets, including, without
limitation, Indebtedness incurred or assumed in connection with, or in
contemplation of, such other Person merging with or into or becoming a
Subsidiary of such specified Person or the acquisition of such assets, as the
case may be.
"Affiliate" of any specified Person means (i) any other Person which,
directly or indirectly, is in control of, is controlled by or is under common
control with such specified Person or (ii) any other Person who is a director or
officer (A) of such specified Person, (B) of any Subsidiary of such specified
Person or (C) of any Person described in clause (i) above or (iii) any Person in
which such Person has, directly or indirectly, a 5% or greater voting or
economic interest or the power to control. For purposes of this definition,
control of a Person means the power, direct or indirect, to direct or cause the
direction of the management or policies of such Person whether through the
ownership of voting securities or by contract or otherwise and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
"Annualized Cash Flow Ratio" with respect to any Person means the ratio of
the Consolidated Indebtedness of such Person to the Annualized EBITDA of such
Person for the relevant period.
"Annualized EBITDA" as of any date of determination means the aggregate
amount of EBITDA for the most recent fiscal quarter for which financial
information has been filed with the Commission multiplied by four; provided,
however, that (i) if the Company or any Subsidiary of the Company has incurred
any Indebtedness (including Acquired Debt) that remains outstanding on the date
of such determination or if the transaction giving rise to the need to calculate
the Annualized EBITDA is an incurrence of Indebtedness (including Acquired
Debt), EBITDA for such fiscal quarter will be calculated after giving effect on
a pro forma basis to (a) such Indebtedness, as if such Indebtedness had been
incurred on the first day of such fiscal quarter and (b) the discharge of any
other Indebtedness repaid, repurchased, defeased or otherwise discharged with
the proceeds of such new Indebtedness as if such discharge had occurred on the
first day of such fiscal quarter, (ii) if since the beginning of such fiscal
quarter the Company or any Subsidiary of the Company has made any Asset Sale,
EBITDA for such fiscal quarter will be (a) reduced by an amount equal to EBITDA
(if positive) directly attributable to the assets which are the subject of such
Asset Sale for such fiscal quarter or (b) increased by an amount equal to EBITDA
(if negative) directly attributable thereto for such fiscal quarter and (iii) if
since the beginning of such period the Company or any Subsidiary of the Company
(by merger or otherwise) has made an Investment in any Person which becomes a
Subsidiary of the Company as a result of such Investment or an Investment in an
existing Subsidiary with the result that such Investment will result in the
consolidation of a greater percentage of such Subsidiary's Consolidated Net
Income (other than a transfer of operating assets from the Company or one
Subsidiary to another Subsidiary) or has made an acquisition of assets (other
than from the Company or another Subsidiary of the Company), including any
acquisition of assets occurring in connection with a transaction causing a
calculation of Annualized EBITDA to be made hereunder, which constitutes all or
substantially all of an operating unit of a business, EBITDA for such fiscal
quarter will be calculated after giving pro forma effect thereto (including the
incurrence of any Indebtedness (including Acquired Debt)) as if such Investment
or acquisition occurred on the first day of such fiscal quarter. For purposes of
this definition, whenever pro forma effect is to be given to an acquisition of
assets or an Investment, the pro forma calculations will be determined in good
faith by a responsible financial or
44
<PAGE> 46
accounting officer of the Company; provided, however, that such officer shall
apply in his calculations the historical EBITDA associated with such assets for
the most recent fiscal quarter for which financial information is available. If
any Indebtedness (including Acquired Debt) bears a floating rate of interest and
is being given pro forma effect, the interest on such Indebtedness will be
calculated as if the rate in effect on the date of determination had been the
applicable rate for the entire period.
"Asset Sale" means any sale, lease, transfer or other disposition (or
series of related sales, leases, transfers or dispositions) of shares of Capital
Stock of a Subsidiary (other than directors' qualifying shares), property or
other assets (each referred to for the purposes of this definition as a
"disposition") by the Company or any of its Subsidiaries, including any
disposition by means of a merger, consolidation or similar transaction, other
than (i) a disposition of property or assets at Fair Market Value in the
ordinary course of business, (ii) a disposition that constitutes a Restricted
Payment and (iii) a disposition by a Subsidiary to the Company or by the Company
or a Subsidiary to a Wholly-Owned Subsidiary.
"AWS Transaction" means the acquisition by the Company of the capital stock
of American Wireless Systems, Inc., a Delaware corporation, and the acquisition
by the Company of the assets of Wireless Cable TV Associates #38 and Fort Worth
Wireless Cable T.V. Associates for consideration comprised of Equity Interests
of the Company.
"Bankruptcy Code" means Title 11, United States Code, as amended.
"Bank Indebtedness" means loans made by banks, trust companies and other
institutions principally engaged in the business of lending money to businesses
to the Company or a Subsidiary under a credit facility, loan agreement or
similar agreement.
"Beneficial Owner" means a beneficial owner as defined in Rules 13d-3 and
13d-5 under the Exchange Act (or any successor rules), including the provision
of such Rules that a Person shall be deemed to have beneficial ownership of all
securities that such Person has a right to acquire within 60 days; provided that
a Person will not be deemed a beneficial owner of, or to own beneficially, any
securities if such beneficial ownership (i) arises solely as a result of a
revocable proxy delivered in response to a proxy or consent solicitation made
pursuant to, and in accordance with, the Exchange Act and (ii) is not also then
reportable on Schedule 13D or Schedule 13G (or any successor schedule) under the
Exchange Act.
"Business Day" means any day that is not a Saturday, Sunday or a day on
which banking institutions are required to close in the State of New York or
Texas.
"CableMaxx Transaction" means the acquisition by the Company of the capital
stock of CableMaxx, Inc., a Delaware corporation ("CableMaxx"), for
consideration comprised of Equity Interests of the Company.
"Call Markets" means Fanning Springs, Florida; Leesburg, Florida; and Lake
City, Florida.
"Capital Lease Obligation" means, at the time any determination thereof is
to be made, the amount of the liability in respect of a capital lease that would
at such time be required to be capitalized on the balance sheet in accordance
with GAAP.
"Capital Stock" means any and all shares, interests, participations,
warrants, options, rights or other equivalents of or interests in (however
designated and whether voting or non-voting) corporate stock of a corporation
and any and all equivalent ownership interests in a Person (other than a
corporation), in each case whether outstanding on the date of issuance of the
Notes or thereafter issued, including any Preferred Stock.
"Change of Control" means the occurrence of any of the following events:
(i) any Person (as such term is used in Sections 13(d) and 14(d) of
the Exchange Act), other than the Permitted Holders, is or becomes the
Beneficial Owner, directly or indirectly, of (a) more than 35% of the total
Voting Stock or Equity Market Capitalization of the Company and (b) a
greater percentage of the voting power of the total Voting Stock of the
Company than that represented by the voting power of the Voting Stock of
the Company then beneficially owned, in the aggregate, by the Permitted
Holders; or
45
<PAGE> 47
(ii) 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 immediately after the consummation
thereof the stockholders of the Company immediately prior to the date of
such transaction cease to own, directly or indirectly, a majority of the
Voting Stock of the surviving or transferee corporation, or Persons owning
a majority of the Voting Stock of the Company immediately prior to such
transaction cease to own, directly or indirectly, a majority of the Voting
Stock of the surviving or transferee corporation; or
(iii) 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 66 2/3% 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; or
(iv) the Company adopts a plan of liquidation or dissolution.
"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, 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" has the meaning ascribed to such term in the Escrow and
Disbursement Agreement.
"Common Stock" of any Person means Capital Stock of such Person that does
not rank prior, as to the payment of dividends or as to the distribution of
assets upon any voluntary or involuntary liquidation, dissolution or winding up
of such Person, to shares of Capital Stock of any other class of such Person.
"Consolidated Income Tax Expense" for any Person for any period means,
without duplication, the aggregate amount of net taxes based on income or
profits for such period of the operations of such Person and its consolidated
Subsidiaries with respect to such period in accordance with GAAP.
"Consolidated Indebtedness" means, with respect to any Person, as of any
date of determination, the aggregate amount of Indebtedness of such Person and
its Subsidiaries as of such date determined on a consolidated basis in
accordance with GAAP.
"Consolidated Interest Expense" means, for any Person, for any period, the
aggregate of the following for such Person for such period determined on a
consolidated basis in accordance with GAAP: the amount of interest in respect of
Indebtedness (including amortization of original issue discount and non-cash
interest payments on any Indebtedness and the interest portion of any deferred
payment obligation and after taking into account the effect of elections made
under any Interest Rate Agreement, however denominated, with respect to such
Indebtedness), and the interest component of any Capital Lease Obligation paid,
in each case whether accrued or scheduled to be paid or accrued by such Person
during such period to the extent such amounts were deducted in computing
Consolidated Net Income, determined on a consolidated basis in accordance with
GAAP, provided that each of the foregoing shall only be included in the
calculation of Consolidated Interest Expense to the extent such amounts reduce
Consolidated Net Income for such period. For purposes of this definition,
interest on a Capital Lease Obligation shall be deemed to accrue at an interest
rate reasonably determined by such Person to be the rate of interest implicit in
such Capital Lease Obligation in accordance with GAAP consistently applied.
46
<PAGE> 48
"Consolidated Net Income" means, with respect to any Person for any period,
the aggregate of the Net Income of such Person and its consolidated Subsidiaries
for such period determined in accordance with GAAP, provided that there shall be
excluded (i) the Net Income of any Person (other than a consolidated Subsidiary)
in which such Person or any of its consolidated Subsidiaries has a joint
interest with a third party, including, without limitation, interests accounted
for on the equity method, except to the extent of the amount of dividends or
distributions actually paid to such Person or its consolidated Subsidiary during
such period; (ii) except to the extent includable pursuant to the foregoing
clause (i), the Net Income of any Person accrued prior to the date it becomes a
Subsidiary of such Person or is merged into or consolidated with such Person or
any of its Subsidiaries or that Person's assets are acquired by such Person or
any of its Subsidiaries; (iii) the Net Income (if positive), or any portion
thereof, of any Subsidiary of such Person to the extent that the declaration or
payment of dividends or similar distributions by that Subsidiary to such Person
or to any other Subsidiary of such Net Income is not at the time permitted by
operation of the terms of its charter or any agreement, instrument, judgment,
decree, order, statute, rule or governmental regulation applicable to that
Subsidiary, except that (A) the Company's equity in the Net Income of any such
Subsidiary for such period shall be included in such Consolidated Net Income up
to the aggregate amount of cash actually distributed by such Subsidiary during
such period to the Company or another Subsidiary as a dividend or other
distribution (subject, in the case of a dividend or other distribution to a
Subsidiary, to the limitation contained in this clause) and (B) the Company's
equity in a net loss of any such Subsidiary for such period shall be included in
determining such Consolidated Net Income; (iv) without duplication, any gains or
losses attributable to Asset Sales; (v) Net Income (if positive), arising from
the adoption of changes in accounting policy to comply with GAAP or voluntarily
by the Company with the consent of its independent auditors that so qualify
under Regulation S-X of the Securities Act; (vi) Net Income arising for periods
prior to the date of a transaction in connection with the accounting treatment
for a merger, combination or consolidation under the pooling of interests
method; and (vii) foreign currency translation gains and losses.
"Default" means any event that is or with the passage of time or the giving
of notice or both would be an Event of Default.
"Disqualified Stock" means any Capital Stock that, by its terms (or by the
terms of any security into which it is convertible or for which it is
exchangeable) or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or is redeemable
at the option of the holder thereof, in whole or in part, on or prior to the
date on which the Notes mature; provided, however, that any Capital Stock that
would not constitute Disqualified 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 of Control occurring prior to the
final maturity of the Notes shall not constitute Disqualified Stock if (i) the
change of control provisions applicable to such Capital Stock are no more
favorable to the holders of such Capital Stock than the provisions applicable to
the Notes contained in the covenant described under "Offer to Purchase Upon
Change of Control" and (ii) 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 such Notes as are required to be
repurchased pursuant to the covenant described under "Offer to Purchase Upon
Change of Control."
"EBITDA" for any period means the Consolidated Net Income for such period
plus the following to the extent deducted in calculating such Consolidated Net
Income: (i) Consolidated Income Tax Expense, (ii) Consolidated Interest Expense,
(iii) depreciation and amortization expense determined on a consolidated basis
for such Person and its consolidated Subsidiaries in accordance with GAAP for
such period and (iv) all other non-cash charges (other than non-cash charges
which require an accrual of or reserve for cash charges in future periods), and
less any non-cash items which have the effect of increasing Consolidated Net
Income for such period.
"Eligible Institution" means a commercial banking institution that has
combined capital and surplus of not less than $500 million or its equivalent in
foreign currency, whose debt is rated "A" (or higher) according to S&P or
Moody's at the time as of which any investment or rollover therein is made.
47
<PAGE> 49
"Equity Interests" means Capital Stock and all warrants, options or other
rights to acquire Capital Stock or that are measured by the value of Capital
Stock (but excluding any debt security that is convertible into or exchangeable
for Capital Stock).
"Equity Market Capitalization" of any Person means, as of any day of
determination, the product of (a) the aggregate number of outstanding 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 an independent investment banking firm of national repute.
"Escrow Account" means an escrow account for the deposit of approximately
$25.0 million of the net proceeds from the sale of the Old Notes under the
Escrow and Disbursement Agreement.
"Escrow Agent" means Bankers Trust Company, as Escrow Agent under the
Escrow and Disbursement Agreement, or any successor thereto appointed pursuant
to such agreement.
"Escrow and Disbursement Agreement" means the Escrow and Disbursement
Agreement, dated as of the date of the Indenture, by and among the Escrow Agent,
the Trustee and the Company, governing the disbursement of funds from the Escrow
Account, as amended.
"Exchange Act" means the Securities Exchange Act of 1934, as amended (or
any successor act), and the rules and regulations promulgated thereunder.
"Existing Indebtedness" means the Notes and any other Indebtedness of the
Company and its Subsidiaries in existence on the Issue Date, excluding
Indebtedness under a senior secured revolving credit facility that has been
repaid from the proceeds of the sale of the Old Notes.
"Fair Market Value" means, with respect to any asset or property, the sale
value that would be obtained in an arm's length transaction between an informed
and willing seller under no compulsion to sell and an informed and willing buyer
under no compulsion to buy.
"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, which are applicable as of the date of
determination.
"Guarantee" means any obligation, contingent or otherwise, of any Person
directly or indirectly guaranteeing any Indebtedness or other obligation of any
other Person and any obligation, direct or indirect, contingent or otherwise, of
such Person (i) to purchase or pay (or advance or supply funds for the purchase
or payment of) such Indebtedness or other obligation or such other Person
(whether arising by virtue of partnership arrangements, or by agreement to keep
well, to purchase assets, goods, securities or services, to take-or-pay or to
maintain financial statement conditions or otherwise) or (ii) entered into for
the purposes of assuring in any other manner the obligee of such Indebtedness or
other obligation of the payment thereof or to protect such obligee against loss
in respect thereof (in whole or in part); provided, however, that the term
"Guarantee" shall not include endorsements for collection or deposits in the
ordinary course of business. The term "Guarantee" used as a verb has a
corresponding meaning. The amount of any Guarantee shall be deemed to be an
amount equal to the stated or determinable amount of the primary obligation in
respect of which such Guarantee is made (unless such Guarantee shall be
expressly limited to a lesser amount, in which case such lesser amount shall
apply) or, if not stated or determinable, the maximum reasonably anticipated
liability in respect thereof as determined by such Person in good faith.
"Indebtedness" of any Person means, without duplication: (i) the principal
of and premium (if any) in respect of (A) indebtedness of such Person for money
borrowed and (B) indebtedness evidenced by notes, debentures, bonds or other
similar instruments for the payment of which such Person is responsible or
liable; (ii) all Capital Lease Obligations of such Person; (iii) all obligations
of such Person issued or assumed as the
48
<PAGE> 50
deferred purchase price of property, all conditional sale obligations of such
Person and all obligations of such Person under any title retention agreement
(but excluding trade accounts payable arising in the ordinary course of
business); (iv) all obligations of such Person for the reimbursement of any
obligor for any letter of credit, banker's acceptance or similar credit
transaction (other than obligations with respect to letters of credit securing
obligations (other than obligations described in (i) through (iii) above)
entered into in the ordinary course of business of such Person to the extent
such letters of credit are not drawn upon or, if and to the extent drawn upon,
such drawing is reimbursed no later than the third Business Day following
receipt by such Person of a demand for reimbursement following payment on the
letter of credit); (v) the amount of all obligations of such Person with respect
to the redemption, repayment or other repurchase of any Disqualified Stock (the
amount of Indebtedness represented by any Disqualified Stock will be the
liquidation preference, plus accrued and unpaid dividends); (vi) to the extent
not otherwise included, Interest Rate Agreements; (vii) all obligations of the
type referred to in clauses (i) through (vi) of other Persons and all dividends
of other Persons for the payment for which, in either case, such Person is
responsible or liable, directly or indirectly, as obligor, guarantor or
otherwise, including by means of any Guarantee; and (viii) all obligations of
the type referred to in clauses (i) through (vii) of other Persons secured by
any Lien on any property or asset of such Person (whether or not such obligation
is assumed by such Person); provided that if recourse with respect to such
Indebtedness is limited to such asset, the amount of such Indebtedness shall be
deemed to be the lesser of the value of such property or assets or the amount of
the obligation so secured.
"Interest Rate Agreement" means, with respect to any Person, the
obligations of such Person under (i) interest rate swap agreements, interest
rate cap agreements and interest rate collar agreements and (ii) other
agreements or arrangements designed to protect such Person against fluctuations
in interest rates.
"Investments" means, with respect to any Person, on any date of
determination, the outstanding amount of (i) all investments by such Person in
other Persons (including Affiliates) in the forms of loans, Guarantees, advances
or capital contributions (excluding commission, travel and similar advances to
officers and employees made in the ordinary course of business), purchases or
other acquisitions for consideration of Indebtedness, Equity Interests or other
securities of any other Person and all other items that are or would be
classified as investments on a balance sheet prepared in accordance with GAAP
and (ii) all acquisitions by such Person of assets to be used in the Wireless
Cable Business (other than any such acquisitions of equipment made in the
ordinary course of such Person's business and other than any acquisition or
lease (and any deposit required to be made in connection therewith) of
additional channel rights on or after November 30, 1996 in any wireless cable
market or "Basic Trading Area" (as defined by Rand McNally) in which the Company
and its Subsidiaries (A) as of November 30, 1996, have channel rights, whether
by way of license, lease with a channel license holder, lease with a channel
license applicant, lease with a qualified, non-profit educational organization
that plans to apply for a channel license or option to acquire any of the
foregoing, or (B) as of the date of such acquisition or lease, have rights with
respect to at least eight wireless cable channels, whether by way of license,
lease with a channel license holder, lease with a channel license applicant,
lease with a qualified, non-profit educational organization that plans to apply
for a channel license or option to acquire any of the foregoing).
"Issue Date" means the date on which Notes are first authenticated and
issued.
"Lien" means, with respect to any asset, any mortgage, deed of trust, lien,
pledge, charge, security interest, lease, easement, restriction, covenant,
right-of-way, charge, encumbrance or other similar lien of any kind in respect
of such asset, whether or not filed, recorded or otherwise perfected under
applicable law (including any conditional sale or other title retention
agreement, any lease in the nature thereof, any option or other agreement to
sell or give a security interest in and any filing of or agreement to give any
financing statement under the Uniform Commercial Code (or equivalent statutes)
of any jurisdiction).
"Marketable Securities" means (i) U.S. Government Securities maturing not
more than two years after the date of acquisition; (ii) any certificate of
deposit maturing not more than 270 days after the date of acquisition issued by,
or time deposit of, an Eligible Institution; (iii) commercial paper maturing not
more than 270 days after the date of acquisition issued by a corporation (other
than an Affiliate of the Company) with a rating, at the time as of which any
investment therein is made, of "A-1" (or higher) according to S&P
49
<PAGE> 51
or "P-1" (or higher) according to Moody's; (iv) any banker's acceptances or
money market deposit accounts issued or offered by an Eligible Institution; and
(v) any fund investing exclusively in investments of the types described in
clauses (i) through (iv) above.
"Moody's" means Moody's Investors Service Inc. and its successors.
"Net Cash Proceeds" means the aggregate cash proceeds received by the
Company or any of its Subsidiaries in respect of any Asset Sale (excluding,
without limitation, any consideration received in the form of assumption by the
acquiring Person of Indebtedness or other obligations relating to such property
or assets or received in any other noncash form), net of the direct costs
relating to such Asset Sale (including, without limitation, legal, accounting
and investment banking fees and sales commissions), any relocation expenses
incurred as a result thereof, Federal, state, provincial, foreign and local
taxes paid or payable as a result thereof (after taking into account any
available tax credits or deductions and any tax sharing arrangements), title and
recording tax expenses, and in each case net of appropriate amounts to be
provided by the Company or its Subsidiaries as a reserve, in accordance with
GAAP, against any liabilities associated with such assets and retained by the
Company or any Subsidiary after such Asset Sale, including, without limitation,
pension and other post-employment benefit liabilities and liabilities related to
environmental matters and the after-tax cost of any indemnification payments
(fixed or contingent) attributable to the seller's indemnities to the purchaser
undertaken by the Company or any of its Subsidiaries in connection with such
Asset Sale (but excluding any payments, which by the terms of the indemnities
will not, under any circumstances, be made during the term of the Notes) and net
of all payments made on any Indebtedness which is secured by any assets subject
to such Asset Sale, in accordance with the terms of any Lien upon or other
security agreement of any kind with respect to such assets, or which must by its
terms, or in order to obtain a release of such Lien or a necessary consent to
such Asset Sale, or by applicable law be repaid out of the proceeds from such
Asset Sale, and net of all distributions and other payments required to be made
to minority interests holders in Subsidiaries or joint ventures as a result of
such Asset Sale. Net Cash Proceeds shall exclude any non-cash proceeds received
from any Asset Sale, but shall include such proceeds when and as converted by
the Company or any Subsidiary to cash.
"Net Income" of any Person for any period means the net income (loss) of
such Person for such period, determined in accordance with GAAP, except that
extraordinary gains and losses as determined in accordance with GAAP shall be
excluded.
"Net Proceeds" means, with respect to any issuance or sale of Equity
Interests, the cash proceeds of such issuance or sale net of attorneys' fees,
accountants' fees, underwriters' or placement agents' fees, discounts and
commissions and brokerage, consultant and other fees actually incurred in
connection with such issuance or sale and net of taxes paid or payable as a
result thereof.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Opinion of Counsel" means an opinion in writing signed by legal counsel
reasonably satisfactory to the Trustee.
"Permitted Assets" means Wireless Cable Related Assets related to wireless
cable systems (i) in the United States and containing a maximum of 250,000
households within a 35-mile radius of the licensed transmission site associated
with such system, at least 15% of which households are unpassed by traditional
hard-wire cable (as supported by an Officer's Certificate), (ii) owned by the
Company as of November 30, 1996 or (iii) owned by Television Interactiva del
Norte, SA de C.V. (but only, with respect to Investments in assets named in this
clause (iii), up to the amount of $3.0 million after November 30, 1996).
"Permitted Designee" means (i) a spouse, child or grandchild (whether such
relationship arises from birth, adoption or through marriage) of a Permitted
Holder, (ii) any trust, corporation, partnership or other entity, a majority in
interest of the beneficiaries, stockholders, partners or owners (direct or
beneficial) of which are Permitted Holders and/or Persons of the type referred
to in clause (i) above or (iii) any Person so long as a Permitted Holder owns at
least 50% of the Voting Stock of such Person.
50
<PAGE> 52
"Permitted Holders" means Hunt Capital Group L.L.C. and its Affiliates,
David E. Webb and L. Allen Wheeler and their Permitted Designees.
"Permitted Investment" means (a) any Investment by the Company in a
Subsidiary (provided that, in the case of Wholly-Owned Subsidiaries, if such
Wholly-Owned Subsidiary ceases to be a Wholly-Owned Subsidiary (except by reason
of the sale by the Company or its Wholly-Owned Subsidiary of the Equity
Interests therein), then any Investment in such Subsidiary will be deemed to be
a Restricted Payment at the time of such event determined in accordance with the
"Limitation on Restricted Payments" covenant); and (b) any Investments in
Marketable Securities.
"Permitted Liens" means:
(i) Liens on (x) the Escrow Account and all funds and securities
therein securing only the Notes equally and ratably or (y) other assets of
the Company or any Subsidiary thereof securing only the Notes equally and
ratably;
(ii) Liens to secure Bank Indebtedness incurred by the Company or the
Subsidiaries in compliance with the "Limitation on Indebtedness" covenant
and Guarantees incurred by the Subsidiaries in compliance with clause (iv)
of the second paragraph of "Certain Covenants -- Limitation on
Indebtedness" executed in connection therewith;
(iii) Liens on the property of the Company or its Subsidiaries created
solely for the purpose of securing purchase money obligations incurred in
compliance with the Indenture; provided that (a) such property so acquired
is for use in lines of business related to the Company's or its
Subsidiaries' business as it exists immediately prior to the issuance of
the related Indebtedness, (b) no such Lien shall extend to or cover other
property or assets of the Company and its Subsidiaries other than the
respective property so acquired and (c) the principal amount of
Indebtedness secured by any such Lien shall at no time exceed the original
purchase price of such property or assets;
(iv) Liens on the property or assets of a Subsidiary acquired after
the Issue Date or on property or assets acquired in an asset purchase
transaction with a Person that is not an Affiliate created solely to secure
the obligations that financed the acquisition of such Subsidiary or such
property and assets; provided that (a) no such Lien shall extend to or
cover property or assets of the Company and its Subsidiaries other than the
property or assets of the Subsidiary so acquired or the property or assets
so acquired and (b) no such Lien shall extend to the Capital Stock of any
Subsidiary so acquired and (c) the principal amount of Indebtedness secured
by any such Lien shall not exceed the original purchase price of such
Subsidiary or such property or assets;
(v) Liens on the assets of any entity existing at the time such entity
or assets are acquired by the Company or any of its Subsidiaries, whether
by merger, consolidation, purchase of assets or otherwise; provided that
such Liens (a) are not created, incurred or assumed in connection with, or
in contemplation of, such assets being acquired by the Company or any of
its Subsidiaries and (b) do not extend to any other property of the Company
or any of its Subsidiaries;
(vi) Liens to secure the performance of statutory obligations, surety
or appeal bonds or performance bonds or landlords', carriers',
warehousemen's, mechanics', suppliers', materialmen's or other like Liens,
in any case incurred in the ordinary course of business and with respect to
amounts not yet delinquent or being contested in good faith by appropriate
process of law, if a reserve or other appropriate provision, if any, as
required by GAAP shall have been made therefor;
(vii) Liens existing on the date of the Indenture;
(viii) Liens for taxes, assessments or governmental charges or claims
that are not yet delinquent or that are being contested in good faith by
appropriate proceedings promptly instituted and diligently concluded,
provided that any reserve or other appropriate provision as shall be
required in conformity with GAAP shall have been made therefor;
51
<PAGE> 53
(ix) Liens in favor of any Federal governmental authority on any
wireless cable channels or "Basic Trading Area" (as defined by Rand
McNally) licenses acquired by the Company or any of its Subsidiaries in an
auction or other sale, provided that such wireless cable channels or "Basic
Trading Area" licenses are within the United States; and
(x) extensions or renewals of any Liens referred to in clauses (i)
through (ix) above, provided that such extension or renewal does not extend
to any assets or secure any Indebtedness not securing or secured by the
Liens being extended or renewed.
Notwithstanding the foregoing, Permitted Liens may not extend to the Escrow
Account or the Escrow and Disbursement Agreement.
"Permitted Payments" means, with respect to the Company or any of its
Subsidiaries, (a) any dividend on shares of Capital Stock payable solely in
shares of Capital Stock (other than Disqualified Stock) or in options, warrants
or other rights to purchase Capital Stock (other than Disqualified Stock); (b)
any dividend, other distribution, loan or advance to the Company by any of its
Subsidiaries or by a Subsidiary to another Subsidiary; (c) any defeasance,
redemption, repurchase or other acquisition for value of any Indebtedness of the
Company with the proceeds from the issuance of (i) Indebtedness which is
subordinate to the Notes at least to the extent and in the manner as the
Indebtedness to be defeased, redeemed, repurchased or otherwise acquired is
subordinate in right of payment to the Notes; provided that (1) such
newly-issued subordinated Indebtedness provides for no payments of principal by
way of sinking fund, mandatory redemption, defeasance or otherwise by the
Company or its Subsidiaries (including, without limitation, at the option of the
holder thereof other than an option given to a holder pursuant to a Change of
Control covenant which (x) is no more favorable to the holders of such
Indebtedness than the provisions in favor of the Holders and (y) such
Indebtedness provides that the Company or its Subsidiaries will not repurchase
such Indebtedness pursuant to such provisions prior to the Company's repurchase
of the Notes required to be repurchased by the Company upon a Change of Control)
prior to the maturity of the Indebtedness being replaced and (2) the proceeds of
such new Indebtedness are utilized for such purpose within 45 days of issuance
or (ii) Capital Stock (other than Disqualified Stock) issued in accordance with
the provisions of the Indenture; and (d) the redemption or repurchase by a
Wholly-Owned Subsidiary of its Capital Stock owned by the Company.
"Person" means any individual, corporation, partnership, joint venture,
association, joint stock company, trust, unincorporated organization, government
or any agency or political subdivision thereof or any other entity.
"Preferred Stock," as applied to the Capital Stock of any Person, means
Capital Stock of such Person of any class or classes (however designated) that
ranks prior, as to 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.
"Strategic Equity Investor" means any Person that, both as of the Trading
Day immediately before the day of such sale and the Trading Day immediately
after the day of such sale, has an Equity Market Capitalization of at least $2
billion and is engaged in the business of (i) transmitting video, voice or data
through wireless and other transmission facilities, (ii) creating, developing or
packaging entertainment or communication programming or (iii) evaluating,
participating or pursuing any other activity or opportunity that is related to
those identified in (i) or (ii) above.
"Subsidiary" means any corporation, association or other business entity of
which more than 50% of the total voting power of the outstanding Voting Stock
(or other interests, including partnership interests) is owned directly or
indirectly by any Person or one or more of the other Subsidiaries of that Person
or a combination thereof.
"S&P" means Standard & Poor's Corporation and its successors.
"TechniVision Transaction" means the acquisition by the Company of the
assets of TechniVision, Inc. for consideration comprised of Equity Interests of
the Company.
52
<PAGE> 54
"Trading Day," with respect to a securities exchange or automated quotation
system, means a day on which such exchange or system is open for a full day of
trading.
"Transactions" means the AWS Transaction, the CableMaxx Transaction, the
TechniVision Transaction and the Wireless One Transaction, collectively.
"U.S. Government Securities" means securities that are (x) direct
obligations of the United States of America for the payment of which its full
faith and credit is pledged or (y) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States of
America, the payment of which is unconditionally guaranteed as a full faith and
credit obligation by the United States of America, which, in either case, are
not callable or redeemable at the option of the issuer thereof, and shall also
include a depository receipt issued by a bank (as defined in Section 3(a)(2) of
the Securities Act) as custodian with respect to any such U.S. Government
Obligation or a specific payment of principal of or interest on any such U.S.
Government Obligation held by such custodian for the account of the holder of
such depository receipt; provided that (except as required by law) such
custodian is not authorized to make any deduction from the amount payable to the
holder of such depository receipt from any amount received by the custodian in
respect of the U.S. Government Obligation or the specific payment of principal
of or interest on the U.S. Government Obligation evidenced by such depository
receipt.
"Voting Stock" of any Person means all outstanding classes of Capital Stock
of any entity entitled (without regard to the occurrence of any contingency) to
vote in the election of directors, managers or trustees thereof.
"Weighted Average Life to Maturity" means, when applied to any Indebtedness
or Preferred Stock, as the case may be, at any date, the number of years
obtained by dividing (i) the then outstanding principal amount or stated value
of such Indebtedness or Preferred Stock, as the case may be, into (ii) the total
of the product obtained by multiplying (x) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, or preference in respect
thereof, by (y) the number of years (calculated to the nearest one-twelfth) that
will elapse between such date and the making of such payment.
"Wholly-Owned Subsidiary" means any Subsidiary of the Company, all of the
outstanding Capital Stock (other than directors' qualifying shares), or in the
case of a non-corporate Subsidiary, other equity interests having ordinary
voting power for the election of directors or other governing body of such
Subsidiary, of which is owned by the Company or another Wholly-Owned Subsidiary
of the Company or a combination thereof.
"Wireless Cable Business" means, when used in reference to any Person, that
such Person, directly or indirectly, is engaged primarily in the business of (i)
transmitting video, voice or data primarily through wireless transmission
facilities, (ii) utilizing wireless cable channels for any commercial purpose
permitted by the FCC, (iii) creating, developing and packaging programming that
may be used to satisfy educational programming requirements for ITFS channels
and advertising, that, in either case, is transmitted over one or more of the
Company's wireless cable channels or (iv) evaluating, participating or pursuing
any other activity or opportunity that is related to those identified in (i),
(ii) or (iii) above.
"Wireless Cable Related Assets" means all assets, rights (contractual or
otherwise) and properties, whether tangible or intangible, used in connection
with a Wireless Cable Business.
"Wireless One Transaction" means the transaction between the Company and
Wireless One Operating Company, a Delaware corporation ("Old Wireless One"),
whereby, among other things, Wireless One, Inc., a newly-formed Delaware
corporation ("Wireless One"), acquired (A) all of the outstanding capital stock
of Old Wireless One (which retained all of its assets and liabilities except its
wireless cable assets and certain related liabilities with respect to the
Springfield, Missouri market which the Company acquired) for consideration
comprised of the Common Stock, $.01 par value per share (the "Wireless One
Common Stock"), of Wireless One and (B) the wireless cable assets and related
liabilities of certain Subsidiaries of the Company with respect to the
Contributed Markets for consideration comprised of Wireless One Common Stock and
promissory notes of Wireless One.
53
<PAGE> 55
DESCRIPTION OF CERTAIN INDEBTEDNESS
On November 30, 1994, the Company consummated the private placement of
$40,150,000 in gross proceeds of the Convertible Notes, representing an
aggregate principal amount payable at maturity of $62,351,722 to Jupiter and an
accredited individual pursuant to the terms of the Note Purchase Agreement. The
Convertible Notes were issued with an original issue discount of approximately
35.607% from the principal amount at the maturity thereof. The Convertible Notes
mature November 1, 2004. The yield to maturity of the Convertible Notes will be
9% per annum (computed on a semi-annual bond equivalent basis). No periodic
interest payments are due on the Convertible Notes prior to the Applicable Date,
after which interest will be payable in cash semi-annually in arrears on each
May 1 and November 1, commencing with the first such date after the Applicable
Date, which shall be no later than November 30, 1999. The Convertible Notes may
be converted to Common Stock at the option of the holders thereof at any time
prior to maturity, unless previously redeemed by the Company, into the number of
shares of Common Stock computed by dividing the accreted value thereof (or, if
after the Applicable Date, the principal amount at maturity thereof plus accrued
and unpaid interest) (the "Applicable Amount") by the Conversion Price of
$15.34. The Conversion Price will not be adjusted for accrued original issue
discount, but will be subject to adjustment upon the occurrence of certain
events affecting the Common Stock. The Convertible Notes are redeemable, in
whole or in part, at the option of the Company at any time on or after November
30, 1999, at a redemption price equal to the principal amount at maturity
thereof plus accrued and unpaid interest, except that no such redemption may be
made unless the market price of the Common Stock for 20 trading days within a
period of 30 consecutive trading days ending no later than the fifth trading day
preceding the redemption notice, which 20 trading days must include the
thirtieth trading day of such period, exceeds 150% of the Conversion Price on
each of such 20 trading days. The Note Purchase Agreement contains certain
covenants that, among other things, limit or prohibit the ability of the Company
and its subsidiaries to pay dividends, to liquidate or dissolve, to merge or
sell all or substantially all of its assets, to sell or lease channel rights, to
enter into a new business, to make certain acquisitions and to incur certain
indebtedness.
On April 19, 1995, the Company consummated a private placement of 100,000
Units consisting of $100.0 million principal amount of 13% Senior Notes ("13%
Series A Notes") and 600,000 Warrants to purchase shares of Common Stock. On
March 13, 1996, the Company consummated an exchange offer pursuant to which
$100.0 million principal amount of 13% Series B Senior Notes ("13% Series B
Notes") were issued in exchange for an equal principal amount of 13% Series A
Notes, which were all cancelled. The terms of the 13% Series A Notes and the 13%
Series B Notes are identical in all material respects, except that the 13%
Series B Notes have been registered under the Securities Act and therefore do
not have legends restricting their transfer.
On March 25, 1996, the Company consummated a private placement of $15.0
million principal amount of 13% Series C Senior Notes (the "13% Series C
Notes"). On January 29, 1997, the Company consummated an exchange offer pursuant
to which $15.0 million principal amount of 13% Series D Senior Notes ("13%
Series D Notes") were issued in exchange for an equal principal amount of 13%
Series C Notes, which were all cancelled. The terms of the 13% Series C Notes
and 13% Series D Notes are identical in all material respects, except that the
Series D Notes have been registered under the Securities Act and therefore do
not have legends restricting their transfer. The 13% Series B Notes and 13%
Series D Notes constitute the Existing Notes described elsewhere herein.
The Company was the winning bidder in the BTA Auction in 93 BTAs at a cost
of approximately $19.8 million, of which the Company has paid approximately $4.0
million towards this obligation. The remaining $15.8 million bears interest at
9.5% and is to be paid over a 10-year period commencing in the fourth quarter of
1996. The Company will be required to make quarterly interest-only payments for
the first two years and quarterly payments of principal and interest over the
remaining 8 years. The remaining payments are secured by a lien on the BTA
licenses purchased in the BTA Auction. CS Wireless will reimburse the Company
for all amounts paid in the BTA Auction relating to 12 BTAs at a total cost of
approximately $5.3 million, of which approximately $1.1 million had been
reimbursed as of October 30, 1996, representing all amounts paid by the Company
as of such date in connection with the award of the 12 BTAs.
54
<PAGE> 56
After giving effect to these obligations of and payments by CS Wireless, the
Company's remaining obligation associated with the BTA Auction is approximately
$11.6 million.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following discussion is a summary of certain Federal income tax
consequences of the exchange of Old Notes for New Notes pursuant to the Exchange
Offer and of the ownership of New Notes. The discussion is based upon the Code,
Treasury Regulations, Internal Revenue Service ("IRS") rulings and
pronouncements and judicial decisions now in effect, all of which are subject to
change at any time by legislative, judicial or administrative action. Any such
changes may be applied retroactively in a manner that could adversely affect a
holder of the Notes. The following discussion assumes that holders will hold the
New Notes, and have held the Old Notes, as capital assets.
The Company has not sought and will not seek any rulings from the IRS with
respect to the positions of the Company discussed below. There can be no
assurance that the IRS will not take a different position concerning the tax
consequences of the Exchange Offer or of the purchase, ownership or disposition
of the New Notes or that any such different position would not be sustained.
The tax treatment of a holder of New Notes may vary depending on his or its
particular situation or status. This summary does not address the tax
consequences to taxpayers who are subject to special rules such as insurance
companies, tax-exempt organizations, financial institutions, broker-dealers,
foreign entities and individuals, persons holding New Notes as a part of a
hedging or conversion transaction or a straddle and holders whose "functional
currency" is not the U.S. dollar, or aspects of Federal income taxation that may
be relevant to a holder based upon such holder's particular tax situation. In
addition, the description does not consider the effect of any applicable
foreign, state, local or other tax laws.
EACH HOLDER SHOULD CONSULT HIS OR ITS OWN TAX ADVISER AS TO THE PARTICULAR
TAX CONSEQUENCES TO HIM, HER OR IT OF THE EXCHANGE OF OLD NOTES FOR NEW NOTES
PURSUANT TO THE EXCHANGE OFFER AND OF THE OWNERSHIP OF THE NEW NOTES, INCLUDING
THE APPLICABILITY AND EFFECT OF ANY STATE, LOCAL OR FOREIGN TAX LAWS.
Although the matter is not entirely free from doubt, the exchange of an Old
Note for a New Note pursuant to the Exchange Offer should not be treated as an
exchange or otherwise as a taxable event for Federal income tax purposes.
Accordingly, the New Notes should have the same issue price as the Old Notes and
each holder should have the same adjusted basis and holding period in the New
Notes as it had in the Old Notes immediately before the Exchange Offer. It is
assumed, for purposes of the following discussion, that the consummation of the
Exchange Offer will not be treated as a taxable event and that the New Notes and
the Old Notes will be treated as the same instruments for Federal income tax
purposes.
NEW NOTES
Payments of Interest. Holders of the New Notes will be required to include
payments of qualified stated interest (as defined below) received thereon in
taxable income in accordance with their respective methods of accounting.
Acquisition Premium of a Subsequent Purchaser. An acquisition premium will
exist if a subsequent purchaser purchases a New Note at a cost that exceeds the
sum of all amounts payable on the New Notes after the acquisition date (other
than stated interest). In such case, a subsequent purchaser who is treated as
having purchased a New Note at such a premium may elect to amortize such
acquisition premium over the term of the New Note. If a holder makes this
election, each interest payment on the New Note will be offset by the portion of
the acquisition premium allocable to such interest payment, and will therefore,
reduce the amount of interest on the New Note that the holder would otherwise
have to include in income. Acquisition premium is amortized on a constant yield
to maturity basis (except to the extent regulations may provide otherwise).
Amortized acquisition premium will reduce a holder's adjusted tax basis in the
New Note. A holder that elects to amortize acquisition premium on a New Note
will generally be required to amortize
55
<PAGE> 57
acquisition premium on all other debt instruments that it acquired at a premium
in such year, and in subsequent years. Additionally, the manner of amortizing
acquisition premium of a New Note may be affected by the Company's rights to
redeem the New Notes prior to maturity. Holders should consult with their tax
advisor before electing to amortize acquisition premium with respect to the New
Notes.
Market Discount of a Subsequent Holder. If a subsequent holder of a New
Note that was purchased at a "market discount" thereafter realizes gain upon its
disposition or retirement, such gain will be taxed as ordinary income to the
extent of the market discount that has accrued on a straight-line basis (or on a
constant interest rate basis, if such basis of accrual has been elected by the
holder under Section 1276(b) of the Code) while the debt instrument was held by
such holder. "Market discount" with respect to a New Note is the amount by which
the stated redemption price at Maturity of a New Note exceeds the holder's basis
in the New Note immediately after acquisition (unless such excess is less than
0.25% of the stated redemption price at maturity of the New Note multiplied by
the number of complete years from acquisition by such holder to maturity, in
which case there is no "market discount"). If a subsequent holder makes a gift
of a New Note, accrued market discount, if any, will be recognized as if such
holder had sold such New Note for a price equal to its fair market value. The
market discount rules also provide that a holder who acquires a New Note at a
market discount may be required to defer a portion of any interest expense that
otherwise may be deductible on any indebtedness incurred or maintained to
purchase or carry such New Note until the holder disposes of the New Note in a
taxable transaction.
The New Notes provide for optional redemption, in whole or in part, and, in
the case of Change of Control, a mandatory offer to redeem, prior to maturity.
If the New Notes were redeemed, a holder generally would be required to include
in gross income as ordinary income, for Federal income tax purposes, the portion
of the payment that is attributable to accrued market discount on the New Notes,
if any.
A holder of New Notes acquired at a market discount may elect to include
market discount in gross income as the discount accrues either on a
straight-line basis or on a constant interest rate basis. This current inclusion
election, once made, applies to all market discount obligations acquired on or
after the first day of the first taxable year to which the election applies, and
may not be revoked without the consent of the IRS. If a holder of New Notes
makes such an election, the foregoing rules with respect to the recognition of
ordinary income on sales and other dispositions of such debt instruments, and
with respect to the deferral of interest deductions on indebtedness incurred or
maintained to purchase or carry such debt instruments, would not apply.
Sale, Exchange, Redemption, Retirement or Other Disposition of New
Notes. In general, subject to the market discount provisions discussed above,
the holder of a New Note will recognize gain or loss upon the sale, exchange,
redemption, retirement or other disposition of such debt instrument measured by
the difference between (i) the amount of cash and fair market value of property
received in exchange therefor and (ii) the holder's adjusted tax basis in such
debt instrument.
The holder's initial tax basis in a New Note which is generally equal to
the price paid therefore will be increased from time to time by the accrual of
market discount, if any, that the holder has previously elected to include in
gross income on an annual basis and decreased from time to time to reflect any
amortized premium.
Any gain or loss on the sale, exchange, redemption, retirement or other
disposition of a New Note should be capital gain or loss (except as discussed in
"Market Discount of a Subsequent Holder" above). Any capital gain or loss will
be long-term capital gain or loss if the debt instrument had been held for more
than one year and otherwise will be short-term capital gain or loss.
BACKUP WITHHOLDING
The backup withholding rules require a payor to deduct and withhold a tax
if (i) the payee fails to furnish a taxpayer identification number ("TIN") to
the payor, (ii) the IRS notifies the payor that the TIN furnished by the payee
is incorrect, (iii) the IRS has notified the payor that withholding is required
because the payee has failed to report properly the receipt of "reportable
payments" or (iv) there has been a failure of the payee to certify under the
penalty of perjury that the payee is not subject to withholding under Section
3406 of the
56
<PAGE> 58
Code. If any one of the events discussed above occurs, the Company, its paying
agent or other withholding agent will be required to withhold a tax equal to 31%
of any "reportable payment" made in connection with the New Notes. A "reportable
payment" includes, among other things, interest actually paid and amounts paid
through brokers in retirement of a New Note. Any amounts withheld from a payment
to a holder under the backup withholding rules will be allowed as a refund or
credit against such holder's Federal income tax, provided that the required
information is furnished to the IRS. Certain holders (including, among others,
corporations and certain tax exempt organizations) are not subject to the backup
withholding and information reporting requirements. A holder should consult his
or its tax advisor as to his or its qualification for exemption from backup
withholding and the procedure for obtaining such an exemption.
PLAN OF DISTRIBUTION
Based on interpretation by the staff of the Commission set forth in
no-action letters issued to third parties, the Company believes that the New
Notes issued pursuant to the Exchange Offer in exchange for Old Notes may be
offered for resale, resold and otherwise transferred by any holder thereof
(other than any such holder that is an "affiliate" of the Company within the
meaning of Rule 405 promulgated under the Securities Act) without compliance
with the registration and prospectus delivery provisions of the Securities Act,
provided that such New Notes are acquired in the ordinary course of such
holder's business, such holder has no arrangement with any person to participate
in the distribution of such New Notes and neither such holder nor any such other
person is engaging in or intends to engage in a distribution of such New Notes.
Accordingly, any holder who is an affiliate of the Company or any holder using
the Exchange Offer to participate in a distribution of the New Notes will not be
able to 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 resale transaction. Notwithstanding the
foregoing, each broker-dealer that receives New Notes for its own account
pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such New Notes. This Prospectus, as
it may be amended or supplemented from time to time, may be used by a
broker-dealer in connection with any resale of New Notes received in exchange
for Old Notes where such Old Notes were acquired as a result of market-making
activities or other trading activities (other than Old Notes acquired directly
from the Company). The Company has agreed that, for a period of 120 days from
the date of this Prospectus, it will make this Prospectus, as amended or
supplemented, available to any broker-dealer for use in connection with any such
resale. In addition, until May , 1997 (90 days from the date of this
Prospectus), all dealers effecting transactions in the New Notes may be required
to deliver a prospectus.
The Company will not receive any proceeds from any sale of New Notes by
broker-dealers, New Notes received by broker-dealers for their own account
pursuant to the Exchange Offer may be sold from time to time in one or more
transactions in the over-the-counter market, in negotiated transactions, through
the writing of options on the New Notes or a combination of such methods of
resale, at market prices prevailing at the time of resale, at prices related to
such prevailing market prices or negotiated prices. Any such resale may be made
directly to purchasers or to or through brokers or dealers who may receive
compensation in the form of commissions or concessions from any such
broker-dealer and/or the purchasers of any such New Notes. Any broker-dealer
that resells New Notes that were received by it for its own account pursuant to
the Exchange Offer and any broker-dealer that participates in a distribution of
such New Notes may be deemed to be an "underwriter" within the meaning of the
Securities Act and any profit on any such resale of New Notes and any
commissions or concessions received by any such persons may be deemed to be
underwriting compensation under the Securities Act. The Letter of Transmittal
states that by acknowledging that it will deliver, and by delivering, a
prospectus as required, 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 120 days from the date of this Prospectus, the Company will
send a reasonable number of additional copies of this Prospectus and any
amendment or supplement to this Prospectus to any broker-dealer that requests
such documents in the Letter of Transmittal. The Company will pay all the
expenses incident to the Exchange Offer (which shall not include the expenses of
any holder in connection with resales of the New
57
<PAGE> 59
Notes). The Company has agreed to indemnify the Initial Purchasers and any
broker-dealers participating in the Exchange Offer against certain liabilities,
including liabilities under the Securities Act.
LEGAL MATTERS
Certain legal matters with respect to the validity of the New Notes and
federal income tax matters will be passed upon for the Company by Arter &
Hadden, Dallas, Texas.
EXPERTS
The consolidated financial statements and schedule of Heartland Wireless
Communications, Inc. as of December 31, 1995 and 1994, and for each of the years
in the three-year period ended December 31, 1995, have been incorporated by
reference herein and in the Registration Statement in reliance upon the reports
of KPMG Peat Marwick LLP, independent certified public accountants, incorporated
by reference herein, and upon the authority of said firm as experts in
accounting and auditing. The report of KPMG Peat Marwick LLP related to the
consolidated financial statements of Heartland Wireless Communications, Inc.
refers to a change in 1995 by the Company in the method of accounting for the
direct costs and installation fees related to subscriber installations.
The financial statements of Technivision, Inc. as of May 31, 1995 and 1994,
and for each of the years in the three-year period ended May 31, 1995, have been
incorporated by reference herein and in the Registration Statement in reliance
upon the report of KPMG Peat Marwick LLP, independent certified public
accountants, incorporated by reference herein, and upon the authority of said
firm as experts in accounting and auditing. The report of KPMG Peat Marwick LLP
contains an explanatory paragraph that states that Technivision, Inc.'s
recurring losses from operations and excess of current liabilities over current
assets raise substantial doubt about the entity's ability to continue as a going
concern. The financial statements do not include any adjustments that might
result from the outcome of that uncertainty.
The balance sheets of Cross Country Division as of December 31, 1993 and
1994, and the related statements of operations and division equity and cash
flows for the year ended December 31, 1993, the period from January 1, 1994 to
August 18, 1994 and the period from August 19, 1994 to December 31, 1994 have
been incorporated by reference herein and in the Registration Statement in
reliance upon the report of KPMG Peat Marwick LLP, independent certified public
accountants, incorporated by reference herein, and upon the authority of said
firm as experts in accounting and auditing. The report of KPMG Peat Marwick LLP
contains an explanatory paragraph that refers to a business combination in 1994
accounted for as a purchase involving assets comprising a portion of Cross
Country Division. As a result of the acquisition, financial information of Cross
Country Division for periods after August 18, 1994 is presented on a different
cost basis than that for periods before August 18, 1994 and, therefore, such
information is not comparable.
The consolidated balance sheets as of June 30, 1994 and 1995 and the
consolidated statements of operations, stockholders' equity and cash flows of
CableMaxx, Inc. for the period December 18, 1992 to June 30, 1993 and the fiscal
years ended June 30, 1994 and 1995, and the consolidated statements of
operations and cash flows of Supreme Cable Co., Inc. and its subsidiaries (the
"Predecessor") for the period commencing July 1, 1992 to December 17, 1992,
incorporated by reference in this Prospectus have been audited by Coopers &
Lybrand L.L.P., independent certified public accountants, as indicated in their
report with respect thereto, which includes an explanatory paragraph which
states that specified circumstances raise substantial doubt about CableMaxx,
Inc.'s ability to continue as a going concern, and are included herein in
reliance upon the authority of said firm as experts in accounting and auditing.
The financial statements of American Wireless Systems, Inc. incorporated by
reference in this Prospectus have been audited by Arthur Andersen LLP,
independent public accountants, as indicated in their report with respect
thereto, and are incorporated by reference herein in reliance upon the authority
of said firm as experts in accounting and auditing in giving said report.
Reference is made to said report which includes an explanatory paragraph that
describes factors raising substantial doubt about the Company's ability to
continue as a going concern.
58
<PAGE> 60
The consolidated financial statements of Fort Worth Wireless Cable T.V.
Associates incorporated by reference in this Prospectus have been audited by
Arthur Andersen LLP, independent public accountants, as indicated in their
report with respect thereto, and are incorporated by reference herein in
reliance upon the authority of said firm as experts in giving said report.
Reference is made to said report which includes an explanatory paragraph that
describes factors raising substantial doubt about the Company's ability to
continue as a going concern.
The consolidated financial statements of Wireless Cable T.V. Associates #38
incorporated by reference in this Prospectus have been audited by Arthur
Andersen LLP, independent public accountants, as indicated in their report with
respect thereto, and are incorporated by reference herein in reliance upon the
authority of said firm as experts in giving said report. Reference is made to
said report which includes an explanatory paragraph that describes factors
rasing substantial doubt about the Company's ability to continue as a going
concern.
59
<PAGE> 61
------------------------------------------------------
------------------------------------------------------
NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR MAKE ANY REPRESENTATIONS IN CONNECTION WITH THE OFFER CONTAINED
HEREIN OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL
OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITY OTHER THAN THOSE TO WHICH IT
RELATES NOR DOES IT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER
TO BUY, TO ANY PERSON IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS
NOT AUTHORIZED, OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT
QUALIFIED TO DO SO, OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER
OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE 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 ANY TIME SUBSEQUENT TO THE DATE
HEREOF.
---------------------
<TABLE>
<CAPTION>
TABLE OF CONTENTS
PAGE
----
<S> <C>
Available Information................. 2
Incorporation of Certain Documents by
Reference........................... 2
Safe Harbor Statement Under the
Private Securities Litigation Reform
Act of 1995......................... 3
Prospectus Summary.................... 4
Risk Factors.......................... 11
Recent Events......................... 19
The Exchange Offer.................... 20
Description of Notes.................. 28
Description of Certain Indebtedness... 54
Certain Federal Income Tax
Considerations...................... 55
Plan of Distribution.................. 57
Legal Matters......................... 58
Experts............................... 58
---------------------
UNTIL MAY , 1997 (90 DAYS AFTER THE
DATE OF THIS PROSPECTUS), ALL DEALERS
EFFECTING TRANSACTIONS IN THE NEW NOTES
OFFERED HEREBY, WHETHER OR NOT PARTICIPATING
IN THIS DISTRIBUTION, MAY BE REQUIRED TO
DELIVER A PROSPECTUS.
- --------------------------------------------
- --------------------------------------------
</TABLE>
- ------------------------------------------------------
- ------------------------------------------------------
---------------------------
PROSPECTUS
---------------------------
HEARTLAND WIRELESS
COMMUNICATIONS, INC.
$125,000,000
14% SERIES B SENIOR NOTES
DUE 2004
FEBRUARY , 1997
- ------------------------------------------------------
- ------------------------------------------------------
<PAGE> 62
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Pursuant to Section 102(b)(7) of the Delaware General Corporation Law (the
"DGCL"), Article VI of the Registrant's Restated Certificate of Incorporation
(the "Certificate of Incorporation") eliminates the liability of the
Registrant's directors to the Registrant or its stockholders, except for
liabilities related to breach of duty of loyalty, actions not in good faith and
certain other liabilities.
Section 145 of the DGCL provides for indemnification by the Registrant of
its directors and officers. In addition, Article IX, Section 1 of the
Registrant's Restated By-Laws (the "By-laws") requires the Registrant to
indemnify any current or former director or officer to the fullest extent
permitted by the DGCL. In addition, the Registrant has entered into indemnity
agreements with its directors, which obligate the Registrant to indemnify such
directors to the fullest extent permitted by the DGCL. The Registrant has also
obtained officers' and directors' liability insurance which insures against
liabilities that officers and directors of the Registrant may incur in such
capacities.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
------- ----------------------
<C> <S>
2.1 -- Letter Agreement regarding formation of the Registrant
(filed as Exhibit 2.1 to the Registrant's Registration
Statement on Form S-1, File No. 33-74244 (the "Form
S-1"), and incorporated herein by reference)
2.2 -- Supplement to Letter Agreement regarding formation of the
Registrant (filed as Exhibit 2.2 to the Form S-1 and
incorporated herein by reference)
2.3 -- Asset Purchase Agreement among RuralVision Joint Venture,
RuralVision Central, Inc. and RuralVision South, Inc.
(filed as Exhibit 2.3 to the Registrant's Registration
Statement on Form S-1, File No. 33-84408 (the "November
Form S-1") and incorporated herein by reference)
2.4 -- Supplemental Agreement to the Asset Purchase Agreement
among RuralVision Joint Venture, RuralVision Central,
Inc. and RuralVision South, Inc. (filed as Exhibit 2.4 to
the November Form S-1 and incorporated herein by
reference)
2.5 -- Closing Agreement amending the Supplemental Agreement
among RuralVision Joint Venture, RuralVision Central,
Inc. and RuralVision South, Inc. (filed as Exhibit 2.5 to
the November Form S-1 and incorporated herein by
reference)
2.6 -- Asset Purchase Agreement between RuralVision Joint
Venture and Cable Equity Partners, Inc. (filed as Exhibit
2.6 to the November Form S-1 and incorporated herein by
reference)
2.7 -- Letter Agreement amending Asset Purchase Agreement
between RuralVision Joint Venture and Cable Equity
Partners, Inc. (filed as Exhibit 2.7 to the November Form
S-1 and incorporated herein by reference)
2.8 -- Letter Agreement between the Registrant and Cross Country
Wireless, Inc. (filed as Exhibit 2.8 to the November Form
S-1 and incorporated herein by reference)
2.9 -- Letter Agreement between the Registrant and Cable Equity
Partners, Inc. (filed as Exhibit 2.9 to the Registrant's
Registration Statement on Form S-4, File No. 33-87076
(the "Form S-4"), and incorporated herein by reference)
2.10 -- Lease Purchase Agreement between the Registrant and
Choice Television of Iowa, L.C. (filed as Exhibit 2.10 to
the Form S-4 and incorporated herein by reference)
</TABLE>
II-1
<PAGE> 63
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
------- ----------------------
<C> <S>
2.11 -- Asset Purchase Agreement between the Registrant and
RuralVision Joint Venture (filed as Exhibit 2.11 to the
Form 8-K Current Report dated as of December 1, 1994 and
filed with the Commission on December 14, 1994 (the "Form
8-K"), and incorporated herein by reference)
2.12 -- Agreement for Purchase and Sales of Assets between the
Registrant and REC Services, Inc. (filed as Exhibit 2.12
to the Form S-4 and incorporated herein by reference)
2.13 -- Letter Agreement among the Registrant, United States
Wireless Cable, Inc. and United States Wireless Cable
Systems, Inc. (filed as Exhibit 2.13 to the Form S-4 and
incorporated herein by reference)
2.14 -- Letter Agreement among the Registrant, Cross Country
Wireless, Inc. and RuralVision Joint Venture (filed as
Exhibit 2.14 to the Form S-4 and incorporated herein by
reference)
2.15 -- Extension Agreement among the Registrant, Cross Country
Wireless, Inc., Cross Country Wireless Cable West, L.P.,
RuralVision Joint Venture, RuralVision Central, Inc.,
RuralVision South, Inc. and Selling Shareholders of
RuralVision Central, Inc. and RuralVision South, Inc.
