As filed with the Securities and Exchange Commission on March 31, 1998
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORMS S-3 AND S-4
REGISTRATION STATEMENT
Under the Securities Act of 1933
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PAGEMART WIRELESS, INC.
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C> <C>
Delaware 4812 75-2575229
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Code Number) Identification No.)
3333 Lee Parkway Frederick G. Anderson
Suite 100 Vice President, General Counsel
Dallas, TX 75219 and Secretary
(214) 765-4000 PageMart Wireless, Inc.
3333 Lee Parkway
Suite 100
Dallas, TX 75219
(214) 765-4536
(Address, including zip code, and telephone (Name, address, including zip code,
number, including area code, of registrant's and telephone number, including
principal executive offices) area code, of agent for service)
-------------------------
Copies to:
Sarah Jones Beshar
Davis Polk & Wardwell
450 Lexington Avenue
New York, NY 10017
(212) 450-4000
-------------------------
</TABLE>
Approximate date of commencement of proposed sale to the public:
As soon as practicable after the Registration Statement becomes effective.
If the securities are being registered on this form are being offered in
connection with the formation of a holding company and there is compliance
with General Instruction G, check the following box. [ ]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
===========================================================================================================
Proposed Proposed
Maximum Maximum
Title of Each Class of Amount to be Offering Price Aggregate Amount of
Securities to be Registered(1) Registered Per Note(1) Offering Price(1) Registration Fee
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
11 1/4% Senior Subordinated
Discount Exchange Notes
due 2008 ........................ $432,000,000 58.939% $ 254,615,096 $ 75,112
===========================================================================================================
</TABLE>
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(1) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457(f) under the Securities Act of 1933.
--------------
The Registrant hereby amends this Registration Statement on
such date or dates as may be necessary to delay its effective date until the
Registrant shall file a further amendment which specifically states that this
Registration Statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until the Registration Statement
shall become effective on such date as the Commission, acting pursuant to said
Section 8(a), may determine.
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EXPLANATORY NOTE
This Registration Statement contains a prospectus (the
"Prospectus") relating to the offer (the "Exchange Offer") for all outstanding
11 1/4% Senior Subordinated Discount Notes Due 2008 (the "Old Notes") of
PageMart Wireless, Inc. (the "Company") in exchange for the Company's 11 1/4%
Senior Subordinated Discount Exchange Notes Due 2008 (the "New Notes"). In
addition, this Registration Statement contains a Prospectus (the
"Market-Making Prospectus") relating to certain market-making activities with
respect to the New Notes which may, from time to time, be carried out by
Morgan Stanley & Co. Incorporated ("Morgan Stanley"). The two prospectuses
will be identical in all material respects except for the front cover page and
the Plan of Distribution and except for the fact that the Market-Making
Prospectus will not contain the information in the Prospectus Summary relating
to the Exchange Offer, the information under the captions "The Exchange Offer"
and "Certain United States Federal Tax Considerations" will be deleted and
certain conforming changes will be made to delete references to the Exchange
Offer and federal tax considerations. The Prospectus for the Exchange Offer
follows immediately after this Explanatory Note. Following such Prospectus
are the form of alternative cover page and Plan of Distribution section for
the Market-Making Prospectus and alternative pages covering conforming
changes.
$432,000,000
Offer to Exchange
11 1/4% Senior Subordinated Discount Exchange Notes due 2008
for Any and All Outstanding
11 1/4% Senior Subordinated Discount Notes due 2008
of
PageMart Wireless, Inc.
The Exchange Offer will expire at 5:00 P.M.,
New York City time, on o , 1998, unless extended
PageMart Wireless, Inc. (the "Company") hereby offers, upon the
terms and subject to the conditions set forth in this Prospectus and the
accompanying Letter of Transmittal (the "Letter of Transmittal", which
together with this Prospectus constitutes the "Exchange Offer"), to exchange
$1,000 principal amount of 11 1/4% Senior Subordinated Discount Exchange Notes
due 2008 (the "New Notes") of the Company for each $1,000 principal amount of
the issued and outstanding 11 1/4% Senior Subordinated Discount Notes due 2008
(the "Old Notes" and, together with the New Notes, the