(filed as Exhibit 2.15 to the Form S-4 and incorporated
herein by reference)
2.16 -- Note Modification Agreement among the Registrant, Cross
Country Wireless, Inc., Cross Country Wireless Cable
West, L.P., RuralVision Joint Venture, RuralVision
Central, Inc., RuralVision South, Inc., the Selling
Shareholders of RuralVision Central, Inc. and RuralVision
South, Inc., the Larry D. Hudson Trust and Jerri Hudson
Bell (filed as Exhibit 2.16 to the Form S-4 and
incorporated herein by reference)
2.17 -- Asset Purchase Agreement between Heartland Wireless
Paducah, Inc. and Cross Country Wireless, Inc. (filed as
Exhibit 2.17 to the Form S-4 and incorporated herein by
reference)
2.18 -- First Amendment to Joint Venture Agreement between the
Registrant and Cross Country Wireless, Inc. (filed as
Exhibit 2.18 to the Form S-4 and incorporated herein by
reference)
2.19 -- Venture Distribution Agreement between the Registrant and
RuralVision Joint Venture (filed as Exhibit 2.19 to the
Form S-4 and incorporated herein by reference)
2.20 -- Stock Purchase Agreement between Wireless Communications,
Inc. and Robert R. Story (filed as Exhibit 2.20 to the
Registrant's Registration Statement on Form S-4, File No.
33-65337 (the "January Form S-4"), and incorporated
herein by reference)
2.21 -- Asset Purchase Agreement between United States Wireless
Systems, Inc. and Robert R. Story, Inc. (filed as Exhibit
2.21 to the January Form S-4 and incorporated herein by
reference)
2.22 -- Amended and Restated Agreement and Plan of Merger dated
as of September 11, 1995, between American Wireless
Systems, Inc. (Heartland Merger Sub, Inc. and the
Registrant (filed as Exhibit 2.22 to the January Form S-4
and incorporated herein by reference)
2.23 -- Amended and Restated Asset Purchase Agreement dated as of
October 4, 1995, between Fort Worth Wireless Cable T.V.
Associates and the Registrant (filed as Exhibit 2.23 to
the January Form S-4 and incorporated herein by
reference)
</TABLE>
II-2
<PAGE> 64
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
------- ----------------------
<C> <S>
2.24 -- Amended and Restated Asset Purchase Agreement dated as of
October 4, 1995, between Wireless Cable TV Associates #38
and the Registrant (filed as Exhibit 2.24 to the January
Form S-4 and incorporated herein by reference)
2.25 -- Amended and Restated Agreement and Plan of Merger dated
as of September 11, 1995, between CableMaxx, Inc.,
Heartland Merger Sub 2, Inc. and the Registrant (filed as
Exhibit 2.25 to the January Form S-4 and incorporated
herein by reference)
2.26 -- Amended and Restated Assets Purchase Agreement dated as
of October 19, 1995, between Three Sixty Corp.,
Technivision, Inc. and the Registrant (filed as Exhibit
2.26 to the January Form S-4 and incorporated herein by
reference)
4.1 -- 1994 Employee Stock Option Plan of the Registrant, as
amended (filed as Exhibit 4.1 to the Registrant's Annual
Report on Form 10-K for the year ended December 31, 1995
(the "Form 10-K") and incorporated herein by reference)
4.2 -- Revised Form of Nontransferable Incentive Stock Option
Agreement under the 1994 Employee Stock Option Plan of
the Registrant (filed as Exhibit 4.2 to the Registrant's
Registration Statement on Form S-4, File No. 33-91930
(the "February Form S-4"), and incorporated herein by
reference)
4.3 -- Revised Form of Nontransferable Non-Qualified Stock
Option Agreement under the 1994 Employee Stock Option
Plan of the Registrant (filed as Exhibit 4.3 to the
February Form S-4 and incorporated herein by reference)
4.4 -- 1994 Stock Option Plan for Non-Employee Directors of the
Registrant (filed as Exhibit 4.4 to the Form S-1 and
incorporated herein by reference)
4.5 -- Form of Stock Option Agreement under the 1994 Stock
Option Plan for Non-Employee Directors of the Registrant
(filed as Exhibit 4.5 to the Form S-1 and incorporated
herein by reference)
4.6 -- Warrant Agreement between the Registrant and Gerard
Klauer Mattison & Co., Inc. (including form of warrant
certificate) (filed as Exhibit 4.6 to the Form S-1 and
incorporated herein by reference)
4.7 -- Registration Rights Agreement among the Registrant,
Jupiter Partners L.P. and Thomas R. Haack (filed as
Exhibit 4.7 to the Form S-4 and incorporated herein by
reference)
4.8 -- Stockholders Agreement among the Registrant, Hunt Capital
Group, L.L.C., David E. Webb, L. Allen Wheeler and
Jupiter Partners L.P. (filed as Exhibit 4.8 to the Form
S-4 and incorporated herein by reference)
4.9 -- Note Purchase Agreement among the Registrant, Jupiter
Partners L.P. and Thomas R. Haack (filed as Exhibit 4.9
to the Form S-4 and incorporated herein by reference)
4.10 -- First Amendment to Note Purchase Agreement among the
Registrant, Jupiter Partners L.P. and Thomas R. Haack
(filed as Exhibit 4.10 to the Form 10-K Annual Report
filed with the Commission on March 31, 1995 (the "Form
10-K"), and incorporated herein by reference)
4.11 -- Second Amendment to Note Purchase Agreement among the
Registrant, Jupiter Partners L.P. and Thomas R. Haack
(filed as Exhibit 4.11 to the February Form S-4 and
incorporated herein by reference)
4.12 -- Indenture between the Registrant and First Trust of New
York, National Association, as Trustee (the "Trustee")
(filed as Exhibit 4.12 to the February Form S-4 and
incorporated herein by reference)
</TABLE>
II-3
<PAGE> 65
<TABLE>
<C> <S>
4.13 -- Supplemental Indenture dated October 2, 1995, between the Registrant and the Trustee
(filed as Exhibit 4.13 to the February Form S-4 and incorporated herein by reference)
4.14 -- Supplemental Indenture dated as of December 9, 1996, between the Registrant and the
Trustee (filed as Exhibit 4.14 to the Registrant's Registration Statement on Form S-4,
File No. 12577 (the "December 1996 Form S-4") and incorporated herein by reference)
4.15 -- Registration Rights Agreement among the Registrant, BT Securities Corporation ("BT
Securities") and Lazard Freres & Co. ("Lazard") (filed as Exhibit 4.14 to the February
Form S-4 and incorporated herein by reference)
4.16 -- Securityholders' and Registration Rights Agreement among the Registrant, BT Securities
and Lazard (filed as Exhibit 4.15 to the February Form S-4 and incorporated herein by
reference)
4.17 -- Warrant Agreement between the Registrant and Bankers Trust Company, as Warrant Agent
(filed as Exhibit 4.16 to the February Form S-4 and incorporated herein by reference)
4.18 -- Unit Agreement among the Registrant, Bankers Trust Company, as Unit Agent and Warrant
Agent, and the Trustee (filed as Exhibit 4.17 to the February S-4 and incorporated
herein by reference)
4.19 -- Escrow and Disbursement Agreement among the Registrant, Bankers Trust Company, as
Escrow Agent, and the Trustee (filed as Exhibit 4.18 to the February Form S-4 and
incorporated herein by reference)
4.20 -- Indenture between the Registrant and First Trust of New York, National Association, as
Trustee (the "Trustee") (filed as Exhibit 4.20 to the December 1996 Form S-4 and
incorporated herein by reference)
4.21 -- Supplemental Indenture dated as of December 9, 1996, between the Registrant and the
Trustee (filed as Exhibit 4.21 to the December 1996 Form S-4 and incorporated herein by
reference)
4.22 -- Registration Rights Agreement among the Registrant and BT Securities Corporation ("BT
Securities") (filed as Exhibit 4.22 to the December 1996 Form S-4 and incorporated
herein by reference)
4.23 -- Escrow and Disbursement Agreement among the Registrant, Bankers Trust Company ("BT
Co."), as Escrow Agent, and the Trustee (filed as Exhibit 4.23 to the December 1996
Form S-4 and incorporated herein by reference)
*4.24 -- Indenture dated December 20, 1996 among the Registrant and the Trustee
*4.25 -- Registration Rights Agreement dated December 20, 1996 among Registrant, BT Securities,
Alex. Brown & Sons Incorporated and Gerard Klauer Mattison & Co., LLC
*4.26 -- Escrow and Disbursement Agreement dated December 20, 1996 among Registrant, BT Co. and
the Trustee
*5 -- Opinion of Arter & Hadden (including the consent of such firm) regarding legality of
securities being offered
*8 -- Opinion of Arter & Hadden regarding the material United States Federal income tax
consequences to the holders of the securities being offered
*12.1 -- Statement re: Computation of Consolidated Earnings to Fixed Charges
*23.1 -- Consent of Arter & Hadden (included as part of its opinion filed as Exhibit 5 hereto)
</TABLE>
II-4
<PAGE> 66
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
------- ----------------------
<C> <S>
*23.2 -- Consent of KPMG Peat Marwick LLP, independent certified public accountants (Registrant)
*23.3 -- Consent of KPMG Peat Marwick LLP, independent certified public accountants
(Technivision)
*23.4 -- Consent of KPMG Peat Marwick LLP, independent certified public accountants (Cross
Country Division)
*23.5 -- Consent of Coopers & Lybrand L.L.P., independent accountants
*23.6 -- Consent of Arthur Andersen LLP, independent public accountants
*24 -- Powers of Attorney
*25 -- Form T-1 Statement of Eligibility and Qualification under the Trust Indenture Act of
1939 of First Trust of New York, National Association, as Trustee
*99.1 -- Form of Letter of Transmittal
*99.2 -- Form of Notice of Guaranteed Delivery
*99.3 -- Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other
Nominees
*99.4 -- Form of Letter to Clients
*99.5 -- Form of Exchange Agent Agreement between the Registrant and Bankers Trust Company, as
Exchange Agent
</TABLE>
- ---------------
* Filed herewith.
Schedules have been omitted because they are either not applicable or the
required information has been disclosed in the financial statements or notes
thereto.
ITEM 22. UNDERTAKINGS.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 (the "Securities Act") may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the DGCL, the Certificate of
Incorporation and By-laws, or otherwise, the Registrant has been advised that in
the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
The 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;
II-5
<PAGE> 67
(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.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities
Act, the information omitted from the form of prospectus filed as part of
this registration statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of that time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at the time shall be
deemed to be the initial bona fide offering thereof.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11 or 13 of this form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of 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.
II-6
<PAGE> 68
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Plano, State of Texas, on
the 10th day of February, 1997.
Heartland Wireless Communications, Inc.
By /s/ JOHN R. BAILEY
--------------------------------------
John R. Bailey
Senior Vice President -- Finance,
Chief Financial
Officer and Treasurer
POWER OF ATTORNEY
We, the undersigned directors and officers of HEARTLAND WIRELESS
COMMUNICATIONS, INC., do hereby constitute and appoint J. R. HOLLAND, JR. and
JOHN R. BAILEY, or either of them, our true and lawful attorneys and agents, to
do any and all acts and things in our name and on our behalf in our capacities
as directors and officers and to execute any and all instruments for us and in
our names in the capacities indicated below, which said attorneys and agents, or
either of them, may deem necessary or advisable to enable said Corporation to
comply with the Securities Act of 1933 and any rules, regulations and
requirements of the Securities and Exchange Commission, in connection with this
Registration Statement, including specifically, but without limitation, power
and authority to sign for us or any of us in our names in the capacities
indicated below, any and all amendments (including post-effective amendments)
hereto; and we do hereby ratify and confirm all that said attorneys and agents,
or either of them, shall do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed on the 10th day of February, 1997, by or
on behalf of the following persons in the capacities indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
/s/ J.R. HOLLAND, JR. Chairman of the Board and Director
- -----------------------------------------------------
J.R. Holland, Jr.
/s/ L. ALLEN WHEELER Interim President, Interim Chief Executive Officer,
- ----------------------------------------------------- Vice Chairman of the Board and Director (Principal
L. Allen Wheeler Executive Officer)
/s/ JOHN R. BAILEY Senior Vice President -- Finance, Chief Financial
- ----------------------------------------------------- Officer and Treasurer (Principal Financial Officer)
John R. Bailey
/s/ DAVID D. HAGEY Vice President, Controller and Assistant Secretary
- ----------------------------------------------------- (Principal Accounting Officer)
David D. Hagey
/s/ DAVID E. WEBB Director
- -----------------------------------------------------
David E. Webb
/s/ ALVIN H. LANE, JR. Director
- -----------------------------------------------------
Alvin H. Lane, Jr.
/s/ DENNIS M. O'ROURKE Director
- -----------------------------------------------------
Dennis M. O'Rourke
/s/ JOHN A. SPRAGUE Director
- -----------------------------------------------------
John A. Sprague
</TABLE>
II-7
<PAGE> 69
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
------- ----------------------
<C> <S>
2.1 -- Letter Agreement regarding formation of the Registrant
(filed as Exhibit 2.1 to the Registrant's Registration
Statement on Form S-1, File No. 33-74244 (the "Form
S-1"), and incorporated herein by reference)
2.2 -- Supplement to Letter Agreement regarding formation of the
Registrant (filed as Exhibit 2.2 to the Form S-1 and
incorporated herein by reference)
2.3 -- Asset Purchase Agreement among RuralVision Joint Venture,
RuralVision Central, Inc. and RuralVision South, Inc.
(filed as Exhibit 2.3 to the Registrant's Registration
Statement on Form S-1, File No. 33-84408 (the "November
Form S-1") and incorporated herein by reference)
2.4 -- Supplemental Agreement to the Asset Purchase Agreement
among RuralVision Joint Venture, RuralVision Central,
Inc. and RuralVision South, Inc. (filed as Exhibit 2.4 to
the November Form S-1 and incorporated herein by
reference)
2.5 -- Closing Agreement amending the Supplemental Agreement
among RuralVision Joint Venture, RuralVision Central,
Inc. and RuralVision South, Inc. (filed as Exhibit 2.5 to
the November Form S-1 and incorporated herein by
reference)
2.6 -- Asset Purchase Agreement between RuralVision Joint
Venture and Cable Equity Partners, Inc. (filed as Exhibit
2.6 to the November Form S-1 and incorporated herein by
reference)
2.7 -- Letter Agreement amending Asset Purchase Agreement
between RuralVision Joint Venture and Cable Equity
Partners, Inc. (filed as Exhibit 2.7 to the November Form
S-1 and incorporated herein by reference)
2.8 -- Letter Agreement between the Registrant and Cross Country
Wireless, Inc. (filed as Exhibit 2.8 to the November Form
S-1 and incorporated herein by reference)
2.9 -- Letter Agreement between the Registrant and Cable Equity
Partners, Inc. (filed as Exhibit 2.9 to the Registrant's
Registration Statement on Form S-4, File No. 33-87076
(the "Form S-4"), and incorporated herein by reference)
2.10 -- Lease Purchase Agreement between the Registrant and
Choice Television of Iowa, L.C. (filed as Exhibit 2.10 to
the Form S-4 and incorporated herein by reference)
2.11 -- Asset Purchase Agreement between the Registrant and
RuralVision Joint Venture (filed as Exhibit 2.11 to the
Form 8-K Current Report dated as of December 1, 1994 and
filed with the Commission on December 14, 1994 (the "Form
8-K"), and incorporated herein by reference)
2.12 -- Agreement for Purchase and Sales of Assets between the
Registrant and REC Services, Inc. (filed as Exhibit 2.12
to the Form S-4 and incorporated herein by reference)
2.13 -- Letter Agreement among the Registrant, United States
Wireless Cable, Inc. and United States Wireless Cable
Systems, Inc. (filed as Exhibit 2.13 to the Form S-4 and
incorporated herein by reference)
2.14 -- Letter Agreement among the Registrant, Cross Country
Wireless, Inc. and RuralVision Joint Venture (filed as
Exhibit 2.14 to the Form S-4 and incorporated herein by
reference)
</TABLE>
<PAGE> 70
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
------- ----------------------
<C> <S>
2.15 -- Extension Agreement among the Registrant, Cross Country
Wireless, Inc., Cross Country Wireless Cable West, L.P.,
RuralVision Joint Venture, RuralVision Central, Inc.,
RuralVision South, Inc. and Selling Shareholders of
RuralVision Central, Inc. and RuralVision South, Inc.
(filed as Exhibit 2.15 to the Form S-4 and incorporated
herein by reference)
2.16 -- Note Modification Agreement among the Registrant, Cross
Country Wireless, Inc., Cross Country Wireless Cable
West, L.P., RuralVision Joint Venture, RuralVision
Central, Inc., RuralVision South, Inc., the Selling
Shareholders of RuralVision Central, Inc. and RuralVision
South, Inc., the Larry D. Hudson Trust and Jerri Hudson
Bell (filed as Exhibit 2.16 to the Form S-4 and
incorporated herein by reference)
2.17 -- Asset Purchase Agreement between Heartland Wireless
Paducah, Inc. and Cross Country Wireless, Inc. (filed as
Exhibit 2.17 to the Form S-4 and incorporated herein by
reference)
2.18 -- First Amendment to Joint Venture Agreement between the
Registrant and Cross Country Wireless, Inc. (filed as
Exhibit 2.18 to the Form S-4 and incorporated herein by
reference)
2.19 -- Venture Distribution Agreement between the Registrant and
RuralVision Joint Venture (filed as Exhibit 2.19 to the
Form S-4 and incorporated herein by reference)
2.20 -- Stock Purchase Agreement between Wireless Communications,
Inc. and Robert R. Story (filed as Exhibit 2.20 to the
Registrant's Registration Statement on Form S-4, File No.
33-65337 (the "January Form S-4"), and incorporated
herein by reference)
2.21 -- Asset Purchase Agreement between United States Wireless
Systems, Inc. and Robert R. Story, Inc. (filed as Exhibit
2.21 to the January Form S-4 and incorporated herein by
reference)
2.22 -- Amended and Restated Agreement and Plan of Merger dated
as of September 11, 1995, between American Wireless
Systems, Inc. (Heartland Merger Sub, Inc. and the
Registrant (filed as Exhibit 2.22 to the January Form S-4
and incorporated herein by reference)
2.23 -- Amended and Restated Asset Purchase Agreement dated as of
October 4, 1995, between Fort Worth Wireless Cable T.V.
Associates and the Registrant (filed as Exhibit 2.23 to
the January Form S-4 and incorporated herein by
reference)
2.24 -- Amended and Restated Asset Purchase Agreement dated as of
October 4, 1995, between Wireless Cable TV Associates #38
and the Registrant (filed as Exhibit 2.24 to the January
Form S-4 and incorporated herein by reference)
2.25 -- Amended and Restated Agreement and Plan of Merger dated
as of September 11, 1995, between CableMaxx, Inc.,
Heartland Merger Sub 2, Inc. and the Registrant (filed as
Exhibit 2.25 to the January Form S-4 and incorporated
herein by reference)
2.26 -- Amended and Restated Assets Purchase Agreement dated as
of October 19, 1995, between Three Sixty Corp.,
Technivision, Inc. and the Registrant (filed as Exhibit
2.26 to the January Form S-4 and incorporated herein by
reference)
4.1 -- 1994 Employee Stock Option Plan of the Registrant, as
amended (filed as Exhibit 4.1 to the Registrant's Annual
Report on Form 10-K for the year ended December 31, 1995
(the "Form 10-K") and incorporated herein by reference)
</TABLE>
<PAGE> 71
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
------- ----------------------
<C> <S>
4.2 -- Revised Form of Nontransferable Incentive Stock Option
Agreement under the 1994 Employee Stock Option Plan of
the Registrant (filed as Exhibit 4.2 to the Registrant's
Registration Statement on Form S-4, File No. 33-91930
(the "February Form S-4"), and incorporated herein by
reference)
4.3 -- Revised Form of Nontransferable Non-Qualified Stock
Option Agreement under the 1994 Employee Stock Option
Plan of the Registrant (filed as Exhibit 4.3 to the
February Form S-4 and incorporated herein by reference)
4.4 -- 1994 Stock Option Plan for Non-Employee Directors of the
Registrant (filed as Exhibit 4.4 to the Form S-1 and
incorporated herein by reference)
4.5 -- Form of Stock Option Agreement under the 1994 Stock
Option Plan for Non-Employee Directors of the Registrant
(filed as Exhibit 4.5 to the Form S-1 and incorporated
herein by reference)
4.6 -- Warrant Agreement between the Registrant and Gerard
Klauer Mattison & Co., Inc. (including form of warrant
certificate) (filed as Exhibit 4.6 to the Form S-1 and
incorporated herein by reference)
4.7 -- Registration Rights Agreement among the Registrant,
Jupiter Partners L.P. and Thomas R. Haack (filed as
Exhibit 4.7 to the Form S-4 and incorporated herein by
reference)
4.8 -- Stockholders Agreement among the Registrant, Hunt Capital
Group, L.L.C., David E. Webb, L. Allen Wheeler and
Jupiter Partners L.P. (filed as Exhibit 4.8 to the Form
S-4 and incorporated herein by reference)
4.9 -- Note Purchase Agreement among the Registrant, Jupiter
Partners L.P. and Thomas R. Haack (filed as Exhibit 4.9
to the Form S-4 and incorporated herein by reference)
4.10 -- First Amendment to Note Purchase Agreement among the
Registrant, Jupiter Partners L.P. and Thomas R. Haack
(filed as Exhibit 4.10 to the Form 10-K Annual Report
filed with the Commission on March 31, 1995 (the "Form
10-K"), and incorporated herein by reference)
4.11 -- Second Amendment to Note Purchase Agreement among the
Registrant, Jupiter Partners L.P. and Thomas R. Haack
(filed as Exhibit 4.11 to the February Form S-4 and
incorporated herein by reference)
4.12 -- Indenture between the Registrant and First Trust of New
York, National Association, as Trustee (the "Trustee")
(filed as Exhibit 4.12 to the February Form S-4 and
incorporated herein by reference)
4.13 -- Supplemental Indenture dated October 2, 1995, between the
Registrant and the Trustee (filed as Exhibit 4.13 to the
February Form S-4 and incorporated herein by reference)
4.14 -- Supplemental Indenture dated as of December 9, 1996,
between the Registrant and the Trustee (filed as Exhibit
4.14 to the Registrant's Registration Statement on Form
S-4, File No. 12577 (the "December 1996 Form S-4") and
incorporated herein by reference)
4.15 -- Registration Rights Agreement among the Registrant, BT
Securities Corporation ("BT Securities") and Lazard
Freres & Co. ("Lazard") (filed as Exhibit 4.14 to the
February Form S-4 and incorporated herein by reference)
4.16 -- Securityholders' and Registration Rights Agreement among
the Registrant, BT Securities and Lazard (filed as
Exhibit 4.15 to the February Form S-4 and incorporated
herein by reference)
</TABLE>
<PAGE> 72
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
------- ----------------------
<C> <S>
4.17 -- Warrant Agreement between the Registrant and Bankers
Trust Company, as Warrant Agent (filed as Exhibit 4.16 to
the February Form S-4 and incorporated herein by
reference)
4.18 -- Unit Agreement among the Registrant, Bankers Trust
Company, as Unit Agent and Warrant Agent, and the Trustee
(filed as Exhibit 4.17 to the February S-4 and
incorporated herein by reference)
4.19 -- Escrow and Disbursement Agreement among the Registrant,
Bankers Trust Company, as Escrow Agent, and the Trustee
(filed as Exhibit 4.18 to the February Form S-4 and
incorporated herein by reference)
4.20 -- Indenture between the Registrant and First Trust of New
York, National Association, as Trustee (the "Trustee")
(filed as Exhibit 4.20 to the December 1996 Form S-4 and
incorporated herein by reference)
4.21 -- Supplemental Indenture dated as of December 9, 1996,
between the Registrant and the Trustee (filed as Exhibit
4.21 to the December 1996 Form S-4 and incorporated
herein by reference)
4.22 -- Registration Rights Agreement among the Registrant and BT
Securities Corporation ("BT Securities") (filed as
Exhibit 4.22 to the December 1996 Form S-4 and
incorporated herein by reference)
4.23 -- Escrow and Disbursement Agreement among the Registrant,
Bankers Trust Company ("BT Co."), as Escrow Agent, and
the Trustee (filed as Exhibit 4.23 to the December 1996
Form S-4 and incorporated herein by reference)
*4.24 -- Indenture dated December 20, 1996 among the Registrant
and the Trustee
*4.25 -- Registration Rights Agreement dated December 20, 1996
among Registrant, BT Securities, Alex. Brown & Sons
Incorporated and Gerard Klauer Mattison & Co., LLC
*4.26 -- Escrow and Disbursement Agreement dated December 20, 1996
among Registrant, BT Co. and the Trustee
*5 -- Opinion of Arter & Hadden (including the consent of such
firm) regarding legality of securities being offered
*8 -- Opinion of Arter & Hadden regarding the material United
States Federal income tax consequences to the holders of
the securities being offered
*12.1 -- Statement re: Computation of Consolidated Earnings to
Fixed Charges
*23.1 -- Consent of Arter & Hadden (included as part of its
opinion filed as Exhibit 5 hereto)
*23.2 -- Consent of KPMG Peat Marwick LLP, independent certified
public accountants (Registrant)
*23.3 -- Consent of KPMG Peat Marwick LLP, independent certified
public accountants (Technivision)
*23.4 -- Consent of KPMG Peat Marwick LLP, independent certified
public accountants (Cross Country Division)
*23.5 -- Consent of Coopers & Lybrand L.L.P., independent
accountants
*23.6 -- Consent of Arthur Andersen LLP, independent public
accountants
*24 -- Powers of Attorney
*25 -- Form T-1 Statement of Eligibility and Qualification under
the Trust Indenture Act of 1939 of First Trust of New
York, National Association, as Trustee
</TABLE>
<PAGE> 1
EXHIBIT 4.24
================================================================================
HEARTLAND WIRELESS COMMUNICATIONS, INC.
14% SENIOR NOTES DUE 2004
-----------------------------------
---------------
INDENTURE
DATED AS OF DECEMBER 20, 1996
---------------
---------------
FIRST TRUST OF NEW YORK, NATIONAL ASSOCIATION
TRUSTEE
---------------
================================================================================
<PAGE> 2
CROSS-REFERENCE TABLE*
<TABLE>
<CAPTION>
Trust Indenture
Act Section Indenture Section
<S> <C>
310(a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(a)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(a)(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(a)(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
311(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.11
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.11
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
312(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.05
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.03
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.03
313(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.06
(b)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.03
(b)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.06
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.06; 12.02
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.06
314(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.03; 12.02
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.02
(c)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.04
(c)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.04
(c)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.03, 11.04, 11.05
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.05
(f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
315(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.01
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.05, 12.02
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.01
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.01
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.11
316(a)(last sentence) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.09
(a)(1)(A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.05
(a)(1)(B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.04
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.07
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.13
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
317(a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.08
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.09
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.04
318(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.01
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.01
</TABLE>
N.A. means not applicable.
*This Cross-Reference Table is not part of the Indenture.
<PAGE> 4
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE
Section 1.01. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.02. Other Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 1.03. Incorporation by Reference of Trust Indenture Act . . . . . . . . . . . . . . . . . . . . . . . 21
Section 1.04. Rules of Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE 2
THE NOTES
Section 2.01. Form and Dating . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 2.02. Execution and Authentication; Aggregate Principal Amount . . . . . . . . . . . . . . . . . . . 23
Section 2.03. Registrar and Paying Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 2.04. Paying Agent to Hold Assets in Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 2.05. Noteholder Lists . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 2.06. Transfer and Exchange. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 2.07. Replacement Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 2.08. Outstanding Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 2.09. Treasury Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 2.10. Temporary Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 2.11. Cancellation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 2.12. Defaulted Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 2.13. CUSIP Number . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 2.14. Deposit of Monies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 2.15. Restrictive Legends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 2.16. Book-Entry Provisions for Global Security . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 2.17. Special Transfer Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
</TABLE>
-i-
<PAGE> 5
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE 3
REDEMPTION
Section 3.01. Notices to Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 3.02. Selection of Notes to Be Redeemed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 3.03. Notice of Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 3.04. Effect of Notice of Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 3.05. Deposit of Redemption Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 3.06. Notes Redeemed in Part . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 3.07. Optional Redemption. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 3.08. Mandatory Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
ARTICLE 4
COVENANTS
Section 4.01. Payment of Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 4.02. Maintenance of Office or Agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 4.03. Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 4.04. Compliance Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 4.05. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 4.06. Stay, Extension and Usury Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 4.07. Limitation on Restricted Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 4.08. Limitation on Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 4.09. Limitation on Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Section 4.10. Limitation on Issuance and Sale of Capital Stock of Subsidiaries . . . . . . . . . . . . . . . 46
Section 4.11. Limitation on Preferred Stock of Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . 46
Section 4.12. Limitation on Asset Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 4.13. Dividend and Other Payment Restrictions Affecting Subsidiaries . . . . . . . . . . . . . . . . 51
Section 4.14. Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 4.15. Conduct of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 4.16. Change of Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 4.17. Disbursement of Funds; Escrow Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
</TABLE>
-ii-
<PAGE> 6
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE 5
SUCCESSORS
Section 5.01. Merger, Consolidation or Sale of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 5.02. Successor Corporation Substituted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
ARTICLE 6
DEFAULTS AND REMEDIES
Section 6.01. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Section 6.02. Acceleration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Section 6.03. Other Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Section 6.04. Waiver of Past Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Section 6.05. Control by Majority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Section 6.06. Limitation on Suits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Section 6.07. Rights of Holders of Notes to Receive Payment . . . . . . . . . . . . . . . . . . . . . . . . . 61
Section 6.08. Collection Suit by Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Section 6.09. Trustee May File Proofs of Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Section 6.10. Priorities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Section 6.11. Undertaking for Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
ARTICLE 7
TRUSTEE
Section 7.01. Duties of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Section 7.02. Rights of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Section 7.03. Individual Rights of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Section 7.04. Trustee's Disclaimer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Section 7.05. Notice of Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Section 7.06. Reports by Trustee to Holders of the Notes . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Section 7.07. Compensation and Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Section 7.08. Replacement of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Section 7.09. Successor Trustee by Merger, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
Section 7.10. Eligibility; Disqualification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
Section 7.11. Preferential Collection of Claims Against Company . . . . . . . . . . . . . . . . . . . . . . . 69
</TABLE>
-iii-
<PAGE> 7
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE 8
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Section 8.01. Option to Effect Legal Defeasance or Covenant Defeasance . . . . . . . . . . . . . . . . . . . 69
Section 8.02. Legal Defeasance and Discharge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
Section 8.03. Covenant Defeasance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
Section 8.04. Conditions to Legal or Covenant Defeasance . . . . . . . . . . . . . . . . . . . . . . . . . . 70
Section 8.05. Deposited Money and U.S. Government Securities to be Held in Trust; Other
Miscellaneous Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
Section 8.06. Repayment to Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
Section 8.07. Reinstatement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
ARTICLE 9
SATISFACTION AND DISCHARGE
Section 9.01. Satisfaction and Discharge of Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
Section 9.02. Application of Monies for Satisfaction and Discharge . . . . . . . . . . . . . . . . . . . . . 75
ARTICLE 10
AMENDMENT, SUPPLEMENT AND WAIVER
Section 10.01. Without Consent of Holders of Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
Section 10.02. With Consent of Holders of Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
Section 10.03. Compliance with Trust Indenture Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
Section 10.04. Revocation and Effect of Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
Section 10.05. Notation on or Exchange of Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
Section 10.06. Trustee to Sign Amendments, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
ARTICLE 11
COLLATERAL AND SECURITY
Section 11.01. Escrow and Disbursement Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
Section 11.02. Recording and Opinions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
</TABLE>
-iv-
<PAGE> 8
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
Section 11.03. Release of Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
Section 11.04. Certificates of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
Section 11.05. Authorization of Actions to be Taken by the Trustee Under the Escrow and Disbursement
Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
Section 11.06. Authorization of Receipt of Funds by the Trustee Under
the Escrow and Disbursement Agreement . . . . . . . . . . . . . . . . . . . . . 83
Section 11.07. Termination of Security Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
ARTICLE 12
MISCELLANEOUS
Section 12.01. Trust Indenture Act Controls . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
Section 12.02. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
Section 12.03. Communication by Holders of Notes with Other Holders of Notes . . . . . . . . . . . . . . . . . 85
Section 12.04. Certificate and Opinion as to Conditions Precedent . . . . . . . . . . . . . . . . . . . . . . 85
Section 12.05. Statements Required in Certificate or Opinion . . . . . . . . . . . . . . . . . . . . . . . . . 86
Section 12.06. Rules by Trustee and Agents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
Section 12.07. No Personal Liability of Partners, Directors, Officers, Employees and Stockholders . . . . . . 86
Section 12.08. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
Section 12.09. No Adverse Interpretation of Other Agreements . . . . . . . . . . . . . . . . . . . . . . . . . 87
Section 12.10. Successors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
Section 12.11. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
Section 12.12. Counterpart Originals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
Section 12.13. Table of Contents, Headings, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
</TABLE>
-v-
<PAGE> 9
EXHIBITS
Exhibit A Form of Initial Note
Exhibit B Form of Exchange Note
Exhibit C Form of Certificate to Be Delivered in Connection with Transfers
to Non-QIB Accredited Investors
Exhibit D Form of Certificate to Be Delivered in Connection with Transfers
Pursuant to Regulation S
Exhibit E Form of Escrow and Disbursement Agreement
-vi-
<PAGE> 10
INDENTURE, dated as of December 20, 1996, between Heartland
Wireless Communications, Inc., a Delaware corporation (the "Company"), and
First Trust of New York, National Association, as trustee (the "Trustee").
The Company has duly authorized the creation of an issue of 14%
Senior Notes due 2004 (the "Initial Notes") and 14% Senior Notes due 2004 to be
issued in exchange for the Initial Notes pursuant to the Registration Rights
Agreement (the "Exchange Notes" and, together with the Initial Notes, the
"Notes") and, to provide therefor, the Company has duly authorized the
execution and delivery of this Indenture. All things necessary to make the
Notes, when duly issued and executed by the Company, and authenticated and
delivered hereunder, the valid obligations of the Company, and to make this
Indenture a valid and binding agreement of the Company, have been done.
The Company and the Trustee agree as follows for the benefit of
each other and for the equal and ratable benefit of the Holders of the Notes:
ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE
Section 1.01. Definitions.
"Acquired Debt" means, with respect to any specified Person,
Indebtedness of any other Person existing at the time such other Person merged
with or into or became a Subsidiary of such specified Person or Indebtedness
incurred by such Person in connection with the acquisition of assets,
including, without limitation, Indebtedness incurred or assumed in connection
with, or in contemplation of, such other Person merging with or into or
becoming a Subsidiary of such specified Person or the acquisition of such
assets, as the case may be.
"Affiliate" of any specified Person means (i) any other Person
which, directly or indirectly, is in control of, is controlled by or is under
common control with such specified Person or (ii) any other Person who is a
director or officer (A) of such specified Person, (B) of any Subsidiary of such
specified Person or (C) of any Person described in clause (i) above or (iii)
any Person in which such Person has, directly or indirectly, a 5% or greater
voting or economic interest or the power to control. For purposes of this
definition, control of a Person means the power, direct or indirect, to direct
or cause the direction of the management or policies of such Person whether
through the ownership of voting securities or by contract or otherwise and the
terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Agent" means any Registrar or Paying Agent.
<PAGE> 11
-2-
"Annualized Cash Flow Ratio" with respect to any Person means the
ratio of the Consolidated Indebtedness of such Person to the Annualized EBITDA
of such Person for the relevant period.
"Annualized EBITDA" as of any date of determination means the
aggregate amount of EBITDA for the most recent fiscal quarter for which
financial information has been filed with the Commission multiplied by four;
provided, however, that (i) if the Company or any Subsidiary of the Company has
incurred any Indebtedness (including Acquired Debt) that remains outstanding on
the date of such determination or if the transaction giving rise to the need to
calculate the Annualized EBITDA is an incurrence of Indebtedness (including
Acquired Debt), EBITDA for such fiscal quarter will be calculated after giving
effect on a pro forma basis to (a) such Indebtedness, as if such Indebtedness
had been incurred on the first day of such fiscal quarter and (b) the discharge
of any other Indebtedness repaid, repurchased, defeased or otherwise discharged
with the proceeds of such new Indebtedness as if such discharge had occurred on
the first day of such fiscal quarter, (ii) if since the beginning of such
fiscal quarter the Company or any Subsidiary of the Company has made any Asset
Sale, EBITDA for such fiscal quarter will be (a) reduced by an amount equal to
EBITDA (if positive) directly attributable to the assets which are the subject
of such Asset Sale for such fiscal quarter or (b) increased by an amount equal
to EBITDA (if negative) directly attributable thereto for such fiscal quarter
and (iii) if since the beginning of such period the Company or any Subsidiary
of the Company (by merger or otherwise) has made an Investment in any Person
which becomes a Subsidiary of the Company as a result of such Investment or an
Investment in an existing Subsidiary with the result that such Investment will
result in the consolidation of a greater percentage of such Subsidiary's
Consolidated Net Income (other than a transfer of operating assets from the
Company or one Subsidiary to another Subsidiary) or has made an acquisition of
assets (other than from the Company or another Subsidiary of the Company),
including any acquisition of assets occurring in connection with a transaction
causing a calculation of Annualized EBITDA to be made hereunder, which
constitutes all or substantially all of an operating unit of a business, EBITDA
for such fiscal quarter will be calculated after giving pro forma effect
thereto (including the incurrence of any Indebtedness (including Acquired
Debt)) as if such Investment or acquisition occurred on the first day of such
fiscal quarter. For purposes of this definition, whenever pro forma effect is
to be given to an acquisition of assets or an Investment, the pro forma
calculations will be determined in good faith by a responsible financial or
accounting officer of the Company; provided, however, that such officer shall
apply in his calculations the historical EBITDA associated with such assets for
the most recent fiscal quarter for which financial information is available. If
any Indebtedness (including Acquired Debt) bears a floating rate of interest
and is being given pro forma effect, the
<PAGE> 12
-3-
interest on such Indebtedness will be calculated as if the rate in effect on
the date of determination had been the applicable rate for the entire period.
"Asset Sale" means any sale, lease, transfer or other disposition
(or series of related sales, leases, transfers or dispositions) of shares of
Capital Stock of a Subsidiary (other than directors' qualifying shares),
property or other assets (each referred to for the purposes of this definition
as a "disposition") by the Company or any of its Subsidiaries, including any
disposition by means of a merger, consolidation or similar transaction, other
than (i) a disposition of property or assets at Fair Market Value in the
ordinary course of business, (ii) a disposition that constitutes a Restricted
Payment and (iii) a disposition by a Subsidiary to the Company or by the
Company or a Subsidiary to a Wholly-Owned Subsidiary.
"AWS Transaction" means the acquisition by the Company of the
capital stock of American Wireless Systems, Inc., a Delaware corporation, and
the acquisition by the Company of the assets of Wireless Cable T.V. Associates
#38 and Fort Worth Wireless Cable TV Associates for consideration comprised of
Equity Interests of the Company.
"Bank Facility" means the $25 million senior secured revolving
credit facility entered into by the Company on November 27, 1996, to be repaid
from the proceeds of the issuance of the Notes.
"Bank Indebtedness" means loans made by banks, trust companies and
other institutions principally engaged in the business of lending money to
businesses to the Company or a Subsidiary under a credit facility, loan
agreement or similar agreement.
"Bankruptcy Code" means Title 11, United States Code, as amended.
"Beneficial Owner" means a beneficial owner as defined in Rules
13d-3 and 13d-5 under the Exchange Act (or any successor rules), including the
provision of such Rules that a Person shall be deemed to have beneficial
ownership of all securities that such Person has a right to acquire within 60
days; provided that a Person will not be deemed a beneficial owner of, or to
own beneficially, any securities if such beneficial ownership (i) arises solely
as a result of a revocable proxy delivered in response to a proxy or consent
solicitation made pursuant to, and in accordance with, the Exchange Act and
(ii) is not also then reportable on Schedule 13D or Schedule 13G (or any
successor schedule) under the Exchange Act.
<PAGE> 13
-4-
"Business Day" means any day that is not a Saturday, Sunday or a
day on which banking institutions are required to close in the State of New
York or Texas.
"CableMaxx Transaction" means the acquisition by the Company of
the capital stock of CableMaxx, Inc., a Delaware corporation ("CableMaxx"), for
consideration comprised of Equity Interests of the Company.
"Call Markets" means Fanning Springs, Florida; Leesburg, Florida;
and Lake City, Florida.
"Capital Lease Obligation" means, at the time any determination
thereof is to be made, the amount of the liability in respect of a capital
lease that would at such time be required to be capitalized on the balance
sheet in accordance with GAAP.
"Capital Stock" means any and all shares, interests,
participations, warrants, options, rights or other equivalents of or interests
in (however designated and whether voting or non-voting) corporate stock of a
corporation and any and all equivalent ownership interests in a Person (other
than a corporation), in each case whether outstanding on the date of issuance
of the Notes or thereafter issued, including any Preferred Stock.
"Change of Control" means the occurrence of any of the following
events:
(i) any Person (as such term is used in Sections 13(d)
and 14(d) of the Exchange Act), other than the Permitted Holders,
is or becomes the Beneficial Owner, directly or indirectly, of (a)
more than 35% of the total Voting Stock or Equity Market
Capitalization of the Company and (b) a greater percentage of the
voting power of the total Voting Stock of the Company than that
represented by the voting power of the Voting Stock of the Company
then beneficially owned, in the aggregate, by the Permitted
Holders; or
(ii) 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 immediately after the consummation thereof the stockholders
of the Company immediately prior to the date of such transaction
cease to own, directly or indirectly, a majority of the Voting
Stock of the surviving or transferee corporation, or Persons
owning
<PAGE> 14
-5-
a majority of the Voting Stock of the Company immediately prior to
such transaction cease to own, directly or indirectly, a majority
of the Voting Stock of the surviving or transferee corporation; or
(iii) 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 66 2/3% 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; or
(iv) the Company adopts a plan of liquidation or
dissolution.
"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, 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" has the meaning ascribed to such term in the Escrow
and Disbursement Agreement.
"Common Stock" of any Person means Capital Stock of such Person
that does not rank prior, as to the payment of dividends or as to the
distribution of assets upon any voluntary or involuntary liquidation,
dissolution or winding up of such Person, to shares of Capital Stock of any
other class of such Person.
"Consolidated Income Tax Expense" for any Person for any period
means, without duplication, the aggregate amount of net taxes based on income
or profits for such
<PAGE> 15
-6-
period of the operations of such Person and its consolidated Subsidiaries with
respect to such period in accordance with GAAP.
"Consolidated Indebtedness" means, with respect to any Person, as
of any date of determination, the aggregate amount of Indebtedness of such
Person and its Subsidiaries as of such date determined on a consolidated basis
in accordance with GAAP.
"Consolidated Interest Expense" means, for any Person, for any
period, the aggregate of the following for such Person for such period
determined on a consolidated basis in accordance with GAAP: the amount of
interest in respect of Indebtedness (including amortization of original issue
discount and non-cash interest payments on any Indebtedness and the interest
portion of any deferred payment obligation and after taking into account the
effect of elections made under any Interest Rate Agreement, however
denominated, with respect to such Indebtedness), and the interest component of
any Capital Lease Obligation paid, in each case whether accrued or scheduled to
be paid or accrued by such Person during such period to the extent such amounts
were deducted in computing Consolidated Net Income, determined on a
consolidated basis in accordance with GAAP, provided that each of the foregoing
shall only be included in the calculation of Consolidated Interest Expense to
the extent such amounts reduce Consolidated Net Income for such period. For
purposes of this definition, interest on a Capital Lease Obligation shall be
deemed to accrue at an interest rate reasonably determined by such Person to be
the rate of interest implicit in such Capital Lease Obligation in accordance
with GAAP consistently applied.
"Consolidated Net Income" means, with respect to any Person for
any period, the aggregate of the Net Income of such Person and its consolidated
Subsidiaries for such period determined in accordance with GAAP, provided that
there shall be excluded (i) the Net Income of any Person (other than a
consolidated Subsidiary) in which such Person or any of its consolidated
Subsidiaries has a joint interest with a third party, including, without
limitation, interests accounted for on the equity method, except to the extent
of the amount of dividends or distributions actually paid to such Person or its
consolidated Subsidiary during such period; (ii) except to the extent
includable pursuant to the foregoing clause (i), the Net Income of any Person
accrued prior to the date it becomes a Subsidiary of such Person or is merged
into or consolidated with such Person or any of its Subsidiaries or that
Person's assets are acquired by such Person or any of its Subsidiaries; (iii)
the Net Income (if positive), or any portion thereof, of any Subsidiary of such
Person to the extent that the declaration or payment of dividends or similar
distributions by that Subsidiary to such Person or to any other Subsidiary of
such Net Income is not at the time permitted by operation of the terms of its
charter or any agreement, instrument, judgment, decree, order, statute, rule or
governmental regulation
<PAGE> 16
-7-
applicable to that Subsidiary, except that (A) the Company's equity in the Net
Income of any such Subsidiary for such period shall be included in such
Consolidated Net Income up to the aggregate amount of cash actually distributed
by such Subsidiary during such period to the Company or another Subsidiary as a
dividend or other distribution (subject, in the case of a dividend or other
distribution to a Subsidiary, to the limitation contained in this clause) and
(B) the Company's equity in a net loss of any such Subsidiary for such period
shall be included in determining such Consolidated Net Income; (iv) without
duplication, any gains or losses attributable to Asset Sales; (v) Net Income
(if positive), arising from the adoption of changes in accounting policy to
comply with GAAP or voluntarily by the Company with the consent of its
independent auditors that so qualify under Regulation S-X of the Securities
Act; (vi) Net Income arising for periods prior to the date of a transaction in
connection with the accounting treatment for a merger, combination or
consolidation under the pooling of interests method; and (vii) foreign currency
translation gains and losses.
"Corporate Trust Office of the Trustee" shall be at the address of
the Trustee specified in Section 12.02 or such other address as to which the
Trustee may give notice to the Company.
"Default" means any event that is or with the passage of time or
the giving of notice or both would be an Event of Default.
"Depository" means The Depository Trust Company, or its nominee or
successors and assigns.
"Disqualified Stock" means any Capital Stock that, by its terms
(or by the terms of any security into which it is convertible or for which it
is exchangeable) or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or is
redeemable at the option of the holder thereof, in whole or in part, on or
prior to the date on which the Notes mature; provided, however, that any
Capital Stock that would not constitute Disqualified 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 of Control
occurring prior to the final maturity of the Notes shall not constitute
Disqualified Stock if (i) the change of control provisions applicable to such
Capital Stock are no more favorable to the holders of such Capital Stock than
the provisions applicable to the Notes contained in Section 4.16 and (ii) 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 such Notes as are required to be repurchased pursuant to Section
4.16.
<PAGE> 17
-8-
"EBITDA" for any period means the Consolidated Net Income for such
period plus the following to the extent deducted in calculating such
Consolidated Net Income: (i) Consolidated Income Tax Expense, (ii) Consolidated
Interest Expense, (iii) depreciation and amortization expense determined on a
consolidated basis for such Person and its consolidated Subsidiaries in
accordance with GAAP for such period and (iv) all other non-cash charges (other
than non- cash charges which require an accrual of or reserve for cash charges
in future periods), and less any non-cash items which have the effect of
increasing Consolidated Net Income for such period.
"Eligible Institution" means a commercial banking institution that
has combined capital and surplus of not less than $500 million or its
equivalent in foreign currency, whose debt is rated "A" (or higher) according
to S&P or Moody's at the time as of which any investment or rollover therein is
made.
"Equity Interests" means Capital Stock and all warrants, options
or other rights to acquire Capital Stock or that are measured by the value of
Capital Stock (but excluding any debt security that is convertible into or
exchangeable for Capital Stock).
"Equity Market Capitalization" of any Person means, as of any day
of determination, the product of (a) the aggregate number of outstanding 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 (ii) of the preceding sentence
shall be determined by an independent investment banking firm of national
repute.
"Escrow Account" means an escrow account for the deposit of
$22,012,265.59 of the net proceeds from the sale of the Notes (the "Escrow
Amount") under the Escrow and Disbursement Agreement.
"Escrow Agent" means Bankers Trust Company, as Escrow Agent under
the Escrow and Disbursement Agreement, or any successor thereto appointed
pursuant to such agreement.
"Escrow and Disbursement Agreement" means the Escrow and
Disbursement Agreement, dated as of the date of this Indenture, by and among
the Escrow Agent, the Trustee and the Company, governing the disbursement of
funds from the Escrow Account, as amended, in substantially the form set forth
as Exhibit E hereto.
<PAGE> 18
-9-
"Exchange Act" means the Securities Exchange Act of 1934, as
amended (or any successor act), and the rules and regulations promulgated
thereunder.
"Exchange Notes" has the meaning provided in the preamble to this
Indenture.
"Existing Indebtedness" means the Notes and any other Indebtedness
of the Company and its Subsidiaries in existence on the Issue Date, excluding
Indebtedness under the Bank Facility, which Indebtedness is required to be
repaid with the proceeds from the issuance of the Notes.
"Existing Indentures" means the indentures governing the Existing
Notes.
"Existing Notes" means the Company's 13% Series B Senior Notes due
2003 and 13% Series C Senior Notes due 2003.
"Fair Market Value" means, with respect to any asset or property,
the sale value that would be obtained in an arm's length transaction between an
informed and willing seller under no compulsion to sell and an informed and
willing buyer under no compulsion to buy.
"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, which are applicable as of the
date of determination.
"Global Note" has the meaning provided in Section 2.01.
"Guarantee" means any obligation, contingent or otherwise, of any
Person directly or indirectly guaranteeing any Indebtedness or other obligation
of any other Person and any obligation, direct or indirect, contingent or
otherwise, of such Person (i) to purchase or pay (or advance or supply funds
for the purchase or payment of) such Indebtedness or other obligation or such
other Person (whether arising by virtue of partnership arrangements, or by
agreement to keep well, to purchase assets, goods, securities or services, to
take-or-pay or to maintain financial statement conditions or otherwise) or (ii)
entered into the purposes of assuring in any other manner the obligee of such
Indebtedness or other obligation of the payment thereof or to protect such
obligee
<PAGE> 19
-10-
against loss in respect thereof (in whole or in part); provided, however, that
the term "Guarantee" shall not include endorsements for collection or deposits
in the ordinary course of business. The term "Guarantee" used as a verb has a
corresponding meaning. The amount of any Guarantee shall be deemed to be an
amount equal to the stated or determinable amount of the primary obligation in
respect of which such Guarantee is made (unless such Guarantee shall be
expressly limited to a lesser amount, in which case such lesser amount shall
apply) or, if not stated or determinable, the maximum reasonably anticipated
liability in respect thereof as determined by such Person in good faith.
"Holder" means a Person in whose name a Note is registered.
"Indebtedness" of any Person means, without duplication: (i) the
principal of and premium (if any) in respect of (A) indebtedness of such Person
for money borrowed and (B) indebtedness evidenced by notes, debentures,bonds or
other similar instruments for the payment of which such Person is responsible
or liable; (ii) all Capital Lease Obligations of such Person; (iii) all
obligations of such Person issued or assumed as the deferred purchase price of
property, all conditional sale obligations of such Person and all obligations
of such Person under any title retention agreement (but excluding trade
accounts payable arising in the ordinary course of business); (iv) all
obligations of such Person for the reimbursement of any obligor or any letter
of credit, banker's acceptance or similar credit transaction (other than
obligations with respect to letters of credit securing obligations (other than
obligations described in (i) through (iii) above) entered into in the ordinary
course of business of such Person to the extent such letters of credit are not
drawn upon or, if and to the extent drawn upon, such drawing is reimbursed no
later than the third Business Day following receipt by such Person of a demand
for reimbursement following payment on the letter of credit); (v) the amount of
all obligations of such Person with respect to the redemption, repayment or
other repurchase of any Disqualified Stock (the amount of Indebtedness
represented by any Disqualified Stock will be the liquidation preference, plus
accrued and unpaid dividends); (vi) to the extent not otherwise included,
Interest Rate Agreements; (vii) all obligations of the type referred to in
clauses (i) through (vi) of other Persons and all dividends of other Persons
for the payment for which, in either case, such Person is responsible or
liable, directly or indirectly, as obligor, guarantor or otherwise, including
by means of any Guarantee; and (viii) all obligations of the type referred to
in clauses (i) through (vii) of other Persons secured by any Lien on any
property or asset of such Person (whether or not such obligation is assumed by
such Person); provided that if recourse with respect to such Indebtedness is
limited to such asset, the amount of such Indebtedness shall be deemed to be
the lesser of the value of such property or assets or the amount of the
obligation so secured.
<PAGE> 20
-11-
"Indenture" means this Indenture, as amended or supplemented from
time to time.
"Initial Notes" has the meaning provided in the preamble to this
Indenture.
"Initial Purchasers" means BT Securities Corporation, Alex. Brown
& Sons Incorporated and Gerrard Klauer Mattison & Co., L.L.C.
"Institutional Accredited Investor" means an institution that is
an "accredited investor" as that term is defined in Rule 501(a)(1), (2), (3) or
(7) under the Securities Act.
"Interest Rate Agreement" means, with respect to any Person, the
obligations of such Person under (i) interest rate swap agreements, interest
rate cap agreements and interest rate collar agreements and (ii) other
agreements or arrangements designed to protect such Person against fluctuations
in interest rates.
"Investment Grade" means a rating of at least BBB-, in the case of
S&P, or Baa3, in the case of Moody's.
"Investments" means, with respect to any Person, on any date of
determination, the outstanding amount of all investments by such Person in
other Persons (including Affiliates) in the forms of loans, Guarantees,
advances or capital contributions (excluding commission, travel and similar
advances to officers and employees made in the ordinary course of business),
purchases or other acquisitions for consideration of Indebtedness, Equity
Interests or other securities of any other Person and all other items that are
or would be classified as investments on a balance sheet prepared in accordance
with GAAP and (ii) all acquisitions by such Person of assets to be used in the
Wireless Cable Business (other than any such acquisitions of equipment made in
the ordinary course of such Person's business and other than any acquisition or
lease (and any deposit required to be made in connection therewith) of
additional channel rights on or after November 30, 1996 in any wireless cable
market or "Basic Trading Area" (as defined by Rand McNally) in which the
Company and its Subsidiaries (A) as of November 30, 1996, have channel rights,
whether by way of license, lease with a channel license holder, lease with a
channel license applicant, lease with a qualified, non-profit educational
organization that plans to apply for a channel license or option to acquire any
of the foregoing, or (B) as of the date of such acquisition or lease, have
rights with respect to at least eight wireless cable channels, whether by way
of license, lease with a channel license holder, lease with a channel license
applicant, lease with a qualified, non-profit educational organization that
plans to apply for a channel license or option to acquire any of the
foregoing).
<PAGE> 21
-12-
"Issue Date" means the date on which Notes are first authenticated
and issued.
"Legal Holiday" means a Saturday, a Sunday or a day on which
banking institutions in the City of New York or at a place of payment are
authorized by law, regulation or executive order to remain closed. If a
payment date is a Legal Holiday at a place of payment, payment may be made at
that place on the next succeeding day that is not a Legal Holiday, and no
interest shall accrue for the intervening period.
"Lien" means, with respect to any asset, any mortgage, deed of
trust, lien, pledge, charge, security interest, lease, easement, restriction,
covenant, right-of-way, charge, encumbrance or other similar lien of any kind
in respect of such asset, whether or not filed, recorded or otherwise perfected
under applicable law (including any conditional sale or other title retention
agreement, any lease in the nature thereof, any option or other agreement to
sell or give a security interest in and any filing of or agreement to give any
financing statement under the Uniform Commercial Code (or equivalent statutes)
of any jurisdiction).
"Marketable Securities" means (i) U.S. Government Securities
maturing not more than two years after the date of acquisition; (ii) any
certificate of deposit maturing not more than 270 days after the date of
acquisition issued by, or time deposit of, an Eligible Institution; (iii)
commercial paper maturing not more than 270 days after the date of acquisition
issued by a corporation (other than an Affiliate of the Company) with a rating,
at the time as of which any investment therein is made, of "A-1" (or higher)
according to S&P or "P-1" (or higher) according to Moody's; (iv) any banker's
acceptances or money market deposit accounts issued or offered by an Eligible
Institution; and (v) any fund investing exclusively in investments of the types
described in clauses (i) through (iv) above.
"Moody's" means Moody's Investors Service Inc. and its successors.
"Net Cash Proceeds" means the aggregate cash proceeds received by
the Company or any of its Subsidiaries in respect of any Asset Sale (excluding,
without limitation, any consideration received in the form of assumption by the
acquiring Person of Indebtedness or other obligations relating to such property
or assets or received in any other non- cash form), net of the direct costs
relating to such Asset Sale (including, without limitation, legal, accounting
and investment banking fees and sales commissions), any relocation expenses
incurred as a result thereof, Federal, state, provincial, foreign and local
taxes paid or payable as a result thereof (after taking into account any
available tax credits or deductions and any tax sharing arrangements), title
and recording tax expenses,
<PAGE> 22
-13-
and in each case net of appropriate amounts to be provided by the Company or
its Subsidiaries as a reserve, in accordance with GAAP, against any liabilities
associated with such assets and retained by the Company or any Subsidiary after
such Asset Sale, including, without limitation, pension and other
post-employment benefit liabilities and liabilities related to environmental
matters and the after-tax cost of any indemnification payments (fixed or
contingent) attributable to the seller's indemnities to the purchaser
undertaken by the Company or any of its Subsidiaries in connection with such
Asset Sale (but excluding any payments, which by the terms of the indemnities
will not, under any circumstances, be made during the term of the Notes) and
net of all payments made on any Indebtedness which is secured by any assets
subject to such Asset Sale, in accordance with the terms of any Lien upon or
other security agreement of any kind with respect to such assets, or which must
by its terms, or in order to obtain a release of such Lien or a necessary
consent to such Asset Sale, or by applicable law be repaid out of the proceeds
from such Asset Sale, and net of all distributions and other payments required
to be made to minority interests holders in Subsidiaries or joint ventures as a
result of such Asset Sale. Net Cash Proceeds shall exclude any non-cash
proceeds received from any Asset Sale, but shall include such proceeds when and
as converted by the Company or any Subsidiary to cash.
"Net Income" of any Person for any period means the net income
(loss) of such Person for such period, determined in accordance with GAAP,
except that extraordinary gains and losses as determined in accordance with
GAAP shall be excluded.
"Net Proceeds" means, with respect to any issuance or sale of
Equity Interests, the cash proceeds of such issuance or sale net of attorneys'
fees, accountants' fees, underwriters' or placement agents' fees, discounts and
commissions and brokerage, consultant and other fees actually incurred in
connection with such issuance or sale and net of taxes paid or payable as a
result thereof.
"Notes" mean the Initial Notes and the Exchange Notes treated as a
single class of securities, as amended or supplemented from time to time in
accordance with the terms hereof, that are issued pursuant to this Indenture.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Offering Memorandum" means the Offering Memorandum dated December
16, 1996 of the Company relating to the offering of the Notes.
<PAGE> 23
-14-
"Officer" means, with respect to any Person, other than the
Trustee, Authenticating Agent, Paying Agent, or Registrar, the Chairman of the
Board, the Chief Executive Officer, the President, the Chief Operating Officer,
the Chief Financial Officer, the Treasurer, any Assistant Treasurer, the
Controller, the Secretary or any Vice President of such Person.
"Officers' Certificate" means a certificate signed by two Officers
of the Company, one of whom must be the principal executive officer, principal
financial officer, treasurer or principal accounting officer of the Company.
"Opinion of Counsel" means an opinion in writing signed by legal
counsel reasonably satisfactory to the Trustee.
"Permitted Assets" means Wireless Cable Related Assets related to
wireless cable systems (i) in the United States and containing a maximum of
250,000 households within a 35-mile radius of the licensed transmission site
associated with such system, at least 15% of which households are unpassed by
traditional hard-wire cable (as supported by an Officer's Certificate), (ii)
owned by the Company as of November 30, 1996 or (iii) owned by Television
Interactiva del Norte, SA de C.V. (but only, with respect to Investments in
assets named in this clause (iii), up to the amount of $3.0 million after
November 30, 1996).
"Permitted Designee" means (i) a spouse, child or grandchild
(whether such relationship arises from birth, adoption or through marriage) of
a Permitted Holder, (ii) any trust, corporation, partnership or other entity, a
majority in interest of the beneficiaries, stockholders, partners or owners
(direct or beneficial) of which are Permitted Holders and/or Persons of the
type referred to in clause (i) above or (iii) any Person so long as a Permitted
Holder owns at least 50% of the Voting Stock of such Person.
"Permitted Holders" means Hunt Capital Group L.L.C. and its
Affiliates, David E. Webb and L. Allen Wheeler and their Permitted Designees.
"Permitted Investment" means (a) any Investments by the Company in
a Subsidiary (provided that, in the case of Wholly-Owned Subsidiaries, if such
Wholly-Owned Subsidiary ceases to be a Wholly-Owned Subsidiary (except by
reason of the sale by the Company or its Wholly-Owned Subsidiary of the Equity
Interests therein), then any Investment in such Subsidiary will be deemed to be
a Restricted Payment at the time of such event determined in accordance with
Section 4.07); and (b) any Investments in Marketable Securities.
<PAGE> 24
-15-
"Permitted Liens" means:
(i) Liens on (x) the Escrow Account and all funds and
securities therein securing only the Notes equally and ratably or
(y) other assets of the Company or any Subsidiary thereof securing
only the Notes equally and ratably;
(ii) Liens to secure Bank Indebtedness incurred by the
Company or the Subsidiaries in compliance with Section 4.08 and
Guarantees incurred by the Subsidiaries in compliance with clause
(iv) of the second paragraph of Section 4.08 executed in
connection therewith;
(iii) Liens on the property of the Company or its
Subsidiaries created solely for the purpose of securing purchase
money obligations incurred in compliance with this Indenture;
provided that (a) such property so acquired is for use in lines of
business related to the Company's or its Subsidiaries' business as
it exists immediately prior to the issuance of the related
Indebtedness, (b) no such Lien shall extend to or cover other
property or assets of the Company and its Subsidiaries other than
the respective property so acquired and (c) the principal amount
of Indebtedness secured by any such Lien shall at no time exceed
the original purchase price of such property or assets;
(iv) Liens on the property or assets of a Subsidiary
acquired after the Issue Date or on property or assets acquired in
an asset purchase transaction with a Person that is not an
Affiliate created solely to secure the obligations that financed
the acquisition of such Subsidiary or such property and assets;
provided that (a) no such Lien shall extend to or cover property
or assets of the Company and its Subsidiaries other than the
property or assets of the Subsidiary so acquired or the property
or assets so acquired and (b) no such Lien shall extend to the
Capital Stock of any Subsidiary so acquired and (c) the principal
amount of Indebtedness secured by any such Lien shall not exceed
the original purchase price of such Subsidiary or such property or
assets;
(v) Liens on the assets of any entity existing at the
time such entity or assets are acquired by the Company or any of
its Subsidiaries, whether by merger, consolidation, purchase of
assets or otherwise; provided that such Liens (a) are not created,
incurred or assumed in connection with,
<PAGE> 25
-16-
or in contemplation of, such assets being acquired by the Company
or any of its Subsidiaries and (b) do not extend to any other
property of the Company or any of its Subsidiaries;
(vi) Liens to secure the performance of statutory
obligations,surety or appeal bonds or performance bonds or
landlords', carriers', warehousemen's, mechanics', suppliers',
materialmen's or other like Liens, in any case incurred in the
ordinary course of business and with respect to amounts not yet
delinquent or being contested in good faith by appropriate process
of law, if a reserve or other appropriate provision,if any, as
required by GAAP shall have been made therefor;
(vii) Liens existing on the date of this Indenture;
(viii) Liens for taxes, assessments or governmental
charges or claims that are not yet delinquent or that are being
contested in good faith by appropriate proceedings promptly
instituted and diligently concluded, provided that any reserve or
other appropriate provision as shall be required in conformity
with GAAP shall have been made therefor;
(ix) Liens in favor of any Federal governmental
authority on any wireless cable channels or "Basic Trading Area"
(as defined by Rand McNally) licenses acquired by the Company or
any of its Subsidiaries in an auction or other sale, provided that
such wireless cable channels or "Basic Trading Area" licenses are
within the United States; and
(x) extensions or renewals of any Liens referred to in
clauses (i) through (ix) above, provided that such extension or
renewal does not extend to any assets or secure any Indebtedness
not securing or secured by the Liens being extended or renewed.
Notwithstanding the foregoing, Permitted Liens may not extend to the Escrow
Account or the Escrow and Disbursement Agreement.
"Permitted Payments" means, with respect to the Company or any of
its Subsidiaries, (a) any dividend on shares of Capital Stock payable solely in
shares of Capital Stock (other than Disqualified Stock) or in options, warrants
or other rights to purchase Capital Stock (other than Disqualified Stock); (b)
any dividend, other distribution, loan or advance to the Company by any of its
Subsidiaries or by a Subsidiary to another Subsidiary; (c) any defeasance,
redemption, repurchase or other acquisition for
<PAGE> 26
-17-
value of any Indebtedness of the Company with the proceeds from the issuance of
(i) Indebtedness which is subordinate to the Notes at least to the extent and
in the manner as the Indebtedness to be defeased, redeemed, repurchased or
otherwise acquired is subordinate in right of payment to the Notes; provided
that (1) such newly-issued subordinated Indebtedness provides for no payments
of principal by way of sinking fund, mandatory redemption, defeasance or
otherwise by the Company or its Subsidiaries (including, without limitation, at
the option of the holder thereof other than an option given to a holder
pursuant to a Change of Control covenant which (x) is no more favorable to the
holders of such Indebtedness than the provisions in favor of the Holders and
(y) such Indebtedness provides that the Company or its Subsidiaries will not
repurchase such Indebtedness pursuant to such provisions prior to the Company's
repurchase of the Notes required to be repurchased by the Company upon a Change
of Control) prior to the maturity of the Indebtedness being replaced and (2)
the proceeds of such new Indebtedness are utilized for such purpose within 45
days of issuance or (ii) Capital Stock (other than Disqualified Stock) issued
in accordance with the provisions of this Indenture; and (d) the redemption or
repurchase by a Wholly-Owned Subsidiary of its Capital Stock owned by the
Company.
"Person" means any individual, corporation, partnership, joint
venture, association, joint stock company, trust, unincorporated organization,
government or any agency or political subdivision thereof or any other entity.
"Physical Notes" has the meaning provided in Section 2.01.
"Preferred Stock," as applied to the Capital Stock of any Person,
means Capital Stock of such Person of any class or classes (however designated)
that ranks prior, as to 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.
"Private Placement Legend" means the legend initially set forth on
the Notes in the form set forth in Section 2.15.
"Qualified Institutional Buyer" or "QIB" shall have the meaning
specified in Rule 144A under the Securities Act.
"Registration Rights Agreement" means the Registration Rights
Agreement dated on or about the Issue Date between the Company and the Initial
Purchasers for the benefit of themselves and the Holders as the same may be
amended from time to time in accordance with the terms thereof.
<PAGE> 27
-18-
"Regulation S" means Regulation S under the Securities Act.
"Responsible Officer," when used with respect to the Trustee,
means any officer within the Corporate Trust Administration of the Trustee (or
any successor group of the Trustee) or any other officer of the Trustee
customarily performing functions similar to those performed by any of the above
designated officers and also means, with respect to a particular corporate
trust matter, any other officer to whom such matter is referred because of his
knowledge of and familiarity with the particular subject.
"Restricted Security" has the meaning assigned to such term in
Rule 144(a)(3) under the Securities Act; provided, however, that the Trustee
shall be entitled to request and conclusively rely on an Opinion of Counsel
with respect to whether any Note constitutes a Restricted Security.
"Rule 144A" means Rule 144A under the Securities Act.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended (or
any successor act), and the rules and regulations thereunder.
"Strategic Equity Investor" means any Person that, both as of the
Trading Day immediately before the day of such sale and the Trading Day
immediately after the day of such sale, has an Equity Market Capitalization of
at least $2 billion and is engaged in the business of (i) transmitting video,
voice or data through wireless and other transmission facilities, (ii)
creating, developing or packaging entertainment or communication programming or
(iii) evaluating, participating or pursuing any other activity or opportunity
that is related to those identified in (i) or (ii) above.
"Subsidiary" means any corporation, association or other business
entity of which more than 50% of the total voting power of the outstanding
Voting Stock (or other interests, including partnership interests) is owned
directly or indirectly by any Person or one or more of the other Subsidiaries
of that Person or a combination thereof.
"S&P" means Standard & Poor's Corporation and its successors.
"TechniVision Transaction" means the acquisition by the Company of
the assets of TechniVision, Inc. for consideration comprised of Equity
Interests of the Company.
<PAGE> 28
-19-
"TIA" means the Trust Indenture Act of 1939 (15 U.S. Code Sections
77aaa-bbbb), as it may be amended from time to time.
"Trading Day," with respect to a securities exchange or automated
quotation system, means a day on which such exchange or system is open for a
full day of trading.
"Transactions" means the AWS Transaction, the CableMaxx
Transaction, the TechniVision Transaction and the Wireless One Transaction,
collectively.
"Trustee" means the party named as such above until a successor
replaces it in accordance with the applicable provisions of this Indenture and
thereafter means the successor serving hereunder.
"U.S. Government Securities" means securities that are (x) direct
obligations of the United States of America for the payment of which its full
faith and credit is pledged or (y) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States
of America, the payment of which is unconditionally guaranteed as a full faith
and credit obligation by the United States of America, which, in either case,
are not callable or redeemable at the option of the issuer thereof, and shall
also include a depository receipt issued by a bank (as defined in Section
3(a)(2) of the Securities Act) as custodian with respect to any such U.S.
Government Obligation or a specific payment of principal of or interest on any
such U.S. Government Obligation held by such custodian for the account of the
holder of such depository receipt; provided that (except as required by law)
such custodian is not authorized to make any deduction from the amount payable
to the holder of such depository receipt from any amount received by the
custodian in respect of the U.S. Government Obligation or the specific payment
of principal of or interest on the U.S. Government Obligation evidenced by such
depository receipt.
"U.S. Physical Notes" has the meaning provided in Section 2.01.
"Voting Stock" of any Person means all outstanding classes of
Capital Stock of any entity entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees
thereof.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness or Preferred Stock, as the case may be, at any date, the number of
years obtained by dividing (i) the then outstanding principal amount or stated
value of such Indebtedness or Preferred Stock, as the case may be, into (ii)
the total of the product
<PAGE> 29
-20-
obtained by multiplying (x) the amount of each then remaining installment,
sinking fund, serial maturity or other required payments of principal,
including payment at final maturity, or preference in respect thereof, by (y)
the number of years (calculated to the nearest one-twelfth) that will elapse
between such date and the making of such payment.
"Wholly-Owned Subsidiary" means any Subsidiary of the Company, all
of the outstanding Capital Stock (other than directors' qualifying shares), or
in the case of a non-corporate Subsidiary, other equity interests having
ordinary voting power for the election of directors or other governing body of
such Subsidiary, of which is owned by the Company or another Wholly-Owned
Subsidiary of the Company or a combination thereof.
"Wireless Cable Business" means, when used in reference to any
Person,that such Person, directly or indirectly, is engaged primarily in the
business of (i) transmitting video, voice or data primarily through wireless
transmission facilities, (ii) utilizing wireless cable channels for any
commercial purpose permitted by the FCC, (iii) creating, developing and
packaging programming that may be used to satisfy educational programming
requirements for ITFS channels and advertising, that, in either case, is
transmitted over one or more of the Company's wireless cable channels or (iv)
evaluating, participating or pursuing any other activity or opportunity that is
related to those identified in (i), (ii) or (iii) above.
"Wireless Cable Related Assets" means all assets, rights
(contractual or otherwise) and properties, whether tangible or intangible, used
in connection with a Wireless Cable Business.
"Wireless One Transaction" means the transaction consummated
pursuant to the Contribution Agreement dated October 24, 1995, between the
Company and Wireless One Operating Company, a Delaware corporation ("Old
Wireless One"), whereby, among other things, Wireless One, Inc., a newly-formed
Delaware corporation ("Wireless One"), acquired (A) all of the outstanding
capital stock of Old Wireless One (which retained all of its assets and
liabilities except its wireless cable assets and certain related liabilities
with respect to the Springfield, Missouri market which the Company acquired)
for consideration comprised of the Common Stock, $.01 par value per share (the
"Wireless One Common Stock"), of Wireless One and (B) the wireless cable assets
and related liabilities of certain Subsidiaries of the Company with respect to
the Contributed Markets for consideration comprised of Wireless One Common
Stock and promissory notes of Wireless One.
<PAGE> 30
-21-
Section 1.02. Other Definitions.
<TABLE>
<CAPTION>
Defined in
Term Section
<S> <C>
"Affiliate Transaction" . . . . . . . . . 4.14
"Bankruptcy Law" . . . . . . . . . . . . 4.01
"Change of Control Offer" . . . . . . . . 4.16
"Change of Control Payment" . . . . . . . 4.16
"Change of Control Payment Date" . . . . 4.16
"Covenant Defeasance" . . . . . . . . . . 8.03
"Custodian" . . . . . . . . . . . . . . . 6.01
"Event of Default" . . . . . . . . . . . 6.01
"incur" . . . . . . . . . . . . . . . . . 4.08
"Legal Defeasance" . . . . . . . . . . . 8.02
"Net Cash Proceeds Offer" . . . . . . . . 4.12
"Net Proceeds Offer Payment Date" . . . . 4.12
"Net Proceeds Offer Trigger Date" . . . . 4.12
"Paying Agent" . . . . . . . . . . . . . 2.03
"Permitted Refinancing" . . . . . . . . . 4.08
"Purchase Date" . . . . . . . . . . . . . 4.12
"Refinancing Indebtedness" . . . . . . . 4.08
"Registrar" . . . . . . . . . . . . . . . 2.03
"Restricted Payments" . . . . . . . . . . 4.07
"SEC Reports" . . . . . . . . . . . . . . 4.03
</TABLE>
Section 1.03. Incorporation by Reference of Trust Indenture Act.
This Indenture shall be governed by the provisions of the TIA.
Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the
following meanings:
"indenture securities" means the Notes;
"indenture security holder" means a Holder of a Note;
"indenture to be qualified" means this Indenture;
<PAGE> 31
-22-
"indenture trustee" or "institutional trustee" means the Trustee;
"obligor" on the Notes means the Company and any successor obligor
upon the Notes.
All other terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by SEC rule under
the TIA have the meanings so assigned to them.
Section 1.04. Rules of Construction.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the
meaning assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and in the
plural include the singular; and
(5) provisions apply to successive events and transactions.
ARTICLE 2
THE NOTES
Section 2.01. Form and Dating.
The Initial Notes and the Trustee's certificate of authentication
relating thereto shall be substantially in the form of Exhibit A hereto. The
Exchange Notes and the Trustee's certificate of authentication relating thereto
shall be substantially in the form of Exhibit B hereto. The Notes may have
notations, legends or endorsements required by law, stock exchange rule or
depository rule or usage. The Company shall approve the form of the Notes and
any notation, legend or endorsement on them and shall furnish the same to the
Trustee, which shall be in form and substance satisfactory to the Trustee. Each
Note shall be dated the date of its authentication.
<PAGE> 32
-23-
The terms and provisions contained in the Notes, annexed hereto
as Exhibits A and B, shall constitute, and are hereby expressly made, a part of
this Indenture and, to the extent applicable, the Company and the Trustee, by
their execution and delivery of this indenture, expressly agree to such terms
and provisions and to be bound thereby.
Notes offered and sold in reliance on Rule 144A shall be issued
initially in the form of one or more permanent global Notes in registered form,
substantially in the form set forth in Exhibit A (the "Global Note"), deposited
with Bankers Trust Company, as custodian for the Depository, duly executed by
the Company and authenticated by the Trustee as hereinafter provided and shall
bear the legend set forth in Section 2.15. The aggregate principal amount of
the Global Note may from time to time be increased or decreased by adjustments
made on the records of the Trustee, as custodian for the Depository, as
hereinafter provided.
Notes offered and sold in offshore transactions in reliance on
Regulation S shall be issued in the form of permanent certificated Notes in
registered form in substantially the form set forth in Exhibit A (the "Offshore
Physical Notes"). Notes offered and sold in reliance on any other exemption
from registration under the Securities Act other than as described in the
preceding paragraph shall be issued, and Notes offered and sold in reliance on
Rule 144A may be issued, in the form of permanent certificated Notes in
registered form, in substantially the form set forth in Exhibit A (the "U.S.
Physical Notes"). The Offshore Physical Notes and the U.S. Physical Notes are
sometimes collectively herein referred to as the "Physical Notes."
Section 2.02. Execution and Authentication; Aggregate Principal
Amount.
Two Officers, or an Officer and an Assistant Secretary, shall
sign, or one Officer shall sign and one Officer or an Assistant Secretary (each
of whom shall, in each case, have been duly authorized by all requisite
corporate actions) shall attest to, the Notes for the Company by manual or
facsimile signature.
If an Officer or Assistant Secretary whose signature is on a
Note was an Officer or Assistant Secretary at the time of such execution but no
longer holds that office or position at the time the Trustee authenticates the
Note, the Note shall nevertheless be valid.
A Note shall not be valid until an authorized signatory of the
Trustee manually signs the certificate of authentication on the Note. The
signature shall be conclusive evidence that the Note has been authenticated
under this Indenture.
<PAGE> 33
-24-
The Trustee shall authenticate (i) Initial Notes for original
issue in the aggregate principal amount not to exceed $125,000,000 and from
time to time additional Initial Notes in an amount not to exceed $25,000,000,
and (ii) Exchange Notes from time to time for issue in the aggregate amount not
to exceed the amount of Initial Notes issued hereunder for issuance in exchange
for a like principal amount of Initial Notes pursuant to one or more exchange
offer registration statements under the Securities Act or pursuant to Private
Exchanges (as defined in the Registration Rights Agreement), in each case upon
a written order of the Company in the form of an Officers' Certificate.
Exchange Notes may have such distinctive series designation as, and such
changes in the form thereof, as are specified in the written order referred to
in the preceding sentence. The Officers' Certificate shall specify the amount
of Notes to be authenticated and the date on which the Notes are to be
authenticated, whether the Notes are to be Initial Notes or Exchange Notes,
whether the Notes are to be issued as Physical Notes or a Global Note and
whether or not the Notes shall bear the Private Placement Legend, or such other
information as the Trustee may reasonably request. The aggregate principal
amount of Notes outstanding at any time may not exceed $125,000,000, except as
provided in this paragraph and in Section 2.07.
The Trustee may appoint an authenticating agent (the
"Authenticating Agent") reasonably acceptable to the Company to authenticate
Notes. Unless otherwise provided in the appointment, an Authenticating Agent
may authenticate Notes whenever the Trustee may do so. Each reference in this
Indenture to authentication by the Trustee includes authentication by such
Authenticating Agent. An Authenticating Agent has the same rights as an Agent
to deal with the Company or with any Affiliate of the Company. The Trustee
initially appoints, and the Company approves the appointment of, Bankers Trust
Company, as Authenticating Agent.
The Notes shall be issuable in fully registered form only,
without coupons, in denominations of $1,000 and any integral multiple thereof.
Section 2.03. Registrar and Paying Agent.
The Company shall maintain an office or agency (which shall be
located in the Borough of Manhattan in the City of New York, State of New York)
where (a) Notes may be presented or surrendered for registration of transfer or
for exchange ("Registrar"), (b) Notes may be presented or surrendered for
payment ("Paying Agent") and (c) notices and demands to or upon the Company in
respect of the Notes and this Indenture may be served. The Registrar shall
keep a register of the Notes and of their transfer and exchange. The Company,
upon prior written notice to the Trustee, may have one or more additional
paying agents reasonably acceptable to the Trustee. The term "Paying Agent"
includes any additional Paying Agent. The Company may act as its own Paying
Agent, except that for the
<PAGE> 34
-25-
purposes of payments on the Notes pursuant to Sections 3.07(b), 4.12 and 4.16
neither the Company nor any Affiliate of the Company may act as Paying Agent.
The Company shall enter into an appropriate agency agreement
with any Agent not a party to this Indenture, which agreement shall incorporate
the provisions of the TIA and implement the provisions of this Indenture that
relate to such Agent. The Company shall notify the Trustee, in advance, of the
name and address of any such Agent. If the Company fails to maintain a
Registrar or Paying Agent, or fails to give the foregoing notice, the Trustee
shall act as such.
The Company initially appoints Bankers Trust Company as Registrar,
Paying Agent, Authenticating Agent and agent for service of demands and notices
in connection with the Notes, until such time as Bankers Trust Company has
resigned or a successor has been appointed. Any of the Registrar, the Paying
Agent, Authenticating Agent or any other agent may resign upon 30 days' written
notice to the Company.
Section 2.04. Paying Agent To Hold Assets in Trust.
The Company shall require each Paying Agent other than the
Trustee to agree in writing that each Paying Agent shall hold in trust for the
benefit of the Holders or the Trustee all assets held by the Paying Agent for
the payment of principal of, or interest on, the Notes (whether such assets
have been distributed to it by the Company or any other obligor on the Notes),
and the Company and the Paying Agent shall notify the Trustee of any Default by
the Company (or any other obligor on the Notes) in making any such payment.
The Company at any time may require a Paying Agent to distribute all assets
held by it to the Trustee and account for any assets disbursed and the Trustee
may at any time during the continuance of any Payment Default, upon written
request to a Paying Agent, require such Paying Agent to distribute all assets
held by it to the Trustee and to account for any assets distributed. Upon
distribution to the Trustee of all assets that shall have been delivered by the
Company to the Paying Agent, the Paying Agent shall have no further liability
for such assets.
Section 2.05. Noteholder Lists.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
the Holders. The Company shall furnish or cause the Registrar to furnish to the
Trustee promptly after each Record Date and as of such Record Date at such other
times as the Trustee may reasonably request in writing a list as of such date
and in such form as the Trustee may reasonably require of the
<PAGE> 35
-26-
names and addresses of the Holders, which list may be conclusively relied upon
by the Trustee.
Section 2.06. Transfer and Exchange.
Subject to Section 2.17 hereof, when Notes are presented to
the Registrar with a request to register the transfer of such Notes or to
exchange such Notes for an equal principal amount of Notes of other authorized
denominations, the Registrar shall register the transfer or make the exchange
as requested if its requirements for such transaction are met; provided,
however, that the Notes presented or surrendered for registration of transfer
or exchange shall be duly endorsed or accompanied by a written instrument of
transfer in form satisfactory to the Company and the Registrar, duly executed
by the Holder thereof or his attorney duly authorized in writing. To permit
registrations of transfer and exchanges, the Company shall execute and the
Trustee shall authenticate Notes at the Registrar's request. No service charge
shall be made for any registration of transfer or exchange, but the Company may
require payment of a sum sufficient to cover any transfer tax or similar
governmental charge payable in connection therewith (other than any such
transfer taxes or similar governmental charge payable upon exchanges or
transfers pursuant to Sections 2.10, 3.06, 3.07(b), 4.12, 4.16 or 10.05, in
which event the Company shall be responsible for the payment of such taxes).
The Registrar shall not be required to register the transfer
of or exchange of any Note (i) during a period beginning at the opening of
business 15 days before the mailing of a notice of redemption of Notes and
ending at the close of business on the day of such mailing and (ii) selected
for redemption in whole or in part pursuant to Article Three, except the
unredeemed portion of any Note being redeemed in part.
Any Holder of the Global Note shall, by acceptance of such
Global Note, agree that transfers of beneficial interests in such Global Notes
may be effected only through a book entry system maintained by the Holder of
such Global Note (or its agent), and that ownership of a beneficial interest in
the Note shall be required to be reflected in a book entry system.
Section 2.07. Replacement Notes.
If a mutilated Note is surrendered to the Trustee or an Agent
or if the Holder of a Note claims that the Note has been lost, destroyed or
wrongfully taken, the Company shall issue and the Trustee shall authenticate a
replacement Note if the Trustee's requirements are met. Such Holder must
provide an indemnity bond or other indemnity of reasonable tenor, sufficient in
the reasonable judgment of the Company, such Agent and the Trustee, to
<PAGE> 36
-27-
protect the Company, the Trustee or any Agent from any loss which any of them
may suffer if a Note is replaced. Every replacement Note shall constitute an
additional obligation of the Company.
Section 2.08. Outstanding Notes.
Notes outstanding at any time are all the Notes that have been
authenticated by the Trustee except those cancelled by it, those delivered to
it for cancellation and those described in this Section as not outstanding.
Subject to the provisions of Section 2.09, a Note does not cease to be
outstanding because the Company or any of its Affiliates holds the Note.
If a Note is replaced pursuant to Section 2.07 (other than a
mutilated Note surrendered for replacement), it ceases to be outstanding unless
the Trustee receives proof satisfactory to it that the replaced Note is held by
a bona fide purchaser. A mutilated Note ceases to be outstanding upon
surrender of such Note and replacement thereof pursuant to Section 2.07.
If on a Redemption Date or the Maturity Date the Paying Agent
holds U.S. Legal Tender or U.S. Government Obligations sufficient to pay all
of the principal and interest due on the Notes payable on that date and is not
prohibited from paying such money to the Holders thereof pursuant to the terms
of this Indenture, then on and after that date such Notes cease to be
outstanding and interest on them ceases to accrue.
Section 2.09. Treasury Notes.
In determining whether the Holders of the required principal
amount of Notes have concurred in any direction, waiver, consent or notice,
Notes owned by the Company or an Affiliate shall be considered as though they
are not outstanding, except that for the purposes of determining whether the
Trustee shall be protected in relying on any such direction, waiver or consent,
only Notes as to which a Responsible Officer of the Trustee has received
written notice of such ownership shall be so considered. The Company shall
notify the Trustee, in writing, when it or any of its Affiliates repurchases or
otherwise acquires Notes, of the aggregate principal amount of such Notes so
repurchased or otherwise acquired.
Section 2.10. Temporary Notes.
Until definitive Notes are ready for delivery, the Company may
prepare and the Trustee shall authenticate temporary Notes upon receipt of a
written order of the
<PAGE> 37
-28-
Company in the form of an Officers' Certificate. The Officers' Certificate
shall specify the amount of temporary Notes to be authenticated, the date on
which the temporary Notes are to be authenticated, whether such Notes are
Initial Notes or Exchange Notes and whether such Notes shall bear the Private
Placement Legend. Temporary Notes shall be substantially in the form of
definitive Notes but may have variations that the Company considers appropriate
for temporary Notes and so indicates in the Officers' Certificate. Without
unreasonable delay, the Company shall prepare and the Trustee shall
authenticate upon receipt of a written order of the Company pursuant to Section
2.02 definitive Notes in exchange for temporary Notes.
Section 2.11. Cancellation.
The Company at any time may deliver Notes to the Trustee for
cancellation. The Registrar and the Paying Agent shall forward to the Trustee
any Notes surrendered to them for transfer, exchange or payment. The Trustee,
or at the direction of the Trustee, the Registrar or the Paying Agent, and no
one else, shall cancel and, at the written direction of the Company, shall
dispose of all Notes surrendered for transfer, exchange, payment or
cancellation. Subject to Section 2.07, the Company may not issue new Notes to
replace Notes that it has paid or delivered to the Trustee for cancellation.
If the Company shall acquire any of the Notes, such acquisition shall not
operate as a redemption or satisfaction of the Indebtedness represented by such
Notes unless and until the same are surrendered to the Trustee for cancellation
pursuant to this Section 2.11.
Section 2.12. Defaulted Interest.
If the Company defaults in a payment of interest on the Notes,
it shall pay the defaulted interest, plus (to the extent lawful) any interest
payable on the defaulted interest to the Persons who are Holders on a
subsequent special record date, which special record date shall be the
fifteenth day next preceding the date fixed by the Company for the payment of
defaulted interest or the next succeeding Business Day if such date is not a
Business Day. The Company shall notify the Trustee and Paying Agent in writing
of the amount of defaulted interest proposed to be paid on each Note and the
date of the proposed payment (a "Default Interest Payment Date"), and at the
same time the Company shall deposit with the Trustee or Paying Agent an amount
of money equal to the aggregate amount proposed to be paid in respect of such
defaulted interest or shall make arrangements satisfactory to the Trustee or
Paying Agent for such deposit prior to the date of the proposed payment, such
money when deposited to be held in trust for the benefit of the Persons
entitled to such defaulted interest as in this Section provided; provided that
in no event shall the Company deposit monies proposed to be paid in respect of
defaulted interest later than 10:00 a.m. New York time on the proposed Default
Interest Payment Date. At least 15 days before the
<PAGE> 38
-29-
subsequent special record date, the Company shall mail (or cause to be mailed)
to each Holder, as of a recent date selected by the Company, with a copy to the
Trustee and Paying Agent, a notice that states the subsequent special record
date, the payment date and the amount of defaulted interest, and interest
payable on such defaulted interest, if any, to be paid. Notwithstanding the
foregoing, any interest which is paid prior to the expiration of the 30-day
period set forth in Section 6.01(a) shall be paid to Holders as of the regular
record date for the Interest Payment Date for which interest has not been paid.
Notwithstanding the foregoing, the Company may make payment of any defaulted
interest in any other lawful manner not inconsistent with the requirements of
any securities exchange on which the Notes may be listed, and upon such notice
as may be required by such exchange.
Section 2.13. CUSIP Number.
The Company in issuing the Notes may use a "CUSIP" number, and, if
so, the Trustee shall use the CUSIP number in notices of redemption or exchange
as a convenience to Holders; provided, however, that no representation is hereby
deemed to be made by the Trustee as to the correctness or accuracy of the CUSIP
number printed in the notice or on the Notes, and that reliance may be placed
only on the other identification numbers printed on the Notes. The Company
shall promptly notify the Trustee of any change in the CUSIP number.
Section 2.14. Deposit of Monies.
Prior to 10:00 a.m. New York City time on each Interest Payment
Date, Maturity Date, Redemption Date, Change of Control Payment Date and Net
Proceeds Offer Payment Date, the Company shall have deposited with the Paying
Agent in immediately available funds money sufficient to make cash payments, if
any, due on such Interest Payment Date, Maturity Date, Redemption Date, Change
of Control Payment Date and Net Proceeds Offer Payment Date, as the case may be,
in a timely manner which permits the Paying Agent to remit payment to the
Holders on such Interest Payment Date, Maturity Date, Redemption Date, Change of
Control Payment Date and Net Proceeds Offer Payment Date, as the case may be.
Section 2.15. Restrictive Legends.
Each Global Note and Physical Note that constitutes a Restricted
Security shall bear the following legend (the "Private Placement Legends") on
the face thereof until December 20, 1999, unless otherwise agreed by the Company
and the Holder thereof and unless specified in an Officers' Certificate
delivered to the Trustee and Registrar:
<PAGE> 39
-30-
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY,
MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR
THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH BELOW.
BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS
A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER
THE SECURITIES ACT) OR (B) IT IS AN INSTITUTIONAL "ACCREDITED
INVESTOR" (AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7) UNDER THE
SECURITIES ACT) (AN "ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S.
PERSON AND IS ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTION IN
COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (2) AGREES THAT
IT WILL NOT RESELL OR OTHERWISE TRANSFER THIS SECURITY, EXCEPT (A)
TO THE ISSUER, OR ANY SUBSIDIARY THEREOF, (B) INSIDE THE UNITED
STATES TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE
144A UNDER THE SECURITIES ACT, (C) INSIDE THE UNITED STATES TO AN
INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER,
FURNISHES (OR HAS FURNISHED ON ITS BEHALF BY A U.S. BROKER-DEALER)
TO THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS
AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF THIS
SECURITY (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE TRUSTEE
OR REGISTRAR), (D) OUTSIDE THE UNITED STATES IN AN OFFSHORE
TRANSACTION IN COMPLIANCE WITH RULE 904 PROMULGATED UNDER THE
SECURITIES ACT, (E) PURSUANT TO THE EXEMPTION FROM REGISTRATION
PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE) OR (F)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT AND (3) AGREES THAT IT WILL GIVE TO EACH PERSON TO
WHOM THIS SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE
<PAGE> 40
-31-
EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THIS
SECURITY WITHIN THREE YEARS AFTER THE ORIGINAL ISSUANCE OF THIS
SECURITY, IF THE PROPOSED TRANSFEREE IS AN INSTITUTIONAL ACCREDITED
INVESTOR, THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE
TRUSTEE AND THE ISSUER SUCH CERTIFICATIONS, WRITTEN LEGAL OPINIONS
OR OTHER INFORMATION AS EITHER OF THEM MAY REASONABLY REQUIRE TO
CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION
FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT. AS USED HEREIN, THE TERMS
"OFFSHORE TRANSACTIONS," "UNITED STATES" AND "U.S. PERSON" HAVE THE
MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT.
Each Global Note shall also bear the following legend on the
face thereof:
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES
IN DEFINITIVE FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS
A WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY, OR BY ANY
SUCH NOMINEE OF THE DEPOSITORY, OR BY THE DEPOSITORY OR NOMINEE OF
SUCH SUCCESSOR DEPOSITORY OR ANY SUCH NOMINEE TO A SUCCESSOR
DEPOSITORY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITORY. UNLESS THIS
CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE
ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR
PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF
CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO.
OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF
FOR
<PAGE> 41
-32-
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN
WHOLE, BUT NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR
THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF
THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN
ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN SECTION 2.17 OF THE
INDENTURE.
Section 2.16. Book-Entry Provisions for Global Security.
(a) The Global Note initially shall (i) be registered in
the name of the Depository or the nominee of such Depository, (ii) be delivered
to the Trustee as custodian for such Depository and (iii) bear legends as set
forth in Section 2.15.
Members of, or participants in, the Depository ("Agent Members")
shall have no rights under this Indenture with respect to any Global Note held
on their behalf by the Depository, or the Trustee as its custodian, or under the
Global Note, and the Depository may be treated by the Company, the Trustee and
any Agent of the Company or the Trustee as the absolute owner of the Global Note
for all purposes whatsoever. Notwithstanding the foregoing, nothing herein
shall prevent the Company, the Trustee or any Agent of the Company or the
Trustee from giving effect to any written certification, proxy or other
authorization furnished by the Depository or impair, as between the Depository
and its Agent Members, the operation of customary practices governing the
exercise of the rights of a holder of any Note.
(b) Transfers of the Global Note shall be limited to
transfers in whole, but not in part, to the Depository, its successors or their
respective nominees. Interests of beneficial owners in the Global Note may be
transferred or exchanged for Physical Notes in accordance with the rules and
procedures of the Depository and the provisions of Section 2.17. In addition,
Physical Notes shall be transferred to all beneficial owners in exchange for
their beneficial interests in the Global Note if (i) the Depository notifies
the Company that it is unwilling or unable to continue as Depository for the
Global Note and a successor depositary is not appointed by the Company within
90 days of such notice or (ii) an Event of Default has occurred and is
continuing and the Registrar has received a written request from the Depository
to issue Physical Notes.
<PAGE> 42
-33-
(c) In connection with any transfer or exchange of a portion
of the beneficial interest in the Global Note to beneficial owners pursuant to
paragraph (b), the Registrar shall (if one or more Physical Notes are to be
issued) reflect on its books and records the date and a decrease in the
principal amount of the Global Note in an amount equal to the principal amount
of the beneficial interest in the Global Note to be transferred, and the Company
shall execute, and the Trustee shall authenticate and deliver, one or more
Physical Notes of like tenor and amount.
(d) In connection with the transfer of the entire Global
Note to beneficial owners pursuant to paragraph (b), the Global Note shall be
deemed to be surrendered to the Trustee for cancellation, and the Company shall
execute, and the Trustee shall authenticate and deliver, to each beneficial
owner identified by the Depository in exchange for its beneficial interest in
the Global Note, an equal aggregate principal amount of Physical Notes of
authorized denominations.
(e) Any Physical Note constituting a Restricted Security
delivered in exchange for an interest in the Global Note pursuant to paragraph
(b) or (c) shall, except as otherwise provided by paragraphs (a)(i)(x) and (c)
of Section 2.17, bear the legend regarding transfer restrictions applicable to
the Physical Notes set forth in Section 2.15.
(f) The Holder of the Global Note may grant proxies and
otherwise authorize any person, including Agent members and persons that may
hold interests through Agent Members, to take any action which a Holder is
entitled to take under this Indenture or the Notes.
Section 2.17. Special Transfer Provisions.
(a) Transfers to Non-QIB Institutional Accredited Investors
and Non-U.S. Persons. The following provisions shall apply with respect to the
registration of any proposed transfer of a Note constituting a Restricted
Security to any Institutional Accredited Investor which is not a QIB or to any
Non-U.S. Person:
(i) the Registrar shall register the transfer of any
Note constituting a Restricted Security, whether or not such Note
bears the Private Placement Legend, if (x) the Trustee and Registrar
have received both an Opinion of Counsel and an Officers' Certificate
directing transfer without a Private Placement Legend, (y) the
requested transfer is after December 20, 1999 or (z) (1) in the case
of a transfer to an Institutional Accredited Investor which is not a
QIB (excluding Non-U.S. Persons), the proposed transferee has
delivered to the Registrar a certificate substantially in the form of
Exhibit C hereto or (2) in the case of a transfer to a Non-U.S.
Person, the
<PAGE> 43
-34-
proposed transferor has delivered to the Registrar a certificate
substantially in the form of Exhibit D hereto; and
(ii) if the proposed transferor is an Agent Member
holding a beneficial interest in the Global Note, upon receipt by the
Registrar of (x) the certificates required by paragraph (i) above and
(y) written instructions given in accordance with the Depository's and
the Registrar's procedures,
whereupon (a) the Registrar shall reflect on its books and records the date and
(if the transfer does not involve a transfer of outstanding Physical Notes) a
decrease in the principal amount of the Global Note in an amount equal to the
principal amount of the beneficial interest in the Global Note to be
transferred, and (b) the Company shall execute and the Trustee shall
authenticate and deliver one or more Physical Notes of like tenor and amount.
(b) Transfers to QIBs. The following provisions shall apply
with respect to the registration of any proposed transfer of a Note
constituting a Restricted Security to a QIB (excluding transfers to Non-U.S.
Persons):
(i) the Registrar shall register the transfer if such
transfer is being made by a proposed transferor who has checked the
box provided for on the form of Note stating, or has otherwise advised
the Company and the Registrar in writing, that the sale has been made
in compliance with the provisions of Rule 144A to a transferee who has
signed the certification provided for on the form of Note stating, or
has otherwise advised the Company and the Registrar in writing, that
it is purchasing the Note for its own account or an account with
respect to which it exercises sole investment discretion and that it
and any such account is a QIB within the meaning of Rule 144A, and is
aware that the sale to it is being made in reliance on Rule 144A and
acknowledges that it has received such information regarding the
Company as it has requested pursuant to Rule 144A or has determined
not to request such information and that it is aware that the
transferor is relying upon its foregoing representations in order to
claim the exemption from registration provided by Rule 144A; and
(ii) if the proposed transferee is an Agent Member, and
the Notes to be transferred consist of Physical Notes which after
transfer are to be evidenced by an interest in the Global Note, upon
receipt by the Registrar of written instructions given in accordance
with the Depository's and the Registrar's procedures, the Registrar
shall reflect on its books and records the date and an increase in the
principal amount of the Global Note in an amount equal to the
principal amount of the Physical Notes to be transferred, and the
Trustee shall cancel the Physical Notes so transferred.
<PAGE> 44
-35-
(c) Private Placement Legend. Upon the transfer, exchange or
replacement of Notes not bearing the Private Placement Legend, the Registrar
shall deliver Notes that do not bear the Private Placement Legend. Upon the
transfer, exchange or replacement of Notes bearing the Private Placement
Legend, the Registrar shall deliver only Notes that bear the Private Placement
Legend unless (i) the requested transfer is after December 20, 1999, or (ii)
there is delivered to the Registrar and the Trustee an Opinion of Counsel
reasonably satisfactory to the Company and the Trustee to the effect that
neither such legend nor the related restrictions on transfer are required in
order to maintain compliance with the provisions of the Securities Act.
(d) General. By its acceptance of any Note bearing the
Private Placement Legend, each Holder of such a Note acknowledges the
restrictions on transfer of such Note set forth in this Indenture and in the
Private Placement Legend and agrees that it will transfer such Note only as
provided in this Indenture.
The Registrar shall retain copies of all letters, notices and
other written communications received pursuant to Section 2.16 or this Section
2.17. The Company shall have the right to inspect and make copies of all such
letters, notices or other written communications at any reasonable time during
the Registrar's normal business hours upon the giving of reasonable written
notice to the Registrar.
The Trustee shall be under no duty to monitor compliance with
any federal, state or other securities laws.
ARTICLE 3
REDEMPTION
Section 3.01. Notices to Trustee.
If the Company elects to redeem Notes pursuant to the optional
redemption provisions of Section 3.07, it shall furnish to the Trustee,
Registrar and Paying Agent, at least 45 days (unless a shorter period is
acceptable to the Trustee) but not more than 60 days before a redemption date,
an Officers' Certificate setting forth (i) the redemption date, (ii) the
principal amount at maturity of Notes to be redeemed and (iii) the redemption
price.
Section 3.02. Selection of Notes to Be Redeemed.
If less than all of the Notes are to be redeemed, the
Registrar or Trustee shall select the Notes to be redeemed among the Holders of
the Notes on a pro rata basis, by lot or in accordance with any other method
the Trustee considers fair and appropriate, provided
<PAGE> 45
-36-
that no Notes of $1,000 or less shall be redeemed in part. In the event of
partial redemption by lot, the particular Notes to be redeemed shall be
selected, unless otherwise provided herein, not less than 30 nor more than 60
days prior to the redemption date by the Registrar or Trustee from the
outstanding Notes not previously called for redemption.
The Registrar shall promptly notify the Company in writing of
the Notes selected for redemption and, in the case of any Note selected for
partial redemption, the principal amount at maturity thereof to be redeemed.
Notes and portions of them selected shall be in amounts of $1,000 or whole
multiples of $1,000. Except as provided in the preceding sentence, provisions
of this Indenture that apply to Notes called for redemption also apply to
portions of Notes called for redemption.
Section 3.03. Notice of Redemption.
Subject to the provisions of Section 4.12, at least 30 days
but not more than 60 days before a redemption date, the Company shall mail or
cause to be mailed, by first class mail, a notice of redemption to each Holder
whose Notes are to be redeemed at its registered address.
The notice shall identify the Notes to be redeemed and shall
state:
(a) the redemption date;
(b) the redemption price;
(c) if any Note is being redeemed in part, the portion of the
principal amount at maturity of such Note to be redeemed and that,
after the redemption date upon surrender of such Note, a new Note or
Notes in principal amount at maturity equal to the principal amount at
maturity of the unredeemed portion shall be issued;
(d) the name and address of the Paying Agent;
(e) that Notes called for redemption must be surrendered to
the Paying Agent to collect the redemption price;
(f) that, unless the Company defaults in making such
redemption payment, interest on Notes called for redemption ceases to
accrue on and after the redemption date;
<PAGE> 46
-37-
(g) the paragraph of the Notes and/or Section of this
Indenture pursuant to which the Notes called for redemption are being
redeemed; and
(h) the CUSIP number, and that no representation is made as
to the correctness or accuracy of the CUSIP number, if any, listed in
such notice or printed on the Notes.
At the Company's request, the Registrar shall give the notice
of redemption in the Company's name and at the Company's expense; provided,
however, that the Company shall have delivered to the Trustee and Registrar, at
least 45 days prior to the redemption date, an Officers' Certificate requesting
that the Trustee give such notice and setting forth the information to be
stated in such notice as provided in the preceding paragraph.
Section 3.04. Effect of Notice of Redemption.
Once notice of redemption is mailed in accordance with Section
3.03, Notes called for redemption become due and payable on the redemption
date at the redemption price.
Section 3.05. Deposit of Redemption Price.
Prior to 10:00 a.m. New York time on any redemption date, the
Company shall deposit with the Trustee or with the Paying Agent money
sufficient to pay the redemption price of and accrued interest on all Notes to
be redeemed on that date. The Trustee or the Paying Agent shall promptly
return to the Company upon its written request any money deposited with the
Trustee or the Paying Agent by the Company in excess of the amounts necessary
to pay the redemption price of, and accrued interest on, all Notes to be
redeemed.
On and after the redemption date, interest shall cease to
accrue on the Notes or the portions of Notes called for redemption. If a Note
is redeemed on or after an interest record date but on or prior to the related
interest payment date, then any accrued and unpaid interest shall be paid to
the Person in whose name such Note was registered at the close of business on
such record date. If any Note called for redemption shall not be so paid upon
surrender for redemption because of the failure of the Company to comply with
the preceding paragraph, interest shall be paid on the unpaid principal, from
the redemption date until such principal is paid, and to the extent lawful on
any interest not paid on such unpaid principal, in each case at the rate
provided in the Notes and in Section 4.01.
<PAGE> 47
-38-
Section 3.06. Notes Redeemed in Part.
Upon surrender of a Note that is redeemed in part, the Company
shall issue and the Trustee shall authenticate for the Holder of the Notes at
the expense of the Company a new Note equal in principal amount to the
unredeemed portion of the Note surrendered.
Section 3.07. Optional Redemption.
1. Optional Redemption. The Notes will not be redeemable at
the Company's option prior to October 15, 2002. Thereafter, the Notes will be
subject to redemption at the option of the Company, in whole or in part, upon
not less than 30 nor more than 60 days notice, at the redemption prices
(expressed as percentages of principal amount) set forth below plus accrued and
unpaid interest thereon to the applicable redemption date, if redeemed during
the twelve- month period beginning on October 15 of the years indicated below:
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
2002 . . . . . . . . . . . . . . . . . . . . . 102.333%
2003 and thereafter . . . . . . . . . . . . . 100.00%
</TABLE>
2. Optional Redemption Upon Sale of Equity to Strategic
Equity Investor. Notwithstanding the foregoing, in the event of the sale by
the Company prior to October 15, 1999 of at least $25.0 million of its Capital
Stock (other than Disqualified Stock) to a Strategic Equity Investor in a
single transaction, the Company may, at its option, use the net cash proceeds
of such sale of Capital Stock to redeem up to 35% of the Notes at a redemption
price equal to 114% of the principal amount thereof plus accrued and unpaid
interest thereon, if any, to the date of redemption; provided that at least 65%
of the initial principal amount of the Notes remains outstanding immediately
after such redemption. In order to effect the foregoing redemption with the
proceeds of any such sale of Capital Stock (other than Disqualified Stock), the
Company shall make such redemption not more than 120 days after the
consummation of any such sale of Capital Stock.
<PAGE> 48
-39-
Section 3.08. Mandatory Redemption.
Except as set forth under Sections 4.12 and 4.16 of this
Indenture, the Company shall not be required to make mandatory redemption
payments with respect to the Notes. There are no sinking fund payments with
respect to the Notes.
ARTICLE 4
COVENANTS
Section 4.01. Payment of Notes.
The Company shall pay or cause to be paid the principal of,
premium, if any, and interest on the Notes on the dates and in the manner
provided in the Notes. Principal, premium, if any, and interest shall be
considered paid on the date due if the Paying Agent, if other than the Company,
holds as of 10:00 a.m. Eastern Time on the due date money deposited by the
Company in immediately available funds and designated for and sufficient to pay
all principal, premium, if any, and interest then due.
The Company shall pay interest (including post-petition
interest in any proceeding under any Bankruptcy Law) on overdue principal and
on overdue installments of interest (without regard to any applicable grace
period) from time to time on demand at the rate borne by the Notes plus 2% per
annum, to the extent lawful.
The term "Bankruptcy Law" means Title 11, U.S. Code or any
similar Federal or state law for the relief of debtors.
Section 4.02. Maintenance of Office or Agency.
The Company shall maintain an office or agency (which may be
an office of the Trustee or Registrar or an affiliate of the Trustee or
Registrar) where Notes may be surrendered for registration of transfer,
exchange or conversion and where notices and demands to or upon the Company in
respect of the Notes and this Indenture may be served. The Company shall give
prompt written notice to the Trustee of the location, and any change in the
location, of such office or agency. If at any time the Company shall fail to
maintain any such required office or agency or shall fail to furnish the
Trustee with the address thereof, such presentations, surrenders, notices and
demands may be made or served at the Corporate Trust Office of the Trustee.
The Company may also from time to time designate one or more
other offices or agencies where the Notes may be presented or surrendered for
any or all such purposes and may from time to time rescind such designations;
provided, however, that no such designation or rescission shall in any manner
relieve the Company of its obligation to
<PAGE> 49
-40-
maintain an office or agency for such purposes. The Company shall give prompt
written notice to the Trustee of any such designation or rescission and of any
change in the location of any such other office or agency.
The Company hereby designates the Corporate Trust Office of
the Trustee as one such office or agency of the Company in accordance with
Section 2.03.
Section 4.03. Reports.
The Company (at its own expense) shall file with the Trustee
within 15 days after it files them with the Commission copies of the quarterly
and annual reports and of the information, documents and other reports (or
copies of such portions of any of the foregoing as the Commission may by rules
and regulations prescribe) to be filed pursuant to Section 13 or 15(d) of the
Exchange Act (without regard to whether the Company is subject to the
requirements of such Section 13 or 15(d) of the Exchange Act) ("SEC Reports").
Upon qualification of this Indenture under the TIA, the Company shall also
comply with the provisions of Section 314(a). In the event that the Company is
not required or shall cease to be required to file SEC Reports pursuant to the
Exchange Act, the Company shall nevertheless continue to file such reports with
the Commission and the Trustee. If the Trustee (at the Company's request and
expense) is to mail the foregoing information to the Holders, the Company shall
supply such information to the Trustee at least five days prior thereto. The
Company shall provide to any Holder any information concerning the Company
reasonably requested by such Holder (including financial statements) necessary
in order to permit such Holder to sell or transfer Notes in compliance with
Rule 144A promulgated under the Securities Act.
Section 4.04. Compliance Certificate.
(a) The Company shall deliver to the Trustee, within 120
days after the end of each fiscal year, an Officers' Certificate stating that a
review of the activities of the Company and its Subsidiaries during the
preceding fiscal year has been made under the supervision of the signing
Officers with a view to determining whether the Company has kept, observed,
performed and fulfilled, and has caused each of its Subsidiaries to keep,
observe, perform and fulfill, its obligations under this Indenture and the
Escrow and Disbursement Agreement, and further stating, as to each such Officer
signing such certificate, that to the best of his or her knowledge the Company
has kept, observed, performed and fulfilled, and has caused each of its
Subsidiaries to keep, observe, perform and fulfill, each and every covenant
contained in this Indenture and the Escrow and
<PAGE> 50
-41-
Disbursement Agreement and no such Person is in default in the performance or
observance of any of the terms, provisions and conditions of this Indenture or
the Escrow and Disbursement Agreement to be performed or observed by it,
without regard to any period of grace or requirement of notice provided under
this Indenture, including, without limitation, a default in the performance or
breach of Sections 4.07 through 4.17 (or, if a Default or Event of Default
shall have occurred, describing all such Defaults or Events of Default of which
he or she may have knowledge and what action each is taking or proposes to take
with respect thereto) and that to the best of his or her knowledge no event has
occurred and remains in existence by reason of which payments on account of the
principal of or interest, if any, on the Notes is prohibited or if such event
has occurred, a description of the event and what action each is taking or
proposes to take with respect thereto. The Company's fiscal year ends on
December 31 of each year.
(b) So long as not contrary to the then current
recommendations of the American Institute of Certified Public Accountants, the
year-end financial statements delivered pursuant to Section 4.03 above shall be
accompanied by a written statement of the Company's independent public
accountants (who shall be a firm of established national reputation) that in
making the examination necessary for certification of such financial
statements, nothing has come to their attention which would lead them to
believe that the Company has violated any provisions of Article Four or Article
Five of this Indenture or, if any such violation has occurred, specifying the
nature and period of existence thereof, it being understood that such
accountants shall not be liable directly or indirectly to any Person for any
failure to obtain knowledge of any such violation.
(c) The Company shall, so long as any of the Notes are
outstanding, deliver to the Trustee, forthwith upon any Officer becoming aware
of (i) any Default or Event of Default, (ii) any default under the Escrow and
Disbursement Agreement or (iii) any default under any Indebtedness referred to
in Section 6.01(f), an Officers' Certificate specifying such Default, Event of
Default or default and what action the Company is taking or proposes to take
with respect thereto.
Section 4.05. Taxes.
The Company shall pay, and shall cause each of its
Subsidiaries to pay, prior to delinquency, all material taxes, assessments, and
governmental levies except as contested in good faith and by appropriate
proceedings or where the failure to effect such payment is not adverse in any
material respect to the Holders of the Notes.
Section 4.06. Stay, Extension and Usury Laws.
The Company covenants (to the extent that it may lawfully do
so) that it shall not at any time insist upon, plead or in any manner
whatsoever claim or take the benefit or
<PAGE> 51
-42-
advantage of, any stay, extension or usury law wherever enacted, now or at any
time hereafter in force, that may affect the covenants or the performance of
this Indenture; and the Company (to the extent that it may lawfully do so)
hereby expressly waives all benefit or advantage of any such law, and covenants
that it shall not, by resort to any such law, hinder, delay or impede the
execution of any power herein granted to the Trustee, but shall suffer and
permit the execution of every such power as though no such law has been
enacted.
Section 4.07. Limitation on Restricted Payments.
The Company and its Subsidiaries may not, directly or
indirectly (i) declare or pay any dividend or make any distribution on account
of any Equity Interests of the Company or any of its Subsidiaries other than
dividends or distributions payable (A) in Equity Interests of the Company that
are not Disqualified Stock or (B) to the Company or any Wholly-Owned Subsidiary
of the Company; (ii) purchase, redeem or otherwise acquire or retire for value
any Equity Interests of the Company or any of its Subsidiaries (other than any
such Equity Interests owned by the Company or a Wholly-Owned Subsidiary); (iii)
purchase, redeem, defease or otherwise acquire or retire for value any
Indebtedness that is pari passu or subordinated in right of payment to the
Notes, except in accordance with the scheduled repayment provisions set forth
in the original documentation governing such Indebtedness; or (iv) in a single
transaction or a series of related transactions, until the date on which the
ratio of Annualized EBITDA to Consolidated Interest Expense equals or exceeds
1.75 to 1.00, make Investments subsequent to November 30, 1996 in a cumulative
amount for the Company and all of its Subsidiaries, in excess of (A) the sum of
(1) $15 million, and (2) 100% of the Net Proceeds received by the Company from
the issue or sale of Equity Interests of the Company subsequent to November
30, 1996 (other than Equity Interests sold to a Subsidiary of the Company or to
an employee stock ownership plan or similar trust and other than Disqualified
Stock) less (B) the cumulative amount of Net Proceeds received by the Company
from the issue or sale of Equity Interests of the Company that has been applied
to make Restricted Payments (all such payments and other actions set forth in
clauses (i) through (iv) above being collectively referred to as "Restricted
Payments"), unless, at the time of such Restricted Payment: (a) no Default or
Event of Default shall have occurred and be continuing or would occur as a
consequence thereof; (b) after giving effect to such Restricted Payment on a
pro forma basis as if such Restricted Payment had been made at the beginning of
the applicable fiscal quarter, the Company could incur $1.00 of additional
Indebtedness pursuant to the Annualized Cash Flow Ratio test in Section 4.08;
and (c) such Restricted Payment, together with the aggregate of all other
Restricted Payments made by the Company and its Subsidiaries after the Issue
Date, is less than the sum of: (x) 50% of the Consolidated Net Income (or if
Consolidated Net Income shall be a loss, minus 100% of such loss) of the
Company earned from the first day of the fiscal quarter during which the Issue
Date occurs to the end of the most recent fiscal quarter
<PAGE> 52
-43-
ending prior to the date of such Restricted Payment, plus (y) 100% of the
aggregate Net Proceeds received by the Company from the issue or sale of Equity
Interests of the Company (other than Equity Interests sold to a Subsidiary of
the Company or to an employee stock ownership plan or similar trust and other
than Disqualified Stock or the Net Proceeds from the sale of Equity Interests
applied to make Investments in accordance with this covenant) since the Issue
Date. Notwithstanding the foregoing, the Company and its Subsidiaries may not,
directly or indirectly, make any Investment in Wireless Cable Related Assets
other than Permitted Assets, except as permitted under clause (x) of the
following paragraph.
Notwithstanding the foregoing, the provisions set forth in the
immediately preceding paragraph do not prohibit (i) the payment of any dividend
within 60 days after the date of declaration thereof, if at such date of
declaration such payment would have complied with the provisions of this
Indenture; (ii) so long as no Default or Event of Default shall have occurred
and be continuing, the redemption, repurchase, retirement or other acquisition
of any Equity Interests of the Company in exchange for, or out of the net
proceeds of, the substantially concurrent sale for cash or Marketable
Securities (other than to a Subsidiary of the Company) of other Equity
Interests of the Company that are not Disqualified Stock; (iii) so long as no
Default or Event of Default shall have occurred and be continuing, the purchase
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 pursuant to any employment agreement, management
equity subscription agreement or stock option plan or similar agreement in
effect as of the Issue Date or entered into in the ordinary course of business
for consideration which, when added to all loans made pursuant to clause (iv)
below during the fiscal year and then outstanding, does not exceed $0.5 million
in the aggregate in any fiscal year or $2.5 million in the aggregate over the
life of the Notes; (iv) so long as no Default or Event of Default shall have
occurred and be continuing, the making of loans and advances to employees of
the Company or any Subsidiary thereof in the ordinary course of business which,
when added to the aggregate consideration paid pursuant to clause (iii) above
during the same fiscal year, does not exceed $0.5 million in any fiscal year or
$2.5 million in the aggregate over the life of the Notes; provided that upon
repayment of such loans or advances made after the Issue Date, such repaid
amounts shall no longer be included in the principal amount of loans and
advances made to employees; (v) so long as no Default or Event of Default shall
have occurred and be continuing, a Permitted Refinancing; (vi) so long as no
Default or Event of Default shall have occurred and be continuing, the
redemption, repurchase, retirement or other acquisition of Equity Interests of
a Subsidiary of the Company for (A) Equity Interests of the Company that are
not Disqualified Stock or (B) up to $1.0 million in the aggregate over the life
of the Notes of cash consideration; (vii) the payment of dividends on Preferred
Stock of Subsidiaries outstanding on the Issue Date; (viii) Investments in
Wireless Cable Related Assets made with the Net Cash Proceeds from an Asset
Sale made in compliance with the
<PAGE> 53
-44-
first paragraph of Section 4.12 (whether such Asset Sale shall have been
consummated prior to or after the Issue Date) or otherwise permitted by Section
4.12, provided that if such Investment had been acquired in a simultaneous swap
or exchange for the assets disposed of in such Asset Sale, such swap or
exchange would have complied with the provisions of the third paragraph under
Section 4.12; (ix) Investments that constitute part of an Asset Sale
transaction consummated in compliance with or otherwise permitted by the
provisions of the third paragraph under Section 4.12; and (x) Investments in
the Wireless Cable Business acquired in consideration for the issuance of
Equity Interests of the Company (other than Disqualified Stock) and cash paid
in lieu of the issuance of fractional shares and in satisfaction of any
applicable dissenter's or appraisal rights (provided that such Investments need
not be in Permitted Assets). The amounts referred to in clauses (i), (ii),
(iii), (iv) and (vi) shall be included as Restricted Payments in any
computation made pursuant to clause (c) above. Restricted Payments shall be
deemed not to include Permitted Payments and Permitted Investments.
Not later than the making of any Restricted Payment, the
Company shall deliver to the Trustee an Officers' Certificate stating that such
Restricted Payment is permitted and setting forth the basis upon which the
calculations required by Section 4.07 were computed.
Section 4.08. Limitation on Indebtedness
The Company will not, and will not permit any of its
Subsidiaries to, directly or indirectly, create, incur, assume, Guarantee,
acquire, become liable, contingently or otherwise, with respect to, or
otherwise become responsible for payment of (collectively, "incur") any
Indebtedness; provided that the Company (but not its Subsidiaries) may incur
Indebtedness if (i) no Default or Event of Default shall have occurred and be
continuing and (ii) the Annualized Cash Flow Ratio of the Company as of the
date of such incurrence or issuance shall not exceed (x) 7.0 to 1.0 if such
incurrence or issuance occurs on or prior to the second anniversary of the
Issue Date and (y) 5.0 to 1.0 if such incurrence or issuance occurs thereafter.
The foregoing limitation will not apply to: (i) Indebtedness
evidenced by the Notes and this Indenture; (ii) the incurrence by the Company
and its Subsidiaries of Existing Indebtedness; (iii) the incurrence by the
Company and its Subsidiaries of Bank Indebtedness in an aggregate principal
amount at any one time outstanding not to exceed $50.0 million (less the amount
of any then-outstanding Preferred Stock of Subsidiaries issued to refinance
Indebtedness to the extent such amount has not been applied to reduce the
amount of Indebtedness permitted under clause (vii) below), as such amount may
be permanently reduced as specified in Section 4.12; provided that no Default
or Event of Default shall have
<PAGE> 54
-45-
occurred and be continuing at the time of such incurrence; (iv) the Guarantee
by the Subsidiaries of Bank Indebtedness permitted to be incurred by the
Company pursuant to clause (iii) immediately above; (v) Indebtedness of the
Company issued to any Wholly-Owned Subsidiary; provided that (a) any such
Indebtedness is unsecured and is subordinated to the Notes and (b) that any
subsequent issuance or transfer of any Capital Stock which results in any
Wholly-Owned Subsidiary ceasing to be a Wholly-Owned Subsidiary or any transfer
of such Indebtedness to a Person not a Wholly-Owned Subsidiary will be deemed
an incurrence of such Indebtedness; (vi) Indebtedness of a Subsidiary issued to
and held by the Company or any Wholly-Owned Subsidiary of the Company; provided
that any subsequent issuance or transfer of any Capital Stock which results in
a Wholly-Owned Subsidiary ceasing to be a Wholly-Owned Subsidiary or any
transfer of such Indebtedness to a Person not a Wholly-Owned Subsidiary of the
Company will be deemed an incurrence of such Indebtedness; (vii) the incurrence
by the Company or its Subsidiaries of additional Indebtedness subsequent to
November 30, 1996 in an aggregate principal amount not to exceed $15.0 million
at any one time outstanding (less the amount of any then-outstanding Preferred
Stock of the Subsidiaries issued to refinance Indebtedness to the extent such
amount has not been applied to reduce the amount of Indebtedness permitted
under clause (iii) above), (viii) the incurrence (a "Permitted Refinancing") by
the Company and its Subsidiaries of Indebtedness issued in exchange for, or the
proceeds of which are used to extend, refinance, renew, replace or refund
Indebtedness incurred pursuant to the Annualized Cash Flow Ratio test above or
pursuant to clauses (ii), (iii), (iv), (v), and (vii) above ("Refinancing
Indebtedness"), provided that (a) the net proceeds of such Refinancing
Indebtedness shall not exceed the principal amount of and required premium, if
any, and accrued interest on the Indebtedness so extended, refinanced, renewed,
replaced, substituted or refunded (or if such Indebtedness was issued at an
original issue discount, the original issue price plus amortization of the
original issue discount at the time of the repayment of such Indebtedness) and
reasonable expenses incurred in connection therewith; (b) the Refinancing
Indebtedness shall have a final maturity later than, and a Weighted Average
Life to Maturity equal to or greater than, the final maturity and remaining
Weighted Average Life to Maturity of the Indebtedness being extended,
refinanced, renewed, replaced or refunded; and (c) if the Indebtedness being
extended, refinanced, renewed, replaced or refunded is subordinated in right of
payment to the Notes, the Refinancing Indebtedness shall be subordinated in
right of payment to the Notes on terms at least as favorable to the Holders of
Notes as those contained in the documentation governing the Indebtedness being
so extended, refinanced, renewed, replaced or refunded; (ix) the incurrence by
the Company or its Subsidiaries of obligations in respect of Interest Rate
Agreements relating to Indebtedness to the extent that the notional principal
amount of such obligation does not exceed the aggregate principal amount of the
Indebtedness to which such Interest Rate Agreement relates; or (x) the
incurrence by the Company or any of its Subsidiaries of Indebtedness owing to a
Federal governmental authority relating to the purchase of wireless cable
channels in an auction or
<PAGE> 55
-46-
other sale (or Indebtedness satisfying the requirements of (vii)(b) above
issued in exchange for, or the proceeds of which are used to extend, refinance,
renew, replace or refund, such Indebtedness) in an amount not to exceed in the
aggregate $30 million at any one time outstanding. The Company and its
Subsidiaries may incur Acquired Debt only in compliance with this covenant.
Section 4.09. Limitation on Liens.
Neither the Company nor any of its Subsidiaries may directly
or indirectly create, incur, assume or suffer to exist any Lien on any asset
now owned or hereafter acquired, or on any income or profits therefrom, or
assign or convey any right to receive income therefrom, except Permitted Liens.
If the Company or any of its Subsidiaries shall create, incur,
assume or suffer to exist any Lien, other than a Permitted Lien, on any assets
or other property to secure Indebtedness in violation of this covenant, the
Company or such Subsidiary, as the case maybe, shall make effective provision
for securing the Notes equally and ratably with such Indebtedness as to such
assets or other property for so long as such Indebtedness shall be so secured;
provided that the provision of such equal and ratable security in favor of the
Notes shall not cure any Default or Event of Default arising from such
violation of the provisions of this covenant.
Section 4.10. Limitation on Issuance and Sale of Capital
Stock of Subsidiaries.
The Company will not sell any Capital Stock of a Subsidiary,
and will not permit any Subsidiary to issue or sell any Capital Stock, or
permit any Person, other than the Company and its Subsidiaries, to own or hold
any such interest, other than (i) any interest owned or held on the Issue Date
by, or issuable as of the Issue Date to, a Person other than the Company and
its Subsidiaries in any Capital Stock of any Subsidiary or (ii) any interest
owned or held by a Person at the time that such Subsidiary became a Subsidiary
(other than any such interest created or issued in anticipation of the
acquisition of such Subsidiary by the Company); provided that the foregoing
limitation shall not apply to (i) the sale of 100% of the Capital Stock of any
Subsidiary made in accordance with Section 4.12 and (ii) issuances of Preferred
Stock permitted pursuant to clauses (i) or (iii) of Section 4.11.
Section 4.11. Limitation on Preferred Stock of Subsidiaries.
The Company will not permit any of its Subsidiaries to issue,
directly or indirectly, any Preferred Stock, except (i) Preferred Stock of
Subsidiaries outstanding on the
<PAGE> 56
-47-
Issue Date, (ii) Preferred Stock issued to and held by the Company or a
Subsidiary, except that any subsequent issuance or transfer of any Capital
Stock which results in any Wholly-Owned Subsidiary ceasing to be a Wholly-Owned
Subsidiary or any transfer of such Preferred Stock to a Person not a
Wholly-Owned Subsidiary will be deemed an issuance of Preferred Stock; (iii)
Preferred Stock issued by a Person prior to the time (a) such Person became a
Subsidiary, (b) such Person merges with or into a Subsidiary or (c) another
Person merges with or into such Person (in a transaction in which such Person
becomes a Subsidiary), in each case if such Preferred Stock was not issued in
anticipation of such transaction; and (iv) Preferred Stock issued in exchange
for, or the proceeds of which are used to refund Indebtedness or refinance
Preferred Stock referred to in clause (i) or issued pursuant to clauses (ii) or
(iii) (other than Preferred Stock which by its terms (or by the terms of any
security into which it is convertible or for which it is exchangeable) is
redeemable at the option of the holder thereof or is otherwise redeemable,
pursuant to sinking fund obligations or otherwise, prior to the date of
redemption or maturity of the Preferred Stock or Indebtedness being so refunded
or refinanced); provided that (a) the liquidation value of such Preferred Stock
so issued shall not exceed the principal amount or the liquidation value of the
Indebtedness or Preferred Stock, as the case may be, so refunded or refinanced
and (b) the Preferred Stock so issued (1) shall have a stated maturity not
earlier than the stated maturity of the Indebtedness or Preferred Stock being
refunded or refinanced and (2) shall have a Weighted Average Life to Maturity
equal to or greater than the remaining Weighted Average Life to Maturity of the
Indebtedness or Preferred Stock being refunded or refinanced.
Section 4.12. Limitation on Asset Sales.
(a) The Company will not, and will not permit any of its
Subsidiaries to, consummate an Asset Sale unless (i) the Company or the
applicable 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 assets sold
or otherwise disposed of (as determined in good faith by the Company's Board of
Directors or if the Fair Market Value of such assets exceeds $20.0 million, the
Company shall receive from an investment banking firm of national standing a
written opinion in customary form as to the fairness, to the Company, of such
Asset Sale) and (ii) at least 80% of the consideration received by the Company
or the Subsidiary, as the case may be, from such Asset Sale shall be cash or
Marketable Securities and is received at the time of such disposition. Upon
the consummation of an Asset Sale, the Company may apply, or cause such
Subsidiary to apply, the Net Cash Proceeds relating to such Asset Sale within
270 days of receipt thereof either (A) to prepay any Bank Indebtedness and, in
the case of any Bank Indebtedness under any revolving credit facility, to
effect a permanent reduction in the availability under such revolving credit
facility, (B) to prepay the Existing Notes (to the extent required by the
Existing Indentures), (C) to reinvest in Wireless Cable
<PAGE> 57
-48-
Related Assets that are Permitted Assets or (D) to a combination of prepayment
and investment permitted by the foregoing clauses (A), (B), and (C). On the
271st day after an Asset Sale or such earlier date, if any, as the Board of
Directors of the Company or of such Subsidiary determines not to apply the Net
Cash Proceeds relating to such Asset Sale as set forth in clauses (A), (B), (C)
or (D) of the preceding sentence (each, a "Net Proceeds Offer Trigger Date"),
such aggregate amount of Net Cash Proceeds which have not been applied on or
before such Net Proceeds Offer Trigger Date as permitted in clauses (A), (B),
(C) or (D) of the preceding sentence (each, a "Net Proceeds Offer Amount")
shall be applied by the Company to make an offer to purchase (the "Net Proceeds
Offer") on a date (the "Net Proceeds Offer Payment Date") not less than 30 nor
more than 45 days following the applicable Net Proceeds Offer Trigger Date,
from all Holders on a pro rata basis that amount of Notes equal to the Net
Proceeds Offer Amount at a price equal to 100% of the principal amount of the
Notes to be purchased, plus accrued and unpaid interest thereon, if any, to the
date of purchase; provided, however, that if at any time any non-cash
consideration received by the Company or any Subsidiary of the Company, as the
case may be, in connection with any Asset Sale is converted into or sold or
otherwise disposed of for cash (other than interest received with respect to
any such non-cash consideration), then such conversion or disposition shall be
deemed to constitute an Asset Sale hereunder and the Net Cash Proceeds thereof
shall be applied in accordance with this covenant.
(b) Notwithstanding the foregoing, if a Net Proceeds Offer Amount is
less than $5.0 million, the application of the Net Cash Proceeds constituting
such Net Proceeds Offer Amount to a Net Proceeds Offer may be deferred until
such time as such Net Proceeds Offer Amount plus the aggregate amount of all
Net Proceeds Offer Amounts arising subsequent to the Net Proceeds Offer Trigger
Date relating to such initial Net Proceeds Offer Amount from all Asset Sales by
the Company and its Subsidiaries aggregates at least $5.0 million, at which
time the Company shall apply all Net Cash Proceeds constituting all Net
Proceeds Offer Amounts that have been so deferred to make a Net Proceeds Offer
(the first date the aggregate of all such deferred Net Proceeds Offer Amounts
is equal to $5.0 million or more shall be deemed to be a Net Proceeds Offer
Trigger Date).
(c) Notwithstanding the two immediately preceding paragraphs (a) and
(b), the Company and its Subsidiaries will be permitted to consummate an Asset
Sale without complying with such paragraphs to the extent (i) at least 95% of
the consideration for such Asset Sale, other than cash consideration,
constitutes assets used in the business of the Company and its Subsidiaries on
the date of such transaction that are Permitted Assets and (ii) such Asset Sale
is for Fair Market Value (as determined in good faith by the Company's Board of
Directors or if the Fair Market Value of such assets exceeds $20.0 million, the
Company shall receive from an investment banking firm of national standing a
written opinion in customary form as to the fairness, to the Company, of such
Asset Sale); provided
<PAGE> 58
-49-
that any consideration received by the Company or its Subsidiaries, as the case
may be, in an Asset Sale permitted to be consummated under this paragraph that
does not constitute assets to be used in the operations of the Company or its
Subsidiaries shall constitute Net Cash Proceeds which are subject to the
provisions of the two preceding paragraphs. In addition, notwithstanding the
two immediately preceding paragraphs, the Company will be permitted (i) to sell
the Call Markets to Wireless One without complying with such paragraphs, (ii)
to sell any or all of the assets acquired in the AWS Transaction, the CableMaxx
Transaction or the TechniVision Transaction on or prior to the first
anniversary of the consummation of each such Transaction without complying with
such paragraphs, (iii) to sell any or all of the assets acquired by way of an
Investment permitted by clause (x) of the second paragraph of Section 4.07 on
or prior to the first anniversary of the consummation of such acquisition
without complying with such paragraphs and (iv) to sell, in a single
transaction or a series of transactions, assets for up to $25 million of
non-cash consideration without complying with such paragraphs; provided, in the
case of clauses (ii), (iii) and (iv) that the Company receives consideration at
the time of such Asset Sale at least equal to the Fair Market Value of the
assets sold or otherwise disposed of (as determined in good faith by the
Company's Board of Directors or if the Fair Market Value of such assets exceeds
$20.0 million, the Company shall receive from an investment banking firm of
national standing a written opinion in customary form as to the fairness, to
the Company, of such Asset Sale).
(d) Each Net Proceeds Offer will be mailed within 25 days following
the Net Proceeds Offer Trigger Date to the record Holders as shown on the
register of Holders, at their last registered addresses as of a date within 15
days of the mailing of such notice, with a copy to the Trustee. The notice
shall contain all instructions and materials necessary to enable such Holders
to tender Notes pursuant to the Net Proceeds Offer and shall state the
following terms:
(1) that the Net Proceeds Offer is being made pursuant to
Section 4.12 and that all Notes tendered will be accepted for payment;
provided, however, that if the aggregate principal amount of Notes
tendered in a Net Proceeds Offer plus accrued interest at the
expiration of such offer exceeds the aggregate amount of the Net
Proceeds Offer, the Company shall select the Notes to be purchased on
a pro rata basis (with such adjustments as may be deemed appropriate
by the Company so that only Notes in denominations of $1,000 or
multiples thereof shall be purchased);
(2) the purchase price (including the amount of accrued
interest) and the purchase date (which shall be 20 Business Days from
the date of mailing of notice of such Net Proceeds Offer, or such
longer period as required by law) (the "Proceeds Purchase Date");
<PAGE> 59
-50-
(3) that any Note not tendered will continue to accrue
interest;
(4) that, unless the Company defaults in making payment
therefor, any Note accepted for payment pursuant to the Net Proceeds
Offer shall cease to accrue interest after the Proceeds Purchase Date;
(5) that Holders electing to have a Note purchased pursuant
to a Net Proceeds Offer will be required to surrender the Note, with
the form entitled "Option of Holder to Elect Purchase" on the reverse
of the Note completed, to the Paying Agent at the address specified in
the notice prior to the close of business on the third Business Day
prior to the Proceeds Purchase Date;
(6) that Holders will be entitled to withdraw their election
if the Paying Agent receives, not later than the second Business Day
prior to the Proceeds Purchase Date, a facsimile transmission or
letter, signature guaranteed, setting forth the name of the Holder,
the principal amount of the Notes the Holder delivered for purchase
and a statement that such Holder is withdrawing his election to have
such Note purchased; and
(7) that Holders whose Notes are purchased only in part will
be issued new Notes in a principal amount equal to the unpurchased
portion of the Notes surrendered; provided, however, that each Note
purchased and each new Note issued shall be in an original principal
amount of $1,000 or integral multiples thereof.
On or before the Proceeds Purchase Date, the Company shall (i)
accept for payment Notes or portions thereof tendered pursuant to the Net
Proceeds Offer which are to be purchased in accordance with item (b)(1) above,
(ii) deposit with the Paying Agent, in accordance with Section 2.14, U.S. Legal
Tender sufficient to pay the purchase price plus accrued interest, if any, of
all Notes to be purchased, (iii) deliver to the Trustee Notes so accepted
together with an Officers' Certificate stating the Notes or portions thereof
being purchased by the Company and (iv) deliver to the Paying Agent an
Officers' Certificate specifying the Notes or portions thereof being purchased
by the Company and the payees of the purchase price. The Paying Agent shall
promptly mail to the Holders of Notes so accepted payment in an amount equal to
the purchase price plus accrued interest, if any. For purposes of this Section
4.12, the Trustee shall act as the Paying Agent.
The Company will comply with the requirements of 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 connection with the
repurchase of Notes pursuant to a Net Proceeds Offer. To the extent that the
provisions of any securities laws or regulations
<PAGE> 60
-51-
conflict with the foregoing provisions of this Indenture, the Company shall
comply with the applicable securities laws and regulations and shall not be
deemed to have breached its obligations under the foregoing provisions of this
Indenture by virtue thereof.
Section 4.13. Dividend and Other Payment Restrictions
Affecting Subsidiaries.
The Company and its Subsidiaries may not, directly or
indirectly, create or otherwise cause or suffer to exist or become effective
any encumbrance or restriction on the ability of any such Subsidiary (i) to pay
dividends or make any other distributions to the Company or any of its
Subsidiaries on or in respect of its Capital Stock or with respect to any other
interest or participation in, or measured by, its profits, or pay any
Indebtedness or other obligation owed to the Company or any of its
Subsidiaries; (ii) to make loans or advances to the Company or any of its
Subsidiaries or Investments in Subsidiaries; or (iii) to transfer any of its
properties or assets to the Company or any of its Subsidiaries, except for such
encumbrances or restrictions existing under or by reason of: (a) any
encumbrance or restriction pursuant to the Notes or this Indenture; (b)
applicable law; (c) Existing Indebtedness; (d) any instrument governing
Acquired Debt as in effect at the time of acquisition (except to the extent
such Indebtedness was incurred in connection with, or in contemplation of, such
acquisition), which encumbrance or restriction is not applicable to any Person,
or the properties or assets of any Person, other than the Person, or the
property or assets of the Person, so acquired; (e) any encumbrance or
restriction pursuant to an agreement effecting a refinancing of Indebtedness
pursuant to an agreement referred to in clause (c) or (d) or contained in any
amendment to an agreement referred to in clause (c) or (d); provided, however,
that the encumbrances and restrictions contained in any such refinancing
agreement or amendment are no more restrictive than encumbrances or
restrictions contained in the refinanced or amended agreements; (f) with
respect to clause (iii) above, by reason of customary non-assignment provisions
in leases entered into in the ordinary course of business; (g) with respect to
clause (iii) above, purchase money obligations for property acquired in the
ordinary course of business, which obligations do not cover any asset other
than the asset acquired or (h) Bank Indebtedness or Guarantees of such Bank
Indebtedness incurred pursuant to clauses (iii) or (iv) of the second paragraph
of Section 4.08.
Section 4.14. Transactions with Affiliates.
The Company and its Subsidiaries may not sell, lease, transfer
or otherwise dispose of any of their respective properties or assets to, or
purchase any property or assets from, or enter into any contract, agreement,
understanding, loan, advance or Guarantee with, or for the benefit of, any
Affiliate of the Company or any legal or beneficial owner of 5% or more of any
class of Capital Stock of the Company or with an Affiliate of any such owner
<PAGE> 61
-52-
(each of the foregoing, an "Affiliate Transaction"), unless: (i) such Affiliate
Transaction is on terms that are no less favorable to the Company or the
relevant Subsidiary than those that would have been obtained in a comparable
transaction by the Company or such Subsidiary with an unrelated Person; and
(ii) the Company delivers to the Trustee: (x) with respect to any Affiliate
Transaction involving aggregate payments in excess of $250,000 but less than
$3.0 million, a resolution of the Board of Directors of the Company set forth
in an Officers' Certificate certifying that such Affiliate Transaction complies
with clause (i) above, (y) with respect to any Affiliate Transaction involving
aggregate payments equal to or greater than $3.0 million but less than $20.0
million, a resolution of the Board of Directors of the Company set forth in an
Officers' Certificate certifying that such Affiliate Transaction complies with
clause (i) above and that such Affiliate Transaction has been approved by a
majority of the disinterested directors of the Board of Directors of the
Company, and (z) with respect to any Affiliate Transaction involving aggregate
payments equal to or greater than $20.0 million, a resolution of the Board of
Directors of the Company set forth in an Officers' Certificate and certifying
to the matters referred to in (i) above and a written opinion as to the
fairness to the Company or such Subsidiary from a financial point of view
issued by an independent investment banking firm of national standing with
respect to any such Affiliate Transaction. Notwithstanding the foregoing, the
following shall not be deemed Affiliate Transactions: (a) any employment or
option agreement entered into by the Company or any of its Subsidiaries in the
ordinary course of business that is approved by the Compensation Committee of
the Board of Directors of the Company; (b) the payment by the Company of annual
fees to Unity Hunt, Inc. for the provision of Mr. Holland's services to the
Company in an amount equal to Mr. Holland's annual base compensation from the
Company,which amount is approved by the Compensation Committee of the Board of
Directors of the Company; (c) transactions between or among the Company and one
or more of its Wholly Owned Subsidiaries provided that such transactions are
not otherwise prohibited; (d) Restricted Payments, Permitted Payments and
Permitted Investments; (e) Affiliate Transactions in existence on the Issue
Date, including, without limitation, channel leases and options between the
Company and any of its Subsidiaries, on the one hand, and Messrs. Webb and
Wheeler and their respective Affiliates, on the other hand, and the lease with
respect to the Company's operating offices in Durant, Oklahoma as in effect on
the Issue Date; (f) channel leases and options with Affiliates entered into
after the Issue Date; provided such leases are no less beneficial to the
Company or the applicable Subsidiary than any such leases in effect on the
Issue Date, meet the standard described in clause (i) above and are approved by
a majority of the disinterested directors of the Board of Directors of the
Company; (g) amendments to or renewals of the agreements and leases referred to
in clauses (d) and (e) above; provided that any such amendments or renewals are
no less beneficial to the Company or the applicable Subsidiary than the
agreement or lease being amended or renewed, meet the standard described in
clause (i) above and are approved by a majority of the disinterested directors
of the Board of Directors of the Company; (h) payment of
<PAGE> 62
-53-
reasonable and customary compensation for director and Board of Director
observer fees, meeting expenses, insurance premiums and indemnities to the
extent permitted by law; and (i) the issuance of stock options (and shares of
stock upon the exercise thereof) pursuant to any stock option plan approved by
the Board of Directors and stockholders of the Company and loans or advances to
employees for relocation or travel related expenses consistent with ordinary
past practices.
Section 4.15. Conduct of Business.
The Company and its Subsidiaries may not, directly or
indirectly, engage in any business other than the Wireless Cable Business;
provided that in the event a Change of Control occurs in which a Strategic
Equity Investor gains control of the Company this covenant shall no longer be
of force or effect.
Section 4.16. Change of Control.
(a) Upon the occurrence of a Change of Control, the Company
shall be required to offer to repurchase (the "Change of Control Offer") all or
a portion of each Holder's Notes, in integral multiples of $1,000 pursuant to
the offer described in paragraph (b) below, at a purchase price equal to 101%
of the aggregate principal amount thereof plus accrued and unpaid interest, if
any, to the date of repurchase. The Change of Control Offer shall remain open
for at least 20 Business Days and until the close of business on the second
Business Day prior to the Change of Control Payment Date.
(b) Within 30 days following the date upon which the Change
of Control occurred (the "Change of Control Date"), the Company shall send, by
first class mail, a notice to each Holder, with a copy to the Trustee and
Paying Agent, which notice shall govern the terms of the Change of Control
Offer. The notice to the Holders shall contain all instructions and materials
necessary to enable such Holders to tender Notes pursuant to the Change of
Control Offer. Such notice shall state:
(1) that the Change of Control Offer is being made
pursuant to this Section 4.16 and that all Notes tendered and not
withdrawn will be accepted for payment;
(2) the purchase price (including the amount of
accrued interest) and the purchase date (which shall be no earlier
than 30 days nor later than 45 days from the date such notice is
mailed, other than as may be required by law) (the "Change of Control
Payment Date");
<PAGE> 63
-54-
(3) that any Note not tendered will continue to
accrue interest;
(4) that, unless the Company defaults in making
payment therefor, any Note accepted for payment pursuant to the Change
of Control Offer shall cease to accrue interest after the Change of
Control Payment Date;
(5) that Holders electing to have a Note purchased
pursuant to a Change of Control Offer will be required to surrender
the Note, with the form entitled "Option of Holder to Elect Purchase"
on the reverse of the Note completed, to the Paying Agent at the
address specified in the notice prior to the close of business on the
third Business Day prior to the Change of Control Payment Date;
(6) that Holders will be entitled to withdraw their
election if the Paying Agent receives, not later than the second
Business Day prior to the Change of Control Payment Date, a telegram,
telex, facsimile transmission or letter, signature guaranteed, setting
forth the name of the Holder, the principal amount of the Notes the
Holder delivered for purchase and a statement that such Holder is
withdrawing his election to have such Notes purchased;
(7) that Holders whose Notes are purchased only in
part will be issued new Notes in a principal amount equal to the
unpurchased portion of the Notes surrendered; provided, however, that
each Note purchased and each new Note issued shall be in an original
principal amount of $1,000 or integral multiples thereof; and
(8) the circumstances and relevant facts regarding
such Change of Control.
On or before the Change of Control Payment Date, the Company
shall (i) accept for payment Notes or portions thereof tendered pursuant to the
Change of Control Offer, (ii) deposit with the Paying Agent in accordance with
Section 2.14 U.S. Legal Tender sufficient to pay the purchase price plus
accrued interest, if any, of all Notes so tendered, (iii) deliver to the
Trustee Notes so accepted together with an Officers' Certificate stating the
Notes or portions thereof being purchased by the Company and (iv) deliver to
the Paying Agent an Officers' Certificate specifying the Notes or portions
thereof being purchased by the Company and the payees of the purchase price.
Upon receipt by the Paying Agent of the monies specified in clause (ii) above
and a copy of the Officers' Certificate specified in clause (iii) above, the
Paying Agent shall promptly mail to the Holders of Notes so accepted payment in
an amount equal to the purchase price plus accrued interest, if any, and the
<PAGE> 64
-55-
Trustee shall promptly authenticate and mail to such Holders new Notes equal in
principal amount to any unpurchased portion of the Notes surrendered. Any
Notes not so accepted shall be promptly mailed by the Company to the Holder
thereof. For purposes of this Section 4.16, the Trustee shall act as the
Paying Agent.
Any amounts remaining after the purchase of Notes pursuant to
a Change of Control Offer shall be returned by the Paying Agent (i) to the
Company upon its written request if, immediately prior to such Change of
Control Offer, the balance of Available Funds in the Escrow Account equalled
zero, or (ii) to the Escrow Agent if Available Funds from the Escrow Account
have been used, in whole or in part, to make such Change of Control Offer and
any such funds remain, as the case may be.
The Company will comply with the requirements of 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 connection with the
repurchase of Notes pursuant to a Change of Control Offer. To the extent that
the provisions of any securities laws or regulations conflict with the
foregoing provisions of this Indenture, the Company shall comply with the
applicable securities laws and regulations and shall not be deemed to have
breached its obligations under the foregoing provisions of this Indenture by
virtue thereof.
Section 4.17. Disbursement of Funds; Escrow Account.
The Company shall, on the date of this Indenture, enter into
the Escrow and Disbursement Agreement and, pursuant thereto, shall place the
Escrow Amount in the Escrow Account held by the Escrow Agent for the benefit of
the Holders of the Notes and the Trustee (in its capacity as such).
ARTICLE 5
SUCCESSORS
Section 5.01. Merger, Consolidation or Sale of Assets.
The Company will not, in a single transaction or a series of
related transactions, (i) consolidate with or merge with or into any other
Person, (ii) permit any other Person to consolidate with or merge into (a) the
Company or (b) any of its Subsidiaries in a transaction in which such
Subsidiary (or successor Person) remains (or becomes) a Subsidiary, (iii)
directly or indirectly, sell, assign, transfer, lease, convey or otherwise
dispose of all or substantially all of its assets to another Person or Persons
or adopt a plan of liquidation, (iv) directly or indirectly, purchase, lease or
otherwise acquire all or substantially all of the property and assets of any
Person or any existing business (whether existing as a
<PAGE> 65
-56-
separate entity, subsidiary, division, unit or otherwise) of any Person or
acquire Equity Interests or other ownership interests of any other Person such
that such Person becomes a Subsidiary or (v) permit any of its Subsidiaries to
enter into any such transaction unless (i) either (A) the Company or such
Subsidiary shall be the survivor of such merger or consolidation or (B) the
surviving Person (if not the Company or such Subsidiary) is a corporation,
partnership or trust organized and existing under the laws of the United
States, any state thereof or the District of Columbia and such surviving Person
shall expressly assume by supplemental indenture all the obligations of the
Company or such Subsidiary, as the case may be, under the Notes and this
Indenture; (ii) immediately after giving effect to such transaction (on a pro
forma basis, including any Indebtedness incurred or anticipated to be incurred
in connection with such transaction), the Company or the surviving Person is
able to incur at least $1.00 of additional Indebtedness under the Annualized
Cash Flow Ratio test in compliance with Section 4.08; (iii) immediately before
and immediately after giving effect to such transaction (including any
Indebtedness incurred or anticipated to be incurred in connection with the
transaction), no Default or Event of Default shall have occurred and be
continuing; and (iv) the Company has delivered to the Trustee an Officers'
Certificate and Opinion of Counsel, each stating that such consolidation,
merger or transfer complies with this Indenture, that the surviving Person
agrees to be bound thereby and that all conditions precedent in this Indenture
relating to such transaction have been satisfied. For purposes of the
foregoing, the transfer (by lease, assignment, sale or otherwise, in a single
transaction or series of transactions) of all or substantially all of the
properties and assets of one or more Subsidiaries of the Company, the Capital
Stock of which constitutes all or substantially all of the properties and
assets of the Company, shall be deemed to be the transfer of all or
substantially all of the properties and assets of the Company. The foregoing
will not be deemed to apply to Permitted Investments or Investments permitted
under Section 4.07.
Section 5.02. Successor Corporation Substituted.
Upon any consolidation, combination or merger or any transfer
of all or substantially all of the assets of the Company in accordance with
Section 5.01, the surviving entity 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 surviving entity had been named as
such; provided that solely for purposes of computing amounts described in
clause (c) of the first paragraph of Section 4.07, any such surviving entity to
the Company 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, combination or transfer of assets.
<PAGE> 66
-57-
ARTICLE 6
DEFAULTS AND REMEDIES
Section 6.01. Events of Default.
Each of the following constitutes a "Event of Default":
(a) the failure to pay interest on any Notes when the
same becomes due and payable and such default continues for a period of 30
days;
(b) (i) the failure to pay the principal or premium when
due on the Notes at maturity, upon redemption, upon acceleration or otherwise
or (ii) the failure to redeem or purchase the Notes when required pursuant to
this Indenture and the Notes (including, without limitation, failure to make
payments when due pursuant to a Change of Control Offer or Net Proceeds Offer);
(c) failure by the Company to comply with the provisions
of Sections 4.12 or 4.16 or the failure by the Company to comply with Section
4.17;
(d) failure to comply with the provisions of Article 5;
(e) failure by the Company for 30 days after notice from
the Trustee or the Holders of at least 25% in principal amount of the Notes
then outstanding to comply with its agreements in this Indenture or the Notes
or in the Escrow and Disbursement Agreement (other than those referred to in
(a), (b), (c) or (d) above);
(f) a default in the payment of principal at final
maturity under any mortgage, indenture or instrument under which there may be
issued or by which there may be secured or evidenced any Indebtedness of the
Company or any of its Subsidiaries (or the payment of which is Guaranteed now
or hereafter by the Company or any of its Subsidiaries), whether such
Indebtedness or Guarantee now exists or shall be created hereafter, in a
principal amount of at least $3.0 million (after the expiration of any
applicable grace period with respect thereto);
(g) a default occurs under any mortgage, indenture or
instrument under which there may be issued or by which there may be secured or
evidenced any Indebtedness (including any interest thereon) of the Company or
its Subsidiaries (or the payment of which is Guaranteed now or hereafter by the
Company or any of its Subsidiaries), whether such Indebtedness or Guarantee now
exists or shall be created hereafter, if (i) as a result of such event of
default the maturity of such Indebtedness has been accelerated prior to its
stated
<PAGE> 67
-58-
maturity and (ii) the principal amount of such Indebtedness, together with the
principal amount of any other Indebtedness of the Company and its Subsidiaries
the maturity of which has been accelerated, aggregates $3.0 million or more;
(h) one or more final judgments rendered against the
Company or any of its Subsidiaries (other than any judgment as to which a
reputable insurance company has accepted full liability in writing) aggregating
in excess of $3.0 million which judgments are not stayed within 60 days after
their entry;
(i) the Company or any Subsidiary of the Company pursuant
to or within the meaning of any Bankruptcy Law:
(i) commences a voluntary case;
(ii) consents to the entry of an order for relief
against it in an involuntary case;
(iii) consents to the appointment of a Custodian of
it or for all or substantially all of its property; or
(iv) makes a general assignment for the benefit of
its creditors;
(j) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that:
(i) is for relief against the Company or any
Subsidiary of the Company in an involuntary case;
(ii) appoints a Custodian of the Company or any
Subsidiary of the Company or for all or substantially all of
the property of the Company or any Subsidiary of the Company;
or
(iii) orders the liquidation of the Company or any
Subsidiary of the Company,
and the order or decree remains unstayed and in effect for 60 consecutive days;
and
(k) repudiation by the Company of its obligations under
the Escrow and Disbursement Agreement for any reason.
<PAGE> 68
-59-
The term "Custodian" means any receiver, trustee, assignee,
liquidator or similar official under any Bankruptcy Law.
Section 6.02. Acceleration.
If any Event of Default occurs and is continuing under this
Indenture, the Trustee or the Holders of at least 25% in principal amount of
the then outstanding Notes may declare all the Notes to be due and payable
immediately by notice in writing to the Company and the Trustee specifying the
respective Event of Default and that it is a "notice of acceleration" (the
"Acceleration Notice"). Upon such declaration, the principal of, and premium,
if any, and interest on the Notes shall become due and payable immediately.
Notwithstanding the foregoing, in the case of an Event of Default specified in
clause (i) or (j) of Section 6.01, the foregoing amount shall ipso facto become
due and payable without further action or notice. No premium is payable upon
acceleration of the Notes except that in the case of an Event of Default that
is the result of an action or inaction by the Company or any of its
Subsidiaries intended to avoid premiums related to redemptions of the Notes
contained in this Indenture or the Notes, the amount declared due and payable
will include the premium that would have been applicable on a voluntary
prepayment of the Notes or, if voluntary prepayment is not then permitted, the
premium set forth in this Indenture.
At any time after a declaration of acceleration with respect
to the Notes as described in the preceding paragraph, the Holders of a majority
in principal amount of the Notes may rescind and cancel such declaration and
its consequences (i) if the rescission would not conflict with any judgment or
decree, (ii) if all existing Events of Default have been cured or waived except
non payment of principal or interest that has become due solely because of the
acceleration, (iii) to the extent the payment of such interest is lawful,
interest on overdue installments of interest and overdue principal, which has
become due otherwise than by such declaration of acceleration, has been paid,
(iv) if the Company has paid the Trustee its reasonable compensation and
reimbursed the Trustee for its expenses, disbursements and advances and (v) in
the event of the cure or waiver of an Event of Default specified in clause (h)
of Section 6.01, the Trustee shall have received an Officers' Certificate and
an Opinion of Counsel that such Event of Default has been cured or waived.
Section 6.03. Other Remedies.
If an Event of Default occurs and is continuing, the Trustee
may pursue any available remedy to collect the payment of principal, premium,
if any, and interest on the Notes or to enforce the performance of any
provision of the Notes or this Indenture or the Escrow and Disbursement
Agreement.
<PAGE> 69
-60-
The Trustee may maintain a proceeding even if it does not
possess any of the Notes or does not produce any of them in the proceeding. A
delay or omission by the Trustee or any Holder of a Note in exercising any
right or remedy accruing upon an Event of Default shall not impair the right or
remedy or constitute a waiver of or acquiescence in the Event of Default. All
remedies are cumulative to the extent permitted by law.
Section 6.04. Waiver of Past Defaults.
The Holders of a majority in aggregate principal amount of the
Notes then outstanding, by notice to the Trustee, may on behalf of the Holders
of all of the Notes waive any existing Default or Event of Default and its
consequences under this Indenture, except a continuing Default or Event of
Default in the payment of interest or premium on, or the principal of, the
Notes, or in respect of a covenant or a provision which cannot be amended or
modified without the consent of all Holders.
Upon any such waiver, such Default shall cease to exist, and
any Event of Default arising therefrom shall be deemed to have been cured for
every purpose of this Indenture; but no such waiver shall extend to any
subsequent or other Default or impair any right consequent thereon.
Section 6.05. Control by Majority.
Subject to 2.09, holders of a majority in principal amount of
the then outstanding Notes may direct the time, method and place of conducting
any proceeding for exercising any remedy available to the Trustee or exercising
any trust or power conferred on it. However, the Trustee may refuse to follow
any direction that conflicts with the law or this Indenture that the Trustee
determines may be unduly prejudicial to the rights of other Holders of Notes or
that may involve the Trustee in personal liability.
Section 6.06. Limitation on Suits.
A Holder of a Note may pursue a remedy with respect to this
Indenture or the Notes only if:
(a) the Holder of a Note gives to the Trustee written
notice of a continuing Event of Default;
(b) the Holders of at least 25% in principal amount of
the then outstanding Notes make a written request to the Trustee to
pursue the remedy;
<PAGE> 70
-61-
(c) such Holder of a Note or Holders of Notes offer and,
if requested, provide to the Trustee indemnity satisfactory to the
Trustee against any loss, liability or expense;
(d) the Trustee does not comply with the request within
15 days after receipt of the request and the offer and, if requested,
the provision of indemnity; and
(e) during such 15-day period the Holders of a majority
in principal amount of the then outstanding Notes do not give the
Trustee a direction inconsistent with the request.
A Holder of a Note may not use this Indenture to prejudice the rights of
another Holder of a Note or to obtain a preference or priority over another
Holder of a Note.
Section 6.07. Rights of Holders of Notes to Receive Payment.
Notwithstanding any other provision of this Indenture, the
right of any Holder of a Note to receive payment of principal, premium, if any,
and interest on the Note, on or after the respective due dates expressed in the
Note, or to bring suit for the enforcement of any such payment on or after such
respective dates, shall not be impaired or affected without the consent of the
Holder of the Note.
Section 6.08. Collection Suit by Trustee.
If an Event of Default specified in Section 6.01(a) or (b)
occurs and is continuing, the Trustee is authorized to recover judgment in its
own name and as trustee of an express trust against the Company for the whole
amount of principal of, premium, if any, and interest remaining unpaid on the
Notes and interest on overdue principal and, to the extent lawful, interest and
such further amount as shall be sufficient to cover the costs and expenses of
collection, including the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel.
Section 6.09. Trustee May File Proofs of Claim.
The Trustee is authorized to file such proofs of claim and
other papers or documents as may be necessary or advisable in order to have the
claims of the Trustee (including any claim for the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel)
and the Holders of the Notes allowed in any judicial proceedings relative to
the Company (or any other obligor upon the Notes), the Company's creditors or
the Company's property and shall be entitled and empowered to collect, receive
<PAGE> 71
-62-
and distribute any money or other property payable or deliverable on any such
claims and any custodian in any such judicial proceeding is hereby authorized
by each Holder of a Note to make such payments to the Trustee, and in the event
that the Trustee shall consent to the making of such payments directly to the
Holders of the Notes, to pay to the Trustee any amount due to it for the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel, and any other amounts due the Trustee under Section
7.07. To the extent that the payment of any such compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any
other amounts due the Trustee under Section 7.07 out of the estate in any such
proceeding, shall be denied for any reason, payment of the same shall be
secured by a Lien on, and shall be paid out of, any and all distributions,
dividends, money, securities and other properties which the Holders of the
Notes may be entitled to receive in such proceeding whether in liquidation or
under any plan of reorganization or arrangement or otherwise. Nothing herein
contained shall be deemed to authorize the Trustee to authorize or consent to
or accept or adopt on behalf of any Holder of a Note any plan of
reorganization, arrangement, adjustment or composition affecting the Notes or
the rights of any Holder of a Note thereof, or to authorize the Trustee to vote
in respect of the claim of any Holder of a Note in any such proceeding.
Section 6.10. Priorities.
If the Trustee collects any money pursuant to this Article, it
shall pay out the money in the following order:
First: to the Trustee, the Agents, and their agents and
attorneys for amounts due under Section 7.07, including payment of all
compensation, expense and liabilities incurred, and all advances made, by the
Trustee and the costs and expenses of collection;
Second: to Holders of Notes, for amounts due and unpaid on
such Notes for principal, premium, if any, and interest, ratably, without
preference or priority of any kind to the extent of moneys and securities
collected under the Escrow and Disbursement Agreement according to the amounts
due and payable on the Notes for principal, premium, if any, and interest,
respectively; and
Third: to the Company or to such party as a court of
competent jurisdiction shall direct.
The Trustee may fix a record date and payment date for any
payment to Holders of Notes.
<PAGE> 72
-63-
Section 6.11. Undertaking for Costs.
In any suit for the enforcement of any right or remedy under
this Indenture or in any suit against the Trustee for any action taken or
omitted by it as a Trustee, a court in its discretion may require the filing by
any party litigant in the suit of an undertaking to pay the costs of the suit,
and the court in its discretion may assess reasonable costs, including
reasonable attorneys' fees, against any party litigant in the suit, having due
regard to the merits and good faith of the claims or defenses made by the party
litigant. This Section does not apply to a suit by the Trustee, a suit by a
Holder of a Note pursuant to Section 6.07 or a suit by Holders of more than 10%
in principal amount of the then outstanding Notes.
ARTICLE 7
TRUSTEE
Section 7.01. Duties of Trustee.
(a) If an Event of Default has occurred and is
continuing, the Trustee shall exercise such of the rights and powers vested in
it by this Indenture, and use the same degree of care and skill in their
exercise, as a prudent man would exercise or use under the circumstances in the
conduct of his own affairs.
(b) Except during the continuance of an Event of Default:
(i) the duties of the Trustee and the Agents shall be
determined solely by the express provisions of this Indenture and the
Trustee and the Agents need perform only those duties that are
specifically set forth in this Indenture and no others, and no implied
covenants or obligations shall be read into this Indenture against the
Trustee and the Agents, and
(ii) in the absence of bad faith on their part, the
Trustee and the Agents may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein, upon
certificates or opinions furnished to the Trustee and the Agents and
conforming to the requirements of this Indenture. However, the
Trustee shall examine the certificates and opinions to determine
whether or not they conform to the requirements of this Indenture.
(c) The Trustee may not be relieved from liabilities for
its own negligent action, its own negligent failure to act or its own willful
misconduct, except that:
(i) this paragraph does not limit the effect of paragraph
(b) of this Section;
<PAGE> 73
-64-
(ii) neither the Trustee nor any Agent shall be liable for
any error of judgment made in good faith by a Responsible Officer,
unless it is proved that the Trustee or such Agent was negligent in
ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to any
action it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Section 6.05.
(d) Whether or not therein expressly so provided, every
provision of this Indenture that in any way relates to the Trustee or any Agent
is subject to paragraphs (a), (b), and (c) of this Section.
(e) No provision of this Indenture shall require the
Trustee to expend or risk its own funds or incur any liability. The Trustee
shall be under no obligation to exercise any of its rights and powers under
this Indenture at the request of any Holders of Notes, unless such Holder shall
have offered to the Trustee security and indemnity satisfactory to the Trustee
against any loss, liability or expense.
(f) Neither the Trustee nor any Agent shall be liable for
interest on any money received by it except as the Trustee or such Agent, as
the case may be, may agree in writing with the Company. Money held in trust by
the Trustee or such Agent, as the case may be, need not be segregated from
other funds except to the extent required by law.
Section 7.02. Rights of Trustee.
(a) The Trustee and each Agent may conclusively rely upon
any document believed by them to be genuine and to have been signed or
presented by the proper Person. Neither the Trustee nor any Agent need
investigate any fact or matter stated in the document.
(b) Before the Trustee or any Agent acts or refrains from
acting, it may require an Officers' Certificate or an Opinion of Counsel or
both. Neither the Trustee nor any Agent shall be liable for any action it
takes or omits to take in good faith in reliance on such Officers' Certificate
or Opinion of Counsel. The Trustee or any Agent may consult with counsel and
the advice of such counsel or any Opinion of Counsel shall be full and complete
authorization and protection from liability in respect of any action taken,
suffered or omitted by it hereunder in good faith and in reliance thereon.
(c) The Trustee and any Agent may act through their
attorneys and agents and shall not be responsible for the misconduct or
negligence of any agent appointed with due care.
<PAGE> 74
-65-
(d) The Trustee and any Agent shall not be liable for any
action they take or omit to take in good faith which they believe to be
authorized or within their rights or powers conferred upon it by this
Indenture.
(e) Unless otherwise specifically provided in this
Indenture, any demand, request, direction or notice from the Company shall be
sufficient if signed by two Officers of the Company.
(f) The Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this Indenture at the request or
direction of any of the Holders unless such Holders shall have offered to the
Trustee reasonable security or indemnity against the costs, expenses and
liabilities that might be incurred by it in compliance with such request or
direction.
Section 7.03. Individual Rights of Trustee.
The Trustee in its individual or any other capacity may become
the owner or pledgee of Notes and may otherwise deal with the Company or any
Affiliate of the Company with the same rights it would have if it were not
Trustee. However, in the event that the Trustee acquires any conflicting
interest it must eliminate such conflict within 90 days, apply to the
Commission for permission to continue as trustee or resign. Any Agent may do
the same with like rights and duties. The Trustee is also subject to Sections
7.10 and 7.11.
Section 7.04. Trustee's Disclaimer.
The Trustee and the Agents shall not be responsible for and
make no representation as to the validity or adequacy of this Indenture or the
Notes, shall not be accountable for the Company's use of the proceeds from the
Notes or any money paid to the Company or upon the Company's direction under
any provision of this Indenture, shall not be responsible for the use or
application of any money received by any Paying Agent other than the Trustee
and shall not be responsible for any statement or recital herein or any
statement in the Notes or any other document in connection with the sale of the
Notes or pursuant to this Indenture other than its certificate of
authentication.
Section 7.05. Notice of Defaults.
If a Default or Event of Default occurs and is continuing and
if it is known to a Responsible Officer of the Trustee, the Trustee shall mail
to Holders of Notes a notice of the Default or Event of Default within 90 days
after it occurs. Except in the case of a Default or Event of Default in
payment of principal of, premium, if any, or interest on any
<PAGE> 75
-66-
Note, the Trustee may withhold the notice if and so long as a committee of its
Responsible Officers in good faith determines that withholding the notice is in
the interests of the Holders of the Notes.
Section 7.06. Reports by Trustee to Holders of the Notes.
Within 60 days after each May 15 beginning with the May 15
following the date of this Indenture, the Trustee shall mail to the Holders of
the Notes a brief report dated as of such reporting date that complies with TIA
Section 313(a) (but if no event described in TIA Section 313(a) has occurred
within the twelve months preceding the reporting date, no report need be
transmitted). The Trustee also shall comply with TIA Section 313(b)(2). The
Trustee shall also transmit by mail all reports as required by TIA Section
313(c).
A copy of each report at the time of its mailing to the
Holders of Notes shall be mailed to the Company and filed with the SEC and each
stock exchange on which the Notes are listed. The Company shall promptly
notify the Trustee when the Notes are listed on any stock exchange.
Section 7.07. Compensation and Indemnity.
The Company shall pay to the Trustee and the Agents from time
to time reasonable compensation as agreed in writing from time to time for
their acceptance of this Indenture and services hereunder. The Trustee's and
the Agents' compensation shall not be limited by any law on compensation of a
trustee of an express trust. The Company shall reimburse the Trustee and the
Agents promptly upon request for all reasonable disbursements, advances and
expenses incurred or made by them in addition to the compensation for their
services. Such expenses shall include the reasonable compensation,
disbursements and expenses of the Trustee's and the Agents' agents and counsel.
The Company shall indemnify the Trustee and the Agents against
any and all losses, liabilities or expenses incurred by them arising out of or
in connection with the acceptance or administration of their duties under this
Indenture, the Notes, or the Escrow and Disbursement Agreement, except any
such loss, liability or expense as may be attributable to the negligence or bad
faith of the Trustee or such Agent. The Trustee or such Agent shall notify the
Company promptly of any claim for which it may seek indemnity. Failure by the
Trustee or such Agent to so notify the Company shall not relieve the Company of
its obligations hereunder. The Company shall defend the claim and the Trustee
shall cooperate in the defense. The Trustee may have separate counsel and the
Company shall pay the reasonable fees and expenses of such counsel. The
Company need not pay for any settlement made without its consent, which consent
shall not be unreasonably withheld.
<PAGE> 76
-67-
The obligations of the Company under this Section 7.07 shall
survive the satisfaction and discharge of this Indenture.
To secure the Company's payment obligations in this Section,
the Trustee shall have a lien prior to the Notes on all money or property held
or collected by the Trustee, except that held in trust to pay principal,
premium, if any, and interest on particular Notes. Such lien shall survive the
satisfaction and discharge or termination of this Indenture (including any
termination under any Bankruptcy Law) or the resignation or removal of any
Agent or the Trustee, as the case may be.
When the Trustee or any Agent incurs expenses or renders
services after an Event of Default specified in Section 6.01(i) or (j) occurs,
the expenses and the compensation for the services (including the fees and
expenses of its agents and counsel) are intended to constitute expenses of
administration under any Bankruptcy Law.
Section 7.08. Replacement of Trustee.
A resignation or removal of the Trustee and appointment of a
successor Trustee shall become effective only upon the successor Trustee's
acceptance of appointment as provided in this Section.
The Trustee may resign in writing at any time and be
discharged from the trust hereby created by so notifying the Company. The
Holders of Notes of a majority in principal amount of the then outstanding
Notes may remove the Trustee by so notifying the Trustee and the Company in
writing. The Company may remove the Trustee if:
(a) the Trustee fails to comply with Section 7.10;
(b) the Trustee is adjudged a bankrupt or an insolvent or
an order for relief is entered with respect to the Trustee under any
Bankruptcy Law;
(c) a Custodian or public officer takes charge of the
Trustee or its property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in
the office of Trustee for any reason, the Company shall promptly appoint a
successor Trustee. Within one year after the successor Trustee takes office,
the Holders of a majority in principal
<PAGE> 77
-68-
amount of the then outstanding Notes may appoint a successor Trustee to replace
the successor Trustee appointed by the Company.
If a successor Trustee does not take office within 60 days
after the retiring Trustee resigns or is removed, the retiring Trustee, the
Company, or the Holders of Notes of at least 10% in principal amount of the
then outstanding Notes may petition any court of competent jurisdiction for the
appointment of a successor Trustee.
If the Trustee after written request by any Holder of a Note
who has been a Holder of a Note for at least six months fails to comply with
Section 7.10, such Holder of a Note may petition any court of competent
jurisdiction for the removal of the Trustee and the appointment of a successor
Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon, the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Holders of the Notes. The retiring Trustee shall promptly
transfer all property held by it as Trustee to the successor Trustee, provided
all sums owing to the Trustee hereunder have been paid and subject to the Lien
provided for in Section 7.07. Notwithstanding replacement of the Trustee
pursuant to this Section 7.08, the Company's obligations under Section 7.07
shall continue for the benefit of the retiring Trustee.
Section 7.09. Successor Trustee by Merger, etc.
If the Trustee consolidates, merges or converts into, or
transfers all or substantially all of its corporate trust business to, another
corporation, the successor corporation without any further act shall be the
successor Trustee.
Section 7.10. Eligibility; Disqualification.
There shall at all times be a Trustee hereunder which shall be
a corporation organized and doing business under the laws of the United States
of America or of any state thereof authorized under such laws to exercise
corporate trustee power, shall be subject to supervision or examination by
Federal or state authority and shall have a combined capital and surplus of at
least $25 million as set forth in its most recent published annual report of
condition.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA Section 310(a)(1), (2) and (5). The Trustee is subject to
TIA Section 310(b).
<PAGE> 78
-69-
Section 7.11. Preferential Collection of Claims Against
Company.
The Trustee is subject to TIA Section 311(a), excluding any
creditor relationship listed in TIA Section 311(b). A Trustee who has
resigned or been removed shall be subject to TIA Section 311(a) to the extent
indicated therein.
ARTICLE 8
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Section 8.01. Option to Effect Legal Defeasance or Covenant
Defeasance.
The Company may, at the option of its Board of Directors
evidenced by a resolution set forth in an Officers' Certificate, at any time,
with respect to the Notes, elect to have either Section 8.02 or 8.03 be applied
to all outstanding Notes upon compliance with the conditions set forth below in
this Article Eight.
Section 8.02. Legal Defeasance and Discharge.
Upon the Company's exercise under Section 8.01 of the option
applicable to this Section 8.02, the Company shall be deemed to have been
discharged from its obligations with respect to all outstanding Notes on the
date the conditions set forth below in Section 8.04 are satisfied (hereinafter,
"Legal Defeasance"). For this purpose, such Legal Defeasance means that the
Company shall be deemed to have paid and discharged the entire Indebtedness
represented by the outstanding Notes, which shall thereafter be deemed to be
"outstanding" only for the purposes of Section 8.05 and the other Sections of
this Indenture referred to in (a) and (b) below, and to have satisfied all its
other obligations under such Notes and this Indenture (and the Trustee, on
demand of and at the expense of the Company, shall execute proper instruments
acknowledging the same), except for the following which shall survive until
otherwise terminated or discharged hereunder:
(a) the rights of Holders of outstanding Notes to receive
solely from the trust fund described in Section 8.04, and as more fully set
forth in such Section, payments in respect of the principal of, premium, if
any, and interest on such Notes when such payments are due or on the redemption
date, as the case may be;
(b) the Company's obligations with respect to such Notes
under Sections 2.04, 2.06, 2.07, 2.10 and 4.02;
(c) the rights, powers, trusts, duties and immunities of the
Trustee hereunder and the Company's obligations in connection therewith; and
<PAGE> 79
-70-
(d) this Article Eight.
Subject to compliance with this Article Eight, the Company may
exercise its option under this Section 8.02 notwithstanding the prior exercise
of its option under Section 8.03 with respect to the Notes.
Section 8.03. Covenant Defeasance.
Upon the Company's exercise under Section 8.01 of the option
applicable to this Section 8.03, the Company shall be released from its
obligations under the covenants contained in Sections 4.03, 4.04, 4.07, 4.08,
4.09, 4.10, 4.11, 4.12, 4.13, 4.14, 4.15, 4.16 and 4.17 and Article Five with
respect to the outstanding Notes on and after the date the conditions set forth
below are satisfied (hereinafter, "Covenant Defeasance"), and the Notes shall
thereafter be deemed not "outstanding" for the purposes of any direction,
waiver, consent or declaration or act of Holders (and the consequences of any
thereof) in connection with such covenants, but shall continue to be deemed
"outstanding" for all other purposes hereunder (it being understood that such
Notes shall not be deemed outstanding for accounting purposes). For this
purpose, such Covenant Defeasance means that, with respect to the outstanding
Notes, the Company may omit to comply with and shall have no liability in
respect of any term, condition or limitation set forth in any such covenant,
whether directly or indirectly, by reason of any reference elsewhere herein to
any such covenant or by reason of any reference in any such covenant to any
other provision herein or in any other document and such omission to comply
shall not constitute a Default or an Event of Default under Sections 6.01(c),
but, except as specified above, the remainder of this Indenture and such Notes
shall be unaffected thereby. In addition, upon the Company's exercise under
Section 8.01 of the option applicable to this Section 8.03, Sections 6.01(d)
through 6.01(h) and Section 6.01(k) shall not constitute Events of Default.
Section 8.04. Conditions to Legal or Covenant Defeasance.
The following shall be the conditions to the application of
either Section 8.02 or Section 8.03 to the outstanding Notes:
(a) The Company shall irrevocably have deposited or
caused to be deposited with the Trustee (or another trustee satisfying
the requirements of Section 7.10 who shall agree to comply with the
provisions of this Article Eight applicable to it) as trust funds in
trust for the purpose of making the following payments, specifically
pledged as security for, and dedicated solely to, the benefit of the
Holders of such Notes, (a) cash in U.S. Dollars in an amount, or (b)
non-callable U.S. Government Securities which through the scheduled
payment of principal and interest
<PAGE> 80
-71-
in respect thereof in accordance with their terms will provide, not
later than one day before the due date of any payment, cash in U.S.
Dollars in an amount, or (c) a combination thereof, in such amounts,
as will be sufficient, in the opinion of a nationally recognized firm
of independent public accountants expressed in a written certification
thereof delivered to the Trustee, to pay and discharge and which shall
be applied by the Trustee (or other qualifying trustee) to pay and
discharge the principal of, premium, if any, and interest on the
outstanding Notes on the stated maturity or on the applicable
redemption date, as the case may be, of such principal or installment
of principal, premium, if any, or interest, without reinvestment of
the deposited U.S. Government Securities and other deposited monies;
provided that the Trustee shall have been irrevocably instructed to
apply such money or the proceeds of such non-callable U.S. Government
Securities to said payments with respect to the Notes;
(b) In the case of an election under Section 8.02, the
Company shall have delivered to the Trustee an Opinion of Counsel in
the United States reasonably satisfactory to the Trustee confirming
that (i) the Company has received from, or there has been published
by, the Internal Revenue Service a ruling or (ii) since the date
hereof, there has been a change in the applicable Federal income tax
law, in either case to the effect that, and based thereon such opinion
shall confirm that, the Holders of the outstanding Notes will not
recognize income, gain or loss for Federal income tax purposes as a
result of such Legal 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 Legal Defeasance had not occurred;
(c) In the case of an election under Section 8.03, the
Company shall have delivered to the Trustee an Opinion of Counsel in
the United States reasonably satisfactory to the Trustee confirming
that the Holders of the outstanding Notes will not recognize income,
gain or loss for Federal income tax purposes as a result of such
Covenant Defeasance and will be subject to Federal income tax in the
same amounts, in the same manner and at the same times as would have
been the case if such Covenant Defeasance had not occurred;
(d) No Default or Event of Default with respect to the
Notes shall have occurred and be continuing on the date of such
deposit (other than a Default or Event of Default resulting from the
incurrence of Indebtedness, all or a portion of which will be used to
defease the notes concurrently with such incurrence) or, insofar as
Sections 6.01(i) and (j) are concerned, at any time in the period
ending on the 123rd day after the date of such deposit (it being
understood that this condition shall not be deemed satisfied until the
expiration of such period);
<PAGE> 81
-72-
(e) Such Legal Defeasance or Covenant Defeasance shall
not result in a breach or violation of, or constitute a default under,
this Indenture or any other material agreement or instrument to which
the Company is a party or by which the Company is bound;
(f) In the case of an election under either Section 8.02
or 8.03, the Company shall have delivered to the Trustee an Officers'
Certificate stating that the deposit made by the Company pursuant to
its election under Section 8.02 or 8.03 was not made by the Company
with the intent of preferring the Holders of Notes over other
creditors of the Company or with the intent of defeating, hindering,
delaying or defrauding creditors of the Company or others;
(g) The Company shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that all
conditions precedent provided for relating to either the Legal
Defeasance under Section 8.02 or the Covenant Defeasance under Section
8.03 (as the case may be) have been complied with as contemplated by
this Section 8.04; and
(h) the Company shall have delivered to the Trustee an
Opinion of Counsel to the effect that (i) the trust resulting from the
deposit does not constitute, or is qualified as, a regulated
investment company under the Investment Company Act of 1940, (ii) the
Holders of the Notes have a valid first priority perfected security
interest in the trust funds, and (iii) after passage of 123 days
following the deposit (except, with respect to any trust funds for the
account of any Holder who may be deemed to be an "insider" for
purposes of the Bankruptcy Code, after one year following the
deposit), the trust funds will not be subject to the effect of Section
547 of the Bankruptcy Code or Section 15 of the New York Debtor and
Creditor Law in a case commenced by or against the Company under
either such statute, and either (A) the trust funds will no longer
remain the property of the Company (and therefore, will not be subject
to the effect of any applicable bankruptcy, insolvency, reorganization
or similar laws affecting creditors' rights generally) or (B) if a
court were to rule under any such law in any case or proceeding that
the trust funds remained in the possession of the Trustee prior to
such court ruling to the extent not paid to Holders, the Trustee will
hold, for the benefit of the Holders, a valid first priority perfected
security interest in such trust funds that is not avoidable in
bankruptcy or otherwise except for the effect of Section 552(b) of the
Bankruptcy Code on interest on the trust funds accruing after the
commencement of a case under such statute and (y) the Holders will be
entitled to receive adequate protection of their interests in such
trust funds if such trust funds are used in such case or proceeding.
<PAGE> 82
-73-
Section 8.05. Deposited Money and U.S. Government Securities
to be Held in Trust; Other Miscellaneous Provisions.
Subject to Section 8.06, all money and U.S. Government
Securities (including the proceeds thereof) deposited with the Trustee (or
other qualifying trustee, collectively for purposes of this Section 8.05, the
"Trustee") pursuant to Section 8.04 in respect of the outstanding Notes shall
be held in trust and applied by the Trustee, in accordance with the provisions
of such Notes and this Indenture, to the payment, either directly or through
any Paying Agent (including the Company acting as Paying Agent) as the Trustee
may determine, to the Holders of such Notes of all sums due and to become due
thereon in respect of principal, premium, if any, and interest, but such money
need not be segregated from other funds except to the extent required by law.
The Company shall pay and indemnify the Trustee against any
tax, fee or other charge imposed on or assessed against the cash or U.S.
Government Securities deposited pursuant to Section 8.04 or the principal and
interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the Holders of the outstanding Notes.
Anything in this Article Eight to the contrary
notwithstanding, the Trustee shall deliver or pay to the Company from time to
time upon the request of the Company any money or U.S. Government Securities
held by it as provided in Section 8.04 which, in the opinion of a nationally
recognized firm of independent public accountants expressed in a written
certification thereof delivered to the Trustee (which may be the opinion
delivered under Section 8.04(a)), are in excess of the amount thereof which
would then be required to be deposited to effect an equivalent Legal Defeasance
or Covenant Defeasance.
Section 8.06. Repayment to Company.
Any money deposited with the Trustee or any Paying Agent, or
then held by the Company, in trust for the payment of the principal of,
premium, if any, or interest on any Note and remaining unclaimed for two years
after such principal, and premium, if any, or interest has become due and
payable shall be paid to the Company on its written request or (if then held by
the Company) shall be discharged from such trust; and the Holder of such Note
shall thereafter, as a creditor, look only to the Company for payment thereof,
and all liability of the Trustee or such Paying Agent with respect to such
trust money, and all liability of the Company as trustee thereof, shall
thereupon cease; provided, however, that the Trustee or such Paying Agent,
before being required to make any such repayment, may at the expense of the
Company cause to be published once, in The New York Times and The Wall Street
Journal (national edition), notice that such money remains unclaimed and that,
<PAGE> 83
-74-
after a date specified therein, which shall not be less than 30 days from the
date of such notification or publication, any unclaimed balance of such money
then remaining will be repaid to the Company.
Section 8.07. Reinstatement.
If the Trustee or Paying Agent is unable to apply any United
States Dollars or U.S. Government Securities in accordance with Section 8.02 or
8.03, as the case may be, by reason of any order or judgment of any court or
governmental authority enjoining, restraining or otherwise prohibiting such
application, then the Company's obligations under this Indenture and the Notes
shall be revived and reinstated as though no deposit had occurred pursuant to
Section 8.02 or 8.03 until such time as the Trustee or Paying Agent is
permitted to apply all such money in accordance with Section 8.02 or 8.03, as
the case may be; provided, however, that, if the Company makes any payment of
principal of, premium, if any, or interest on any Note following the
reinstatement of its obligations, the Company shall be subrogated to the rights
of the Holders of such Notes to receive such payment from the money held by the
Trustee or Paying Agent.
ARTICLE 9
SATISFACTION AND DISCHARGE
Section 9.01. Satisfaction and Discharge of Indenture.
This Indenture shall cease to be of further effect (except as
to any surviving rights of registration of transfer or exchange of Notes herein
expressly provided for), and the Trustee, on demand of and at the expense of
the Company, shall execute instruments in form and substance satisfactory to
the Trustee and the Company acknowledging satisfaction and discharge of this
Indenture, when
(1) either
(A) all Notes theretofore authenticated and
issued (other than (i) Notes which have been destroyed, lost
or stolen and which have been replaced or paid as provided in
Section 2.07 and (ii) 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 Trustee or
discharged from such trust, as provided in Section 2.04) have
been delivered to the Trustee for cancellation; or
<PAGE> 84
-75-
(B) all such Notes not theretofore delivered to
the Trustee for cancellation
(i) have become due and payable; or
(ii) will become due and payable within
one year,
and the Company, in the case of (B)(i) or (ii) above, has
deposited or caused to be deposited with the Trustee as trust
funds in trust an amount sufficient to pay and discharge the
entire indebtedness on such Notes not theretofore delivered to
the Trustee for cancellation, for principal of, premium, if
any, and interest on the Notes to the date of such deposit (in
the case of Notes which have become due and payable) 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;
(2) the Company has paid or caused to be paid all other
sums payable hereunder by the Company; and
(3) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent herein provided for relating to the satisfaction and discharge of
this Indenture have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 7.07, the obligations
of the Trustee to any Authenticating Agent under Section 2.02 and, if money
shall have been deposited with the Trustee pursuant to subclause (B) of Clause
(1) of this Section 9.01, the obligations of the Trustee under Section 7.05 and
Section 8.06 shall survive.
Section 9.02. Application of Monies for Satisfaction and
Discharge.
Subject to the provisions of Section 8.06, all money deposited
with the Trustee pursuant to Section 9.01 shall be held in trust and applied by
it, in accordance with the provisions of the Securities and this Indenture, to
the payment, either directly or through any Paying Agent (including the Company
acting as its own Paying Agent) as the Trustee may determine, to the Persons
entitled thereto, of the principal and interest for whose payment such money
has been deposited with the Trustee.
<PAGE> 85
-76-
ARTICLE 10
AMENDMENT, SUPPLEMENT AND WAIVER
Section 10.01. Without Consent of Holders of Notes.
From time to time, the Company and the Trustee, without the
consent of the Holders of the Notes, may amend this Indenture for the following
purposes, so long as such change does not adversely affect the rights of any of
the Holders. The Trustee will be entitled to rely on such evidence as it deems
appropriate, including, without limitation, solely on an Opinion of Counsel
that such change does not adversely affect the rights of any Holder, in
executing any supplemental indenture.
Notwithstanding Section 10.02 of this Indenture, the Company
and the Trustee may amend or supplement this Indenture, the Notes or the Escrow
and Disbursement Agreement without the consent of any Holder of a Note:
(a) to cure any ambiguity, defect or inconsistency;
(b) to provide for uncertificated Notes in addition to or
in place of certificated Notes;
(c) to provide for the assumption of the Company's
obligations to the Holders of the Notes in the case of a merger or
consolidation pursuant to Article 5;
(d) to execute and deliver any documents necessary or
appropriate to release Liens on any Collateral as permitted by Section
11.03;
(e) to make any change that would provide any additional
rights or benefits to the Holders of the Notes or that does not
adversely affect the legal rights hereunder of any Holder of the
Notes;
(f) to comply with requirements of the SEC in order to
effect or maintain the qualification of this Indenture under the TIA;
or
(g) to provide for issuance of the Exchange Notes (which
will have terms identical in all material respects to the Initial Notes
except that the transfer restrictions contained in the Initial Notes
will be modified or eliminated, as appropriate), and which will be
treated together with any outstanding Initial Notes, as a single issue
of Securities.
<PAGE> 86
-77-
Upon the written request of the Company accompanied by a
resolution of the Board of Directors of the Company authorizing the execution
of any such amended or supplemental Indenture, and upon receipt by the Trustee
of the documents described in Section 10.06, the Trustee shall join with the
Company in the execution of any amended or supplemental Indenture authorized or
permitted by the terms of this Indenture and to make any further appropriate
agreements and stipulations which may be therein contained, but the Trustee
shall not be obligated to enter into such amended or supplemental Indenture
which affects its own rights, duties or immunities under this Indenture or
otherwise.
Section 10.02. With Consent of Holders of Notes.
The Company and the Trustee may amend or supplement this
Indenture, the Notes or the Escrow and Disbursement Agreement or any amended or
supplemental Indenture with the written consent of the Holders of Notes of not
less than a majority in aggregate principal amount of the Notes then
outstanding, and any existing Default and its consequences or compliance with
any provision of this Indenture, the Notes or the Escrow and Disbursement
Agreement may be waived with the consent of the Holders of a majority in
principal amount of the then outstanding Notes.
Upon the request of the Company accompanied by a resolution of
the Board of Directors of the Company authorizing the execution of any such
amended or supplemental Indenture, and upon the filing with the Trustee of
evidence satisfactory to the Trustee of the consent of the Holders of Notes as
aforesaid, and upon receipt by the Trustee of the documents described in
Section 10.06, the Trustee shall join with the Company in the execution of such
amended or supplemental Indenture unless such amended or supplemental Indenture
affects the Trustee's own rights, duties or immunities under this Indenture or
otherwise, in which case the Trustee may in its discretion, but shall not be
obligated to, enter into such amended or supplemental Indenture.
It shall not be necessary for the consent of the Holders of
Notes under this Section 10.02 to approve the particular form of any proposed
amendment or waiver, but it shall be sufficient if such consent approves the
substance thereof.
After an amendment, supplement or waiver under this Section
becomes effective, the Company shall mail to the Holders of Notes affected
thereby a notice briefly describing the amendment, supplement or waiver. Any
failure of the Company to mail such notice, or any defect therein, shall not,
however, in any way impair or affect the validity of any such amended or
supplemental Indenture or waiver. Subject to Sections 6.04 and 6.07, the
Holders of a majority in aggregate principal amount of the Notes then
outstanding may waive compliance in a particular instance by the Company with
any provision of this
<PAGE> 87
-78-
Indenture or the Notes. However, without the consent of each Holder affected
thereby, an amendment or waiver may not (with respect to any Notes held by a
non-consenting Holder of Notes):
(a) reduce the principal amount of Notes whose Holders
must consent to an amendment, supplement or waiver;
(b) reduce the principal of or change or have the effect
of changing the fixed maturity of any Note or change the date on which
any Note may be subject to redemption or repurchase, or reduce the
redemption or repurchase price thereof;
(c) reduce the rate of or change or have the effect of
changing the time for payment of interest, including defaulted
interest, on any Notes;
(d) waive a Default or Event of Default in the payment of
principal of or premium, if any, or interest on the Notes (except a
rescission of acceleration of the Notes by the Holders of at least a
majority in aggregate principal amount of the Notes and a waiver of
the payment default relating solely to the principal or interest that
has become due solely because of the acceleration);
(e) make any Note payable in money other than that stated
in the Notes;
(f) make any change in the provisions of this Indenture
relating to waivers of past Defaults or the rights of Holders of Notes
to receive payments of principal of or interest on the Notes on or
after the due date thereof or to bring suit to enforce such payment;
(g) waive a redemption payment with respect to any Note
(other than a payment required by Section 4.12 and 4.16);
(h) amend, change or modify in any material respect the
obligation of the Company to make and consummate a Change of Control
Offer in the event of a Change of Control or make and consummate a Net
Proceeds Offer with respect to any Asset Sale that has been
consummated or modify any of the provisions or definitions with
respect thereto;
(i) make any change in the foregoing amendment and waiver
provisions; or
<PAGE> 88
-79-
(j) directly or indirectly release Liens on all or
substantially all of the collateral except as permitted by the Escrow
and Disbursement Agreement.
Section 10.03. Compliance with Trust Indenture Act.
Every amendment or supplement to this Indenture or the Notes
shall be set forth in an amended or supplemental Indenture that complies with
the TIA as then in effect.
Section 10.04. Revocation and Effect of Consents.
Until an amendment, supplement or waiver becomes effective, a
consent to it by a Holder of a Note is a continuing consent by the Holder of a
Note and every subsequent Holder of a Note or portion of a Note that evidences
the same debt as the consenting Holder's Note, even if notation of the consent
is not made on any Note. However, any such Holder of a Note or subsequent
Holder of a Note may revoke the consent as to its Note if the Trustee receives
written notice of revocation before the date the waiver, supplement or
amendment becomes effective. An amendment, supplement or waiver becomes
effective in accordance with its terms and thereafter binds every Holder of a
Note.
The Company may fix a record date for determining which
Holders of the Notes must consent to such amendment, supplement or waiver. If
the Company fixes a record date, the record date shall be fixed at (i) the
later of 30 days prior to the first solicitation of such consent or the date of
the most recent list of Holders of Notes furnished to the Trustee prior to such
solicitation pursuant to Section 2.05 or (ii) such other date as the Company
shall designate.
Section 10.05. Notation on or Exchange of Notes.
The Trustee may place an appropriate notation about an
amendment, supplement or waiver on any Note thereafter authenticated. The
Company in exchange for all Notes may issue and the Trustee shall authenticate
new Notes that reflect the amendment, supplement or waiver.
Failure to make the appropriate notation or issue a new Note
shall not affect the validity and effect of such amendment, supplement or
waiver.
<PAGE> 89
-80-
Section 10.06. Trustee to Sign Amendments, etc.
The Trustee shall sign any amended or supplemental Indenture
authorized pursuant to this Article 10 if the amendment or supplement does not
adversely affect the rights, duties, liabilities or immunities of the Trustee.
If it does, the Trustee may but need not sign it. In signing such amendment
the Trustee shall be entitled to receive indemnity reasonably satisfactory to
it and to receive, and (subject to Section 7.01) shall be fully protected in
relying upon, an Officers' Certificate and an Opinion of Counsel stating that
such amendment is authorized or permitted by this Indenture.
ARTICLE 11
COLLATERAL AND SECURITY
Section 11.01. Escrow and Disbursement Agreement.
The due and punctual payment of the principal of and interest
on the Notes when and as the same shall be due and payable, whether on an
interest payment date, at maturity, by acceleration, repurchase, redemption or
otherwise, and interest on the overdue principal of and interest (to the extent
permitted by law), if any, on the Notes and performance of all other
obligations of the Company to the Holders of Notes or the Trustee under this
Indenture with respect to the Notes, and the Notes, according to the terms
hereunder or thereunder, shall be secured as provided in the Escrow and
Disbursement Agreement which the Company, the Escrow Agent and the Trustee have
entered into simultaneously with the execution of this Indenture. Each Holder
of Notes, by its acceptance thereof, consents and agrees to the terms of the
Escrow and Disbursement Agreement (including, without limitation, the
provisions providing for foreclosure and disbursement of Collateral) as the
same may be in effect or may be amended from time to time in accordance with
its terms and authorizes and directs the Escrow Agent and the Trustee to enter
into the Escrow and Disbursement Agreement and to perform its obligations and
exercise its rights thereunder in accordance therewith. The Company shall
deliver to the Trustee copies of the Escrow and Disbursement Agreement, and
shall do or cause to be done all such acts and things as may be necessary or
proper, or as may be required by the provisions of the Escrow and Disbursement
Agreement, to assure and confirm to the Trustee the security interest in the
Collateral contemplated by the Escrow and Disbursement Agreement or any part
thereof, as from time to time constituted, so as to render the same available
for the security and benefit of this Indenture with respect to, and of, the
Notes, according to the intent and purposes expressed in the Escrow and
Disbursement Agreement. The Company shall take any and all actions reasonably
required to cause the Escrow and Disbursement Agreement to create and maintain
(to the extent possible under applicable law), as security for the obligations
of the Company hereunder, a valid and enforceable perfected first priority Lien
in
<PAGE> 90
-81-
and on all the Collateral, in favor of the Trustee for the benefit of the
Holders of Notes, superior to and prior to the rights of all third Persons and
subject to no other Liens.
Section 11.02. Recording and Opinions.
(a) The Company shall furnish to the Trustee
simultaneously with the execution and delivery of this Indenture an Opinion of
Counsel either (i) stating that in the opinion of such counsel all action has
been taken with respect to the recording, registering and filing of this
Indenture, financing statements or other instruments necessary to make
effective the Lien intended to be created by the Escrow and Disbursement
Agreement, and reciting with respect to the security interests in the
Collateral, the details of such action, or (ii) stating that, in the opinion of
such counsel, no such action is necessary to make such Lien effective.
(b) The Company shall furnish to the Escrow Agent and the
Trustee on December 20, 1997, and on each December 20 thereafter until the date
upon which the balance of Available Funds (as defined in the Escrow and
Disbursement Agreement) shall have been reduced to zero, an Opinion of Counsel,
dated as of such date, either (i) stating that (A) in the opinion of such
counsel, action has been taken with respect to the recording, registering,
filing, re-recording, re-registering and refiling of all supplemental
indentures, financing statements, continuation statements or other instruments
of further assurance as is necessary to maintain the Lien of the Escrow and
Disbursement Agreement and reciting with respect to the security interests in
the Collateral the details of such action or referring to prior Opinions of
Counsel in which such details are given and (B) based on relevant laws as in
effect on the date of such Opinion of Counsel, all financing statements and
continuation statements have been executed and filed that are necessary as of
such date and during the succeeding 12 months fully to preserve and protect, to
the extent such protection and preservation are possible by filing, the rights
of the Holders of Notes and the Trustee hereunder and under the Escrow and
Disbursement Agreement with respect to the security interests in the Collateral
or (ii) stating that, in the opinion of such counsel, no such action is
necessary to maintain such Lien and assignment.
Section 11.03. Release of Collateral.
(a) Subject to subsections (b), (c) and (d) of this
Section 11.03, Collateral may be released from the Lien and security interest
created by the Escrow and Disbursement Agreement only in accordance with the
provisions of the Escrow and Disbursement Agreement.
<PAGE> 91
-82-
(b) Except to the extent that any Lien on proceeds of
Collateral is automatically released by operation of Section 9-306 of the
Uniform Commercial Code or other similar law, no Collateral shall be released
from the Lien and security interest created by the Escrow and Disbursement
Agreement pursuant to the provisions of the Escrow and Disbursement Agreement,
other than pursuant to the terms thereof, unless there shall have been
delivered to the Trustee the certificate required by Section 11.03(d) and
Section 11.04.
(c) At any time when an Event of Default shall have
occurred and be continuing and the maturity of the Notes issued on the Issuance
Date shall have been accelerated (whether by declaration or otherwise), no
Collateral shall be released pursuant to the provisions of the Escrow and
Disbursement Agreement, and no release of Collateral in contravention of this
Section 11.03(c) shall be effective as against the Holders of Notes, except for
the disbursement of all Available Funds (as defined in the Escrow and
Disbursement Agreement) to the Trustee pursuant to Section 6(b) of the Escrow
and Disbursement Agreement.
(d) The release of any Collateral from the Liens and
security interests created by this Indenture and the Escrow and Disbursement
Agreement shall not be deemed to impair the security under this Indenture in
contravention of the provisions hereof if and to the extent the Collateral is
released pursuant to the terms hereof or, subject to complying with the
requirements of this Section 11.03, pursuant to the terms of the Escrow and
Disbursement Agreement. To the extent applicable, the Company shall cause TIA
Section 314(d) relating to the release of property or securities from the Lien
and security interest of the Escrow and Disbursement Agreement to be complied
with. Any certificate or opinion required by TIA Section 314(d) may be made
by an Officer of the Company except in cases where TIA Section 314(d) requires
that such certificate or opinion be made by an independent Person, which Person
shall be an independent engineer, appraiser or other expert selected or
approved by the Trustee in the exercise of reasonable care.
Section 11.04. Certificates of the Company.
The Company shall furnish to the Trustee, prior to any
proposed release of Collateral other than pursuant to the express terms of the
Escrow and Disbursement Agreement, (i) all documents required by Section 314(d)
of the TIA and (ii) an Opinion of Counsel, which may be rendered by internal
counsel to the Company, to the effect that such accompanying documents
constitute all documents required by Section 314(d) of the TIA. The Trustee
may, to the extent permitted by Sections 7.01 and 7.02, accept as conclusive
evidence of compliance with the foregoing provisions the appropriate statements
contained in such documents and such Opinion of Counsel.
<PAGE> 92
-83-
Section 11.05. Authorization of Actions to be Taken by the
Trustee Under the Escrow and Disbursement Agreement.
Subject to the provisions of Section 7.01 and 7.02, the
Trustee may, without the consent of the Holders of Notes, on behalf of the
Holders of Notes, take all actions it deems necessary or appropriate in order
to (a) enforce any of the terms of the Escrow and Disbursement Agreement and
(b) collect and receive any and all amounts payable in respect of the
Obligations of the Company hereunder. The Trustee shall have power to
institute and maintain such suits and proceedings as it may deem expedient to
prevent any impairment of the Collateral by any acts that may be unlawful or in
violation of the Escrow and Disbursement Agreement or this Indenture, and such
suits and proceedings as the Trustee may deem expedient to preserve or protect
its interests and the interests of the Holders of Notes in the Collateral
(including power to institute and maintain suits or proceedings to restrain the
enforcement of or compliance with any legislative or other governmental
enactment, rule or order that may be unconstitutional or otherwise invalid if
the enforcement of, or compliance with, such enactment, rule or order would
impair the security interest hereunder or be prejudicial to the interests of
the Holders of Notes or of the Trustee).
Section 11.06. Authorization of Receipt of Funds by the
Trustee Under the Escrow and Disbursement Agreement.
The Trustee is authorized to receive any funds for the benefit
of the Holders of Notes disbursed under the Escrow and Disbursement Agreement,
and to make further distributions of such funds to the Holders of Notes
according to the provisions of this Indenture.
Section 11.07. Termination of Security Interest.
Upon the earliest to occur of (i) the date upon which the
balance of Available Funds (as defined in the Escrow and Disbursement
Agreement) shall have been reduced to zero, (ii) the payment in full of all
obligations of the Company under this Indenture and the Notes, (iii) Legal
Defeasance pursuant to Section 8.02 and (iv) Covenant Defeasance pursuant to
Section 8.03, the Trustee shall, at the written request of the Company, release
the Liens pursuant to this Indenture and the Escrow and Disbursement Agreement
upon the Company's compliance with the provisions of the TIA pertaining to
release of collateral.
<PAGE> 93
-84-
ARTICLE 12
MISCELLANEOUS
Section 12.01. Trust Indenture Act Controls.
If any provision of this Indenture limits, qualifies or
conflicts with the duties imposed by TIA Section 318(c), the imposed duties
shall control.
Section 12.02. Notices.
Any notice or communication by the Company or the Trustee to
the other is duly given if in writing and delivered in Person or mailed by
first class mail (registered or certified, return receipt requested), telex,
telecopier or overnight air courier guaranteeing next day delivery, to the
other's address:
If to the Company:
Heartland Wireless Communications, Inc.
200 Chisholm Place, Suite 200
Plano, Texas 75075
Telecopier No.: (972) 633-0074
Attention: Chief Financial Officer
If to the Trustee:
First Trust of New York, National Association
100 Wall Street, Suite 1600
New York, New York 10005
Telecopier No.: (212) 809-5459
Attention: Corporate Trust Administration
The Company or the Trustee, by notice to the other may
designate additional or different addresses for subsequent notices or
communications.
All notices and communications (other than those sent to
Holders of Notes) shall be deemed to have been duly given: at the time
delivered by hand, if personally delivered; five Business Days after being
deposited in the mail, postage prepaid, if mailed; when answered back, if
telexed; when receipt acknowledged, if telecopied; and the next Business Day
after timely delivery to the courier, if sent by overnight air courier
guaranteeing next day delivery.
<PAGE> 94
-85-
Any notice or communication to a Holder of a Note shall be
mailed by first class mail, certified or registered, return receipt requested,
or by overnight air courier guaranteeing next day delivery to its address shown
on the register kept by the Registrar. Any notice or communication shall also
be so mailed to any Person described in TIA Section 313(c), to the extent
required by the TIA. Failure to mail a notice or communication to a Holder of
a Note or any defect in it shall not affect its sufficiency with respect to
other Holders of Notes.
If a notice or communication is mailed in the manner provided
above within the time prescribed, it is duly given, whether or not the
addressee receives it.
If the Company mails a notice or communication to Holders of
Notes, it shall mail a copy to the Trustee and each Agent at the same time.
Section 12.03. Communication by Holders of Notes with Other
Holders of Notes.
Holders of the Notes may communicate pursuant to TIA Section
312(b) with other Holders of Notes with respect to their rights under this
Indenture or the Notes. The Company, the Trustee, the Registrar and anyone
else shall have the protection of TIA Section 312(c).
Section 12.04. Certificate and Opinion as to Conditions
Precedent.
Upon any request or application by the Company to the Trustee
or any Agent to take any action under this Indenture, the Company shall furnish
to the Trustee or such Agent:
(a) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee or such Agent (which shall include the
statements set forth in Section 12.05) stating that, in the opinion of
the signers, all conditions precedent and covenants, if any, provided
for in this Indenture relating to the proposed action have been
satisfied; and
(b) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee or such Agent (which shall include the
statements set forth in Section 12.05) stating that, in the opinion of
such counsel, all such conditions precedent and covenants have been
satisfied.
<PAGE> 95
-86-
Section 12.05. Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(a) a statement that the Person making such certificate or
opinion has read such covenant or condition;
(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(c) a statement that, in the opinion of such Person, he has
made such examination or investigation as is necessary to enable him
to express an informed opinion as to whether or not such covenant or
condition has been satisfied; and
(d) a statement as to whether or not, in the opinion of such
Person, such condition or covenant has been satisfied.
Section 12.06. Rules by Trustee and Agents.
The Trustee may make reasonable rules for action by or at a
meeting of Holders of Notes. The Registrar or Paying Agent may make reasonable
rules and set reasonable requirements for its functions.
Section 12.07. No Personal Liability of Partners, Directors,
Officers, Employees and Stockholders.
No director, officer, employee, incorporator or stockholder of
the Company, as such, shall have any liability for any obligations of the
Company under the Notes, this Indenture or the Escrow and Disbursement
Agreement or for any claim based on, in respect of, or by reason of, such
obligations or their creation. Each Holder of the Notes by accepting a Note
waives and releases all such liability. The waiver and release are part of the
consideration for issuance of the Notes.
<PAGE> 96
-87-
Section 12.08. Governing Law.
THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE
USED TO CONSTRUE THIS INDENTURE AND THE NOTES WITHOUT REGARD TO PRINCIPLES OF
CONFLICT OF LAWS. EACH OF THE PARTIES HERETO AGREES TO SUBMIT TO THE
JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS INDENTURE.
Section 12.09. No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret another indenture,
loan or debt agreement of the Company or its Subsidiaries. Any such indenture,
loan or debt agreement may not be used to interpret this Indenture.
Section 12.10. Successors.
All agreements of the Company in this Indenture and the Notes
shall bind its successors. All agreements of the Trustee in this Indenture
shall bind its successor.
Section 12.11. Severability.
In case any provision in this Indenture or in the Notes shall
be invalid, illegal or unenforceable, the validity, legality and enforceability
of the remaining provisions shall not in any way be affected or impaired
thereby.
Section 12.12. Counterpart Originals.
The parties may sign any number of copies of this Indenture.
Each signed copy shall be an original, but all of them together represent the
same agreement.
Section 12.13. Table of Contents, Headings, Etc.
The Table of Contents, Cross-Reference Table and Headings of
the Articles and Sections of this Indenture have been inserted for convenience
of reference only, are not to be considered a part of this Indenture and shall
in no way modify or restrict any of the terms or provisions hereof.
[Signatures on following page]
<PAGE> 97
-88-
SIGNATURES
Dated as of December 20, 1996 HEARTLAND WIRELESS
COMMUNICATIONS, INC.
(SEAL)
By: /s/ JOHN R. BAILEY
-----------------------------------
Attest: Name: John R. Bailey
Title: Senior Vice President and CFO
/s/ J. CURTIS HENDERSON By: /s/ DAVID D. HAGEY
- --------------------------------- -----------------------------------
Name: J. Curtis Henderson Name: David D. Hagey
Title: Vice President and Title: Vice President and Controller
General Counsel
Dated as of December 20, 1996 FIRST TRUST OF NEW YORK,
NATIONAL ASSOCIATION
(SEAL)
By: /s/ ALFIA MONASTRA
-----------------------------------
/s/ CATHERINE F. DONAHUE Name: Alfia Monastra
Assistant Secretary Title: Assistant Vice President
<PAGE> 98
EXHIBIT A
CUSIP No.: _______________
HEARTLAND WIRELESS COMMUNICATIONS, INC.
14% SENIOR NOTE DUE 2004
No. 1
HEARTLAND WIRELESS COMMUNICATIONS, INC., a Delaware corporation (the
"Company", which term includes any successor entity), for value received
promises to pay to or registered assigns, the principal
sum of Dollars, on October, 15, 2004.
Interest Payment Dates: April 15 and October 15
Record Dates (whether or not a Business Day): April 1 and October 1
Reference is made to the further provisions of this Note contained
herein, which will for all purposes have the same effect as if set forth at
this place.
A-1
<PAGE> 99
IN WITNESS WHEREOF, the Company has caused this Note to be signed
manually or by facsimile by its duly authorized officers and a facsimile of its
corporate seal to be affixed hereto or imprinted herein.
HEARTLAND WIRELESS COMMUNICATIONS, INC.
By:
-----------------------------------
Name:
Title:
By:
-----------------------------------
Name:
Title:
Dated: December 20, 1996
Certificate of Authentication
This is one of the 14% Senior Notes due 2004 referred to in the
within-mentioned Indenture.
FIRST TRUST OF NEW YORK, NATIONAL
ASSOCIATION, as Trustee
By:
-----------------------------------
Authorized Signatory
or
FIRST TRUST OF NEW YORK, NATIONAL
ASSOCIATION, as Trustee
By: BANKERS TRUST COMPANY, as
Authenticating Agent
By:
-----------------------------------
Authorized Signatory
A-2
<PAGE> 100
(REVERSE OF SECURITY)
14% Senior Note due 2004
1. Interest. HEARTLAND WIRELESS COMMUNICATIONS, INC., a
Delaware corporation (the "Company"), promises to pay interest on the principal
amount of this Note at the rate per annum shown above. If the Company fails to
fulfill its obligations under Section 2 or Section 3 of the Registration Rights
Agreement, the Company shall pay, as liquidated damages, additional interest on
the Notes ("Additional Interest") as follows (each such event referred to in
clauses (i) through (iii) below, a "Registration Default" and each of which
shall be given independent effect):
(i) if the Exchange Offer Registration Statement (as
defined in the Registration Rights Agreement) has not been filed on or
prior to the 120th calendar day following the Issue Date, then
commencing on the 121st day after the Issue Date, Additional Interest
shall accrue on the Notes over and above the accrued interest at a
rate of .50% per annum for the first 120 days immediately following
such 120th calendar day;
(ii) if the Exchange Offer Registration Statement is not
declared effective by the SEC on or prior to the 180th day following
the Issue Date, then commencing on the 181st day after the Issue Date,
Additional Interest shall accrue on the Notes included or which should
have been included in such Exchange Offer Registration Statement over
and above the accrued interest at a rate of .50% per annum for the
first 90 days immediately following such 180th day; and
(iii) if (A) the Company has not exchanged Exchange Notes
for all Notes validly tendered in accordance with the terms of the
Exchange Offer, (B) the Shelf Registration Statement (as defined in
the Registration Rights Agreement) is not declared effective on or
prior to the 60th calendar day following the delivery of the Shelf
Notice or (C) if applicable, the Shelf Registration Statement has been
declared effective and ceases to be effective, then Additional
Interest shall accrue on the Notes over and above the accrued interest
at a rate of .50% per annum for the first 90 days commencing on the
day after such Registration Default;
such Additional Interest rate, in the case of each of (i), (ii) and (iii)
above, to increase by an additional .50% per annum at the beginning of each
subsequent 90-day period; provided, however, that in no event shall the amount
of Additional Interest exceed 2.00% in the aggregate; provided further, that
(1) upon the filing of the Exchange Offer Registration Statement (in the case
of clause (i) above), (2) upon the effectiveness of the Exchange Offer
Registration Statement (in the case of clause (ii) above), or (3) upon the
exchange of Exchange Notes for all Notes tendered (in the case of clause
(iii)(A) above), or upon the effectiveness of the Shelf Registration Statement
(in the case of clause (iii)(B) above), or
A-3
<PAGE> 101
upon the effectiveness of the Shelf Registration Statement which had ceased to
remain effective (in the case of clause (iii)(C) above), Additional Interest on
the Notes as a result of such clause (or the relevant subclause thereof), as
the case may be, shall cease to accrue.
Interest on the Notes will accrue from the most recent date on
which interest has been paid or, if no interest has been paid, from December
20, 1996. The Company will pay interest and Additional Interest, if any, semi-
annually in arrears on each Interest Payment Date, commencing April 15, 1997.
Interest will be computed on the basis of a 360-year of twelve 30-day months
and, in the case of a partial month, the actual number of days elapsed. The
Company shall pay interest on overdue principal and on overdue installments of
interest (without regard to any applicable grace periods) from time to time on
demand at the rate borne by the Notes plus 2% per annum, to the extent lawful.
2. Method of Payment. The Company shall pay interest on
the Notes (except defaulted interest) or on Additional Interest, if any, in
respect of the Notes to the Persons who are the registered Holders at the close
of business on the Record Date immediately preceding the Interest Payment Date
even if the Notes are canceled on registration of transfer or registration of
exchange after such Record Date. Holders must surrender Notes to a Paying
Agent to collect principal payments. The Company shall pay principal and
interest in money of the United States that at the time of payment is legal
tender for payment of public and private debts ("U.S. Legal Tender"). However,
the Company may pay principal and interest by its check payable in such U.S.
Legal Tender. The Company may deliver any such interest payment to the Paying
Agent or to a Holder at the Holder's registered address.
3. Paying Agent and Registrar. Initially, Bankers Trust
Company will act as Paying Agent and Registrar. The Company may change any
Paying Agent or Registrar without notice to the Holders.
4. Indenture. The Company issued the Notes under an
Indenture, dated as of December 20, 1996 (the "Indenture"), between the Company
and First Trust of New York, National Association, as Trustee (the "Trustee").
This Note is one of a duly authorized issue of Initial Notes of the Company
designated as its 14% Senior Notes due 2004 (the "Initial Notes"). The Notes
are limited in aggregate principal amount to $125,000,000, except as otherwise
provided in the Indenture. The Notes include the Initial Notes and the
Exchange Notes, as defined below, issued in exchange for the Notes pursuant to
the Indenture. The Initial Notes and the Exchange Notes are treated as a
single class of securities under the Indenture. Capitalized terms herein are
used as defined in the Indenture unless otherwise defined herein. The terms of
the Notes include those stated in the Indenture and those made part of the
Indenture by reference to the Trust Indenture Act of 1939 (15 U.S. Code
Sections 77aaa-77bbbb) (the "TIA"), as in effect on the date of the Indenture.
Notwithstanding anything to the contrary herein, the Notes are subject to all
such terms, and Holders of Notes are referred to the Indenture and said Act for
a statement of them. The Notes are general unsecured obligations of the
Company.
A-4
<PAGE> 102
5. Optional Redemption. (a) Optional Redemption. The
Notes will not be redeemable at the Company's option prior to October 15, 2002.
Thereafter, the Notes will be subject to redemption at the option of the
Company, in whole or in part, upon not less than 30 nor more than 60 days'
notice, at the redemption prices (expressed as percentages of principal amount)
set forth below plus accrued and unpaid interest thereon to the applicable
redemption date, if redeemed during the twelve-month period beginning on
October 15 of the years indicated below:
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
2002 . . . . . . . . . . . . . . . . . . . 102.333%
2003 and thereafter . . . . . . . . . . . 100.000%
</TABLE>
(b) Optional Redemption Upon Sale of Equity to Strategic
Equity Investor. Notwithstanding the foregoing, in the event of the sale by
the Company prior to October 15, 1999 of at least $25.0 million of its Capital
Stock (other than Disqualified Stock) to a Strategic Equity Investor in a
single transaction, the Company may, at its option, use the net cash proceeds
of such sale of Capital Stock to redeem up to 35% of the Notes at a redemption
price equal to 114% of the principal amount thereof plus accrued and unpaid
interest thereon, if any, to the date of redemption; provided that at least 65%
of the initial principal amount of the Notes remains outstanding immediately
after such redemption. In order to effect the foregoing redemption with the
proceeds of any such sale of Capital Stock (other than Disqualified Stock), the
Company shall make such redemption not more than 120 days after the
consummation of any such sale of Capital Stock.
The Notes are not entitled to the benefit of any sinking fund.
6. Notice of Redemption. Notice of redemption will be mailed
at least 30 days but not more than 60 days before the Redemption Date to each
Holder of Notes to be redeemed at such Holder's registered address. Notes in
denominations larger than $1,000 may be redeemed in part.
Except as set forth in the Indenture, if monies for the
redemption of the Notes called for redemption shall have been deposited with
the Paying Agent for redemption on such Redemption Date, then, unless the
Company defaults in the payment of such Redemption Price plus accrued interest,
if any, the Notes called for redemption will cease to bear interest from and
after such Redemption Date and the only right of the Holders of such Notes will
be to receive payment of the Redemption Price plus accrued interest, if any.
7. Offers to Purchase. Sections 4.12 and 4.16 of the
Indenture provide that, after certain Asset Sales (as defined in the Indenture)
and upon the occurrence of a Change of Control (as defined in the Indenture)
subject to further limitations contained therein, the
A-5
<PAGE> 103
Company will make an offer to purchase certain amounts of the Notes in
accordance with the procedures set forth in the Indenture.
8. Registration Rights. Pursuant to the Registration Rights
Agreement among the Company and the Holders of the Initial Notes, the Company
will be obligated to consummate an exchange offer pursuant to which the Holder
of this Note shall have the right to exchange this Note for the Company's 14%
Senior Notes due 2004 (the "Exchange Notes"), which have been registered under
the Securities Act, in like principal amount and having terms identical in all
material respects as the Initial Notes. The Holders of the Initial Notes shall
be entitled to receive certain additional interest payments in the event such
exchange offer is not consummated and upon certain other conditions, all
pursuant to and in accordance with the terms of the Registration Rights
Agreement.
9. Denominations; Transfer; Exchange. The Notes are in
registered form, without coupons, in denominations of $1,000 and integral
multiples of $1,000. A Holder shall register the transfer of or exchange Notes
in accordance with the Indenture. The Registrar may require a Holder, among
other things, to furnish appropriate endorsements and transfer documents and to
pay certain transfer taxes or similar governmental charges payable in
connection therewith as permitted by the Indenture. The Registrar need not
register the transfer of or exchange of any Notes or portions thereof selected
for redemption.
10. Persons Deemed Owners. The registered Holder of a Note
shall be treated as the owner of it for all purposes.
11. Unclaimed Money. If money for the payment of principal
or interest remains unclaimed for two years after such principal or interest
has become due and payable, the Trustee and the Paying Agent will pay such
money back to the Company. After that, all liability of the Trustee and such
Paying Agent with respect to such money shall cease.
12. Discharge Prior to Redemption or Maturity. If the
Company at any time deposits with the Trustee U.S. Legal Tender or U.S.
Government Obligations sufficient to pay the principal of and interest on the
Notes to redemption or maturity and complies with the other provisions of the
Indenture relating thereto, the Company will be discharged from certain
provisions of the Indenture and the Notes (including certain covenants, but
excluding its obligation to pay the principal of and interest on the Notes).
13. Amendment; Supplement; Waiver. Subject to certain
exceptions set forth in the Indenture, the Indenture or the Notes may be
amended or supplemented with the written consent of the Holders of not less
than a majority in aggregate principal amount of the Notes then outstanding,
and any past Default or Event of Default or noncompliance with any provision
may be waived with the written consent of the Holders of not less than a
majority in aggregate principal amount of the Notes then outstanding. Without
notice to or consent of any Holder, the parties thereto may amend or supplement
the Indenture or the Notes to, among other things, cure any ambiguity, defect
or inconsistency, provide for
A-6
<PAGE> 104
uncertificated Notes in addition to or in place of certificated Notes, or
comply with Article 5 of the Indenture or make any other change that does not
adversely affect the rights of any Holder of a Note.
14. Restrictive Covenants. The Indenture imposes certain
limitations on the ability of the Company and its Subsidiaries to, among other
things, incur additional Indebtedness, make payments in respect of its Capital
Stock or certain Indebtedness, make certain Investments, incur liens, enter
into transactions with Affiliates, create dividend or other payment
restrictions affecting Subsidiaries, issue Preferred Stock of its Subsidiaries,
merge or consolidate with any other Person, sell, assign, transfer, lease,
convey or otherwise dispose of all or substantially all of its assets or adopt
a plan of liquidation. Such limitations are subject to a number of important
qualifications and exceptions. Pursuant to Section 4.04 of the Indenture, the
Company must annually report to the Trustee on compliance with such
limitations.
15. Successors. When a successor assumes, in accordance with
the Indenture, all the obligations of its predecessor under the Notes and the
Indenture, the predecessor, subject to certain exceptions, will be released
from those obligations.
16. Defaults and Remedies. If an Event of Default occurs and
is continuing, the Trustee or the Holders of not less than 25% in aggregate
principal amount of Notes then outstanding may declare all the Notes to be due
and payable in the manner, at the time and with the effect provided in the
Indenture. Holders of Notes may not enforce the Indenture or the Notes except
as provided in the Indenture. The Trustee is not obligated to enforce the
Indenture or the Notes unless it has received indemnity reasonably satisfactory
to it. The Indenture permits, subject to certain limitations therein provided,
Holders of a majority in aggregate principal amount of the Notes then
outstanding to direct the Trustee in its exercise of any trust or power. The
Trustee may withhold from Holders of Notes notice of any continuing Default or
Event of Default (except a Default in payment of principal or interest when
due, for any reason or a Default in compliance with Article 5 of the Indenture)
if it determines that withholding notice is in their interest.
17. Trustee Dealings with Company. The Trustee under the
Indenture, in its individual or any other capacity, may become the owner or
pledgee of Notes and may otherwise deal with the Company, its Subsidiaries or
their respective Affiliates as if it were not the Trustee.
18. No Recourse Against Others. No stockholder, director,
officer, employee or incorporator, as such, of the Company shall have any
liability for any obligation of the Company under the Notes or the Indenture or
for any claim based on, in respect of or by reason of, such obligations or
their creation. Each Holder of a Note by accepting a Note waives and releases
all such liability. The waiver and release are part of the consideration for
the issuance of the Notes.
A-7
<PAGE> 105
19. Authentication. This Note shall not be valid until the
Trustee or Authentication Agent manually signs the certificate of
authentication on this Note.
20. Governing Law. This Note and the Indenture shall be
governed by and construed in accordance with the laws of the State of New York,
as applied to contracts made and performed within the State of New York,
without regard to principles of conflict of laws.
21. Abbreviations and Defined Terms. Customary abbreviations
may be used in the name of a Holder of a Note or an assignee, such as: TEN COM
(= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint
tenants with right of survivorship and not as tenants in common), CUST (=
Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).
22. CUSIP Numbers. Pursuant to a recommendation promulgated
by the Committee on Uniform Security Identification Procedures, the Company has
caused CUSIP numbers to be printed on the Notes as a convenience to the Holders
of the Notes. No representation is made as to the accuracy of such numbers as
printed on the Notes and reliance may be placed only on the other
identification numbers printed hereon.
23. Indenture. Each Holder, by accepting a Note, agrees to
be bound by all of the terms and provisions of the Indenture, as the same may
be amended from time to time.
The Company will furnish to any Holder of a Note upon written
request and without charge a copy of the Indenture, which has the text of this
Note in larger type. Requests may be made to: Heartland Wireless
Communications, Inc., 200 Chisholm Place, Suite 200, Plano, Texas 75075, Attn:
Chief Financial Officer.
A-8
<PAGE> 106
ASSIGNMENT FORM
If you the Holder want to assign this Note, fill in the form
below and have your signature guaranteed:
I or we assign and transfer this Note to:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type name, address and zip code and
social security or tax ID number of assignee)
and irrevocably appoint ______________________________________, agent to
transfer this Note on the books of the Company. The agent may substitute
another to act for him.
Dated: Signed:
------------------ ----------------------------------------
(Sign exactly as your name appears
on the other side of this Note)
Signature Guarantee:
-----------------------------------
A-9
<PAGE> 107
In connection with any transfer of this Note occurring prior
to the date which is the earlier of (i) the date of the declaration by the SEC
of the effectiveness of a registration statement under the Securities Act of
1933, as amended (the "Securities Act") covering resales of this Note (which
effectiveness shall not have been suspended or terminated at the date of the
transfer) and (ii) December 20, 1999, the undersigned confirms that it has not
utilized any general solicitation or general advertising in connection with the
transfer:
[Check One]
(1) ___ to the Company or a subsidiary thereof; or
(2) ___ pursuant to and in compliance with Rule 144A under the
Securities Act of 1933, as amended; or
(3) ___ to an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) under the Securities Act of 1933,
as amended) that has furnished to the Trustee a signed letter
containing certain representations and agreements (the form of
which letter can be obtained from the Trustee); or
(4) ___ outside the United States to a "foreign person" in compliance
with Rule 904 of Regulation S under the Securities Act of
1933, as amended; or
(5) ___ pursuant to the exemption from registration provided by Rule
144 under the Securities Act of 1933, as amended; or
(6) ___ pursuant to an effective registration statement under the
Securities Act of 1933, as amended; or
(7) ___ pursuant to another available exemption from the registration
requirements of the Securities Act of 1933, as amended.
Unless one of the boxes is checked, the Registrar will refuse to register any
of the Notes evidenced by this certificate in the name of any person other than
the registered Holder thereof; provided, however, that if box (3), (4), (5) or
(7) is checked, the Company or the Registrar may require, prior to registering
any such transfer of the Notes, in its sole discretion, such written legal
opinions, certifications (including an investment letter in the case of box (3)
or (4)) and other information as the Registrar or the Company has reasonably
requested to confirm that such transfer is being made pursuant to an exemption
from, or in a transaction not subject to, the registration requirements of the
Securities Act of 1933, as amended.
A-10
<PAGE> 108
If none of the foregoing boxes is checked, the Trustee or Registrar shall not
be obligated to register this Note in the name of any person other than the
Holder hereof unless and until the conditions to any such transfer of
registration set forth herein and in Section 2.17 of the Indenture shall have
been satisfied.
Dated: Signed:
--------------------- ----------------------------------------
(Sign exactly as name appears on
the other side of this Security)
Signature Guarantee:
------------------------------------
TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED
The undersigned represents and warrants that it is purchasing
this Note for its own account or an account with respect to which it exercises
sole investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act
of 1933, as amended and is aware that the sale to it is being made in reliance
on Rule 144A and acknowledges that it has received such information regarding
the Company as the undersigned has requested pursuant to Rule 144A or has
determined not to request such information and that it is aware that the
transferor is relying upon the undersigned's foregoing representations in order
to claim the exemption from registration provided by Rule 144A.
Dated:
--------------------- ----------------------------------------
NOTICE: To be executed by an executive
officer
A-11
<PAGE> 109
[OPTION OF HOLDER TO ELECT PURCHASE]
If you want to elect to have this Note purchased by the
Company pursuant to Section 4.12 or 4.16 of the Indenture, check the
appropriate box:
Section 4.12 [ ]
Section 4.16 [ ]
If you want to elect to have only part of this Note purchased
by the Company pursuant to Section 4.12 or 4.16 of the Indenture, state the
amount you elect to have purchased:
$
-----------------
Dated:
--------------------- ----------------------------------------
NOTICE: The signature on this assignment
must correspond with the name as it
appears upon the face of the within Note
in every particular without alteration or
enlargement or any change whatsoever and
be guaranteed by the endorser's bank or
broker.
Signature Guarantee:
--------------------------------------
A-12
<PAGE> 110
EXHIBIT B
CUSIP No.:
HEARTLAND WIRELESS COMMUNICATIONS, INC.
14% SENIOR NOTE DUE 2004
No. 1
HEARTLAND WIRELESS COMMUNICATIONS, INC., a Delaware corporation
(the "Company", which term includes any successor entity), for value received
promises to pay to or registered assigns, the principal
sum of Dollars, on October, 15, 2004.
Interest Payment Dates: April 15 and October 15
Record Dates (whether or not a Business Day): April 1 and October 1
Reference is made to the further provisions of this Note contained
herein, which will for all purposes have the same effect as if set forth at this
place.
B-1
<PAGE> 111
IN WITNESS WHEREOF, the Company has caused this Note to be
signed manually or by facsimile by its duly authorized officers and a facsimile
of its corporate seal to be affixed hereto or imprinted herein.
HEARTLAND WIRELESS COMMUNICATIONS, INC.
By:
-----------------------------------
Name:
Title:
By:
-----------------------------------
Name:
Title:
Dated: December 20, 1996
B-2
<PAGE> 112
Certificate of Authentication
This is one of the 14% Senior Notes due 2004 referred to in the
within-mentioned Indenture.
FIRST TRUST OF NEW YORK, NATIONAL
ASSOCIATION, as Trustee
By:
-----------------------------------
Authorized Signatory
or
FIRST TRUST OF NEW YORK, NATIONAL
ASSOCIATION, as Trustee
By: BANKERS TRUST COMPANY, as
Authenticating Agent
By:
-----------------------------------
Authorized Signatory
B-3
<PAGE> 113
(REVERSE OF SECURITY)
14% Senior Note due 2004
1. Interest. HEARTLAND WIRELESS COMMUNICATIONS, INC., a
Delaware corporation (the "Company"), promises to pay interest on the principal
amount of this Note at the rate per annum shown above.
Interest on the Notes will accrue from the most recent date on
which interest has been paid or, if no interest has been paid, from December
20, 1996. The Company will pay interest semi-annually in arrears on each
Interest Payment Date, commencing April 15, 1996. Interest will be computed on
the basis of a 360-year of twelve 30-day months and, in the case of a partial
month, the actual number of days elapsed. The Company shall pay interest on
overdue principal and on overdue installments of interest (without regard to any
applicable grace periods) from time to time on demand at the rate borne by the
Notes plus 2% per annum, to the extent lawful.
2. Method of Payment. The Company shall pay interest on
the Notes (except defaulted interest) to the Persons who are the registered
Holders at the close of business on the Record Date immediately preceding the
Interest Payment Date even if the Notes are canceled on registration of
transfer or registration of exchange after such Record Date. Holders must
surrender Notes to a Paying Agent to collect principal payments. The Company
shall pay principal and interest in money of the United States that at the time
of payment is legal tender for payment of public and private debts ("U.S. Legal
Tender"). However, the Company may pay principal and interest by its check
payable in such U.S. Legal Tender. The Company may deliver any such interest
payment to the Paying Agent or to a Holder at the Holder's registered address.
3. Paying Agent and Registrar. Initially, Bankers Trust
Company will act as Paying Agent and Registrar. The Company may change any
Paying Agent or Registrar without notice to the Holders.
4. Indenture. The Company issued the Notes under an
Indenture, dated as of December 20, 1996 (the "Indenture"), between the Company
and First Trust of New York, National Association, as Trustee (the "Trustee").
This Note is one of a duly authorized issue of Exchange Notes of the Company
designated as its 14% Senior Notes due 2004 (the "Exchange Notes"). The Notes
are limited in aggregate principal amount to $125,000,000, except as otherwise
provided in the Indenture. The Notes include the Initial
B-4
<PAGE> 114
Notes and the Exchange Notes, as defined below, issued in exchange for the
Notes pursuant to the Indenture. The Initial Notes and the Exchange Notes are
treated as a single class of securities under the Indenture. Capitalized terms
herein are used as defined in the Indenture unless otherwise defined herein.
The terms of the Notes include those stated in the Indenture and those made
part of the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.
Code Sections 77aaa-77bbbb) (the "TIA"), as in effect on the date of the
Indenture. Notwithstanding anything to the contrary herein, the Notes are
subject to all such terms, and Holders of Notes are referred to the Indenture
and said Act for a statement of them. The Notes are general unsecured
obligations of the Company.
5. Optional Redemption. (a) Optional Redemption. The
Notes will not be redeemable at the Company's option prior to October 15, 2002.
Thereafter, the Notes will be subject to redemption at the option of the
Company, in whole or in part, upon not less than 30 nor more than 60 days'
notice, at the redemption prices (expressed as percentages of principal amount)
set forth below plus accrued and unpaid interest thereon to the applicable
redemption date, if redeemed during the twelve-month period beginning on
October 15 of the years indicated below:
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
2002 . . . . . . . . . . . . . . . . . . 102.333%
2003 and thereafter . . . . . . . . . . 100.00%
</TABLE>
(b) Optional Redemption Upon Sale of Equity to Strategic
Equity Investor. Notwithstanding the foregoing, in the event of the sale by the
Company prior to October 15, 1999 of at least $25.0 million of its Capital Stock
(other than Disqualified Stock) to a Strategic Equity Investor in a single
transaction, the Company may, at its option, use the net cash proceeds of such
sale of Capital Stock to redeem up to 35% of the Notes at a redemption price
equal to 114% of the principal amount thereof plus accrued and unpaid interest
thereon, if any, to the date of redemption; provided that at least 65% of the
initial principal amount of the Notes remains outstanding immediately after such
redemption. In order to effect the foregoing redemption with the proceeds of
any such sale of Capital Stock (other than Disqualified Stock), the Company
shall make such redemption not more than 120 days after the consummation of any
such sale of Capital Stock.
The Notes are not entitled to the benefit of any sinking fund.
B-5
<PAGE> 115
6. Notice of Redemption. Notice of redemption will be mailed
at least 30 days but not more than 60 days before the Redemption Date to each
Holder of Notes to be redeemed at such Holder's registered address. Notes in
denominations larger than $1,000 may be redeemed in part.
Except as set forth in the Indenture, if monies for the
redemption of the Notes called for redemption shall have been deposited with
the Paying Agent for redemption on such Redemption Date, then, unless the
Company defaults in the payment of such Redemption Price plus accrued interest,
if any, the Notes called for redemption will cease to bear interest from and
after such Redemption Date and the only right of the Holders of such Notes will
be to receive payment of the Redemption Price plus accrued interest, if any.
7. Offers to Purchase. Sections 4.12 and 4.16 of the
Indenture provide that, after certain Asset Sales (as defined in the Indenture)
and upon the occurrence of a Change of Control (as defined in the Indenture)
subject to further limitations contained therein, the Company will make an
offer to purchase certain amounts of the Notes in accordance with the
procedures set forth in the Indenture.
8. Denominations; Transfer; Exchange. The Notes are in
registered form, without coupons, in denominations of $1,000 and integral
multiples of $1,000. A Holder shall register the transfer of or exchange Notes
in accordance with the Indenture. The Registrar may require a Holder, among
other things, to furnish appropriate endorsements and transfer documents and to
pay certain transfer taxes or similar governmental charges payable in
connection therewith as permitted by the Indenture. The Registrar need not
register the transfer of or exchange of any Notes or portions thereof selected
for redemption.
9. Persons Deemed Owners. The registered Holder of a Note
shall be treated as the owner of it for all purposes.
10. Unclaimed Money. If money for the payment of principal
or interest remains unclaimed for two years after such principal or interest
has become due and payable, the Trustee and the Paying Agent will pay such
money back to the Company. After that, all liability of the Trustee and such
Paying Agent with respect to such money shall cease.
11. Discharge Prior to Redemption or Maturity. If the
Company at any time deposits with the Trustee U.S. Legal Tender or U.S.
Government Obligations sufficient to pay the principal of and interest on the
Notes to redemption or maturity and complies with the other provisions of the
Indenture relating thereto, the Company will be discharged from
B-6
<PAGE> 116
certain provisions of the Indenture and the Notes (including certain covenants,
but excluding its obligation to pay the principal of and interest on the
Notes).
12. Amendment; Supplement; Waiver. Subject to certain
exceptions set forth in the Indenture, the Indenture or the Notes may be
amended or supplemented with the written consent of the Holders of not less
than a majority in aggregate principal amount of the Notes then outstanding,
and any past Default or Event of Default or noncompliance with any provision
may be waived with the written consent of the Holders of not less than a
majority in aggregate principal amount of the Notes then outstanding. Without
notice to or consent of any Holder, the parties thereto may amend or supplement
the Indenture or the Notes to, among other things, cure any ambiguity, defect
or inconsistency, provide for uncertificated Notes in addition to or in place
of certificated Notes, or comply with Article 5 of the Indenture or make any
other change that does not adversely affect the rights of any Holder of a Note.
13. Restrictive Covenants. The Indenture imposes certain
limitations on the ability of the Company and its Subsidiaries to, among other
things, incur additional Indebtedness, make payments in respect of its Capital
Stock or certain Indebtedness, make certain Investments, incur liens, enter
into transactions with Affiliates, create dividend or other payment
restrictions affecting Subsidiaries, issue Preferred Stock of its Subsidiaries,
merge or consolidate with any other Person, sell, assign, transfer, lease,
convey or otherwise dispose of all or substantially all of its assets or adopt
a plan of liquidation. Such limitations are subject to a number of important
qualifications and exceptions. Pursuant to Section 4.04 of the Indenture, the
Company must annually report to the Trustee on compliance with such
limitations.
14. Successors. When a successor assumes, in accordance with
the Indenture, all the obligations of its predecessor under the Notes and the
Indenture, the predecessor, subject to certain exceptions, will be released
from those obligations.
15. Defaults and Remedies. If an Event of Default occurs and
is continuing, the Trustee or the Holders of not less than 25% in aggregate
principal amount of Notes then outstanding may declare all the Notes to be due
and payable in the manner, at the time and with the effect provided in the
Indenture. Holders of Notes may not enforce the Indenture or the Notes except
as provided in the Indenture. The Trustee is not obligated to enforce the
Indenture or the Notes unless it has received indemnity reasonably satisfactory
to it. The Indenture permits, subject to certain limitations therein provided,
Holders of a majority in aggregate principal amount of the Notes then
outstanding to direct the Trustee in its exercise of any trust or power. The
Trustee may withhold from Holders of Notes notice of any
B-7
<PAGE> 117
continuing Default or Event of Default (except a Default in payment of
principal or interest when due, for any reason or a Default in compliance with
Article Five of the Indenture) if it determines that withholding notice is in
their interest.
16. Trustee Dealings with Company. The Trustee under the
Indenture, in its individual or any other capacity, may become the owner or
pledgee of Notes and may otherwise deal with the Company, its Subsidiaries or
their respective Affiliates as if it were not the Trustee.
17. No Recourse Against Others. No stockholder, director,
officer, employee or incorporator, as such, of the Company shall have any
liability for any obligation of the Company under the Notes or the Indenture or
for any claim based on, in respect of or by reason of, such obligations or
their creation. Each Holder of a Note by accepting a Note waives and releases
all such liability. The waiver and release are part of the consideration for
the issuance of the Notes.
18. Authentication. This Note shall not be valid until the
Trustee or Authentication Agent manually signs the certificate of
authentication on this Note.
19. Governing Law. This Note and the Indenture shall be
governed by and construed in accordance with the laws of the State of New York,
as applied to contracts made and performed within the State of New York,
without regard to principles of conflict of laws.
20. Abbreviations and Defined Terms. Customary abbreviations
may be used in the name of a Holder of a Note or an assignee, such as: TEN COM
(= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint
tenants with right of survivorship and not as tenants in common), CUST (=
Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).
21. CUSIP Numbers. Pursuant to a recommendation promulgated
by the Committee on Uniform Security Identification Procedures, the Company has
caused CUSIP numbers to be printed on the Notes as a convenience to the Holders
of the Notes. No representation is made as to the accuracy of such numbers as
printed on the Notes and reliance may be placed only on the other
identification numbers printed hereon.
22. Indenture. Each Holder, by accepting a Note, agrees to
be bound by all of the terms and provisions of the Indenture, as the same may
be amended from time to time.
B-8
<PAGE> 118
The Company will furnish to any Holder of a Note upon written
request and without charge a copy of the Indenture, which has the text of this
Note in larger type. Requests may be made to: Heartland Wireless
Communications, Inc., 200 Chisholm Place, Suite 200, Plano, Texas 75075, Attn:
Chief Financial Officer.
B-9
<PAGE> 119
ASSIGNMENT FORM
If you the Holder want to assign this Note, fill in the form
below and have your signature guaranteed:
I or we assign and transfer this Note to:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type name, address and zip code and
social security or tax ID number of assignee)
and irrevocably appoint ______________________________________, agent to
transfer this Note on the books of the Company. The agent may substitute
another to act for him.
Dated: Signed:
--------------------- --------------------------------------
(Sign exactly as your name appears
on the other side of this Note)
Signature Guarantee:
---------------------------------
B-10
<PAGE> 120
[OPTION OF HOLDER TO ELECT PURCHASE]
If you want to elect to have this Note purchased by the
Company pursuant to Section 4.12 or 4.16 of the Indenture, check the
appropriate box:
Section 4.12 [ ]
Section 4.16 [ ]
If you want to elect to have only part of this Note purchased
by the Company pursuant to Section 4.12 or 4.16 of the Indenture, state the
amount you elect to have purchased:
$
------------------
Dated:
--------------------- ----------------------------------------
NOTICE: The signature on this assignment
must correspond with the name as it
appears upon the face of the within Note
in every particular without alteration
or enlargement or any change whatsoever
and be guaranteed by the endorser's bank
or broker.
Signature Guarantee:
---------------------------
B-11
<PAGE> 121
EXHIBIT C
Form of Certificate To Be
Delivered in Connection with
Transfers to Non-QIB Accredited Investors
____________, _____
First Trust of New York, National Association
100 Wall Street, Suite 1600
New York, New York 10005
Attention: Corporate Trust Department
Re: Heartland Wireless Communications, Inc.
(the "Company") 14% Senior Notes due 2004
(the "Notes")
Ladies and Gentlemen:
In connection with our proposed purchase of $________
aggregate principal amount of the Notes, we confirm that:
1. We have received a copy of the Offering Memorandum
(the "Offering Memorandum"), dated December 16, 1996, relating to the
Notes and such other information as we deem necessary in order to make
our investment decision. We acknowledge that we have read and agreed
to the matters stated in the section entitled "Transfer Restrictions"
of the Offering Memorandum.
2. We understand that any subsequent transfer of the
Notes is subject to certain restrictions and conditions set forth in
the Indenture dated as of December 20, 1996 relating to the Notes (the
"Indenture") and the undersigned agrees to be bound by, and not to
resell, pledge or otherwise transfer the Notes except in compliance
with, such restrictions and conditions and the Securities Act of 1933,
as amended (the "Securities Act").
3. We understand that the Notes have not been registered
under the Securities Act, and that the Notes may not be offered or
sold except as permitted in the following sentence. We agree, on our
own behalf and on behalf of any accounts
C-1
<PAGE> 122
for which we are acting as hereinafter stated, that if we should sell
any Notes within three years after the original issuance of the Notes,
we will do so only (A) to the Company or any subsidiary thereof, (B)
inside the United States in accordance with Rule 144A under the
Securities Act to a "qualified institutional buyer" (as defined
therein), (C) inside the United States to an "institutional accredited
investor" (as defined below) that, prior to such transfer, furnishes
(or has furnished on its behalf by a U.S. broker-dealer) to you a
signed letter substantially in the form of this letter, (D) outside
the United States in accordance with Rule 904 of Regulation S under
the Securities Act, (E) pursuant to the exemption from registration
provided by Rule 144 under the Securities Act (if available), or (F)
pursuant to an effective registration statement under the Securities
Act, and we further agree to provide to any person purchasing any of
the Notes from us a notice advising such purchaser that resales of the
Notes are restricted as stated herein.
4. We understand that, on any proposed resale of any
Notes, we will be required to furnish to you and the Company such
certification, written legal opinions and other information as you and
the Company may reasonably require to confirm that the proposed sale
complies with the foregoing restrictions. We further understand that
the Notes purchased by us will bear a legend to the foregoing effect.
5. We are an institutional "accredited investor" (as
defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the
Securities Act) and have such knowledge and experience in financial
and business matters as to be capable of evaluating the merits and
risks of our investment in the Notes, and we and any accounts for
which we are acting are each able to bear the economic risk of our or
its investment, as the case may be.
6. We are acquiring the Notes purchased by us for our
own account or for one or more accounts (each of which is an
institutional "accredited investor") as to each of which we exercise
sole investment discretion.
You, the Agents, the Company and counsel for the Company are
entitled to rely upon this letter and are irrevocably authorized to produce
this letter or a copy hereof to
C-2
<PAGE> 123
any interested party in any administrative or legal proceedings or official
inquiry with respect to the matters covered hereby.
Very truly yours,
[Name of Transferee]
By:
------------------------------------
Authorized Signature
C-3
<PAGE> 124
EXHIBIT D
Form of Certificate To Be Delivered
in Connection with Transfers
Pursuant to Regulation S
_________________, ____
First Trust of New York, National Association
100 Wall Street, Suite 1600
New York, New York 10005
Attention: Corporate Trust Department
Re: Heartland Wireless Communications, Inc.
(the "Company") 14% Senior Notes due 2004
(the "Notes")
Ladies and Gentlemen:
In connection with our proposed sale of $_____________
aggregate principal amount of the Notes, we confirm that such sale has been
effected pursuant to and in accordance with Regulation S under the U.S.
Securities Act of 1933, as amended (the "Securities Act"), and, accordingly, we
represent that:
(1) the offer of the Notes was not made to a person in
the United States;
(2) either (a) at the time the buy offer was originated,
the transferee was outside the United States or we and any person
acting on our behalf reasonably believed that the transferee was
outside the United States, or (b) the transaction was executed in, on
or through the facilities of a designated off-shore securities market
and neither we nor any person acting on our behalf knows that the
transaction has been pre-arranged with a buyer in the United States;
(3) no directed selling efforts have been made in the
United States in contravention of the requirements of Rule 903(b) or
Rule 904(b) of Regulation S, as applicable;
(4) the transaction is not part of a plan or scheme to
evade the registration requirements of the Securities Act; and
D-1
<PAGE> 125
(5) we have advised the transferee of the transfer
restrictions applicable to the Notes.
You, the Company and counsel for the Company are entitled to
rely upon this letter and are irrevocably authorized to produce this letter or
a copy hereof to any interested party in any administrative or legal
proceedings or official inquiry with respect to the matters covered hereby.
Terms used in this certificate have the meanings set forth in Regulation S.
Very truly yours,
[Name of Transferor]
By:
------------------------------------
Authorized Signature
D-2
<PAGE> 1
EXHIBIT 4.25
================================================================================
REGISTRATION RIGHTS AGREEMENT
Dated as of December 20, 1996
Among
HEARTLAND WIRELESS COMMUNICATIONS, INC.
as Issuer
and
BT SECURITIES CORPORATION
ALEX. BROWN & SONS INCORPORATED
GERARD KLAUER MATTISON & CO., L.L.C.
as Initial Purchasers
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. Exchange Offer . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3. Shelf Registration . . . . . . . . . . . . . . . . . . . . . . . . 8
4. Additional Interest . . . . . . . . . . . . . . . . . . . . . . . 11
5. Registration Procedures . . . . . . . . . . . . . . . . . . . . . 13
6. Registration Expenses . . . . . . . . . . . . . . . . . . . . . . 23
7. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . 24
8. Rules 144 and 144A . . . . . . . . . . . . . . . . . . . . . . . . 29
9. Underwritten Registrations . . . . . . . . . . . . . . . . . . . . 29
10. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . 29
(a) No Inconsistent Agreements . . . . . . . . . . . . . . . . 29
(b) Adjustments Affecting Registrable Notes . . . . . . . . . 30
(c) Amendments and Waivers . . . . . . . . . . . . . . . . . . 30
(d) Notices . . . . . . . . . . . . . . . . . . . . . . . . . 30
(e) Successors and Assigns . . . . . . . . . . . . . . . . . . 32
(f) Counterparts . . . . . . . . . . . . . . . . . . . . . . . 32
(g) Headings . . . . . . . . . . . . . . . . . . . . . . . . . 32
(h) Governing Law . . . . . . . . . . . . . . . . . . . . . . 32
(i) Severability . . . . . . . . . . . . . . . . . . . . . . . 32
(j) Third Party Beneficiaries . . . . . . . . . . . . . . . . 32
(k) Entire Agreement . . . . . . . . . . . . . . . . . . . . . 32
(l) Underwriting Agreement . . . . . . . . . . . . . . . . . . 33
(m) Termination . . . . . . . . . . . . . . . . . . . . . . . 33
</TABLE>
-i-
<PAGE> 3
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement") is dated
as of December 20, 1996, between Heartland Wireless Communications, Inc., a
Delaware corporation (the "Company"), and BT Securities Corporation, Alex.
Brown & Sons Incorporated and Gerard Klauer Mattison & Co. L.L.C. (the "Initial
Purchasers").
This Agreement is entered into in connection with the Purchase
Agreement, dated December 16, 1996, between the Company and the Initial
Purchasers (the "Purchase Agreement") which provides for the sale by the
Company to the Initial Purchasers of 125,000 units consisting of $125,000,000
aggregate principal amount of the Company's 14% Senior Notes due 2004 (the
"Notes") and [ ] warrants to purchase an equal number of shares of common
stock, par value $.001 per share, of the Company. In order to induce the
Initial Purchasers to enter into the Purchase Agreement, the Company has agreed
to provide the registration rights set forth in this Agreement for the benefit
of the Initial Purchasers and its direct and indirect transferees and assigns.
The execution and delivery of this Agreement is a condition to the Initial
Purchasers' obligation to purchase the Notes under the Purchase Agreement.
The parties hereby agree as follows:
1. Definitions
As used in this Agreement, the following terms shall have the
following meanings:
Additional Interest: See Section 4(a) hereof.
Advice: See the last paragraph of Section 5 hereof.
Agreement: See the introductory paragraphs hereto.
Applicable Period: See Section 2(b) hereof.
Company: See the introductory paragraphs hereto.
Effectiveness Date: The 180th day after the Issue Date.
Effectiveness Period: See Section 3(a) hereof.
Event Date: See Section 4(b) hereof.
Exchange Act: The Securities Exchange Act of 1934, as
amended, and the rules and regulations of the SEC promulgated thereunder.
<PAGE> 4
2
Exchange Notes: See Section 2(a) hereof.
Exchange Offer: See Section 2(a) hereof.
Exchange Offer Registration Statement: See Section 2(a)
hereof.
Filing Date: The 120th day after the Issue Date.
Holder: Any holder of a Registrable Note or Registrable
Notes.
Indemnified Person: See Section 7(c) hereof.
Indemnifying Person: See Section 7(c) hereof.
Indenture: The Indenture, dated as of December 20, 1996
between the Company and First Trust of New York, National Association, as
Trustee, pursuant to which the Notes are being issued, as amended or
supplemented from time to time in accordance with the terms thereof.
Initial Purchasers: See the introductory paragraphs hereto.
Inspectors: See Section 5(o) hereof.
Issue Date: The date on which the original Notes were sold to
the Initial Purchasers pursuant to the Purchase Agreement.
NASD: See Section 5(t) hereof.
Notes: See the introductory paragraphs hereto.
Participant: See Section 7(a) hereof.
Participating Broker-Dealer: See Section 2(b) hereof.
Person: An individual, trustee, corporation, partnership,
joint stock company, trust, unincorporated association, union, business
association, firm or other legal entity.
Private Exchange: See Section 2(b) hereof.
Private Exchange Notes: See Section 2(b) hereof.
Prospectus: The prospectus included in any Registration
Statement (including, without limitation, any prospectus subject to
<PAGE> 5
3
completion and a prospectus that includes any information previously omitted
from a prospectus filed as part of an effective registration statement in
reliance upon Rule 430A promulgated under the Securities Act), as amended or
supplemented by any prospectus supplement, and all other amendments and
supplements to the Prospectus, including post-effective amendments, and all
material incorporated by reference or deemed to be incorporated by reference in
such Prospectus.
Purchase Agreement: See the introductory paragraphs hereto.
Records: See Section 5(o) hereof.
Registrable Notes: Each Note upon original issuance of the
Notes and at all times subsequent thereto, each Exchange Note as to which
Section 2(c)(iv) hereof is applicable upon original issuance and at all times
subsequent thereto and each Private Exchange Note upon original issuance
thereof and at all times subsequent thereto, until in the case of any such
Note, Exchange Note or Private Exchange Note, as the case may be, the earliest
to occur of (i) a Registration Statement (other than, with respect to any
Exchange Note as to which Section 2(c)(iv) hereof is applicable, the Exchange
Offer Registration Statement) covering such Note, Exchange Note or such Private
Exchange Note having been declared effective by the SEC and such Note or such
Private Exchange Note, as the case may be, having been disposed of in
accordance with such effective Registration Statement, (ii) such Note, Exchange
Note or Private Exchange Note, as the case may be, being eligible for sale to
the public pursuant to Rule 144, (iii) such Note having been exchanged for an
Exchange Note pursuant to an Exchange Offer which may be resold without
restriction under state and federal securities laws, or (iv) such Note,
Exchange Note or Private Exchange Note, as the case may be, ceasing to be
outstanding for purposes of the Indenture.
Registration Default: See Section 4(a) hereof.
Registration Statement: Any registration statement of the
Company, including, but not limited to, the Exchange Offer Registration
Statement, filed with the SEC pursuant to the provisions of this Agreement,
including the Prospectus, amendments and supplements to such registration
statement, including post effective amendments, all exhibits, and all material
incorporated by reference or deemed to be incorporated by reference in such
registration statement.
<PAGE> 6
4
Rule 144: Rule 144 promulgated under the Securities Act, as
such Rule may be amended from time to time, or any similar rule (other than
Rule 144A) or regulation hereafter adopted by the SEC providing for offers and
sales of securities made in compliance therewith resulting in offers and sales
by subsequent holders that are not affiliates of an issuer of such securities
being free of the registration and prospectus delivery requirements of the
Securities Act.
Rule 144A: Rule 144A promulgated under the Securities Act, as
such Rule may be amended from time to time, or any similar rule (other than
Rule 144) or regulation hereafter adopted by the SEC.
Rule 415: Rule 415 promulgated under the Securities Act, as
such Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the SEC.
SEC: The Securities and Exchange Commission.
Securities Act: The Securities Act of 1933, as amended, and
the rules and regulations of the SEC promulgated thereunder.
Shelf Notice: See Section 2(c) hereof.
Shelf Registration Statement: See Section 3(a) hereof.
Subsequent Shelf Registration Statement: See Section 3(b)
hereof.
TIA: The Trust Indenture Act of 1939, as amended.
Trustee: The trustee under the Indenture and, if existent,
the trustee under any indenture governing the Exchange Notes and Private
Exchange Notes (if any).
Underwritten registration or underwritten offering: A
registration in which securities of the Company are sold to an underwriter for
reoffering to the public.
2. Exchange Offer
(a) The Company shall file with the SEC no later than the
Filing Date, a registration statement under the Securities Act with respect to
a registered offer to exchange (the "Exchange Offer") any and all of the
Registrable Notes (other than Private Exchange Notes, if any) for a like
aggregate principal amount of debt securities of the Company which are
identical in all material
<PAGE> 7
5
respects to the Notes (the "Exchange Notes"), except that the Exchange Notes
shall have been registered pursuant to an effective Registration Statement
under the Securities Act and shall contain no restrictive legend thereon, and
which are entitled to the benefits of the Indenture or a trust indenture which
is identical in all material respects to the Indenture (other than such changes
to the Indenture or any such identical trust indenture as are necessary to
comply with any requirements of the SEC to effect or maintain the qualification
thereof under the TIA) and which, in either case, has been qualified under the
TIA. The Exchange Offer shall be registered under the Securities Act on an
appropriate form (the "Exchange Offer Registration Statement") and shall comply
with all applicable tender offer rules and regulations under the Exchange Act.
The Company shall cause the Exchange Offer Registration Statement to be
declared effective under the Securities Act on or before the Effectiveness
Date. Upon the Exchange Offer Registration Statement being declared effective,
the Company will offer the Exchange Notes in exchange for surrender of the
Notes. The Company will keep the Exchange Offer open for at least 30 calendar
days (or longer if required by applicable law) after the date that notice of
the Exchange Offer is mailed to Holders. For purposes of this Section 2(a)
only, if after such Exchange Offer Registration Statement is initially declared
effective by the SEC, the Exchange Offer or the issuance of the Exchange Notes
thereunder is interfered with by any stop order, injunction or other order or
requirement of the SEC or any other governmental agency or court, such Exchange
Offer Registration Statement shall be deemed not to have become effective for
purposes of this Agreement. Each Holder who participates in the Exchange Offer
will be required to represent that any Exchange Notes received by it will be
acquired in the ordinary course of its business, that at the time of the
consummation of the Exchange Offer such Holder will have no arrangement or
understanding with any Person to participate in the distribution of the
Exchange Notes in violation of the provisions of the Securities Act, and that
such Holder is not an affiliate of the Company within the meaning of the
Securities Act. Upon consummation of the Exchange Offer in accordance with
this Section 2, the provisions of this Agreement shall continue to apply,
mutatis mutandis, solely with respect to Registrable Notes that are Private
Exchange Notes and Exchange Notes held by Participating Broker-Dealers, and the
Company shall have no further obligation to register Registrable Notes pursuant
to Section 3 hereof (other than Private Exchange Notes and other than in
respect of any Exchange Notes as to which clause 2(c)(iv) hereof applies). No
securities other than the Exchange Notes shall be included in the Exchange
Offer Registration Statement.
<PAGE> 8
6
(b) The Company shall include within the Prospectus
contained in the Exchange Offer Registration Statement a section entitled "Plan
of Distribution," reasonably acceptable to the Initial Purchasers, which shall
contain a summary statement of the positions taken or policies made by the
Staff of the Division of Corporation Finance of the SEC (the "Staff") with
respect to the potential "underwriter" status of any broker-dealer that is the
beneficial owner (as defined in Rule 13d-3 under the Exchange Act) of Exchange
Notes received by such broker-dealer in the Exchange Offer (a "Participating
Broker-Dealer"), whether such positions or policies have been publicly
disseminated by the Staff or such positions or policies, in the judgment of the
Initial Purchasers, represent the prevailing views of the Staff. Such "Plan of
Distribution" section shall also expressly permit the use of the Prospectus by
all Persons subject to the prospectus delivery requirements of the Securities
Act, including all Participating Broker-Dealers, and include a statement
describing the means by which Participating Broker-Dealers may resell the
Exchange Notes.
The Company shall use its best efforts to keep the Exchange
Offer Registration Statement effective and to amend and supplement the
Prospectus contained therein, in order to permit such Prospectus to be lawfully
delivered by all Persons subject to the prospectus delivery requirements of the
Securities Act for such period of time as is necessary to comply with
applicable law in connection with any resale of the Exchange Notes; provided,
however, that such period shall not exceed 120 days after the Exchange Offer
Registration Statement is declared effective (or such longer period if extended
pursuant to the last paragraph of Section 5 hereof) (the "Applicable Period").
If, prior to consummation of the Exchange Offer, any Initial
Purchaser holds any Notes acquired by it and having, or which are reasonably
likely to be determined to have, the status of an unsold allotment in the
initial distribution, or any other Holder is not entitled to participate in the
Exchange Offer, the Company upon the request of such Initial Purchaser or any
such Holder shall simultaneously with the delivery of the Exchange Notes in the
Exchange Offer, issue and deliver to such Initial Purchaser and any such
Holder, in exchange (the "Private Exchange") for such Notes held by such
Initial Purchaser and any such Holder, a like principal amount of debt
securities of the Company that are identical in all material respects to the
Exchange Notes (the "Private Exchange Notes") (and which are issued pursuant to
the same indenture as the Exchange Notes); provided, however, the Company shall
not be required to effect such exchange if, in the written opinion of counsel
for the Company (a copy of which shall be delivered to the Initial Purchasers
and any Holder affected
<PAGE> 9
7
thereby), such exchange cannot be effected without registration under the
Securities Act. The Private Exchange Notes shall bear the same CUSIP number as
the Exchange Notes.
Interest on the Exchange Notes and the Private Exchange Notes
will accrue from (A) the later of (i) the last interest payment date on which
interest was paid on the Notes surrendered in exchange therefor or (ii) if the
Notes are surrendered for exchange on a date in a period which includes the
record date for an interest payment date to occur on or after the date of such
exchange and as to which interest will be paid, the date of such interest
payment date or (B) if no interest has been paid on the Notes, from the Issue
Date.
In connection with the Exchange Offer, the Company shall:
(1) mail to each Holder a copy of the Prospectus forming part
of the Exchange Offer Registration Statement, together with an
appropriate letter of transmittal and related documents;
(2) utilize the services of a depositary for the Exchange
Offer with an address in the Borough of Manhattan, The City of New
York;
(3) permit Holders to withdraw tendered Notes at any time
prior to the close of business, New York time, on the last business
day on which the Exchange Offer shall remain open; and
(4) otherwise comply in all material respects with all
applicable laws, rules and regulations.
As soon as practicable after the close of the Exchange Offer
or the Private Exchange, as the case may be, the Company shall:
(1) accept for exchange all Notes tendered and not
validly withdrawn pursuant to the Exchange Offer or the Private
Exchange;
(2) deliver to the Trustee for cancellation all Notes so
accepted for exchange; and
(3) cause the Trustee to authenticate and deliver
promptly to each Holder of Notes, Exchange Notes or Private Exchange
Notes, as the case may be, equal in principal amount to the Notes of
such Holder so accepted for exchange.
<PAGE> 10
8
The Exchange Offer and the Private Exchange shall not be
subject to any conditions, other than that (i) the Exchange Offer or the
Private Exchange, as the case may be, does not violate applicable law or any
applicable interpretation of the Staff, (ii) no action or proceeding is
instituted or threatened in any court or by any governmental agency which might
materially impair the ability of the Company to proceed with the Exchange Offer
or the Private Exchange and no material adverse development has occurred in any
existing action or proceeding with respect to the Company and (iii) all
governmental approvals have been obtained, which approvals the Company deems
necessary for the consummation of the Exchange Offer or Private Exchange.
The Exchange Notes and the Private Exchange Notes may be
issued under (i) the Indenture or (ii) an indenture identical in all material
respects to the Indenture, which in either event shall provide that the
Exchange Notes shall not be subject to the transfer restrictions set forth in
the Indenture. The Indenture or such indenture shall provide that the Exchange
Notes, the Private Exchange Notes and the Notes shall vote and consent together
on all matters as one class and that neither the Exchange Notes, the Private
Exchange Notes or the Notes will have the right to vote or consent as a
separate class on any matter.
(c) If, (i) because of any change in law or in currently
prevailing interpretations of the Staff, the Company is not permitted to effect
an Exchange Offer, (ii) the Exchange Offer is not consummated within 210 days
of the Issue Date, (iii) any holder of Private Exchange Notes so requests
within 180 days after the consummation of the Private Exchange, or (iv) in the
case of any Holder that participates in the Exchange Offer, such Holder does
not receive Exchange Notes on the date of the exchange that may be sold without
restriction under state and federal securities laws (other than due solely to
the status of such Holder as an affiliate of the Company within the meaning of
the Securities Act) and so notifies the Company within 60 days after such
Holder first becomes aware of any such restriction and provides the Company
with a reasonable basis for its conclusion, in the case of each of clauses (i),
(ii), (iii) and (iv) of this sentence, then the Company shall promptly deliver
to the Holders of Registrable Notes and the Trustee written notice thereof (the
"Shelf Notice") and shall file a Shelf Registration pursuant to Section 3
hereof.
3. Shelf Registration
If a Shelf Notice is delivered as contemplated by Section 2(c)
hereof, then:
<PAGE> 11
9
(a) Shelf Registration. The Company shall file with the
SEC a Registration Statement for an offering to be made on a continuous basis
pursuant to Rule 415 covering all of the Registrable Notes (the "Shelf
Registration Statement"). If the Company shall not have filed an Exchange
Offer Registration Statement, the Company shall use its diligent best efforts
to file with the SEC the Shelf Registration Statement as promptly as
practicable, but no later than 30 days from the delivery of the Shelf Notice.
The Shelf Registration Statement shall be on Form S-1 or another appropriate
form permitting registration of such Registrable Notes for resale by Holders in
the manner or manners designated by them (including, without limitation, one or
more underwritten offerings). The Company shall not permit any securities
other than the Registrable Notes to be included in the Shelf Registration
Statement or any Subsequent Shelf Registration Statement.
The Company shall use all reasonable efforts to cause the
initial Shelf Registration Statement to be declared effective under the
Securities Act by the 60th day after the delivery of the Shelf Notice and to
keep the Shelf Registration Statement continuously effective under the
Securities Act until the third anniversary of its effective date, subject to
extension pursuant to the last paragraph of Section 5 hereof (the
"Effectiveness Period"), or such shorter period ending when (i) all Registrable
Notes covered by the Shelf Registration Statement have been sold in the manner
set forth and as contemplated in the initial Shelf Registration Statement or
(ii) a Subsequent Shelf Registration Statement covering all of the Registrable
Notes has been declared effective under the Securities Act.
(b) Subsequent Shelf Registrations. If the initial Shelf
Registration Statement or any Subsequent Shelf Registration Statement ceases to
be effective for any reason at any time during the Effectiveness Period (other
than because of the sale of all of the securities registered thereunder), the
Company shall use all reasonable efforts to obtain the prompt withdrawal of any
order suspending the effectiveness thereof, and in any event shall within 30
days of such cessation of effectiveness amend the Shelf Registration Statement
in a manner to obtain the withdrawal of the order suspending the effectiveness
thereof, or file an additional "shelf" Registration Statement pursuant to Rule
415 covering all of the Registrable Notes (a "Subsequent Shelf Registration
Statement"). If a Subsequent Shelf Registration Statement is filed, the
Company shall use its best efforts to cause the Subsequent Shelf Registration
to be declared effective under the Securities Act as soon as practicable after
such filing and to keep such Registration Statement continuously effective for
a period
<PAGE> 12
10
equal to the number of days in the Effectiveness Period less the aggregate
number of days during which the Shelf Registration Statement or any Subsequent
Shelf Registration was previously continuously effective. As used herein the
term "Shelf Registration Statement" means the Shelf Registration Statement and
any Subsequent Shelf Registration Statement.
(c) Supplements and Amendments. The Company shall
promptly supplement and amend the Shelf Registration Statement if required by
the rules, regulations or instructions applicable to the registration form used
for such Shelf Registration Statement, if required by the Securities Act, or if
reasonably requested by the Holders of a majority in aggregate principal amount
of the Registrable Notes covered by such Registration Statement or by any
underwriter of such Registrable Notes.
(d) Hold-Back Agreements
(1) Restrictions on Public Sale by Holders of Registrable
Notes. Each Holder of Registrable Notes whose Registrable Notes are
covered by a Shelf Registration Statement filed pursuant to this
Section 3 (which Registrable Notes are not being sold in the
underwritten offering described below) agrees, if requested (pursuant
to a timely written notice) by the Company or the managing underwriter
or underwriters in an underwritten offering, not to effect any public
sale or distribution of any of the Registrable Notes or a similar
security of the Company, including a sale pursuant to Rule 144 or Rule
144A (except as part of such underwritten offering), during the period
beginning 20 days prior to, and ending 90 days after, the closing date
of each underwritten offering made pursuant to such Shelf Registration
Statement, to the extent timely notified in writing by the Company or
by the managing underwriter or underwriters; provided, however, that
each holder of Registrable Notes shall be subject to the hold-back
restrictions of this Section 3(d)(1) only once during the term of this
Agreement.
The foregoing provisions shall not apply to any Holder if such
Holder is prevented by applicable statute or regulation from entering
into any such agreement; provided, however, that any such Holder shall
undertake, in its request to participate in any such underwritten
offering, not to effect any public sale or distribution of the class
of securities covered by such Shelf Registration Statement (except as
part of such underwritten offering) during such period unless it has
provided 30 days' prior written notice of such sale or
<PAGE> 13
11
distribution to the Company or the managing underwriter or
underwriters, as the case may be.
(2) Restrictions on the Company and Others. The Company
agrees (A) not to effect any public or private sale or distribution
(including, without limitation, a sale pursuant to Regulation D under
the Securities Act) of any securities the same as or similar to those
covered by a Shelf Registration Statement filed pursuant to this
Section 3, or any securities convertible into or exchangeable or
exercisable for such securities, during the 10 days prior to, and
during the 90-day period beginning on, the commencement of an
underwritten public distribution of Registrable Notes, where the
managing underwriter or underwriters so requests; (B) to include in
any agreements entered into by the Company on or after the date of
this Agreement (other than any underwriting agreement relating to a
public offering registered under the Securities Act) pursuant to which
the Company issues or agrees to issue securities the same as or
similar to the Notes a provision that each holder of such securities
that are the same as or similar to Notes issued at any time on or
after the date of this Agreement agrees not to effect any public or
private sale or distribution, or request or demand the registration,
of any such securities (or any securities convertible into or
exchangeable or exercisable for such securities) during the period
referred to in clause (A) of this Section 3(d)(2), including any sale
pursuant to Rule 144 or Rule 144A; and (C) not to grant or agree to
grant any "piggy back registration" or other similar rights to any
holder of the Company's or any of their respective subsidiaries'
securities issued on or after the date of this Agreement with respect
to any Registration Statement.
4. Additional Interest
(a) The Company and the Initial Purchasers agree that the
Holders of Notes will suffer damages if the Company fails to fulfill its
obligations under Section 2 or Section 3 hereof and that it would not be
feasible to ascertain the extent of such damages with precision. Accordingly,
the Company agrees to pay, as liquidated damages, additional interest on the
Notes ("Additional Interest") under the circumstances and to the extent set
forth below (each such event referred to in clauses (i) through (iii) below, a
"Registration Default" and each of which shall be given independent effect):
(i) if the Exchange Offer Registration Statement has not
been filed on or prior to the 120th day following the Issue
<PAGE> 14
12
Date, then commencing on the 121st day after the Issue Date,
Additional Interest shall accrue on the Notes over and above the
accrued interest at a rate of .50% per annum for the first 120 days
immediately following such 120th day;
(ii) if the Exchange Offer Registration Statement is not
declared effective by the SEC on or prior to the 180th day following
the Issue Date, then commencing on the 181st day after the Issue Date,
Additional Interest shall accrue on the Notes included or which should
have been included in such Registration Statement over and above the
accrued interest at a rate of .50% per annum for the first 90 days
immediately following such 180th day; and
(iii) if (A) the Company has not exchanged Exchange Notes
for all Notes validly tendered in accordance with the terms of the
Exchange Offer, (B) the Shelf Registration Statement is not declared
effective on or prior to the 60th day following the delivery of the
Shelf Notice or (C) if applicable, the Shelf Registration Statement
has been declared effective and ceases to be effective, then
Additional Interest shall accrue on the Notes over and above the
accrued interest at a rate of .50% per annum for the first 90 days
commencing on the day after such Registration Default;
such Additional Interest rate, in the case of each of (i), (ii) and (iii)
above, to increase by an additional .50% per annum at the beginning of each
subsequent 90-day period; provided, however; that in no event shall the amount
of Additional Interest exceed 2.00% in the aggregate pursuant to this Section
4; provided further, that (1) upon the filing of the Exchange Offer
Registration Statement (in the case of clause (i) of this Section 4(a)), (2)
upon the effectiveness of the Exchange Offer Registration Statement (in the
case of clause (ii) of this Section 4(a)), or (3) upon the exchange of Exchange
Notes for all Notes tendered (in the case of clause (iii)(A) of this Section
4(a)), or upon the effectiveness of the Shelf Registration Statement (in the
case of clause (iii)(B) of this Section 4(a)), or upon the effectiveness of the
Shelf Registration Statement which had ceased to remain effective (in the case
of clause (iii)(C) of this Section 4(a)), Additional Interest on the Notes as a
result of such clause (or the relevant subclause thereof), as the case may be,
shall cease to accrue.
(b) The Company shall notify the Trustee within one
business day after each Registration Default (an "Event Date"). Any amounts of
Additional Interest due pursuant to (a)(i), (a)(ii) or (a)(iii) of this Section
4 will be payable in cash semi-annually on each April 15 and October 15 (to the
holders of record on the
<PAGE> 15
13
April 1 and October 1 immediately preceding such dates), commencing with the
first such date occurring after any such Additional Interest commences to
accrue. The amount of Additional Interest will be determined by multiplying
the applicable Additional Interest rate by the principal amount of the
Registrable Notes, multiplied by a fraction, the numerator of which is the
number of days such Additional Interest rate was applicable during such period
(determined on the basis of a 360-day year comprised of twelve 30-day months
and, in the case of a partial month, the actual number of days elapsed), and
the denominator of which is 360.
5. Registration Procedures
In connection with the filing of any Registration Statement
pursuant to Sections 2 or 3 hereof, the Company shall effect such registrations
to permit the sale of the securities covered thereby in accordance with the
intended method or methods of disposition thereof, and pursuant thereto and in
connection with any Registration Statement filed by the Company hereunder the
Company shall:
(a) Prepare and file with the SEC on or prior to the
Filing Date, a Registration Statement or Registration Statements as prescribed
by Sections 2 or 3 hereof, and use its diligent best efforts to cause each such
Registration Statement to become effective and remain effective as provided
herein; provided, however, that, if (1) such filing is pursuant to Section 3
hereof, or (2) a Prospectus contained in an Exchange Offer Registration
Statement filed pursuant to Section 2 hereof is required to be delivered under
the Securities Act by any Participating Broker-Dealer who seeks to sell
Exchange Notes during the Applicable Period, before filing any Registration
Statement or Prospectus or any amendments or supplements thereto, the Company
shall furnish to and afford the Holders of the Registrable Notes covered by
such Registration Statement or each such Participating Broker-Dealer, as the
case may be, one counsel selected by the Holders of a majority in aggregate
principal amount of the Registrable Notes (the "Holders' Counsel"), counsel for
such Participating Broker-Dealer and the managing underwriters, if any, a
reasonable opportunity to review copies of all such documents (including copies
of any documents to be incorporated by reference therein and all exhibits
thereto) proposed to be filed (in each case at least five business days prior
to such filing, or such later date as is reasonable under the circumstances).
The Company shall not file any Registration Statement or Prospectus or any
amendments or supplements thereto if the Holders of a majority in aggregate
principal amount of the Registrable Notes covered by such
<PAGE> 16
14
Registration Statement and the Holders' Counsel, or any such Participating
Broker-Dealer and its counsel, as the case may be, or the managing
underwriters, if any, shall reasonably object.
(b) Prepare and file with the SEC such amendments and
post-effective amendments to each Shelf Registration Statement or Exchange
Offer Registration Statement, as the case may be, as may be necessary to keep
such Registration Statement continuously effective for the Effectiveness Period
or the Applicable Period, as the case may be; cause the related Prospectus to
be supplemented by any Prospectus supplement required by applicable law, and as
so supplemented to be filed pursuant to Rule 424 (or any similar provisions
then in force) promulgated under the Securities Act; and comply with the
provisions of the Securities Act and the Exchange Act applicable to it with
respect to the disposition of all securities covered by such Registration
Statement as so amended or in such Prospectus as so supplemented and with
respect to the subsequent resale of any securities being sold by a
Participating Broker-Dealer covered by any such Prospectus. The Company shall
be deemed not to have used its diligent best efforts to keep a Registration
Statement effective during the Applicable Period if it voluntarily takes any
action that would result in selling Holders of the Registrable Notes covered
thereby or Participating Broker-Dealers seeking to sell Exchange Notes not
being able to sell such Registrable Notes or such Exchange Notes during that
period unless (i) such action is required by applicable law or (ii) such action
is taken by the Company in good faith and for valid business reasons (not
including avoidance of the Company's obligations hereunder), including the
acquisition or divestiture of assets.
(c) If (1) a Shelf Registration Statement is filed
pursuant to Section 3 hereof, or (2) a Prospectus contained in an Exchange
Offer Registration Statement filed pursuant to Section 2 hereof is required to
be delivered under the Securities Act by any Participating Broker-Dealer who
seeks to sell Exchange Notes during the Applicable Period, notify the selling
Holders of Registrable Notes and Holders' Counsel, or each such Participating
Broker-Dealer and their counsel, as the case may be, and the managing
underwriters, if any, promptly (but in any event within two business days), (i)
when a Prospectus or any Prospectus supplement or post-effective amendment has
been filed, and, with respect to a Registration Statement or any post-effective
amendment, when the same has become effective under the Securities Act
(including in such notice a written statement that any Holder may, upon
request, obtain, at the sole expense of the Company, one conformed copy of such
Registration Statement or post-effective amendment including financial
statements and schedules, documents
<PAGE> 17
15
incorporated or deemed to be incorporated by reference and exhibits), (ii) of
the issuance by the SEC of any stop order suspending the effectiveness of a
Registration Statement or of any order preventing or suspending the use of any
preliminary prospectus or the initiation of any proceedings for that purpose,
(iii) if at any time when a prospectus is required by the Securities Act to be
delivered in connection with sales of the Registrable Notes or resales of
Exchange Notes by Participating Broker-Dealers the representations and
warranties of the Company contained in any agreement (including any
underwriting agreement), contemplated by Section 5(n) hereof, to the knowledge
of the Company, cease to be true and correct in all material respects, (iv) of
the receipt by the Company of any notification with respect to the suspension
of the qualification or exemption from qualification of a Registration
Statement or any of the Registrable Notes or the Exchange Notes to be sold by
any Participating Broker-Dealer for offer or sale in any jurisdiction, or the
initiation or threatening of any proceeding for such purpose, (v) of the
happening of any event, or any information becoming known that makes any
statement made in such Registration Statement or related Prospectus or any
document incorporated or deemed to be incorporated therein by reference untrue
in any material respect or that requires the making of any changes in or
amendments or supplements to such Registration Statement, Prospectus or
documents so that, in the case of the Registration Statement, it will not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading,
and that in the case of the Prospectus, it will not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, and (vi) of the
Company's determination that a post-effective amendment to a Registration
Statement would be appropriate.
(d) If (1) a Shelf Registration Statement is filed
pursuant to Section 3 hereof, or (2) a Prospectus contained in an Exchange
Offer Registration Statement filed pursuant to Section 2 hereof is required to
be delivered under the Securities Act by any Participating Broker-Dealer who
seeks to sell Exchange Notes during the Applicable Period, use its reasonable
best efforts to prevent the issuance of any order suspending the effectiveness
of a Registration Statement or of any order preventing or suspending the use of
a Prospectus or suspending the qualification (or exemption from qualification)
of any of the Registrable Notes or the Exchange Notes to be sold by any
Participating Broker-Dealer, for sale in
<PAGE> 18
16
any jurisdiction, and, if any such order is issued, to use its best efforts to
obtain the withdrawal of any such order at the earliest possible moment.
(e) If a Shelf Registration Statement is filed pursuant to
Section 3 and if requested by the managing underwriter or underwriters (if
any), the Holders of a majority in aggregate principal amount of the
Registrable Notes being sold in connection with an underwritten offering or any
Participating Broker-Dealer, (i) promptly incorporate in a prospectus
supplement or post-effective amendment such information as the managing
underwriter or underwriters (if any), their counsel, such Holders, Holders'
Counsel, any Participating Broker-Dealer or their counsel determine is
reasonably necessary to be included therein, (ii) make all required filings of
such prospectus supplement or such post-effective amendment as soon as
practicable after the Company has received notification of the matters to be
incorporated in such prospectus supplement or post-effective amendment, and
(iii) supplement or make amendments to such Registration Statement.
(f) If (1) a Shelf Registration Statement is filed
pursuant to Section 3 hereof, or (2) a Prospectus contained in an Exchange
Offer Registration Statement filed pursuant to Section 2 hereof is required to
be delivered under the Securities Act by any Participating Broker-Dealer who
seeks to sell Exchange Notes during the Applicable Period, furnish to each
selling Holder of Registrable Notes, Holders' Counsel and to each such
Participating Broker-Dealer who so requests and its counsel and each managing
underwriter, if any, at the sole expense of the Company, one conformed copy of
the Registration Statement or Registration Statements and each post-effective
amendment thereto, including financial statements and schedules, and, if
requested, all documents incorporated or deemed to be incorporated therein by
reference and all exhibits.
(g) If (1) a Shelf Registration Statement is filed
pursuant to Section 3 hereof, or (2) a Prospectus contained in an Exchange
Offer Registration Statement filed pursuant to Section 2 hereof is required to
be delivered under the Securities Act by any Participating Broker-Dealer who
seeks to sell Exchange Notes during the Applicable Period, deliver to each
selling Holder of Registrable Notes and Holders' counsel, or each such
Participating Broker-Dealer and its counsel, as the case may be, and the
underwriters, if any, at the sole expense of the Company, as many copies of the
Prospectus or Prospectuses (including each form of preliminary prospectus) and
each amendment or supplement thereto and any documents incorporated by
reference therein as such Persons may reasonably request; and, subject to the
last paragraph of this
<PAGE> 19
17
Section 5, the Company hereby consents to the use of such Prospectus and each
amendment or supplement thereto by each of the selling Holders of Registrable
Notes or each such Participating Broker-Dealer, as the case may be, and the
underwriters or agents, if any, and dealers (if any), in connection with the
offering and sale of the Registrable Notes covered by, or the sale by
Participating Broker-Dealers of the Exchange Notes pursuant to, such Prospectus
and any amendment or supplement thereto.
(h) Prior to any public offering of Registrable Notes or
any delivery of a Prospectus contained in the Exchange Offer Registration
Statement by any Participating Broker-Dealer who seeks to sell Exchange Notes
during the Applicable Period, use its best efforts to cooperate with the
selling Holders of Registrable Notes and Holders' counsel or each such
Participating Broker-Dealer and its counsel, as the case may be, the managing
underwriter or underwriters, if any, and their counsel in connection with the
registration or qualification (or exemption from such registration or
qualification) of such Registrable Notes for offer and sale under the
securities or Blue Sky laws of such jurisdictions within the United States as
any selling Holder, Participating Broker-Dealer, or the managing underwriter or
underwriters reasonably request; provided, however, that where Exchange Notes
held by Participating Broker-Dealers or Registrable Notes are offered other
than through an underwritten offering, the Company agrees to cause the
Company's counsel to perform Blue Sky investigations and file registrations and
qualifications required to be filed pursuant to this Section 5(h); keep each
such registration or qualification (or exemption therefrom) effective during
the period such Registration Statement is required to be kept effective and do
any and all other acts or things reasonably necessary or advisable to enable
the disposition in such jurisdictions of the Exchange Notes held by
Participating Broker-Dealers or the Registrable Notes covered by the applicable
Registration Statement; provided, however, that the Company shall not be
required (A) to qualify generally to do business in any jurisdiction where it
is not then so qualified, (B) to take any action that would subject it to
general service of process in any such jurisdiction where it is not then so
subject or (C) to subject itself to taxation in excess of a nominal dollar
amount in any such jurisdiction where it is not then so subject.
(i) If a Shelf Registration Statement is filed pursuant
to Section 3 hereof, cooperate with the selling Holders of Registrable Notes
and the managing underwriter or underwriters, if any, to facilitate the timely
preparation and delivery of certificates representing Registrable Notes to be
sold, which certificates shall not bear any restrictive legends and shall be in
a
<PAGE> 20
18
form eligible for deposit with The Depository Trust Company; and enable such
Registrable Notes to be in such denominations and registered in such names as
the managing underwriter or underwriters, if any, or Holders may request.
(j) Use its best efforts to cause the Registrable Notes
covered by the Registration Statement to be registered with or approved by such
other governmental agencies or authorities as may be reasonably necessary to
enable the seller or sellers thereof or the underwriter or underwriters, if
any, to consummate the disposition of such Registrable Notes, except as may be
required solely as a consequence of the nature of such selling Holder's
business, in which case the Company will cooperate in all reasonable respects
with the filing of such registration statement and the granting of such
approvals.
(k) If (1) a Shelf Registration Statement is filed
pursuant to Section 3 hereof, or (2) a Prospectus contained in an Exchange
Offer Registration Statement filed pursuant to Section 2 hereof is required to
be delivered under the Securities Act by any Participating Broker-Dealer who
seeks to sell Exchange Notes during the Applicable Period, upon the occurrence
of any event contemplated by paragraph 5(c)(v) or 5(c)(vi) hereof, as promptly
as practicable prepare and (subject to Section 5(a) hereof) file with the SEC,
at the sole expense of the Company, a supplement or post-effective amendment to
the Registration Statement or a supplement to the related Prospectus or any
document incorporated or deemed to be incorporated therein by reference, or
file any other required document so that, as thereafter delivered to the
purchasers of the Registrable Notes being sold thereunder or to the purchasers
of the Exchange Notes to whom such Prospectus will be delivered by a
Participating Broker-Dealer, any such Prospectus will not contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(l) Use its best efforts to cause the Registrable Notes
covered by a Registration Statement or the Exchange Notes, as the case may be,
to be rated with the appropriate rating agencies, if so requested by the
Holders of a majority in aggregate principal amount of Registrable Notes
covered by such Registration Statement or the Exchange Notes, as the case may
be, or the managing underwriter or underwriters, if any.
(m) Prior to the effective date of the first Registration
Statement relating to the Registrable Notes, (i) provide the Trustee with
certificates for the Registrable Notes in
<PAGE> 21
19
a form eligible for deposit with The Depository Trust Company and (ii) provide
a CUSIP number for the Registrable Notes.
(n) In connection with any underwritten offering of
Registrable Notes pursuant to a Shelf Registration Statement, enter into an
underwriting agreement as is customary in underwritten offerings of debt
securities similar to the Notes and take all such other actions as are
reasonably requested by the managing underwriter or underwriters in order to
expedite or facilitate the registration or the disposition of such Registrable
Notes and, in such connection, (i) make such representations and warranties to,
and covenants with, the underwriters with respect to the business of the
Company and its subsidiaries (including any acquired business, properties or
entity, if applicable) and the Registration Statement, Prospectus and
documents, if any, incorporated or deemed to be incorporated by reference
therein, in each case, as are customarily made by issuers to underwriters in
underwritten offerings of debt securities similar to the Notes, and confirm the
same in writing if and when requested; (ii) use reasonable best efforts to
obtain the written opinions of counsel to the Company and written updates
thereof in form, scope and substance reasonably satisfactory to the managing
underwriter or underwriters, addressed to the underwriters covering the matters
customarily covered in opinions requested in underwritten offerings and such
other matters as may be reasonably requested by the managing underwriter or
underwriters; (iii) use reasonable best efforts to obtain "cold comfort"
letters and updates thereof in form, scope and substance reasonably
satisfactory to the managing underwriter or underwriters from the independent
certified public accountants of the Company (and, if necessary, any other
independent certified public accountants of any subsidiary of the Company or of
any business acquired by the Company for which financial statements and
financial data are, or are required to be, included or incorporated by
reference in the Registration Statement), addressed to each of the
underwriters, such letters to be in customary form and covering matters of the
type customarily covered in "cold comfort" letters in connection with
underwritten offerings and such other matters as reasonably requested by the
managing underwriter or underwriters as permitted by the Statement on Auditing
Standards No. 72; and (iv) if an underwriting agreement is entered into, the
same shall contain indemnification provisions and procedures no less favorable
than those set forth in Section 7 hereof (or such other provisions and
procedures acceptable to Holders of a majority in aggregate principal amount of
Registrable Notes covered by such Registration Statement and the managing
underwriter or underwriters or agents) with respect to all parties to be
indemnified pursuant to said Section. The above shall be done at each closing
under such
<PAGE> 22
20
underwriting agreement, or as and to the extent required thereunder.
(o) If (1) a Shelf Registration Statement is filed
pursuant to Section 3 hereof, or (2) a Prospectus contained in an Exchange
Offer Registration Statement filed pursuant to Section 2 hereof is required to
be delivered under the Securities Act by any Participating Broker-Dealer who
seeks to sell Exchange Notes during the Applicable Period, make available for
inspection by any selling Holder of such Registrable Notes being sold, or each
such Participating Broker-Dealer, as the case may be, any underwriter
participating in any such disposition of Registrable Notes, if any, and any
attorney, accountant or other agent retained by any such selling Holder or each
such Participating Broker-Dealer, as the case may be, or underwriter
(collectively, the "Inspectors"), at the offices where normally kept, during
reasonable business hours, all financial and other records, pertinent corporate
documents and instruments of the Company and its subsidiaries (collectively,
the "Records") as shall be reasonably necessary to enable them to exercise any
applicable due diligence responsibilities, and cause the officers, directors
and employees of the Company and its subsidiaries to supply all information
reasonably requested by any such Inspector in connection with such Registration
Statement; provided, however, that all information shall be kept confidential
by each such Inspector, except to the extent that (i) the disclosure of such
Records is necessary to avoid or correct a misstatement or omission in such
Registration Statement, (ii) the release of such Records is ordered pursuant to
a subpoena or other order from a court of competent jurisdiction, (iii)
disclosure of such information is, in the opinion of counsel for any Inspector,
necessary or advisable in connection with any action, claim, suit or
proceeding, directly or indirectly, involving or potentially involving such
Inspector and arising out of, based upon, relating to, or involving this
Agreement, or any transactions contemplated hereby or arising hereunder;
provided, however, that prior notice be provided as soon as practicable to the
Company of the potential disclosure of any information by such Inspector
pursuant to clause (ii) or this clause (iii) to permit the Company to obtain a
protective order (or waive the provisions of this paragraph (o)) and that such
Inspector shall take such actions as are reasonably necessary to protect the
confidentiality of such information (if practicable) to the extent such action
is otherwise not inconsistent with, an impairment of or in derogation of the
rights and interests of the Holders or any Inspector, or (iv) the information
in such Records has been made generally available to the public. Each selling
Holder of such Registrable Securities and each such Participating Broker-Dealer
will be required to agree that information obtained by it as a result of such
inspections
<PAGE> 23
21
shall be deemed confidential and shall not be used by it as the basis for any
market transactions in the securities of the Issuer unless and until such
information is generally available to the public. Each selling Holder of such
Registrable Notes and each such Participating Broker-Dealer will be required to
further agree that it will, upon learning that disclosure of such Records is
sought in a court of competent jurisdiction, give notice to the Company and
allow the Company to undertake appropriate action to prevent disclosure of the
Records deemed confidential at the Company's sole expense.
(p) Provide an indenture trustee for the Registrable
Notes or the Exchange Notes, as the case may be, and cause the Indenture or the
trust indenture provided for in Section 2(a) hereof, as the case may be, to be
qualified under the TIA not later than the effective date of the Exchange Offer
or the first Registration Statement relating to the Registrable Notes; and in
connection therewith, cooperate with the trustee under any such indenture and
the Holders of the Registrable Notes, to effect such changes to such indenture
as may be required for such indenture to be so qualified in accordance with the
terms of the TIA; and execute, and use its reasonable best efforts to cause
such trustee to execute, all documents as may be required to effect such
changes, and all other forms and documents required to be filed with the SEC to
enable such indenture to be so qualified in a timely manner.
(q) Comply with all applicable rules and regulations of
the SEC and make generally available to its securityholders earnings statements
satisfying the provisions of Section 11(a) of the Securities Act and Rule 158
thereunder (or any similar rule promulgated under the Securities Act) no later
than 45 days after the end of any 12-month period (or 90 days after the end of
any 12-month period if such period is a fiscal year) (i) commencing at the end
of any fiscal quarter in which Registrable Notes are sold to underwriters in a
firm commitment or best efforts underwritten offering and (ii) if not sold to
underwriters in such an offering, commencing on the first day of the first
fiscal quarter of the Company after the effective date of a Registration
Statement, which statements shall cover said 12-month periods.
(r) Upon consummation of an Exchange Offer or a Private
Exchange, obtain an opinion of counsel to the Company, in a form customary for
underwritten transactions, addressed to the Trustee for the benefit of all
Holders of Registrable Notes participating in the Exchange Offer or the Private
Exchange, as the case may be, that the Exchange Notes or Private Exchange
Notes, as the case may be, and the related indenture constitute legal, valid
and binding
<PAGE> 24
22
obligations of the Company, enforceable against the Company in accordance with
their respective terms, subject to customary exceptions and qualifications.
(s) If an Exchange Offer or a Private Exchange is to be
consummated, upon delivery of the Registrable Notes by Holders to the Company
(or to such other Person as directed by the Company) in exchange for the
Exchange Notes or the Private Exchange Notes, as the case may be, the Company
shall mark, or cause to be marked, on such Registrable Notes that such
Registrable Notes are being cancelled in exchange for the Exchange Notes or the
Private Exchange Notes, as the case may be; in no event shall such Registrable
Notes be marked as paid or otherwise satisfied.
(t) Cooperate with each seller of Registrable Notes
covered by any Registration Statement, Holders' Counsel and each underwriter,
if any, participating in the disposition of such Registrable Notes and its
counsel in connection with any filings required to be made with the National
Association of Securities Dealers, Inc. (the "NASD").
(u) Use its diligent best efforts to take all other steps
necessary or advisable to effect the registration of the Exchange Notes and/or
Registrable Notes covered by a Registration Statement contemplated hereby.
The Company may require each seller of Registrable Notes as to
which any registration is being effected to furnish to the Company such
information regarding such seller and the distribution of such Registrable
Notes as the Company may, from time to time, reasonably request. The Company
may exclude from such registration the Registrable Notes of any seller who
fails to furnish such information within a reasonable time after receiving such
request. Each seller as to which any registration pursuant to a Shelf
Registration Statement is being effected agrees to furnish promptly to the
Company all information required to be disclosed in order to make the
information previously furnished to the Company by such seller not materially
misleading.
Each Holder of Registrable Notes and each Participating
Broker-Dealer agrees by acquisition of such Registrable Notes or Exchange Notes
to be sold by such Participating Broker-Dealer, as the case may be, that, upon
actual receipt of any notice from the Company of the happening of any event of
the kind described in Section 5(c)(ii), 5(c)(iv), 5(c)(v), or 5(c)(vi) hereof,
such Holder will forthwith discontinue disposition of such Registrable Notes
covered by such Registration Statement or Prospectus or Exchange Notes to be
sold by such Holder or Participating
<PAGE> 25
23
Broker-Dealer, as the case may be, until such Holder's or Participating
Broker-Dealer's receipt of the copies of the supplemented or amended Prospectus
contemplated by Section 5(k) hereof, or until it is advised in writing (the
"Advice") by the Company that the use of the applicable Prospectus may be
resumed, and has received copies of any amendments or supplements thereto and,
if so directed by the Company, such Holder or Participating Broker-Dealer, as
the case may be, will deliver to the Company all copies, other than permanent
file copies, then in such Holder's or Participating Broker- Dealer's
possession, of the Prospectus covering such Registrable Securities current at
the time of receipt of such notice. In the event the Company shall give any
such notice, each of the Effectiveness Period and the Applicable Period shall
be extended by the number of days during such periods from and including the
date of the giving of such notice to and including the date when each seller of
Registrable Notes covered by such Registration Statement or Exchange Notes to
be sold by such Participating Broker-Dealer, as the case may be, shall have
received (x) the copies of the supplemented or amended Prospectus contemplated
by Section 5(k) hereof or (y) the Advice.
6. Registration Expenses
(a) All fees and expenses incident to the performance of
or compliance with this Agreement by the Company shall be borne by the Company
whether or not the Exchange Offer or a Shelf Registration Statement is filed or
becomes effective, including, without limitation, (i) all registration and
filing fees (including, without limitation, (A) fees with respect to filings
required to be made with the NASD in connection with an underwritten offering
and (B) fees and expenses of compliance with state securities or Blue Sky laws
(including, without limitation, reasonable fees and disbursements of counsel in
connection with Blue Sky qualifications of the Registrable Notes or Exchange
Notes and determination of the eligibility of the Registrable Notes or Exchange
Notes for investment under the laws of such jurisdictions (x) where the holders
of Registrable Notes are located, in the case of the Exchange Notes, or (y) as
provided in Section 5(h) hereof, in the case of Registrable Notes or Exchange
Notes to be sold by a Participating Broker-Dealer during the Applicable
Period)), (ii) printing expenses, including, without limitation, expenses of
printing certificates for Registrable Notes or Exchange Notes in a form
eligible for deposit with The Depository Trust Company and of printing
prospectuses if the printing of prospectuses is requested by the managing
underwriter or underwriters, if any, by the Holders of a majority in aggregate
principal amount of the Registrable Notes included in any Registration
Statement or in respect of Registrable Notes or Exchange Notes to be sold by
any Participating
<PAGE> 26
24
Broker-Dealer during the Applicable Period, as the case may be, (iii)
messenger, telephone and delivery expenses, (iv) fees and disbursements of
counsel for the Company and reasonable fees and disbursements of Holders'
Counsel (subject to the provisions of Section 6(b) hereof), (v) fees and
disbursements of all independent certified public accountants referred to in
Section 5(n)(iii) hereof (including, without limitation, the expenses of any
special audit and "cold comfort" letters required by or incident to such
performance), (vi) rating agency fees, (vii) Securities Act liability
insurance, if the Company desires such insurance, (viii) fees and expenses of
all other Persons retained by the Company, (ix) internal expenses of the
Company (including, without limitation, all salaries and expenses of officers
and employees of the Company performing legal or accounting duties), (x) the
expense of any annual audit, (xi) the fees and expenses incurred in connection
with the listing of the securities to be registered on any securities exchange,
if applicable, and (xii) the expenses relating to printing, word processing and
distributing all Registration Statements, underwriting agreements, securities
sales agreements, indentures and any other documents necessary in order to
comply with this Agreement.
(b) The Company shall reimburse the Holders of the
Registrable Notes being registered in a Shelf Registration Statement for the
reasonable fees and disbursements, not to exceed $25,000, of Holders' Counsel
(in addition to appropriate local counsel) and other out-of-pocket expenses of
such Holders of Registrable Notes incurred in connection with the registration
and sale of the Registrable Notes.
7. Indemnification
(a) In the event of a Shelf Registration Statement or in
connection with any delivery by any Participating Broker-Dealer who seeks to
sell Exchange Securities during the Applicable Period, the Company agrees to
indemnify and hold harmless each Holder of Registrable Notes and each
Participating Broker-Dealer selling Exchange Notes during the Applicable
Period, the officers and directors of each such Person, and each Person, if
any, who controls any such Person within the meaning of either Section 15 of
the Securities Act or Section 20 of the Exchange Act (each, a "Participant"),
from and against any and all losses, claims, damages and liabilities
(including, without limitation, and subject to Section 7(c) below, the
reasonable legal fees and other expenses actually incurred in connection with
any suit, action or proceeding or any claim asserted) caused by, arising out of
or based upon any untrue statement or alleged untrue statement of a material
fact contained in any Registration Statement (or any amendment thereto)
<PAGE> 27
25
or Prospectus (as amended or supplemented if the Company shall have furnished
any amendments or supplements thereto) or any preliminary Prospectus, or caused
by, arising out of or based upon any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein, in the case of the Prospectus in the light of the
circumstances under which they were made, not misleading, except insofar as
such losses, claims, damages or liabilities are caused by any untrue statement
or omission or alleged untrue statement or omission made in reliance upon and
in conformity with information relating to any Participant furnished to the
Company in writing by such Participant expressly for use therein; provided,
however, that the Company shall not be required to indemnify any such Person if
such untrue statement or omission or alleged untrue statement or omission was
contained or made in any preliminary prospectus and corrected in the Prospectus
or any amendment or supplement thereto and the Prospectus does not contain any
other untrue statement or omission or alleged untrue statement or omission of a
material fact that was the subject matter of the related proceeding and any
such loss, liability, claim, damage or expense suffered or incurred by the
Participants resulted from any action, claim or suit by any Person who
purchased Registrable Notes or Exchange Notes which are the subject thereof
from such Participant and it is established in the related proceeding that such
Participant failed to deliver or provide a copy of the Prospectus (as amended
or supplemented) to such Person with or prior to the confirmation of the sale
of such Registrable Notes or Exchange Notes sold to such Person if required by
applicable law, unless such failure to deliver or provide a copy of the
Prospectus (as amended or supplemented) was a result of noncompliance by the
Company with Section 5 of this Agreement.
(b) Each Participant agrees, severally and not jointly,
to indemnify and hold harmless the Company, its directors, its officers who
sign the Registration Statement and each Person who controls the Company within
the meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act to the same extent as the foregoing indemnity from the Company to each
Participant, but only with reference to information relating to such
Participant furnished to the Company in writing by such Participant expressly
for use in any Registration Statement or Prospectus, any amendment or
supplement thereto, or any preliminary prospectus. The liability of any
Participant under this paragraph shall in no event exceed the proceeds received
by such Participant from sales of Registrable Notes or Exchange Notes giving
rise to such obligations.
(c) If any suit, action, proceeding (including any
governmental or regulatory investigation), claim or demand shall be
<PAGE> 28
26
brought or asserted against any Person in respect of which indemnity may be
sought pursuant to either of the two preceding paragraphs, such Person (the
"Indemnified Person") shall promptly notify the Person against whom such
indemnity may be sought (the "Indemnifying Person") in writing, and the
Indemnifying Person, upon request of the Indemnified Person, shall retain
counsel reasonably satisfactory to the Indemnified Person to represent the
Indemnified Person and any others the Indemnifying Person may reasonably
designate in such proceeding and shall pay the reasonable fees and expenses
actually incurred by such counsel related to such proceeding; provided,
however, that the failure to so notify the Indemnifying Person shall not
relieve it of any obligation or liability which it may have hereunder or
otherwise (unless and only to the extent that such failure directly results in
the loss or compromise of any material rights or defenses by the Company and
the Company was not otherwise aware of such action or claim). In any such
proceeding, any Indemnified Person shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such Indemnified Person unless (i) the Indemnifying Person and the Indemnified
Person shall have mutually agreed in writing to the contrary, (ii) the
Indemnifying Person shall have failed within a reasonable period of time to
retain counsel reasonably satisfactory to the Indemnified Person or (iii) the
named parties in any such proceeding (including any impleaded parties) include
both the Indemnifying Person and the Indemnified Person or any affiliate and
representation of both parties by the same counsel would be inappropriate due
to actual or potential differing interests between them. It is understood
that, unless there exists a conflict among Indemnified Persons, the
Indemnifying Person shall not, in connection with any one such proceeding or
separate but substantially similar related proceeding in the same jurisdiction
arising out of the same general allegations, be liable for the fees and
expenses of more than one separate firm (in addition to any appropriate local
counsel) for all Indemnified Persons, and that all such fees and expenses shall
be reimbursed promptly after receipt of the invoice therefor as they are
incurred. Any such separate firm for the Participants and such control Persons
of Participants shall be designated in writing by Participants who sold a
majority in interest of Registrable Notes and Exchange Notes sold by all such
Participants and any such separate firm for the Company, its directors, its
officers and such control Persons of the Company shall be designated in writing
by the Company. The Indemnifying Person shall not be liable for any settlement
of any proceeding effected without its prior written consent (which consent
shall not be unreasonably withheld), but if settled with such consent or if
there be a final judgment for the plaintiff for which the Indemnified Person is
entitled to indemnification pursuant to this Agreement, the Indemnifying Person
<PAGE> 29
27
agrees to indemnify and hold harmless each Indemnified Person from and against
any loss or liability by reason of such settlement or judgment.
Notwithstanding the foregoing sentence, if at any time an Indemnified Person
shall have requested an Indemnifying Person to reimburse the Indemnified Person
for reasonable fees and expenses actually incurred by counsel as contemplated
by the second sentence of this paragraph, the Indemnifying Person agrees that
it shall be liable for any settlement of any proceeding effected without its
prior written consent if (i) such settlement is entered into more than 30 days
after receipt by such Indemnifying Person of the aforesaid request and (ii)
such Indemnifying Person shall not have reimbursed the Indemnified Person in
accordance with such request prior to the date of such settlement; provided,
however, that the Indemnifying Person shall not be liable for any settlement
effected without its consent pursuant to this sentence if the Indemnifying
Person is contesting, in good faith, the request for reimbursement. No
Indemnifying Person shall, without the prior written consent of the Indemnified
Persons (which consent shall not be unreasonably withheld), effect any
settlement or compromise of any pending or threatened proceeding in respect of
which any Indemnified Person is or could have been a party, or indemnity could
have been sought hereunder by such Indemnified Person, unless such settlement
or compromise (A) includes an unconditional written release of such Indemnified
Person, in form and substance reasonably satisfactory to such Indemnified
Person, from all liability on claims that are the subject matter of such
proceeding and (B) does not include any statement as to an admission of fault,
culpability or failure to act by or on behalf of any Indemnified Person.
(d) If the indemnification provided for in the first and
second paragraphs of this Section 7 is for any reason unavailable to (other
than by reason of exceptions provided therein), or insufficient to hold
harmless, an Indemnified Person in respect of any losses, claims, damages or
liabilities referred to therein, then each Indemnifying Person under such
paragraphs, in lieu of indemnifying such Indemnified Person thereunder and in
order to provide for just and equitable contribution, shall contribute to the
amount paid or payable by such Indemnified Person as a result of such losses,
claims, damages or liabilities in such proportion as is appropriate to reflect
(i) the relative benefits received by the Indemnifying Person or Persons on the
one hand and the Indemnified Person or Persons on the other from the offering
of the Notes or (ii) if the allocation provided by the foregoing clause (i) is
not permitted by applicable law, not only such relative benefits but also the
relative fault of the Indemnifying Person or Persons on the one hand and the
Indemnified Person or Persons on the other in connection with the statements or
omissions or alleged
<PAGE> 30
28
statements or omissions that resulted in such losses, claims, damages or
liabilities (or actions in respect thereof) as well as any other relevant
equitable considerations. The relative benefits received by the Company on the
one hand and the Participants on the other shall be deemed to be in the same
proportion as the total proceeds from the offering (net of discounts and
commissions but before deducting expenses) of the Notes received by the Company
bears to the total proceeds received by such Participant from the sale of
Registrable Notes or Exchange Notes, as the case may be. The relative fault of
the parties shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by
the Company on the one hand or such Participant or such other Indemnified
Person, as the case may be, on the other, the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission, and any other equitable considerations appropriate in
the circumstances.
(e) The parties agree that it would not be just and
equitable if contribution pursuant to this Section 7 were determined by pro
rata allocation (even if the Participants were treated as one entity for such
purpose) or by any other method of allocation that does not take account of the
equitable considerations referred to in the immediately preceding paragraph.
The amount paid or payable by an Indemnified Person as a result of the losses,
claims, damages and liabilities referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any reasonable legal or other expenses actually incurred by such
Indemnified Person in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Section 7, in no event
shall a Participant be required to contribute any amount in excess of the
amount by which proceeds received by such Participant from sales of Registrable
Notes or Exchange Notes, as the case may be, exceeds the amount of any damages
that such Participant has otherwise been required to pay or has paid by reason
of such untrue or alleged untrue statement or omission or alleged omission. No
Person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any Person
who was not guilty of such fraudulent misrepresentation.
(f) The indemnity and contribution agreements contained
in this Section 7 will be in addition to any liability which the Indemnifying
Persons may otherwise have to the Indemnified Persons referred to above.
<PAGE> 31
29
8. Rules 144 and 144A
The Company covenants that it will file the reports required
to be filed by it under the Securities Act and the Exchange Act and the rules
and regulations adopted by the SEC thereunder in a timely manner in accordance
with the requirements of the Securities Act and the Exchange Act and, if at any
time the Company is not required to file such reports, it will, upon the
request of Holders of a majority in aggregate principal amount of Registrable
Notes, make publicly available annual reports and such information, documents
and other reports of the type specified in Sections 13 and 15(d) of the
Exchange Act. The Company further covenants, for so long as any Registrable
Notes remain outstanding, to make available to any Holder or beneficial owner
of Registrable Notes in connection with any sale thereof and any prospective
purchaser of such Registrable Notes from such Holder or beneficial owner, the
information required by Rule 144A(d)(4) under the Securities Act in order to
permit resales of such Registrable Notes pursuant to Rule 144A.
9. Underwritten Registrations
If any of the Registrable Notes covered by any Shelf
Registration Statement are to be sold in an underwritten offering, the
investment banker or investment bankers and manager or managers that will
manage the offering will be selected by the Holders of a majority in aggregate
principal amount of such Registrable Notes included in such offering and
reasonably acceptable to the Company.
No Holder of Registrable Notes may participate in any
underwritten registration hereunder unless such Holder (a) agrees to sell such
Holder's Registrable Notes on the basis provided in any underwriting
arrangements approved by the Persons entitled hereunder to approve such
arrangements and (b) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents required
under the terms of such underwriting arrangements.
10. Miscellaneous
(a) No Inconsistent Agreements. The Company has not, as
of the date hereof, and the Company shall not after the date of this Agreement,
enter into any agreement with respect to any of its securities that is
inconsistent with the rights granted to the Holders of Registrable Notes in
this Agreement or otherwise conflicts with the provisions hereof. The rights
granted to the Holders hereunder do not in any way conflict with and are not
inconsistent with the rights granted to the holders of the
<PAGE> 32
30
Company's other issued and outstanding securities under any such agreements.
The Company has not entered and will not enter into any agreement with respect
to any of its securities which will grant to any Person piggy-back registration
rights with respect to a Registration Statement.
(b) Adjustments Affecting Registrable Notes. The Company
shall not, directly or indirectly, take any action with respect to the
Registrable Notes as a class that would adversely affect the ability of the
Holders of Registrable Notes to include such Registrable Notes in a
registration undertaken pursuant to this Agreement.
(c) Amendments and Waivers. The provisions of this
Agreement may not be amended, modified or supplemented, and waivers or consents
to departures from the provisions hereof may not be given, otherwise than with
the prior written consent of (A) the Holders of not less than a majority in
aggregate principal amount of the then outstanding Registrable Notes and (B) in
circumstances that would adversely affect the Participating Broker-Dealers, the
Participating Broker-Dealers holding not less than a majority in aggregate
principal amount of the Exchange Notes held by all Participating
Broker-Dealers; provided, however, that Section 7 and this Section 10(c) may
not be amended, modified or supplemented without the prior written consent of
each Holder and each Participating Broker-Dealer (including any person who was
a Holder or Participating BrokerDealer of Registrable Notes or Exchange Notes,
as the case may be, disposed of pursuant to any Registration Statement).
Notwithstanding the foregoing, a waiver or consent to depart from the
provisions hereof with respect to a matter that relates exclusively to the
rights of Holders of Registrable Notes whose securities are being sold pursuant
to a Registration Statement and that does not directly or indirectly affect,
impair, limit or compromise the rights of other Holders of Registrable Notes
may be given by Holders of at least a majority in aggregate principal amount of
the Registrable Notes being sold by such Holders pursuant to such Registration
Statement.
(d) Notices. All notices and other communications
(including without limitation any notices or other communications to the
Trustee) provided for or permitted hereunder shall be made in writing by
hand-delivery, registered first-class mail, next-day air courier or facsimile:
(1) if to a Holder of the Registrable Notes or any
Participating Broker-Dealer, at the most current address of such
Holder or Participating Broker-Dealer, as the case may be, set forth
on the records of the registrar under the
<PAGE> 33
31
Indenture, with a copy in like manner to the Initial Purchasers as
follows:
BT SECURITIES CORPORATION
Bankers Trust Plaza
130 Liberty Street
New York, New York 10006
Facsimile No: (212) 250-7200
Attention: Corporate Finance
Department
with a copy to:
Cahill Gordon & Reindel
80 Pine Street
New York, New York 10005
Facsimile No: (212) 269-5420
Attention: Stephen A. Greene, Esq.
(2) if to the Initial Purchasers, at the address specified in
Section 10(d)(1);
(3) if to the Company, at the addresses as follows:
Heartland Wireless Communications, Inc.
200 Chisholm Place, Suite 200
Plano, Texas 75075
Facsimile No: (972) 633-0074
Attention: John R. Bailey
with copies to:
Arter & Harden
1717 Main Street
Suite 4100
Dallas, Texas 75201
Facsimile No: (214) 741-7139
Attention: Victor B. Zanetti, Esq.
All such notices and communications shall be deemed to have
been duly given: when delivered by hand, if personally delivered; five
business days after being deposited in the mail, postage prepaid, if mailed;
one business day after being timely delivered to a next-day air courier; and
when receipt is acknowledged by the addressee, if sent by facsimile.
Copies of all such notices, demands or other communications
shall be concurrently delivered by the Person giving
<PAGE> 34
32
the same to the Trustee at the address and in the manner specified in such
Indenture.
(e) Successors and Assigns. This Agreement shall inure
to the benefit of and be binding upon the successors and assigns of each of the
parties hereto, the Holders and the Participating Broker-Dealers; provided,
however, that this Agreement shall not inure to the benefit of or be binding
upon a successor or assign of a Holder unless such successor or assign holds
Registrable Notes.
(f) Counterparts. This Agreement may be executed in any
number of counterparts and by the parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement.
(g) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(h) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED
TO CONTRACTS MADE AND PERFORMED WHOLLY WITHIN THE STATE OF NEW YORK, WITHOUT
REGARD TO PRINCIPLES OF CONFLICTS OF LAW. EACH OF THE PARTIES HERETO AGREES TO
SUBMIT TO THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN ANY ACTION
OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT.
(i) Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to
be invalid, illegal, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions set forth herein shall remain in full
force and effect and shall in no way be affected, impaired or invalidated, and
the parties hereto shall use their best efforts to find and employ an
alternative means to achieve the same or substantially the same result as that
contemplated by such term, provision, covenant or restriction. It is hereby
stipulated and declared to be the intention of the parties that they would have
executed the remaining terms, provisions, covenants and restrictions without
including any of such that may be hereafter declared invalid, illegal, void or
unenforceable.
(j) Third Party Beneficiaries. Holders of Registrable
Notes and Participating Broker-Dealers are intended third party beneficiaries
of this Agreement and this Agreement may be enforced by such Persons.
<PAGE> 35
33
(k) Entire Agreement. This Agreement, together with the
Purchase Agreement and the Indenture, is intended by the parties as a final and
exclusive statement of the agreement and understanding of the parties hereto in
respect of the subject matter contained herein and therein and any and all
prior oral or written agreements, representations, or warranties, contracts,
understandings, correspondence, conversations and memoranda between the Initial
Purchaser on the one hand and the Company on the other, or between or among any
agents, representatives, parents, subsidiaries, affiliates, predecessors in
interest or successors in interest with respect to the subject matter hereof
and thereof are merged herein and replaced hereby.
(l) Underwriting Agreement. Notwithstanding the
provisions of Sections 3(d), 5, 6 and 7, in the event of a Shelf Registration
pursuant to Section 3 hereof, to the extent that the Holders of Registrable
Notes shall enter into an underwriting or similar agreement, which agreement
contains provisions covering one or more issues addressed in such Sections with
substantially similar effect, the provisions contained in such Sections
addressing such issue or issues shall be of no force or effect with respect to
the registration of securities being effected in connection with such
underwriting or similar agreement.
(m) Termination. This Agreement shall terminate and be
of no further force or effect when there shall not be any Registrable Notes,
except that the provisions of Section 4, 6, 7 and Sections 10(h) and (j) shall
survive any such termination.
<PAGE> 36
IN WITNESS WHEREOF, the parties have executed this
Registration Rights Agreement as of the date first written above.
HEARTLAND WIRELESS COMMUNICATIONS, INC.
By: /s/ JOHN R. BAILEY
------------------------------------
Name: John R. Bailey
Title: Senior Vice President and CFO
BT SECURITIES CORPORATION
By: /s/ DAVID F. JACOBS
------------------------------------
Name:
Title:
ALEX. BROWN & SONS INCORPORATED
By: /s/ STEVEN K. FISCHER
------------------------------------
Name: Steven K. Fischer
Title: Managing Director
GERARD KLAUER MATTISON & CO. L.L.C.
By: /s/ LAWRENCE F. CALAHAN
------------------------------------
Name: Lawrence F. Calahan
Title: Vice President
<PAGE> 1
EXHIBIT 4.26
ESCROW AND DISBURSEMENT AGREEMENT
This ESCROW AND DISBURSEMENT AGREEMENT (this "Agreement"), dated as of
December 20, 1996, among Bankers Trust Company, as escrow agent (in such
capacity, the "Escrow Agent"), First Trust of New York, National Association,
as Trustee (in such capacity, the "Trustee") under the Indenture (as defined
herein), and Heartland Wireless Communications, Inc., a Delaware corporation
(the "Company").
RECITALS
A. Pursuant to the Indenture, dated as of December 20, 1996 (the
"Indenture"), between the Company and the Trustee, the Company is issuing
$125,000,000 aggregate principal amount of its 14% Senior Notes due 2004 (the
"Notes").
B. As security for its obligations under the Notes and the Indenture,
the Company hereby grants to the Trustee, for the benefit of the holders of the
Notes, a security interest, subject to and pending disbursement pursuant to
this Agreement, in the Escrow Account (as defined herein).
C. The parties have entered into this Agreement in order to set forth
the conditions upon which, and the manner in which, funds will be disbursed
from the Escrow Account and released from the security interest and lien
described above.
AGREEMENT
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows;
1. Defined Terms. In addition to any other defined terms used herein,
the following terms shall constitute defined terms for purposes of this
Agreement and shall have the meanings set forth below:
"Affiliate" of any specified person means (i) any other person which,
directly or indirectly, is in control of, is controlled by or is under common
control with such specified person or (ii) any other person who is a director
or officer (A) of such specified person, (B) of any subsidiary of such
specified person or (C) of any person described in clause (i) above or (iii)
any person in which such person has, directly or indirectly, a 5% or greater
voting or economic interest or the power to control. For purposes of this
definition, control of a person means the power, direct or indirect, to direct
or cause the direction of the management or policies of such person whether
through the ownership
<PAGE> 2
-2-
of voting securities or by contract or otherwise and the terms "controlling"
and "controlled" have meanings correlative to the foregoing.
"Applied" means that disbursed funds have been applied (i) to the
payment of interest on the Notes, (ii) to the payment of principal of and
premium, if any, on the Notes, upon a repurchase or redemption thereof in
accordance with Section 3.07(a) or Section 4.16 of the Indenture; or (iii) to
any combination of the foregoing.
"Available Funds" means (A) the sum of (i) the Initial Escrow Amount
and (ii) interest earned or dividends paid on the funds in the Escrow Account
(including holdings of Marketable Securities), less (B) the aggregate
disbursements previously made pursuant to this Agreement.
"Collateral" shall have the meaning given in Section 5(a) hereof.
"Eligible Institution" means a commercial banking institution that has
combined capital and surplus of not less than $500 million or its equivalent in
foreign currency, whose debt is rated "A" (or higher) according to Standard &
Poor's ("S&P") or Moody's Investors Service, Inc. ("Moody's") at the time as of
which any investment or rollover therein is made.
"Escrow Account" shall mean an escrow account established pursuant to
Section 2 hereof.
"Escrow Account Statement" shall have the meaning given in section
2(f) hereof.
"Initial Escrow Amount" shall mean $22,012,265.59 of the net proceeds
from the offering of the Notes.
"Interest Payment Date" means April 15 and October 15 of each year,
commencing on April 15, 1997.
"Issue Date" means December 20, 1996.
"Marketable Securities" means
(i) U.S. Government Securities (as defined in the Indenture);
(ii) Other Government Securities;
<PAGE> 3
-3-
(iii) any certificate of deposit maturing not more than 270 days after
the date of acquisition issued by, or time deposit of, an
Eligible Institution;
(iv) commercial paper maturing not more than 270 days after the date
of acquisition issued by a corporation (other than an Affiliate
of the Company) with a rating, at the time as of which any
investment therein is made, of "A_1" (or higher) according to
S&P or "P-1" (or higher) according to Moody's;
(v) any banker's acceptances or money market deposit accounts issued
or offered by an Eligible Institution; and
(vi) any fund investing exclusively in investments of the types
described in clauses (i) through (v) above.
"Other Government Securities" means any security issued or guaranteed
as to principal and interest by the United States of America or by a person
controlled or supervised by and acting as an instrumentality of the government
of the United States pursuant to authority granted by the Congress of the
United States; or any certificate of deposit for any of the foregoing.
"Payment Notice and Disbursement Request" means a notice sent by the
Trustee to the Escrow Agent notifying the Escrow Agent of an upcoming Interest
Payment Date or other payment date in respect of the Notes and requesting a
disbursement, in substantially the form of Exhibit A hereto. Each Payment
Notice and Disbursement Request shall be signed by an officer of the Trustee
designated in a certificate of the Trustee setting forth specimen signatures of
authorized officers delivered to the Escrow Agent.
2. Escrow Account; Escrow Agent.
(a) Appointment of Escrow Agent. The Company and the Trustee hereby
appoint the Escrow Agent, and the Escrow Agent hereby accepts appointment, as
escrow agent, under the terms and conditions of this Agreement.
(b) Establishment of Escrow Account. Concurrently with the
execution and delivery hereof, the Escrow Agent shall establish the Escrow
Account at its office located at Four Albany Street, New York, N.Y. 10006.
Subject to Section 3, Section 5 and the other terms and conditions of this
Agreement, all funds accepted by the Escrow Agent pursuant to this Agreement
shall be held for the benefit of the holders of the Notes. All such funds
<PAGE> 4
-4-
shall be held in the Escrow Account until disbursed in accordance with the
terms hereof. The Escrow Account shall be under the sole dominion and control
of the Escrow Agent for the benefit of the holders of the Notes. Concurrently
with the execution and delivery hereof, the Company shall deliver the initial
Escrow Amount to the Escrow Agent for deposit into the Escrow Account against
the Escrow Agent's written acknowledgment and receipt of the Initial Escrow
Amount.
(c) Escrow Agent Compensation. The Company shall pay to the Escrow
Agent such compensation for services to be performed by it under this Agreement
as the Company and the Escrow Agent may agree in writing from time to time.
The Escrow Agent shall be entitled to disburse from the Escrow Account all such
amounts due to the Escrow Agent as agreed upon by the Company and the Escrow
Agent (including the reasonable expenses described in the next succeeding
paragraph).
The Company shall reimburse the Escrow Agent upon request for all
reasonable expenses, disbursements, and advances incurred or made by the Escrow
Agent in implementing any of the provisions of this Agreement, including
compensation and the reasonable expenses and disbursements of its counsel,
except any such expense, disbursement, or advance as may arise from its gross
negligence or willful misconduct.
(d) Investment of Funds in Escrow Account. Funds deposited in the
Escrow Account shall be invested and reinvested upon the following terms and
conditions:
(i) Acceptable Investments. All funds deposited in the Escrow
Account shall be initially invested by the Escrow Agent in cash items
(including, without limitation, interest bearing deposit accounts) and
Marketable Securities in accordance with the Company's written instructions
to the Escrow Agent. Thereafter, the Escrow Agent shall invest all funds
(including proceeds of any such investments at maturity and interest earned
and dividends paid on any such investments) in the Escrow Account in cash
items or Marketable Securities designated by the Company in writing from
time to time. All Marketable Securities shall be assigned to and held in
the possession of, or, in the case of Marketable Securities maintained in
book entry form with the Federal Reserve Bank, transferred to a book entry
account in the name of, the Escrow Agent, for the benefit of the holders of
the Notes (subject to Section 3 and Section 5), with such guarantees as are
customary, except that Marketable Securities maintained in book entry form
with the Federal Reserve Bank shall be transferred to a book entry account
in the name of
<PAGE> 5
-5-
the Escrow Agent at the Federal Reserve Bank that includes only Marketable
Securities held by the Escrow Agent for its customers and segregated by
separate recordation in the books and records of the Escrow Agent, subject
to the provisions of Section 5 hereof.
(ii) Security Interest in Investments. No investment of funds
in the Escrow Account shall be made unless the Company has certified to the
Escrow Agent and the Trustee that, upon such investment, the Trustee will
have a first priority perfected security interest in the applicable
investment. A certificate as to a class of investments need not be issued
with respect to individual investments in securities in that class if the
certificate applicable to the class remains accurate with respect to such
individual investments. On the date hereof, and on each anniversary of the
Issue Date thereafter until the date upon which the balance of the
Available Funds shall have been reduced to zero, each of the Trustee and
the Escrow Agent shall receive an Opinion of Counsel (as such term is
defined in the Indenture) to the Company, dated the date hereof or thereof,
as the case may be, to the effect that the Escrow Agreement creates a
valid, perfected first priority security interest in the Escrow Account and
the collateral in favor of the Trustee. Such opinion shall meet the
requirements of Section 314(b) of the Trust Indenture Act of 1939, as
amended (the "TIA").
(iii) Interest and Dividends. All interest earned and dividends
paid on funds invested in Marketable Securities shall be deposited in the
Escrow Account as additional Collateral for the benefit of the holders of
the Notes (subject to Section 3 and Section 5) and shall be reinvested in
accordance with the terms hereof at the Company's written instruction.
(iv) Limitation on Escrow Agent's Responsibilities. The Escrow
Agent's sole responsibilities under this Section 2 shall be (A) to retain
possession of certificated Marketable Securities (except, however, that the
Escrow Agent may surrender possession to the issuer of any such Marketable
Security for the purposes of effecting assignment, crediting interest, or
reinvesting such security or reducing such security to cash) and to be the
registered or designated owner of Marketable Securities which are not
certificated, (B) to follow the Company's written instructions given in
accordance with Section 2(d)(i) hereof, (C) to invest and reinvest funds
pursuant to this Section 2(d) and (D) to use reasonable efforts to reduce
to cash such Marketable
<PAGE> 6
-6-
Securities as may be required to fund any disbursement in accordance with
Section 3 hereof. In connection with Clause (A) above, the Escrow Agent
will maintain continuous possession in the State of New York of
certificated Marketable Securities and cash included in the Collateral and
will cause uncertificated Marketable Securities to be registered in the
book-entry system of, and transferred to an account of the Escrow Agent or
a sub-agent of the Escrow Agent at, the Federal Reserve Bank of New York.
(e) Substitution of Escrow Agent. The Escrow Agent may resign by
giving no less than 30 days' prior written notice to the Company and the
Trustee. Such resignation shall take effect upon the later to occur of (i)
delivery of all funds and Marketable Securities maintained by the Escrow Agent
hereunder and copies of all books, records, plans and other documents in the
Escrow Agent's possession relating to such funds or Marketable Securities or
this Agreement to a successor escrow agent mutually approved by the Company and
the Trustee (which approvals shall not be unreasonably withheld) and (ii) the
Company, the Trustee and such successor escrow agent entering into this
Agreement or any written successor agreement no less favorable to the interests
of the holders of the Notes and the Trustee than this Agreement; and the Escrow
Agent shall thereupon be discharged of all obligations under this Agreement and
shall have no further duties, obligations or responsibilities in connection
herewith. If a successor escrow agent has not been appointed or has not
accepted such appointment within 30 days after notice of resignation is given
to the Company, the Escrow Agent may apply to a court of competent jurisdiction
for the appointment of a successor escrow agent.
(f) Escrow Account Statement. Each month, the Escrow Agent shall
deliver to the Company and the Trustee a statement signed by the Escrow Agent
in a form satisfactory to the Company and the Trustee setting forth with
reasonable particularity the balance of funds then in the Escrow Account and
the manner in which such funds are invested ("Escrow Account Statement"). The
parties hereto irrevocably instruct the Escrow Agent that on the first date
upon which the balance in the Escrow Account (including the holdings of all
Marketable Securities) is reduced to zero, the Escrow Agent shall deliver to
the Company and to the Trustee a notice that the balance in the Escrow Account
has been reduced to zero.
3. Disbursements.
(a) Payment Notice and Disbursement Request; Disbursements. The
Trustee shall, five business days prior to an interest
<PAGE> 7
-7-
Payment Date or to a date of redemption or repurchase pursuant to Section
3.07(a) or Section 4.16 of the Indenture in respect of the Notes, submit to the
Escrow Agent a completed Payment Notice and Disbursement Request substantially
in the form of Exhibit A hereto.
The Escrow Agent's disbursement pursuant to any Payment Notice and
Disbursement Request shall be subject to the satisfaction of the applicable
conditions set forth in Section 3(b) hereof. Provided such Payment Notice and
Disbursement Request is not rejected by it, the Escrow Agent, within two (2)
business days following receipt of such Payment Notice and Disbursement
Request, shall disburse the funds requested in such Payment Notice and
Disbursement Request by wire or book-entry transfer of immediately available
funds to the account of the Trustee for the benefit of the holders of the
Notes. The Escrow Agent shall notify the Trustee as soon as reasonably
possible (but not later than two (2) business days from the date of receipt of
the Payment Notice and Disbursement Request) if any Payment Notice and
Disbursement Request is rejected and the reasons therefor. In the event such
rejection is based upon nonsatisfaction of the condition in Section 3(b)(A)
below, the Trustee shall thereupon resubmit the Payment Notice and Disbursement
Request with appropriate changes.
(b) Conditions Precedent to Disbursement. The Escrow Agent's
payment of any disbursement shall be made only if: (A) the Trustee shall have
submitted, in accordance with the provisions of Section 3(a) herein, a
completed Payment Notice and Disbursement Request to the Escrow Agent
substantially in the form of Exhibit A with blanks appropriately filled in and
(B) the Escrow Agent shall not have received any notice from the Trustee that
as a result of an event of Default (as defined in the Indenture) the
indebtedness represented by the Notes has been accelerated and has become due
and payable (in which event the Escrow Agent shall apply all Available Funds as
required by Section 6(b)(iii) hereof).
(c) Retired Notes. In the event a portion of the Notes has been
retired by the Company, funds representing the interest payments on the retired
Notes shall, upon the written request of the Company to the Escrow Agent and
the Trustee, be paid to the Company upon compliance with the release of
collateral provisions of the TIA and upon receipt of a notice relating thereto
from the Trustee.
<PAGE> 8
-8-
4. Escrow Agent.
Limitation of the Escrow Agent's Liability; Responsibilities of the
Escrow Agent. The Escrow Agent's responsibility and liability under this
Agreement shall be limited as follows: (i) the Escrow Agent does not represent,
warrant or guaranty to the holders of the Notes from time to time the
performance of the Company; (ii) the Escrow Agent shall have no responsibility
to the Company or the holders of the Notes or the Trustee from time to time as
a consequence of performance by the Escrow Agent hereunder, except for any
gross negligence or willful misconduct of the Escrow Agent; (iii) the Company
shall remain solely responsible for all aspects of the Company's business and
conduct; and (iv) the Escrow Agent is not obligated to supervise, inspect, or
inform the Company or any third party of any matter referred to above.
No implied covenants or obligations shall be inferred from this
Agreement against the Escrow Agent, nor shall the Escrow Agent be bound by the
provisions of any agreement beyond the specific term hereof. Specifically and
without limiting the foregoing, the Escrow Agent shall in no event have any
liability in connection with its investment, reinvestment or liquidation, in
good faith and in accordance with the terms hereof, of any funds or Marketable
Securities held by it hereunder, including without limitation any liability for
any delay not resulting from gross negligence or willful misconduct in such
investment, reinvestment or liquidation, or for any loss of principal or income
incident to any such delay.
The Escrow Agent shall be entitled to rely upon any judicial order or
judgment, upon any written opinion of counsel or upon any certification,
instruction, notice, or other writing delivered to it by the Company or the
Trustee in compliance with the provisions of this Agreement without being
required to determine the authenticity or the correctness of any fact stated
therein or the propriety or validity of service thereof. The Escrow Agent may
act in reliance upon any instrument comportinq with the provisions of this
Agreement or signature believed by it to be genuine and may assume that any
person purporting to give notice or receipt or advice or make any statement or
execute any document in connection with the provisions hereof has been duly
authorized to do so.
At any time the Escrow Agent may request in writing an instruction in
writing from the Company, and may at its own option include in such request the
course of action it proposes to take and the date on which it proposes to act,
regarding any matter arising in connection with its duties and obligations
hereunder;
<PAGE> 9
-9-
provided, however, that the Escrow Agent shall state in such request that it
believes in good faith that such proposed course of action is consistent with
another identified provision of this Agreement. The Escrow Agent shall not be
liable to the Company for acting without the Company's consent in accordance
with such a proposal on or after the date specified therein if (i) the
specified date is at least two business days after the Company receives the
Escrow Agent's request for instructions and its proposed course of action, and
(ii) prior to so acting, the Escrow Agent has not received the written
instructions requested from the Company.
The Escrow Agent may act pursuant to the written advice of counsel
chosen by it with respect to any matter relating to this Agreement and (subject
to Section 4(a)(ii)) shall not be liable for any action taken or omitted in
accordance with such advice.
The Escrow Agent shall not be called upon to advise any party as to
selling or retaining, or taking or refraining from taking any action with
respect to, any securities or other property deposited hereunder.
In the event of any ambiguity in the provisions of this Agreement with
respect to any funds or property deposited hereunder, the Escrow Agent shall be
entitled to refuse to comply with any and all claims, demands or instructions
with respect to such property or funds, and the Escrow Agent shall not be or
become liable for its failure or refusal to comply with conflicting claims,
demands or instructions. The Escrow Agent shall be entitled to refuse to act
until either any conflicting or adverse claims or demands shall have been
finally determined by a court of competent jurisdiction or settled by agreement
between the conflicting claimants as evidenced in a writing, satisfactory to
the Escrow Agent, or the Escrow Agent shall have received security or an
indemnity satisfactory to the Escrow Agent sufficient to save the Escrow Agent
harmless from and against any and all loss, liability or expense which the
Escrow Agent may incur by reason of its acting. The Escrow Agent may in
addition elect in its sole option to commence an interpleader action or seek
other judicial relief or orders as the Escrow Agent may deem necessary.
No provision of this Agreement shall require the Escrow Agent to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder.
5. Indemnity. The Company shall indemnify, hold harmless and defend the
Escrow Agent and its directors, officers, agents,
<PAGE> 10
-10-
employees and controlling persons, from and against any and all claims,
actions, obligations, liabilities and expenses, including defense costs,
investigative fees and costs, legal fees, and claims for damages, arising from
the Escrow Agent's performance under this Agreement, except to the extent that
such liability, expense or claim is directly attributable to the gross
negligence or willful misconduct of any of the foregoing persons. In
connection with any claim, action, obligation, liability or expense for which
indemnification is sought by the Escrow Agent hereunder, the Escrow Agent shall
be entitled to recover its costs from funds available in the Escrow Account as
provided in Section 2(c), provided, however, that the Company agrees to pay
such costs if funds in the Escrow Account are insufficient. The provisions of
this Section shall survive any termination, satisfaction or discharge of this
Agreement as well as the resignation or removal of the Escrow Agent.
6. Grant of Security Interest; Instructions to Escrow Agent.
(a) The Company hereby irrevocably grants a first priority security
interest in, pledges, assigns and sets over to the Trustee all of the Company's
right, title and interest in the Escrow Account, all funds held therein and all
Marketable Securities held by (or otherwise maintained in the name of) the
Escrow Agent pursuant to Section 2 hereof, as well as all rights of the Company
under this Agreement (collectively, the "Collateral"), in order to secure all
obligations and indebtedness of the Company under the Notes and any other
obligation, now or hereafter arising, of every kind and nature, owed by the
Company under the indenture to the holders of the Notes or to the Trustee. The
Company shall take all actions necessary on its part to insure the continuance
of a first priority security interest in the Collateral in favor of the Trustee
in order to secure all such obligations and indebtedness. Each of the Trustee
and the Escrow Agent shall have received an opinion from counsel to the
Company, on the date hereof, and annually on the anniversary of the Issue Date
to the effect that the Escrow Agreement creates a valid, perfected first
priority security interest in favor of the Trustee in the Escrow Account and
the Collateral.
(b) The Company and the Trustee hereby irrevocably instruct the
Escrow Agent to, and the Escrow Agent will (i) (A) maintain sole dominion and
control over funds in the Escrow Account for the benefit of the Trustee to the
extent specifically required herein, (B) maintain, or cause its agent within
the State of New York to maintain, possession of all certified Marketable
Securities purchased hereunder that are physically possessed by the Escrow
Agent in order for the Trustee to enjoy a
<PAGE> 11
-11-
continuous perfected first priority security interest therein under the law of
the State of New York (the Company hereby agreeing that in the event any
certificated Marketable Securities are in the possession of the Company or a
third party, the Company shall use its best efforts to deliver all such
certificates to the Escrow Agent), (C) take all steps set forth in the opinion
of counsel described in paragraph (a) above to cause the Trustee to enjoy a
continuous perfected first priority security interest under the New York
Uniform Commercial Code and any applicable law of the State of New York in all
Marketable Securities purchased hereunder that are not certificated and (D)
maintain the Collateral free and clear of all liens, security interests,
safekeeping or other charges, demands and claims against the Escrow Agent of
any nature now or hereafter existing in favor of anyone other than the Trustee;
(ii) promptly notify the Trustee if the Escrow Agent receives written notice
that any person other than the Trustee has a lien or security interest upon any
portion of the Collateral (other than any claim which Escrow Agent may have
against the Escrow Account for unpaid fees and expenses) and (iii) in addition
to disbursing amounts held in escrow pursuant to any Payment Notice and
Disbursement Requests given to it by the Trustee pursuant to Section 3, upon
receipt of written notice from the Trustee of the acceleration of the maturity
of the Notes or the failure by the Company to pay principal on the Notes, and
direction from the Trustee to disburse all Available Funds to the Trustee, as
promptly as practicable, after following the procedures set forth in the fourth
paragraph of Section 4(a), disburse all funds held in the Escrow Account to the
Trustee and transfer title to all Marketable Securities held by the Escrow
Agent hereunder to the Trustee. The lien and security interest provided for by
this Section 6 shall automatically terminate and cease as to, and shall not
extend or apply to, and the Trustee shall have no security interest in, any
funds disbursed by the Escrow Agent to the Company pursuant to this Agreement.
The Escrow Agent shall act solely as the Trustee's agent in connection with the
duties under this Section 6, notwithstanding any other provision contained in
this Agreement, without any right to receive compensation from the Trustee and
without any authority to obligate the Trustee or to compromise or pledge its
security interest hereunder.
(c) Any money and Marketable Securities collected by the Trustee
pursuant to section 6(b)(iii) shall be applied as provided in the Indenture.
(d) Upon demand, the Company will execute and deliver to the Trustee
such instruments and documents as the Trustee may reasonably deem necessary or
advisable to confirm or perfect the rights of the Trustee under this Agreement
and the Trustee's interest
<PAGE> 12
-12-
in the Collateral. The Trustee will take all necessary action to preserve and
protect the security interest created hereby as a lien and encumbrance upon the
Collateral.
(e) The Company hereby appoints the Trustee as its attorney-in-fact
effective upon and during the continuance of an Event of Default under the
Indenture with full power of substitution to do any act which the Company is
obligated hereto to do, and the Trustee may exercise such rights as the Company
might exercise with respect to the Collateral and to take any action in the
Company's name to protect the Trustee's security interest hereunder.
7. Termination. This Agreement shall terminate automatically ten (10)
days following disbursement of all funds remaining in the Escrow Account
(including Marketable Securities), unless sooner terminated by agreement of the
parties hereto (in accordance with the terms hereof and not in violation of the
Indenture); provided, however, that the obligations of the Company under
Section 5 (and any existing claims thereunder) shall survive termination of
this Agreement or the resignation of the Escrow Agent: and provided further,
that until such tenth day, the Company will cause this Agreement (or any
permitted successor agreement) to remain in effect and will cause there to be
an escrow agent (including any permitted successor thereto) acting hereunder
(or under any such permitted successor agreement).
8. Miscellaneous.
(a) Waiver. Any party hereto may specifically waive any breach of
this Agreement by any other party, but no such waiver shall be deemed to have
been given unless such waiver is in writing, signed by the waiving party and
specifically designating the breach waived, nor shall any such waiver
constitute a continuing waiver of similar or other breaches.
(b) Invalidity. If for any reason whatsoever any one or more of the
provisions of this Agreement shall be held or deemed to be inoperative,
unenforceable or invalid in a particular case or in all cases, such
circumstances shall not have the effect of rendering any of the other
provisions of this Agreement inoperative, unenforceable or invalid, and the
inoperative, unenforceable or invalid provision shall be construed as if it
were written so as to effectuate, to the maximum extent possible, the parties'
intent.
(c) Assignment. This Agreement is personal to the parties hereto,
and the rights and duties of any party hereunder shall not be assignable except
with the prior written consent of
<PAGE> 13
-13-
the other parties. Notwithstanding the foregoing, this Agreement shall inure
to and be binding upon the parties and their successors and permitted assigns.
(d) Benefit. The parties hereto and their successors and permitted
assigns, but no others, shall be bound hereby and entitled to the benefits
hereof; provided, however, that the holders of the Notes and their permitted
assigns shall be entitled to the benefits hereof and to enforce this Agreement.
(e) Time. Time is of the essence of each provision of this
Agreement.
(f) Entire Agreement; Amendments. This Agreement and the indenture
contain the entire agreement among the parties with respect to the subject
matter hereof and supersede any and all prior agreements, understandings and
commitments, whether oral or written. This Agreement may be amended only by a
writing signed by a duly authorized representative of each party.
(g) Notices. All notices and other communications required or
permitted to be given or made under this Agreement shall be in writing and
shall be deemed to have been duly given and received, regardless of when and
whether received, either: (a) on the day of hand delivery; (b) three business
days following the day sent, when sent by United States certified mail, postage
and certification fee prepaid, return receipt requested, addressed as follows;
(c) when transmitted by telecopy with verbal confirmation of receipt by the
telecopy operator; or (d) one business day following the day timely delivered
to a next-day air courier:
To Escrow Agent:
Bankers Trust Company
Corporate Trust and Agency Group
Four Albany Street, 4th Floor
New York, Now York 10006
Attention: Corporate Market Services
Telecopy; (212) 250-6961
Telephone: (212) 250-6531
<PAGE> 14
-14-
To Trustee:
First Trust of New York, National
Association
100 Wall Street, Suits 1600
New York, NY 10005
Attention: Corporate Trust Administration
Telecopy: (212) 809-5459
Telephone: 361-2532
To the Company:
Heartland Wireless Communications, Inc.
200 Chisolm Place, Suite 200
Plano, Texas 75075
Attention: Chief Financial Officer
Telecopy: (972) 633-0074
Telephone: (972) 923-9497
or at such other address as the specified entity most recently may have
designated in writing in accordance with this Section.
(h) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
(i) Captions. Captions in this Agreement are for convenience only
and shall not be considered or referred to in resolving questions of
interpretation of this Agreement.
(j) Choice of Law. The existence, validity, construction, operation
and effect of any and all terms and provisions of this Agreement shall be
determined in accordance with and governed by the laws of the State of New
York. The parties to this Agreement hereby agree that jurisdiction over such
parties and over the subject matter of any action or proceeding arising under
this Agreement may be exercised by a competent Court of the State of New York,
or by a United States Court, sitting in New York City. The Company hereby
submits to the personal jurisdiction of such courts, hereby waives personal
service of process upon it and consents that any such service of process may be
made by certified or registered mail, return-receipt requested, directed to the
Company at its address last specified for notices hereunder, and service so
made shall be deemed completed five (5) days after the same shall have been so
mailed, and hereby waives the right to a trial by jury in any action or
proceeding with the Escrow Agent. All actions and proceedings brought by the
Company against the Escrow Agent relating to or arising from, directly or
indirectly, this Agreement shall be litigated only in courts within the State
of New York.
<PAGE> 15
-15-
(k) The company hereby represents and warrants that this Agreement
has been duly authorized, executed and delivered on its behalf and constitutes
the legal, valid and binding obligation of the Company. The execution,
delivery and performance of this Agreement by the Company does not violate any
applicable law or regulation to which the Company is subject and does not
require the consent of any governmental or other regulatory body to which the
Company is subject, except for such consents and approvals as have been
obtained and are in full force and effect.
(l) Each of the Escrow Agent and the Trustee hereby represents and
warrants that this Agreement has been duly authorized, executed and delivered
on its behalf and constitutes its legal, valid and binding obligation.
<PAGE> 16
-16-
IN WITNESS WHEREOF, the parties have executed and delivered this
Escrow and Disbursement Agreement as of the day first above written.
ESCROW AGENT: BANKERS TRUST COMPANY
By: /s/ KEVIN WEEKS
-----------------------------------
Name: Kevin Weeks
Title: Assistant Treasurer
TRUSTEE: FIRST TRUST OF NEW YORK, NATIONAL
ASSOCIATION
By: /s/ ALFIA MONASTRA
-----------------------------------
Name: Alfia Monastra
Title: Assistant Vice President
COMPANY: HEARTLAND WIRELESS COMMUNICATIONS, INC.
By: /s/ JOHN R. BAILEY
-----------------------------------
Name: John R. Bailey
Title: Senior Vice President and CFO
<PAGE> 17
EXHIBIT A TO ESCROW AND DISBURSEMENT AGREEMENT
Form of Payment, Notice and Disbursement Request
(Letterhead of the Trustee)
[Date]
Bankers Trust Company
Four Albany Street
New York, New York 10006
Attn: Corporate Trust and Agency Group
(Mr. Kevin Weeks)
Re: Disbursement Request No. ________________________
(indicate whether revised)
Ladies and Gentlemen:
We refer to the Escrow and Disbursement Agreement, dated as of
December 20, 1996 (the "Escrow Agreement") among you (the "Escrow Agent"), the
undersigned as Trustee, and HEARTLAND WIRELESS COMMUNICATIONS, INC., a Delaware
corporation (the "Company"). Capitalized terms used herein shall have the
meaning given in the Escrow Agreement.
This letter constitutes a Payment Notice and Disbursement Request
under the Escrow Agreement.
[choose one of the following, as applicable]
[The undersigned hereby notifies you that a scheduled interest payment
in the amount of $____________ in due and payable on ___________ 15, 199_ and
requests a disbursement of funds contained in the Escrow Account in such
amount.]
[The undersigned hereby notifies you that a scheduled interest payment
in the amount of $_____________ is due and payable on _____________ 15, 199_,
which amount exceeds the amount of remaining Available Funds in the Escrow
Account. Accordingly, you are hereby requested to disburse all remaining funds
contained in the Escrow Account such that the balance in the Escrow Account is
reduced to zero.]
[The undersigned hereby notifies you that a payment of $_______ is due
and payable on ___________ __, 199_ in connection with a repurchase or
redemption of Notes, plus accrued interest, if any, pursuant to the provisions
of [Section 3.07(a)] [Section 4.16] of the Indenture and requests a
disbursement of funds contained in the Escrow Account in such amount. [The
undersigned hereby notifies you that a payment of $_____ is due and payable
<PAGE> 18
-2-
on _________ __, 199_ in connection with a repurchase or redemption of Notes,
plus accrued interest, if any, pursuant to the provisions of [Section 3.07(a)]
[Section 4,16] of the Indenture, which amount exceeds the amount of remaining
Available Funds in the Escrow Account. Accordingly, you are hereby requested
to disburse all remaining funds contained in the Escrow Account such that the
balance in the Escrow Account is reduced to zero.]
[The undersigned hereby notifies you that Notes equaling $____________
in aggregate principal amount have been retired and authorizes you to release
$_____________ of funds in the Escrow Account to the Company (to an account
designated by the Company in writing), which amount represents the interest
payments on such Retired Notes.]
In connection with the requested disbursement, the undersigned hereby
notifies you that:
1. The Notes have not, as a result of an Event of Default (as defined
in the Indenture), been accelerated and become due and payable.
2. All prior disbursements from the Escrow Account have been Applied.
3. [add wire instructions]
The Escrow Agent is entitled to rely on the foregoing in disbursing
funds relating to this Payment Notice and Disbursement Request.
FIRST TRUST OF NEW YORK,
NATIONAL ASSOCIATION
By:
-----------------------------------
Name:
Title:
<PAGE> 1
EXHIBIT 12.1
Consolidated Ratio of Earnings
to Fixed Charges
(in thousands)
<TABLE>
<CAPTION>
Year ended December 31, Nine months
----------------------------------------------------------- ended
1991 1992 1993 1994 1995 September 30, 1996
-------- --------- ---------- ---------- ------------ ------------------
<S> <C> <C> <C> <C> <C> <C>
Loss before income taxes $ (66) $ (51) $ (406) $ (4,638) $ (20,187) $ (35,917)
Fixed charges (1) 4 10 105 714 14,562 17,030
------ ------- ------- -------- --------- ----------
Earnings(1) $ (62) $ (41) $ (301) $ (3,924) $ (5,625) $ (18,887)
====== ======= ======= ======== ========= ==========
Ratio of earnings to fixed
charges - - - - - -
====== ======= ======= ======== ========= ==========
Deficiency of earnings to
to fixed charges $ (66) $ (51) $ (406) $ (4,638) $ (20,187) $ (35,917)
====== ======= ======= ======== ========= ==========
</TABLE>
(1) For purposes of computing the ratio of earnings to fixed charges, earnings
consists of losses prior to income tax benefit and fixed charges. Fixed
charges consist of interest expense, amortization of debt issuance costs,
and one third of rental payments on operating leases (such portion having
been deemed by the Company to represent the interest portion of such
payments).
<PAGE> 1
EXHIBIT 23.2
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
Heartland Wireless Communications, Inc.:
We consent to (a) the incorporation by reference herein of our reports dated
March 8, 1996, on the consolidated balance sheets of Heartland Wireless
Communications, Inc. as of December 31, 1995 and 1994, and the related
consolidated statements of operations, stockholders' equity, and cash flows for
each of the years in the three year period ended December 31, 1995, and the
related schedule, which report is included in the December 31, 1995 annual
report on Form 10-K of Heartland Wireless Communications, Inc. and (b) the
reference to our firm under the heading "Experts" in the Prospectus.
Our report relating to the consolidated financial statements of Heartland
Wireless Communications, Inc. refers to a change in 1995 in the method of
accounting for direct costs and installation fees related to subscriber
installations.
/s/ KPMG PEAT MARWICK LLP
-------------------------
KPMG Peat Marwick LLP
Dallas, Texas
February 6, 1997
<PAGE> 1
EXHIBIT 23.3
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
Heartland Wireless Communications, Inc.:
We consent to (a) the incorporation by reference herein of our report dated
October 25, 1995, on the balance sheets of TechniVision, Inc. as of May 31,
1995 and 1994, and the related statements of operations, stockholders' deficit,
and cash flows for each of the years in the three-year period ended May 31,
1995, which report is included in Form 8-K/A-2 of Heartland Wireless
Communications, Inc. filed with the Securities and Exchange Commission on April
29, 1996 and (b) the reference to our firm under the heading "Experts" in the
prospectus.
Our report relating to the financial statements of TechniVision, Inc. contains
an explanatory paragraph that states that TechniVision, Inc.'s recurring losses
from operations and excess of current liabilities over current assets raise
substantial doubt about the entity's ability to continue as a going concern.
The financial statements do not include any adjustments that might result from
the outcome of that uncertainty.
/s/ KPMG PEAT MARWICK LLP
-------------------------------------
KPMG Peat Marwick LLP
Dallas, Texas
February 6, 1997
<PAGE> 1
EXHIBIT 23.4
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
Heartland Wireless Communications, Inc.:
We consent to (a) the incorporation by reference herein of our report dated
July 28, 1995, on the balance sheets of Cross Country Division as of December
31, 1994 and 1993, and the related statements of operations, division equity,
and cash flows for the year ended December 31, 1993, the period from January 1,
1994 to August 18, 1994 and the period from August 19, 1994 to December 31,
1994, which report is included in the Form 8-K/A-2 of Heartland Wireless
Communications, Inc. filed with the Securities and Exchange Commission on
April 29, 1996 and (b) the reference to our firm under the heading "Experts" in
the prospectus.
Our report relating to the financial statements of Cross Country Division
contains an explanatory paragraph that refers to a business combination in 1994
accounted for as a purchase involving assets comprising a portion of Cross
Country Division. As a result of the acquisition, financial information of
Cross Country Division for periods after August 18, 1994 is presented on a
different cost basis than that for periods before August 18, 1994 and,
therefore, such information is not comparable.
/s/ KPMG PEAT MARWICK LLP
----------------------------------
KPMG Peat Marwick LLP
Dallas, Texas
February 6, 1997
<PAGE> 1
EXHIBIT 23.5
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this Form S-4
to be filed by Heartland Wireless Communications, Inc., of our report, which
includes an explanatory paragraph which states that specified circumstances
raise substantial doubt about CableMaxx, Inc.'s ability to continue as a going
concern, dated August 25, 1995, on our audits of the consolidated balance sheets
of CableMaxx, Inc. as of June 30, 1994 and 1995, and the related consolidated
statements of operations, stockholders' equity and cash flows for the period
December 18, 1992 to June 30, 1993 and for the years ended June 30, 1994 and
1995, and of the consolidated statements of operations and cash flows of Supreme
Cable Co., Inc. and Subsidiaries (the "Predecessor") for the period from July 1,
1992 to December 17, 1992. We also consent to the reference to our firm under
the caption "Experts."
/s/ COOPERS & LYBRAND L.L.P.
--------------------------------
Coopers & Lybrand L.L.P.
Austin, Texas
February 10, 1997
<PAGE> 1
EXHIBIT 23.6
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our reports dated February 23,
1996, included in Heartland Wireless Communications, Inc.'s current report on
Form 8-K/A-2 dated February 23, 1996 and to all references to our firm included
in or made part of this registration statement.
/s/ ARTHUR ANDERSEN LLP
--------------------------------------
ARTHUR ANDERSEN LLP
Phoenix, Arizona,
February 6, 1997.
<PAGE> 1
EXHIBIT 25
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
----------
FORM T - 1
STATEMENT OF ELIGIBILITY UNDER THE TRUST
INDENTURE ACT OF 1939 OF A CORPORATION
DESIGNATED TO ACT AS TRUSTEE
----------
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY
OF A TRUSTEE PURSUANT TO SECTION 305 (b) (2) _________
FIRST TRUST OF NEW YORK, NATIONAL ASSOCIATION
(Exact name of trustee as specified in its charter)
United States 13-3781471
(Jurisdiction of incorporation or (I. R. S. Employer
organization if not a U.S. National Bank) Identification No.)
100 Wall Street, New York, NY 10005
(Address of principal executive offices) (Zip Code)
----------
FOR INFORMATION, CONTACT:
Dennis J. Calabrese, President
First Trust of New York, National Association
100 Wall Street, 16th Floor
New York, NY 10005
Telephone: (212) 361-2506
----------
HEARTLAND WIRELESS COMMUNICATIONS, INC.
(Exact name of obligor as specified in its charter)
Delaware 73-1435149
(State or other jurisdiction of (I. R. S. Employer
incorporation or organization) Identification No.)
200 Chisholm Place, Suite 200
Plano, Texas 75075
(Address of principal executive offices) (Zip Code)
----------
Item 1. GENERAL INFORMATION.
Furnish the following information as to the trustee - -
(a) Name and address of each examining or supervising authority to
which it is subject.
Name Address
---- -------
Comptroller of the Currency Washington, D. C.
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
<PAGE> 2
Item 2. AFFILIATIONS WITH THE OBLIGOR.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
Item 16. LIST OF EXHIBITS.
Exhibit 1. Articles of Association of First Trust of New York,
National Association, incorporated herein by reference to
Exhibit 1 of Form T-1, Registration No. 33-83774.
Exhibit 2. Certificate of Authority to Commence Business for First
Trust of New York, National Association, incorporated
herein by reference to Exhibit 2 of Form T-1, Registration
No. 33-83774.
Exhibit 3. Authorization of the Trustee to exercise corporate trust
powers for First Trust of New York, National Association,
incorporated herein by reference to Exhibit 3 of Form T-1,
Registration No. 33-83774.
Exhibit 4. By-Laws of First Trust of New York, National Association,
Incorporated herein by reference to Exhibit 4 of Form T-1,
Registration No. 33-55851.
Exhibit 5. Not applicable.
Exhibit 6. Consent of First Trust of New York, National Association,
required by Section 321(b) of the Act, incorporated herein
by reference to Exhibit 6 of Form T-1, Registration No.
33-83774.
Exhibit 7. Report of Condition of First Trust of New York, National
Association, as of the close of business on September 30,
1996, published pursuant to law or the requirements of its
supervising or examining authority.
Exhibit 8. Not applicable.
Exhibit 9. Not applicable.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, First Trust of New York, National Association, a national
banking association organized and existing under the laws of the United States,
has duly caused this statement of eligibility to be signed on its behalf by the
undersigned, thereunto duly authorized, all in The City of New York, and State
of New York, on the 28th day of January, 1997.
First Trust of New York,
National Association
By: /s/ ALFIA MONASTRA
--------------------------------
Alfia Monastra
Assistant Vice President
<PAGE> 3
EXHIBIT 7
FIRST TRUST OF NEW YORK, N. A.
STATEMENT OF FINANCIAL CONDITION
AS OF 09/30/96
($000's)
<TABLE>
<CAPTION>
09/30/96
--------------
<S> <C>
ASSETS
Cash and Due From Depository Institutions $ 31,930
Federal Reserve Stock 3,658
Fixed Assets 738
Intangible Assets 81,749
Other Assets 5,710
----------
Total Assets $ 123,785
==========
LIABILITIES
Other Liabilities 6,826
----------
Total Liabilities 6,826
EQUITY
Common and Preferred Stock 1,000
Surplus 120,932
Undivided Profits (4,793)
----------
TOTAL EQUITY CAPITAL 116,959
TOTAL LIABILITIES AND EQUITY CAPITAL $ 123,785
==========
</TABLE>
================================================================================
To the best of the undersigned's determination, as of this date the above
financial information is true and correct.
First Trust of New York, N. A.
By: /s/ ALFIA MONASTRA
----------------------
Assistant Vice President
Date: January 28, 1997
<PAGE> 1
Exhibit 99.1
LETTER OF TRANSMITTAL
TO TENDER FOR EXCHANGE
14% SENIOR NOTES DUE 2004
OF
HEARTLAND WIRELESS COMMUNICATIONS, INC.
PURSUANT TO THE PROSPECTUS DATED FEBRUARY __, 1997
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME,
ON MARCH __, 1997, UNLESS EXTENDED.
To: Bankers Trust Company, as Exchange Agent
<TABLE>
<S> <C> <C>
BY MAIL: BY HAND: BY OVERNIGHT MAIL OR COURIER:
BT Services Tennessee, Inc. Bankers Trust Company BT Services Tennessee, Inc.
Reorganization Unit Corporate Trust and Agency Group Corporate Trust and Agency Group
P.O. Box 292737 Receipt & Delivery Window Reorganization Unit
Nashville, TN 37229-2737 123 Washington Street, 1st Floor 648 Grassmere Park Road
New York, NY 10006 Nashville, TN 37211
</TABLE>
FOR INFORMATION CALL:
(800) 735-7777
Confirm: (615) 835-3572
Facsimile (615) 835-3701
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR
TRANSMISSION VIA A FACSIMILE NUMBER OTHER THAN THE ONE LISTED ABOVE WILL NOT
CONSTITUTE A VALID DELIVERY. THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF
TRANSMITTAL SHOULD BE READ CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS
COMPLETED.
The undersigned acknowledges that he or she has received the Prospectus,
dated February __, 1997 (the "Prospectus), of Heartland Wireless Communications,
Inc. (the "Company") and this Letter of Transmittal (the "Letter of
Transmittal"), which together constitute the Company's offer (the "Exchange
Offer") to exchange its 14% Series B Senior Notes due 2004 (the "New Notes") for
an equal principal amount of its 14% Senior Notes due 2004 (the "Old Notes" and,
together with the New Notes, the "Notes"). The terms of the New Notes are
identical in all material respects to the Old Notes, except that the New Notes
have been registered under the Securities Act of 1933, as amended (the
"Securities Act"), and, therefore, will not bear legends restricting their
transfer and will not contain certain provisions providing for an increase in
the interest rate on the Old Notes under certain circumstances relating to the
Registration Rights Agreement (as defined in the Prospectus). The term
"Expiration Date" shall mean 5:00 p.m., New York City time, on March __, 1997,
unless the Exchange Offer is extended as provided in the Prospectus, in which
case the term "Expiration Date" shall mean the latest date and time to which the
Exchange Offer is extended. Capitalized terms used but not defined herein have
the meanings given to them in the Prospectus.
Holders who wish to tender their Old Notes and (i) whose Old Notes are not
immediately available or (ii) who cannot deliver their Old Notes, this Letter
of Transmittal or an Agent's Message (as defined in the Prospectus) and any
other documents required by this Letter of Transmittal to the Exchange Agent
prior to the Expiration Date must tender their Old Notes according to the
guaranteed delivery procedures set forth under the caption "The Exchange
Offer--Guaranteed Delivery Procedures" in the Prospectus. See Instruction 5.
The term "Holder" with respect to the Exchange Offer means any person in
whose name Old Notes are registered on the books of the Company or any other
person who has obtained a properly completed bond power from the registered
holder. The undersigned has completed, executed and delivered this Letter of
Transmittal to indicate the action the undersigned desires to take with respect
to the Exchange Offer. Holders who wish to tender their Old Notes must complete
this Letter of Transmittal in its entirety.
<PAGE> 2
If the undersigned is a broker-dealer that receives New Notes for its own
account in exchange for Old Notes, where such Old Notes were acquired by such
broker-dealer as a result of market-making activities or other trading
activities (other than Old Notes acquired directly from the Company), the
undersigned may be deemed to be an "underwriter" under the Securities Act and
the undersigned acknowledges, therefore, that it will deliver a prospectus in
connection with any resale of such New Notes. 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.
PLEASE READ THIS ENTIRE LETTER OF TRANSMITTAL CAREFULLY
BEFORE COMPLETING THIS LETTER OF TRANSMITTAL
DESCRIPTION OF 14% SENIOR NOTES DUE 2004
<TABLE>
<CAPTION>
Name(s) and Aggregate Principal Amount
Address(es) of Principal Tendered (must
Registered Holder(s) Amount be in integral
(please fill in, if Certificate Represented by multiples
blank) Number(s) Certificate(s) of $1,000)*
<S> <C> <C> <C>
TOTAL
</TABLE>
* Unless indicated in the column labeled "Principal Amount Tendered," any
tendering Holder of Old Notes will be deemed to have tendered the entire
aggregate principal amount represented by the column labeled "Aggregate
Principal Amount Represented by Certificate(s)." If the space provided above
is inadequate, list the certificate numbers and principal amounts on a
separate signed schedule and affix such schedule to this Letter of
Transmittal. The minimum permitted tender is $1,000 in principal amount. All
other tenders must be in integral multiples of $1,000.
/ / CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED BY BOOK-ENTRY
TRANSFER TO THE EXCHANGE AGENT'S ACCOUNT AT THE DEPOSITORY TRUST COMPANY
("DTC") AND COMPLETE THE FOLLOWING (ONLY PARTICIPANTS IN DTC MAY DELIVER
SHARES BY BOOK-ENTRY TRANSFER) (SEE INSTRUCTION 4):
Name of Tendering Institution______________________________________________
Account No.________________________________________________________________
Transaction Code Number____________________________________________________
/ / CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE
OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND COMPLETE
THE FOLLOWING (SEE INSTRUCTION 5):
Name(s) of Registered Holder(s)____________________________________________
Window Ticket Number (if any)______________________________________________
Date of Execution of Notice of Guaranteed Delivery_________________________
Name of Institution which Guaranteed Delivery______________________________
/ / CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL
COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS
THERETO AND COMPLETE THE FOLLOWING:
Name:______________________________________________________________________
Address:___________________________________________________________________
___________________________________________________________________
<TABLE>
<CAPTION>
SPECIAL REGISTRATION INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 7, 8 AND 9) (SEE INSTRUCTIONS 7, 8 AND 9)
<S> <C>
To be completed ONLY if certificates To be completed ONLY if certificates
for Old Notes in a principal amount not for Old Notes in a principal amount not
tendered, or New Notes issued in tendered, or New Notes issued in
exchange for Old Notes accepted for exchange for Old Notes accepted for
exchange, are to be issued in the name exchange, are to be sent to someone
of someone other than the undersigned. other than the undersigned, or to the
undersigned at an address other than
that shown above.
Issue certificate(s) to: Deliver certificate(s) to:
Name: Name:
(Please Print) (Please Print)
Address:
Address:
(Include Zip Code) (Include Zip Code)
(Tax Identification or Social (Tax Identification or Social
Security No.) Security No.)
</TABLE>
<PAGE> 3
Ladies and Gentlemen:
Subject to the terms and conditions of the Exchange Offer, the undersigned
hereby tenders to the Company the principal amount of Old Notes indicated
above. Subject to and effective upon the acceptance for exchange of the
principal amount of Old Notes tendered in accordance with this Letter of
Transmittal, the undersigned sells, assigns and transfers to, or upon the order
of, the Company all right, title and interest in and to the Old Notes tendered
hereby. The undersigned hereby irrevocably constitutes and appoints the
Exchange Agent its agent and attorney-in-fact (with full knowledge that the
Exchange Agent also acts as the agent of the Company) with respect to the
tendered Old Notes with full power of substitution (i) to deliver certificates
for such Old Notes to the Company and deliver all accompanying evidences of
transfer and authenticity to, or upon the order of, the Company and (ii) to
present such Old Notes for transfer on the books of the Company, all in
accordance with the terms of the Exchange Offer. The power of attorney granted
in this paragraph shall be deemed to be irrevocable and coupled with an
interest.
The undersigned hereby represents and warrants that he or she has full
power and authority to tender, sell, assign and transfer the Old Notes tendered
hereby and that the Company will acquire good and unencumbered title thereto,
free and clear of all liens, restrictions, charges and encumbrances and not
subject to any adverse claim when the same are acquired by the Company. The
undersigned and any beneficial owner of Old Notes tendered hereby further
represent and warrant that (i) the New Notes acquired by the undersigned and
any such beneficial owner of Old Notes pursuant to the Exchange Offer are being
obtained in the ordinary course of business of the person receiving such New
Notes, (ii) neither the undersigned nor any such beneficial owner has an
arrangement with any person to participate in the distribution of such New
Notes, (iii) neither the undersigned nor any such beneficial owner nor any such
other person is engaging in or intends to engage in a distribution of such New
Notes and (iv) neither the undersigned nor any such other person is an
"affiliate," as defined under Rule 405 promulgated under the Securities Act, of
the Company. The undersigned and each beneficial owner acknowledge and agree
that any person who is an affiliate of the Company or who tenders in the
Exchange Offer for the purpose of participating in a distribution of the New
Notes must comply with the registration and prospectus delivery requirements of
the Securities Act in connection with a resale transaction of the New Notes
acquired by such person and may not rely on the position of the staff of the
Securities and Exchange Commission set forth in the no-action letters discussed
in the Prospectus under the caption "The Exchange Offer--Purpose and Effect of
the Exchange Offer." The undersigned and each beneficial owner will, upon
request, execute and deliver any additional documents deemed by the Exchange
Agent or the Company to be necessary or desirable to complete the sale,
assignment and transfer of the Old Notes tendered hereby.
For purposes of the Exchange Offer, the Company shall be deemed to have
accepted validly tendered Old Notes when, as and if the Company has given oral
notice (confirmed in writing) or written notice thereof to the Exchange Agent.
If any tendered Old Notes are not accepted for exchange pursuant to the
Exchange Offer because of an invalid tender, the occurrence of certain other
events set forth in the Prospectus or otherwise, any such unaccepted Old Notes
will be returned, without expense, to the undersigned at the address shown
below or at a different address as may be indicated herein under "Special
Delivery Instructions" as promptly as practicable after the Expiration Date.
<PAGE> 4
All authority conferred or agreed to be conferred by this Letter of
Transmittal shall survive the death, incapacity or dissolution of the
undersigned, and every obligation of the undersigned under this Letter of
Transmittal shall be binding upon the undersigned's heirs, personal
representatives, successors and assigns.
The undersigned understands that tenders of Old Notes pursuant to the
procedures described under the caption "The Exchange Offer--Procedures for
Tendering" 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, subject only to withdrawal of
such tenders on the terms set forth in the Prospectus under the caption "The
Exchange Offer--Withdrawal of Tenders."
Unless otherwise indicated under "Special Registration Instructions,"
please issue the certificates representing the New Notes issued in exchange for
the Old Notes accepted for exchange and any certificates for Old Notes not
tendered or not exchanged, in the name(s) of the undersigned. Similarly, unless
otherwise indicated under "Special Delivery Instructions," please send the
certificates representing the New Notes issued in exchange for the Old Notes
accepted for exchange and any certificates for Old Notes not tendered or not
exchanged (and accompanying documents, as appropriate) to the undersigned at
the address shown below the undersigned's signature(s). In the event that both
"Special Registration Instructions" and "Special Delivery Instructions" are
completed, please issue the certificates representing the New Notes issued in
exchange for the Old Notes accepted for exchange in the name(s) of, and return
any certificates for Old Notes not tendered or not exchanged to, the person(s)
so indicated. The undersigned understands that the Company has no obligation
pursuant to the "Special Registration Instructions" and "Special Delivery
Instructions" to transfer any Old Notes from the name of the registered
Holder(s) thereof if the Company does not accept for exchange any of the Old
Notes so tendered.
Holders who wish to tender their Old Notes and (i) whose Old Notes are not
immediately available or (ii) who cannot deliver their Old Notes, this Letter
of Transmittal and any other documents required by this Letter of Transmittal
to the Exchange Agent prior to the Expiration Date may tender their Old Notes
according to the guaranteed delivery procedures set forth in the Prospectus
under the caption "The Exchange Offer--Guaranteed Delivery Procedures." See
Instruction 5.
PLEASE SIGN HERE WHETHER OR NOT
OLD NOTES ARE BEING PHYSICALLY TENDERED HEREBY
X Date:
---------------------------------- ---------------------------------
X Date:
---------------------------------- ---------------------------------
Signature(s) of Registered Holder(s) or Authorized Signatory
Area Code and Telephone Number:
-------------------------------------------
THE ABOVE LINES MUST BE SIGNED BY THE REGISTERED HOLDER(S) AS HIS OR HER
NAME(S) APPEAR(S) ON THE OLD NOTES OR BY PERSON(S) AUTHORIZED TO BECOME
REGISTERED HOLDER(S) BY A PROPERLY COMPLETED BOND POWER FROM THE REGISTERED
HOLDER(S), A COPY OF WHICH MUST BE TRANSMITTED WITH THIS LETTER OF TRANSMITTAL.
IF THE OLD NOTES TO WHICH THIS LETTER OF TRANSMITTAL RELATE ARE HELD OF RECORD
BY TWO OR MORE JOINT HOLDERS, THEN ALL SUCH HOLDERS MUST SIGN THIS LETTER OF
TRANSMITTAL. IF THIS LETTER OF TRANSMITTAL OR ANY OLD NOTES OR BOND POWERS ARE
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 MUST (I) SO INDICATE AND SET FORTH HIS OR
HER FULL TITLE BELOW AND (II) UNLESS WAIVED BY THE COMPANY, SUBMIT EVIDENCE
SATISFACTORY TO THE COMPANY OF SUCH PERSON'S AUTHORITY TO SO ACT. SEE
INSTRUCTION 7.
Name(s):
-----------------------------------------------------
(Please Print)
Capacity:
-----------------------------------------------------
Address
-----------------------------------------------------
(Include Zip Code)
Signature(s) Guaranteed by an Eligible Institution:
(If required by Instruction 7)
- --------------------------------------------------------------------------------
(Authorized Signature)
- --------------------------------------------------------------------------------
(Title)
- --------------------------------------------------------------------------------
(Name of Firm)
Date: , 199
----------------------
<PAGE> 5
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS
OF THE EXCHANGE OFFER
1. PROCEDURES FOR TENDERING. This Letter of Transmittal or a facsimile
hereof, properly completed and duly executed, or an Agent's Message 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. In addition, either (i) certificates for
tendered Old Notes must be received by the Exchange Agent along with the Letter
of Transmittal or (ii) a timely confirmation of a book-entry transfer (a "Book
Entry Confirmation") of such Old Notes, if such procedure is available, into
the Exchange Agent's account at DTC pursuant to the procedure for book-entry
transfer described below, must be received by the Exchange Agent prior to the
Expiration Date or (iii) the Holder must comply with the guaranteed delivery
procedures described below.
THE METHOD OF DELIVERY OF OLD NOTES AND THIS LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND RISK OF
THE HOLDER AND, EXCEPT AS OTHERWISE PROVIDED BELOW, THE DELIVERY WILL BE DEEMED
MADE ONLY WHEN ACTUALLY RECEIVED BY THE EXCHANGE AGENT. INSTEAD OF DELIVERY BY
MAIL, IT IS RECOMMENDED THAT THE HOLDER USE AN OVERNIGHT OR HAND DELIVERY
SERVICE. IF SENT BY MAIL, IT IS RECOMMENDED THAT REGISTERED MAIL, RETURN
RECEIPT REQUESTED, BE USED AND PROPER INSURANCE BE OBTAINED. IN ALL CASES,
SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE DELIVERY TO THE EXCHANGE AGENT
BEFORE THE EXPIRATION DATE. NO LETTER OF TRANSMITTAL OR OLD NOTES SHOULD BE
SENT TO THE COMPANY.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance and withdrawal of tendered Old Notes will be determined by
the Company in its sole discretion, which determination will be final and
binding. The Company reserves the absolute right to reject any and all Old
Notes not properly tendered or any Old Notes the Company's acceptance of which
would, in the opinion of counsel for the Company, be unlawful. The Company also
reserves the right to waive any defects, irregularities or conditions of tender
as to particular Old Notes. The Company's interpretation of the terms and
conditions of the Exchange Offer (including the instructions in this Letter of
Transmittal) shall be final and binding on all parties. Unless waived, any
defects or irregularities in connection with tenders of Old Notes must be cured
within such time as the Company shall determine. Although the Company intends
to notify Holders of defects or irregularities with respect to tenders of Old
Notes, neither the Company, the Exchange Agent nor any other person shall be
under any duty to give any such notification, nor shall any of them incur any
liability for failure to give such notification. Tenders of Old Notes will not
be deemed to have been made until such defects or irregularities have been
cured or waived. Any Old Notes received by the Exchange Agent that the Company
determines are not properly tendered and as to which the defects or
irregularities have not been cured or waived will be returned by the Exchange
Agent to the tendering Holders, unless otherwise provided in this Letter of
Transmittal, as soon as practicable following the Expiration Date.
2. TENDER BY HOLDER. Only a Holder of Old Notes may tender such Old Notes
in the Exchange Offer. Any beneficial owner whose Old Notes are registered in
the name of a broker, dealer, commercial bank, trust company or other nominee
and who wishes to tender should contact the registered holder promptly and
instruct such registered holder to tender on such beneficial owner's behalf. If
such beneficial owner wishes to tender on such beneficial owner's own behalf,
such beneficial owner must, prior to completing and executing this Letter of
Transmittal and delivering such beneficial owner's Old Notes, either make
appropriate arrangements to register ownership of the Old Notes in such
beneficial owner's name or obtain a properly completed bond power from the
registered holder. The transfer of registered ownership may take considerable
time.
<PAGE> 6
3. PARTIAL TENDERS. Tenders of Old Notes will be accepted only in integral
multiples of $1,000. If less than the entire principal amount of any Old Notes
is tendered, the tendering Holder should fill in the principal amount tendered
in the fourth column of the box entitled "Description of 14% Senior Notes due
2004" above. The entire principal amount of any Old Notes delivered to the
Exchange Agent will be deemed to have been tendered unless otherwise indicated.
If the entire principal amount of all Old Notes is not tendered, then Old Notes
for the principal amount of Old Notes not tendered and a certificate or
certificates representing New Notes issued in exchange for any Old Notes
accepted 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 of
Transmittal, promptly after the Old Notes are accepted for exchange.
4. BOOK-ENTRY TRANSFER. Any financial institution that is a participant in
DTC's system may make book-entry delivery of Old Notes by causing DTC to
transfer such Old Notes into the Exchange Agent's account at DTC in accordance
with DTC's procedures for transfer. However, although delivery of Old Notes may
be effected through book-entry transfer at DTC, this Letter of Transmittal or a
facsimile hereof, or an Agent's Message, with any required signature guarantees
and any other required documents, must, in any case, be transmitted to and
received by the Exchange Agent on or prior to the Expiration Date or the
guaranteed delivery procedures described below must be complied with.
5. GUARANTEED DELIVERY PROCEDURES. Holders who wish to tender their Old
Notes and (i) whose Old Notes are not immediately available or (ii) who cannot
deliver their Old Notes, this Letter of Transmittal or an Agent's Message or
any other documents required hereby to the Exchange Agent prior to the
Expiration Date must tender their Old Notes according to the guaranteed
delivery procedures set forth in the Prospectus. Pursuant to such procedure:
(a) such tender must be made through an Eligible Institution (as defined
below); (b) prior to the Expiration Date, the Exchange Agent must have received
from 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 Holder, the certificate number(s) of such Old
Notes and the principal amount of Old Notes tendered, stating that the tender
is being made thereby and guaranteeing that, within three New York Stock
Exchange trading days after the Expiration Date, this Letter of Transmittal (or
facsimile hereof) or an Agent's Message together with the certificate(s)
representing the Old Notes, or a Book-Entry Confirmation, and any other
required documents will be deposited by the Eligible Institution with the
Exchange Agent; and (c) such properly completed and executed Letter of
Transmittal (or facsimile hereof) or an Agent's Message, as well as the
certificate(s) representing all tendered Old Notes in proper form for transfer,
or a Book-Entry Confirmation, as the case may be, and all other documents
required by this Letter of Transmittal must be received by the Exchange Agent
within three New York Stock Exchange trading days after the Expiration Date,
all as provided in the Prospectus under the caption "The Exchange
Offer--Guaranteed Delivery Procedures." Any Holder who wishes to tender his or
her Old 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. Upon request to
the Exchange Agent, a Notice of Guaranteed Delivery will be sent to Holders who
wish to tender their Old Notes according to the guaranteed delivery procedures
set forth above.
6. WITHDRAWAL OF TENDERS. To withdraw a tender of Old Notes in the Exchange
Offer, a written or facsimile transmission notice of withdrawal must be
received by the Exchange Agent prior to 5:00 p.m., New York City time, on the
Expiration Date. Any such notice of withdrawal must (i) specify the name of the
person having deposited the Old Notes to be withdrawn (the "Depositor"), (ii)
identify the Old Notes to be withdrawn (including the certificate number or
numbers and principal amount of such Old Notes), (iii) be signed by the Holder
in the same manner as the original signature on the Letter of Transmittal by
which such Old Notes were tendered (including any required signature
guarantees) or be accompanied by documents of transfer sufficient to have the
Trustee with respect to the Old Notes register the transfer of such Old Notes
into the name of the persons withdrawing the tender and (iv) specify the name
in which any such Old Notes are to be registered, if different from that of the
Depositor. If certificates for Old Notes have been delivered or otherwise
identified to the Exchange Agent, then, prior to the release of such
certificates, the withdrawing Holder must also submit the serial numbers of the
particular certificates to be withdrawn and a signed notice of withdrawal with
signatures guaranteed by an Eligible Institution unless such Holder is an
Eligible Institution. If Old Notes have been tendered pursuant to the procedure
for book-entry transfer described above, any notice of withdrawal must specify
the name and number of the account at DTC to be credited with the withdrawn Old
Notes and otherwise comply with the procedures of such facility. All questions
as to the validity, form and
<PAGE> 7
eligibility (including time of receipt) of such notices will be determined by
the Company in its sole discretion, which determination shall be final and
binding on all parties. Any Old Notes so withdrawn will be deemed not to have
been validly tendered for purposes of the Exchange Offer and no New Notes will
be issued with respect thereto unless the Old Notes so withdrawn are validly
retendered. Properly withdrawn Old Notes may be retendered by following one of
the procedures described above in Instruction 1, under Procedures for
Tendering, at any time prior to the Expiration Date.
7. SIGNATURES ON THE LETTER OF TRANSMITTAL; BOND POWERS AND ENDORSEMENTS;
GUARANTEE OF SIGNATURES. If this Letter of Transmittal (or facsimile hereof) is
signed by the registered holder(s) of the Old Notes tendered hereby, the
signature must correspond with the name(s) as written on the face of the Old
Notes without alteration, enlargement or any change whatsoever.
If this Letter of Transmittal (or facsimile hereof) is signed by the
registered holder or holders of Old Notes tendered and the certificate or
certificates for New Notes issued in exchange therefor is to be issued (or any
untendered principal amount of Old Notes is to be reissued) to the registered
holder or holders and neither the "Special Delivery Instructions" nor the
"Special Registration Instructions" has been completed, then such holder or
holders need not and should not endorse any tendered Old Notes, nor provide a
separate bond power. In any other case, such holder or holders must either
properly endorse the Old Notes tendered or transmit a properly completed
separate bond power with this Letter of Transmittal with the signatures on the
endorsement or bond power guaranteed by an Eligible Institution.
If this Letter of Transmittal (or facsimile hereof) or any Old Notes or
bond powers are 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 must so indicate when
signing, and, unless waived by the Company, submit evidence satisfactory to the
Company of such person's authority to so act with this Letter of Transmittal.
Endorsements on Old Notes or signatures on bond powers required by this
Instruction 7 must be guaranteed by an Eligible Institution which is a member
of (a) the Securities Transfer Agents Medallion Program, (b) the New York Stock
Exchange Medallion Signature Program or (c) the Stock Exchange Medallion
Program.
Except as otherwise provided below, all signatures on this Letter of
Transmittal must be guaranteed by a firm that 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 an "eligible guarantor institution" within the meaning of
Rule 17Ad-15 under the Securities Exchange Act of 1934, as amended (an
"Eligible Institution"). Signatures on this Letter of Transmittal need not be
guaranteed if (a) this Letter of Transmittal is signed by the registered
holder(s) of the Old Notes tendered herewith and such holder(s) have not
completed the box set forth herein entitled "Special Registration Instructions"
or the box set forth herein entitled "Special Delivery Instructions" or (b)
such Old Notes are tendered for the account of an Eligible Institution.
8. Special Registration and Delivery Information. Tendering holders should
indicate, in the applicable box or boxes, the name and address to which New
Notes or substitute Old Notes for principal amounts not tendered or not
accepted for exchange are to be issued or sent, if different from the name and
address of the person singing 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.
9. TRANSFER TAXES. The Company will pay all transfer taxes, if any,
applicable to the exchange of Old Notes pursuant to the Exchange Offer. If,
however, certificates representing New Notes or Old Notes for principal amounts
not tendered or accepted for exchange are to be delivered to, or are to be
registered in the name of, any person other than the registered holder of the
Old Notes tendered hereby, or if tendered Old Notes are registered in the name
of any person other than the person signing this Letter of Transmittal, or if a
transfer tax is imposed for any reason other than the exchange of Old Notes
pursuant to the Exchange Offer, then the amount of any such transfer taxes
(whether imposed on the registered holder or on any other persons) will be
payable by the tendering Holder. If satisfactory evidence of payment of such
taxes or exemption therefrom is not submitted with this Letter of Transmittal,
the amount of such transfer taxes will be billed directly to such tendering
Holder.
<PAGE> 8
Except as provided in this Instruction 9, it will not be necessary for
transfer tax stamps to be affixed to the Old Notes listed in this Letter of
Transmittal.
10. WAIVER OF CONDITIONS. The Company reserves the right, in its sole
discretion, to amend, waive or modify specified conditions in the Exchange
Offer in the case of any Old Notes tendered.
11. MUTILATED, LOST, STOLEN OR DESTROYED OLD NOTES. Any tendering Holder
whose Old Notes have been mutilated, lost, stolen or destroyed should contact
the Exchange Agent at the address indicated herein for further instructions.
12. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions and requests
for assistance and requests for additional copies of the Prospectus or this
Letter of Transmittal may be directed to the Exchange Agent at the address
specified herein. Holders may also contact their broker, dealer, commercial
bank, trust company or other nominee for assistance concerning the Exchange
Offer.
IMPORTANT TAX INFORMATION
The Holder is required to give the Exchange Agent the social security
number or employer identification number of the Holder of the Notes. If the
Notes are in more than one name or are not in the name of the actual owner,
consult the enclosed Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9 for additional guidance on which number to
report.
PAYER'S NAME: HEARTLAND WIRELESS COMMUNICATIONS, INC.
Name of Holder (if joint, list first and circle the name of
the person or entity whose number you enter in Part I below).
Address (if Holder does not complete, signature below will
constitute a certification that the above address is correct.)
<TABLE>
<S> <C> <C>
SUBSTITUTE Part I--Please provide your
FORM W-9 TIN in the box at right and Social Security Number
DEPARTMENT OF THE TREASURY certify by signing and or
INTERNAL REVENUE SERVICE dating below. If you do not Employer Identification
have a number, see How to Number
Obtain a "TIN" in the
enclosed Guidelines.
Payer's Request for Taxpayer Part II--For Payees exempt from backup withholding, see
Identification Number (TIN) the enclosed Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9.
</TABLE>
CERTIFICATION. Under penalties of perjury, I certify that:
(1) The number shown on this form is my correct Taxpayer Identification Number
(or I am waiting for a number to be issued to me), and
(2) I am not subject to backup withholding either because I have not been
notified by the Internal Revenue Service (IRS) that I am subject to backup
withholding as a result of a failure to report all interest or dividends,
or the IRS has notified me that I am no longer subject to backup
withholding.
CERTIFICATION INSTRUCTIONS. You must cross out item (2) above if you have been
notified by the IRS that you are subject to backup withholding because of
underreported interest or dividends on your tax return. However, if after being
notified by the IRS that you were subject to backup withholding you received
another notification from the IRS that you are no longer subject to backup
withholding, do not cross out item (2). (Also see instructions in the enclosed
Guidelines for Certification of Taxpayer Identification Number on Substitute
Form W-9.)
Signature Date
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU UNDER THE NOTES. PLEASE REVIEW THE
ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER
ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
(DO NOT WRITE IN SPACE BELOW)
<TABLE>
<S> <C> <C>
CERTIFICATE SURRENDERED OLD NOTES TENDERED OLD NOTES ACCEPTED
Delivery Prepared By
---------------------------
Checked By
------------------------------------
Date
-------------------------------------------
</TABLE>
<PAGE> 1
EXHIBIT 99.2
HEARTLAND WIRELESS COMMUNICATIONS, INC.
NOTICE OF GUARANTEED DELIVERY
OF
14% SERIES B SENIOR NOTES DUE 2004
As set forth in the Prospectus dated February __, 1997 (the "Prospectus"),
of Heartland Wireless Communications, Inc. (the "Company") under the caption
"The Exchange Offer--Guaranteed Delivery Procedures," this form must be used to
accept the Company's offer to exchange its 14% Series B Senior Notes due 2004
(the "New Notes") for an equal principal amount of its 14% Senior
Notes due 2004 (the "Old Notes"), by Holders who wish to tender their Old Notes
and (i) whose Old Notes are not immediately available or (ii) who cannot
deliver their Old Notes, the Letter of Transmittal or an Agent's Message (as
defined in the Prospectus) and any other documents required by the Letter of
Transmittal to the Exchange Agent prior to the Expiration Date. This form must
be delivered by an Eligible Institution by mail or hand delivery or
transmitted, via facsimile, to the Exchange Agent at its address set forth
below not later than the Expiration Date. All capitalized terms used herein but
not defined herein shall have the meanings ascribed to them in the Prospectus.
THE EXCHANGE AGENT IS:
BANKERS TRUST COMPANY
<TABLE>
<CAPTION>
BY MAIL: BY HAND: BY OVERNIGHT MAIL OR COURIER:
<S> <C> <C>
BT Services Tennessee, Inc. Bankers Trust Company BT Services Tennessee, Inc.
Reorganization Unit Corporate Trust and Agency Group Corporate Trust and Agency Group
P.O. Box 292737 Receipt & Delivery Window Reorganization Unit
Nashville, TN 37229-2737 123 Washington St., 1st Floor 648 Grassmere Park Road
New York, NY 10006 Nashville, TN 37211
</TABLE>
FOR INFORMATION CALL:
(800) 735-7777
Confirm: (615) 835-3572
Facsimile: (615) 835-3701
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR
TRANSMISSION VIA A FACSIMILE NUMBER OTHER THAN ONE LISTED ABOVE WILL NOT
CONSTITUTE A VALID DELIVERY.
Ladies and Gentlemen:
The undersigned hereby tenders for exchange to the Company, upon the terms
and subject to the conditions set forth in the Prospectus and the Letter of
Transmittal, receipt of which is hereby acknowledged, the principal amount of
Old Notes set forth below pursuant to the guaranteed delivery procedures set
forth in the Prospectus under the caption "The Exchange Offer--Guaranteed
Delivery Procedures."
The undersigned understands and acknowledges that the Exchange Offer will
expire at 5:00 p.m., New York City time, on March __, 1997, unless extended by
the Company. The term "Expiration Date" shall mean 5:00 p.m., New York City
time, on March __, 1997, unless the Exchange Offer is extended as provided in
the Prospectus, in which case the term "Expiration Date" shall mean the latest
date and time to which the Exchange Offer is extended.
All authority conferred or agreed to be conferred by this Notice of
Guaranteed Delivery shall survive the death, incapacity or dissolution of the
undersigned, and every obligation of the undersigned under this Notice of
Guaranteed Delivery shall be binding upon the undersigned's heirs, personal
representatives, successors and assigns.
<PAGE> 1
EXHIBIT 99.3
HEARTLAND WIRELESS COMMUNICATIONS, INC.
Offer to Exchange up to $125,000,000 of its
14% Series B Senior Notes due 2004
for any and all of its outstanding
14% Senior Notes due 2004
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME ON MARCH __,
1997, UNLESS EXTENDED.
To Brokers, Dealers, Commercial Banks, February __, 1997
Trust Companies and Other Nominees:
Heartland Wireless Communications, Inc., a Delaware corporation (the
"Company"), is offering, upon the terms and subject to the conditions set forth
in the Prospectus dated February __, 1997 (the "Prospectus") and the
accompanying Letter of Transmittal enclosed herewith (which together constitute
the "Exchange Offer"), to exchange its 14% Series B Senior Notes due 2004 (the
"New Notes") for an equal principal amount of its 14% Senior Notes due 2004
(the "Old Notes" and together with the New Notes, the "Notes"). As set forth in
the Prospectus, the terms of the New Notes are identical in all material
respects to the Old Notes, except that the New Notes have been registered under
the Securities Act of 1933, as amended, and therefore will not bear legends
restricting their transfer and will not contain certain provisions providing
for an increase in the interest rate on the Old Notes under certain
circumstances relating to the Registration Rights Agreement (as defined in the
Prospectus). Old Notes may be tendered only in integral multiples of $1,000.
THE EXCHANGE OFFER IS SUBJECT TO CERTAIN CUSTOMARY CONDITIONS. SEE "THE
EXCHANGE OFFER -- CONDITIONS" IN THE PROSPECTUS.
Enclosed herewith for your information and forwarding to your clients are
copies of the following documents:
1. the Prospectus, dated February __, 1997;
2. the Letter of Transmittal for your use and for the information of
your clients (facsimile copies of the Letter of Transmittal may be used to
tender Old Notes);
3. a form of letter which may be sent to your clients for whose
accounts you hold Old Notes registered in your name or in the name of your
nominee, with space provided for obtaining such clients' instructions with
regard to the Exchange Offer;
4. a Notice of Guaranteed Delivery;
5. Guidelines of the Internal Revenue Service for Certification of
Taxpayer Identification Number on Substitute Form W-9; and
6. a return envelope addressed to Bankers Trust Company, the Exchange
Agent.
YOUR PROMPT ACTION IS REQUESTED. PLEASE NOTE THE EXCHANGE OFFER WILL EXPIRE
AT 5:00 P.M., NEW YORK CITY TIME, ON MARCH __, 1997, UNLESS EXTENDED. PLEASE
FURNISH COPIES OF THE ENCLOSED MATERIALS TO THOSE OF YOUR CLIENTS FOR WHOM YOU
HOLD OLD NOTES REGISTERED IN YOUR NAME OR IN THE NAME OF YOUR NOMINEE AS
QUICKLY AS POSSIBLE.
In all cases, exchanges of Old Notes accepted for exchange pursuant to the
Exchange Offer will be made only after timely receipt by the Exchange Agent of
(a) certificates representing such Old Notes, or a Book-Entry Confirmation (as
defined in the Prospectus), as the case may be, (b) the Letter of Transmittal
(or facsimile thereof), properly completed and duly executed, or an Agent's
Message (as defined in the Prospectus) and (c) any other required documents.
<PAGE> 2
Holders who wish to tender their Old Notes and (i) whose Old Notes are not
immediately available or (ii) who cannot deliver their Old Notes, the Letter of
Transmittal or an Agent's Message and any other documents required by the
Letter of Transmittal to the Exchange Agent prior to the Expiration Date must
tender their Old Notes according to the guaranteed delivery procedures set
forth under the caption "The Exchange Offer--Guaranteed Delivery Procedures" in
the Prospectus.
The Exchange Offer is not being made to, nor will tenders be accepted from
or on behalf of, holders of Old Notes residing in any jurisdiction in which the
making of the Exchange Offer or the acceptance thereof would not be in
compliance with the laws of such jurisdiction.
The Company will not pay any fees or commissions to brokers, dealers or
other persons for soliciting exchanges of Notes pursuant to the Exchange Offer.
The Company will, however, upon request, reimburse you for customary clerical
and mailing expenses incurred by you in forwarding any of the enclosed
materials to your clients. The Company will pay or cause to be paid any
transfer taxes payable on the transfer of Notes to it, except as otherwise
provided in Instruction 9 of the Letter of Transmittal.
Questions and requests for assistance with respect to the Exchange Offer or
for copies of the Prospectus and Letter of Transmittal may be directed to the
Exchange Agent at its address set forth in the Prospectus or at 1-800-735-7777.
Very truly yours,
HEARTLAND WIRELESS COMMUNICATIONS, INC.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
OR ANY OTHER PERSON THE AGENT OF THE COMPANY, OR ANY AFFILIATE THEREOF, OR
AUTHORIZE YOU OR ANY OTHER PERSON TO MAKE ANY STATEMENTS OR USE ANY DOCUMENT ON
BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN THE ENCLOSED
DOCUMENTS AND THE STATEMENTS CONTAINED THEREIN.
<PAGE> 1
EXHIBIT 99.4
HEARTLAND WIRELESS COMMUNICATIONS, INC.
Offer to Exchange up to $125,000,000 of its
14% Series B Senior Notes due 2004
for any and all of its outstanding
14% Senior Notes due 2004
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
MARCH __, 1997, UNLESS EXTENDED.
To Our Clients:
Enclosed for your consideration is a Prospectus dated February __, 1997 (the
"Prospectus") and a Letter of Transmittal (which together constitute the
"Exchange Offer") relating to the offer by Heartland Wireless Communications,
Inc. (the "Company") to exchange its 14% Series B Senior Notes due 2004 (the
"New Notes") for an equal principal amount of its 14% Senior Notes due 2004
(the "Old Notes" and together with the New Notes, the "Notes"). As set forth in
the Prospectus, the terms of the New Notes are identical in all material
respects to the Old Notes, except that the New Notes have been registered under
the Securities Act of 1933, as amended, and therefore will not bear legends
restricting their transfer and will not contain certain provisions providing
for an increase in the interest rate on the Old Notes under certain
circumstances relating to the Registration Rights Agreement (as defined in the
Prospectus). Old Notes may be tendered only in integral multiples of $1,000.
The enclosed material is being forwarded to you as the beneficial owner of
Old Notes carried by us for your account or benefit but not registered in your
name. An exchange of any Old Notes may only be made by us as the registered
Holder and pursuant to your instructions. Therefore, the Company urges
beneficial owners of Old Notes registered in the name of a broker, dealer,
commercial bank, trust company or other nominee to contact such Holder promptly
if they wish to exchange Old Notes in the Exchange Offer.
Accordingly, we request instructions as to whether you wish us to exchange
any or all such Old Notes held by us for your account or benefit, pursuant to
the terms and conditions set forth in the Prospectus and Letter of Transmittal.
We urge you to read carefully the Prospectus and Letter of Transmittal before
instructing us to exchange your Old Notes.
Your instructions to us should be forwarded as promptly as possible in order
to permit us to exchange Old Notes on your behalf in accordance with the
provisions of the Exchange Offer. THE EXCHANGE OFFER EXPIRES AT 5:00 P.M., NEW
YORK CITY TIME, ON MARCH __, 1997, UNLESS EXTENDED. The term "Expiration Date"
shall mean 5:00 p.m., New York City time, on March __, 1997, unless the Exchange
Offer is extended as provided in the Prospectus, in which case the term
"Expiration Date" shall mean the latest date and time to which the Exchange
Offer is extended. A tender of Old Notes may be withdrawn at any time prior to
5:00 p.m., New York City time, on the Expiration Date.
Your attention is directed to the following:
1. The Exchange Offer is for the exchange of $1,000 principal amount of
the New Notes for each $1,000 principal amount of the Old Notes, of which
$125,000,000 aggregate principal amount was outstanding as of February __,
1997. The terms of the New Notes are identical in all material respects to
the Old Notes, except that the New Notes have been registered under the
Securities Act of 1933, as amended, and therefore will not bear legends
restricting their transfer and will not contain certain provisions
providing for an increase in the interest rate on the Old Notes under
certain circumstances relating to the Registration Rights Agreement.
2. THE EXCHANGE OFFER IS SUBJECT TO CERTAIN CUSTOMARY CONDITIONS. SEE
"THE EXCHANGE OFFER -- CONDITIONS" IN THE PROSPECTUS.
3. The Exchange Offer and withdrawal rights will expire at 5:00 p.m.,
New York City time, on March __, 1997, unless extended.
4. The Company has agreed to pay the expenses of the Exchange Offer.
5. Any transfer taxes incident to the transfer of Old Notes from the
tendering Holder to the Company will be paid by the Company, except as
provided in the Prospectus and the Letter of Transmittal.
The Exchange Offer is not being made to, nor will tenders be accepted from
or on behalf of, holders of Old Notes residing in any jurisdiction in which the
making of the Exchange Offer or the acceptance thereof would not be in
compliance with the laws of such jurisdiction.
If you wish us to tender any or all of your Old Notes held by us for your
account or benefit, please so instruct us by completing, executing and
returning to us the attached instruction form. THE ACCOMPANYING LETTER OF
TRANSMITTAL IS FURNISHED TO YOU FOR INFORMATIONAL PURPOSES ONLY AND MAY NOT BE
USED BY YOU TO EXCHANGE OLD NOTES HELD BY US AND REGISTERED IN OUR NAME FOR
YOUR ACCOUNT OR BENEFIT.
<PAGE> 2
INSTRUCTIONS
The undersigned acknowledge(s) receipt of your letter and the enclosed
material referred to therein relating to the Exchange Offer of Heartland
Wireless Communications, Inc.
This will instruct you to tender for exchange the aggregate principal
amount of Old Notes indicated below (or, if no aggregate principal amount is
indicated below, all Old Notes) held by you for the account or benefit of the
undersigned, pursuant to the terms of and conditions set forth in the
Prospectus and the Letter of Transmittal.
Aggregate Principal Amount of Old Notes to be tendered for exchange
$
----------------------
<TABLE>
<S> <C>
*I (WE) UNDERSTAND THAT IF I (WE) SIGN THIS
INSTRUCTION FORM WITHOUT INDICATING AN AGGREGATE
PRINCIPAL AMOUNT OF OLD NOTES IN THE SPACE ABOVE, ALL
OLD NOTES HELD BY YOU FOR MY (OUR) ACCOUNT WILL BE
TENDERED FOR EXCHANGE.
------------------------------------------------------
SIGNATURE(S)
------------------------------------------------------
CAPACITY (FULL TITLE), IF SIGNING IN A FIDUCIARY OR
REPRESENTATIVE CAPACITY
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
NAME(S) AND ADDRESS, INCLUDING ZIP CODE
DATE: ------------------------------------------------
------------------------------------------------------
AREA CODE AND TELEPHONE NUMBER
------------------------------------------------------
TAXPAYER IDENTIFICATION OR SOCIAL SECURITY NO.
</TABLE>
<PAGE> 1
EXHIBIT 99.5
BANKERS TRUST COMPANY
EXCHANGE AGENT AGREEMENT
February __, 1997
Bankers Trust Company
Corporate Trust and
Agency Group
Four Albany Street, 4th Floor
New York, New York 10006
Attention: Corporate Market Services
Ladies and Gentlemen:
Heartland Wireless Communications, Inc., a Delaware corporation (the
"Company"), is offering to exchange (the "Exchange Offer") its 14% Series B
Senior Notes due 2004 (the "New Notes") for an equal principal amount of its 14%
Senior Notes due 2004 (the "Old Notes" and, together with the New Notes, the
"Notes"), pursuant to a prospectus (the "Prospectus") included in the Company's
Registration Statement on Form S-4 (File No. ), as amended (the
"Registration Statement"), filed with the Securities and Exchange Commission
(the "SEC"). The term "Expiration Date" shall mean 5:00 p.m., New York City
time, on March __, 1997, unless the Exchange Offer is extended as provided in
the Prospectus, in which case the term "Expiration Date" shall mean the latest
date and time to which the Exchange Offer is extended. Upon execution of this
Agreement, Bankers Trust Company will act as the Exchange Agent for the Exchange
Offer (the "Exchange Agent"). A copy of the Prospectus is attached hereto as
EXHIBIT A. Capitalized terms used and not otherwise defined herein shall have
the respective meanings ascribed thereto in the Prospectus.
A copy of each of the form of the letter of transmittal (the "Letter
of Transmittal"), the form of the notice of guaranteed delivery (the "Notice of
Guaranteed Delivery"), the form of letter to brokers and the form of letter to
clients (collectively, the "Tender Documents") to be used by Holders of Old
Notes to surrender Old Notes in order to receive New Notes pursuant to the
Exchange Offer are attached hereto as EXHIBIT B.
The Company hereby appoints you to act as Exchange Agent in
connection with the Exchange Offer. In carrying out your duties as Exchange
Agent, you are to act in accordance with the following provisions of this
Agreement:
1. You are to mail the Prospectus and the Tender Documents to all
of the Holders and participants on the day that you are notified by the Company
that the Registration Statement has become effective under the Securities Act
of 1933, as amended, or as soon as practicable thereafter, and to make
subsequent mailings thereof to any persons who become Holders
<PAGE> 2
prior to the Expiration Date and to any persons as may from time to time be
requested by the Company. All mailings pursuant to this Section 1 shall be by
first class mail, postage prepaid, unless otherwise specified by the Company.
You shall also accept and comply with telephone requests for information
relating to the Exchange Offer provided that such information shall relate only
to the procedures for tendering Old Notes in (or withdrawing tenders of Old
Notes from) the Exchange Offer. All other requests for information relating to
the Exchange Offer shall be directed to the Company, Attention: J. Curtis
Henderson, Vice President and General Counsel, 200 Chisholm Place, Suite 200,
Plano, Texas 75075, telephone (972) 423-9494.
2. You are to examine the Letters of Transmittal and the Old Notes
and other documents delivered or mailed to you, by or for the Holders, prior to
the Expiration Date, to ascertain whether (i) the Letters of Transmittal are
properly executed and completed in accordance with the instructions set forth
therein, (ii) the Old Notes are in proper form for transfer and (iii) all other
documents submitted to you are in proper form. In each case where a Letter of
Transmittal or other document has been improperly executed or completed or, for
any other reason, is not in proper form, or some other irregularity exists, you
are authorized to endeavor to take such action as you consider appropriate to
notify the tendering Holder of such irregularity and as to the appropriate
means of resolving the same. Determination of questions as to the proper
completion or execution of the Letters of Transmittal, or as to the proper form
for transfer of the Old Notes or as to any other irregularity in connection
with the submission of Letters of Transmittal and/or Old Notes and other
documents in connection with the Exchange Offer, shall be made by the officers
of, or counsel for, the Company at their written instructions or oral direction
confirmed by facsimile. Any determination made by the Company on such
questions shall be final and binding.
3. At the written request of the Company or its counsel, Arter &
Hadden, you shall notify tendering Holders of Old Notes in the event of any
extension, termination or amendment of the Exchange Offer. In the event of any
such termination, you will return all tendered Old Notes to the persons
entitled thereto, at the request and expense of the Company or its counsel,
Arter & Hadden.
4. Tender of the Old Notes may be made only as set forth in the
Letter of Transmittal. Notwithstanding the foregoing, tenders which the
Company shall approve in writing as having been properly tendered shall be
considered to be properly tendered. Letters of Transmittal and Notices of
Guaranteed Delivery shall be recorded by you as to the date and time of receipt
and shall be preserved and retained by you at the Company's expense for six
years. New Notes are to be issued in exchange for Old Notes pursuant to the
Exchange Offer only (i)
<PAGE> 3
against deposit with you prior to the Expiration Date or, in the case of a
tender in accordance with the guaranteed delivery procedures outlined in
Instruction 5 of the Letter of Transmittal, within three New York Stock
Exchange trading days after the Expiration Date of the Exchange Offer, together
with executed Letters of Transmittal and any other documents required by the
Exchange Offer or (ii) in the event that the Holder is a participant in the
Depository Trust Company ("DTC") system, by the utilization of DTC's Automated
Tender Offer Program ("ATOP") and any evidence required by the Exchange Offer.
You are hereby directed to establish an account with respect to the
Old Notes at The Depositary Trust Company (the "Book Entry Transfer Facility")
within two days after the Effective Date of the Exchange Offer in accordance
with SEC Regulation 240.17 Ad. Any financial institution that is a participant
in the Book Entry Transfer Facility system may, until the Expiration Date, make
book-entry delivery of the Shares by causing the Book Entry Facility to
transfer such Notes into your account in accordance with the procedure for such
transfer established by the Book Entry Transfer Facility. In every case,
however, a Letter of Transmittal (or a manually executed facsimile thereof) or
an Agent's Message, properly completed and duly executed, with any required
signature guarantees and any other required documents must be transmitted to
and received by you prior to the Expiration Date or the guaranteed delivery
procedures described in the Offer must be complied with.
5. Upon the oral or written request of the Company (with written
confirmation of any such oral request thereafter), you will transmit by
telephone, and promptly thereafter confirm in writing, to (i) J. Curtis
Henderson, Vice President and General Counsel, Heartland Wireless
Communications, Inc., 200 Chisholm Place, Suite 200, Plano, Texas 75075,
telephone (972) 423-9494, and (ii) Victor B. Zanetti, Esq, Arter & Hadden, 1717
Main Street, Suite 4100, Dallas, TX 75201, telephone (214) 761-2100 or such
other persons as the Company may reasonably request, the aggregate number and
principal amount of Old Notes tendered to you and the number and principal
amount of Old Notes properly tendered that day. In addition, you will also
inform the aforementioned persons, upon oral request made from time to time
(with written confirmation of such request thereafter) prior to the Expiration
Date, of such information as they or any of them may reasonably request.
6. Upon the terms and subject to the conditions of the Exchange
Offer, delivery of New Notes to be issued in exchange for accepted Old Notes
will be made by you promptly after acceptance of the tendered Old Notes. You
will hold all items which are deposited for tender with you after 5:00 p.m.,
New York City time, on the Expiration Date pending further instructions from an
officer of the Company.
7. If any Holder shall report to you that his or her failure to
surrender Old Notes registered in his or her name is due to the loss or
destruction of a certificate or certificates, you shall request such Holder (i)
to furnish to you an affidavit of loss and, if required by the Company, a bond
of indemnity in an amount and evidenced by such certificate or certificates of
a surety, as may be satisfactory to you and the Company, and (ii) to execute
and deliver an agreement to indemnify the Company and you in such form as is
<PAGE> 4
acceptable to you and the Company. The obligees to be named in each such
indemnity bond shall include the Company and you. You shall report to the
Company the names of all Holders who claim that their Old Notes have been lost
or destroyed and the principal amount of such Old Notes.
8. As soon as practicable after the Expiration Date, you shall mail
or deliver to a Holder the New Notes that such Holder may be entitled to
receive and you shall arrange for cancellation of the Old Notes submitted to
you or returned by DTC in connection with ATOP. Such Old Notes shall be
forwarded to First Trust of New York, National Association, as trustee (the
"Trustee"), under the Indenture dated as of December 20, 1996, as supplemented
from time to time, governing the Notes, for cancellation and retirement as you
are instructed by the Company (or a representative designated by the Company)
in writing.
9. For your services as the Exchange Agent hereunder, the Company
shall pay you in accordance with the schedule of fees attached hereto as
EXHIBIT C. The Company also will reimburse you for your reasonable
out-of-pocket expenses (including, but not limited to, reasonable attorneys'
fees not previously paid to you as set forth in EXHIBIT C) in connection with
your services promptly after submission to the Company of itemized statements.
10. You are not authorized to pay or offer to pay any concessions,
commissions or solicitation fees to any broker, dealer, bank or other person or
to engage or utilize any person to solicit tenders.
11. As the Exchange Agent hereunder you:
(a) shall have no duties or obligations other than those
specifically set forth herein or in the Exhibits attached hereto or
as may be subsequently requested in writing of you by the Company and
agreed to by you in writing with respect to the Exchange Offer;
(b) will be regarded as making no representations and having no
responsibilities as to the validity, accuracy, sufficiency, value or
genuineness of any Old Notes deposited with you hereunder or any New
Notes, any Tender Documents or other documents prepared by the
Company in connection with the Exchange Offer or any signatures or
endorsements other than your own, and will not be required to make
and will not make any representations as to the validity,
sufficiency, value or genuineness of the Exchange Offer or any other
disclosure materials in connection therewith; PROVIDED, HOWEVER, that
in no way will your general duty to act in good faith be discharged
by the foregoing;
(c) shall not be obligated to take any legal action hereunder
which might in your judgment involve any expense or liability unless
you shall have been furnished with an indemnity reasonably
satisfactory to you;
(d) may rely on, and shall be fully protected and indemnified
as provided in Section 12 hereof in acting upon, the written or oral
<PAGE> 5
instructions with respect to any matter relating to your acting as
Exchange Agent specifically covered by this Agreement or
supplementing or qualifying any such action of any officer or agent
of such other person or persons as may be designated or whom you
reasonably believe have been designated by the Company;
(e) may consult with counsel satisfactory to you, including
counsel for the Company, and the advice of such counsel shall be full
and complete authorization and protection in respect of any action
taken, suffered or omitted by you hereunder in good faith and in
accordance with such advice of such counsel;
(f) shall not at any time advise any person as to the wisdom of
the Exchange Offer or as to the market value or decline or
appreciation in market value of any Old Notes or New Notes; and
(g) shall not be liable for any action which you may do or
refrain from doing in connection with this Agreement except for your
gross negligence, willful misconduct or bad faith.
12. The Company covenants and agrees to indemnify and hold harmless
Bankers Trust Company and its officers, directors, employees, agents and
affiliates (collectively, the "Indemnified Parties" and each an "Indemnified
Party") against any loss, liability or reasonable expense of any nature
(including reasonable attorneys' and other fees and expenses) incurred in
connection with the administration of the duties of the Indemnified Parties
hereunder in accordance with this Agreement; PROVIDED, HOWEVER, such
Indemnified Party shall use its best effort to notify the Company by letter, or
by cable, telex or telecopier confirmed by letter, of the written assertion of
a claim against such Indemnified Party, or of any action commenced against such
Indemnified Party, promptly after but in any event within 10 days of the date
such Indemnified Party shall have received any such written assertion of a
claim or shall have been served with a summons, or other legal process, giving
information as to the nature and basis of the claim; PROVIDED, HOWEVER, that
failure to so notify the Company shall not relieve the Company of any liability
which it may otherwise have hereunder except such liability that is a direct
result of such Indemnified Party's failure to so notify the Company. The
Company shall be entitled to participate at its own expense in the defense of
any such claim or legal action and if the Company so elects or if the
Indemnified Party in such notice to the Company so directs, the Company shall
assume the defense of any suit brought to enforce any such claim. In the event
the Company assumes such defense, the Company shall not be liable for any fees
and expenses thereafter incurred by such Indemnified Party, except for any
reasonable fees and expenses of such Indemnified Party incurred as a result of
the need to have separate representation because of a conflict of interest
between such Indemnified Party and the Company. You shall not enter into a
settlement or other compromise with respect to any indemnified loss, liability
or expense without the prior written consent of the Company, which shall not be
unreasonably withheld or delayed if not adverse to the Company's interests.
13. This Agreement and your appointment as the Exchange Agent shall
be construed and enforced in accordance with the laws of the State of New York
and shall inure to the benefit of, and the obligations created hereby shall be
binding upon, the successors and assigns of the parties hereto. No other
person shall acquire or have any rights under or by virtue of this Agreement.
14. The parties hereto hereby irrevocably submit to the venue and
jurisdiction of any New York State or federal court sitting in the Borough of
Manhattan in New York City in any action or proceeding arising out of or
relating to this Agreement, and the parties hereby irrevocably agree that all
claims in respect of such action or proceeding arising out of or relating to
this Agreement, shall be heard and determined in such a New York State or
federal court. The parties hereby consent to and grant to any such court
jurisdiction over the persons of such parties and over the subject matter of
any such dispute and agree that delivery or mailing of any process or other
papers in the manner provided herein, or in such other manner as may be
permitted by law, shall be valid and sufficient service thereof.
15. This Agreement may not be modified, amended or supplemented
without an express written agreement executed by the parties hereto. Any
inconsistency between this Agreement and the Tender Documents, as they may from
time to time be supplemented or amended, shall be resolved in favor of the
latter, except with
<PAGE> 6
respect to the duties, liabilities and indemnification of you as Exchange
Agent.
16. This Agreement may be executed in one or more counterparts, each
of which shall be deemed to be an original and all of which taken together
shall constitute one and the same agreement.
17. In case any provision of this Agreement shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.
18. Unless terminated earlier by the parties hereto, this Agreement
shall terminate 90 days following the Expiration Date. Notwithstanding the
foregoing, Sections 9 and 12 shall survive the termination of this Agreement.
Upon any termination of this Agreement, you shall promptly deliver to the
Trustee any certificates for Old Notes or New Notes, funds or property then
held by you as Exchange Agent under this Agreement.
19. All notices and communications hereunder shall be in writing and
shall be deemed to be duly given if delivered or mailed first class certified
or registered mail, postage prepaid, or telecopied as follows:
If to Company: Heartland Wireless Communications, Inc.
200 Chisholm Place
Suite 200
Plano, Texas 75075
Attn: J. Curtis Henderson
Telephone: (972) 423-9494
Telecopy: (972) 633-0074
and a copy to: Arter & Hadden
1717 Main Street, Suite 4100
Dallas, Texas 75201
Attn: Victor B. Zanetti, Esq.
(214) 761-2100
(214) 741-7139
If to you: Bankers Trust Company
Corporate Trust and Agency Group
Four Albany Street - 4th Floor
New York, New York 10006
Attn: Mr. Kevin Weeks or Ms. Jenna Kaufman
Telephone: (212) 250-6531
Telecopy: (212) 250-6961
and a copy to: Kramer, Levin, Naftalis & Frankel
919 Third Avenue
New York, New York 10022
Attn: Marilyn Feuer, Esq.
Telephone: (212) 715-9100
Telecopy: (212) 715-8000
or such other address or telecopy number as any of the above may have furnished
to the other parties in writing for such purpose.
20. This Letter Agreement and all of the obligations hereunder shall
be assumed by any and all successors and assigns of the Company.
<PAGE> 7
If the foregoing is in accordance with your understanding, would you
please indicate your agreement by signing and returning the enclosed copy of
this Agreement to the Company.
Very truly yours,
HEARTLAND WIRELESS COMMUNICATIONS, INC.
By:
--------------------------------------
Title:
Agreed to this ___ day of February, 1997
BANKERS TRUST COMPANY
By:
-------------------------------------
Title:
-------------------------------
<PAGE> 8
EXHIBIT A
PROSPECTUS
<PAGE> 9
EXHIBIT B
TENDER DOCUMENTS
<PAGE> 10
EXHIBIT C
SCHEDULE OF FEES
Covers review of the Letter of Transmittal, DTC ATOP Voluntary
Offering Instruction, the Exchange Agent Agreement and other related
documentation, if any, as required by the Exchange Offer; set-up of records and
accounts; distribution of materials; all operational and administrative charges
and time in connection with the review, receipt and processing of Letters of
Transmittal/VOI, Processing Delivery of Guarantees, Legal Items, Withdrawals,
record keeping, and answering securityholders' inquiries pertaining to the
Exchange Offer.
FLAT FEE: $5,000.00
=========
NOTE
These fees are also subject to change should circumstances warrant.
Reimbursement for all out-of-pocket expenses, disbursements (including
postage, telex, fax, photocopying and advertising costs), and fees of
counsel (including their disbursements and expenses) incurred in the
performance of our duties will be added to the billed fees. Once
appointed, if the deal should fail to close for reasons beyond our
control, we reserve the right to charge a fee not to exceed the amount of
our acceptance fee and we will require reimbursement in full for our legal
fees and any out-of-pocket expenses related to the deal.
Fees for any services not specifically covered in this or any other
applicable schedule will be based on the appraisal of services rendered
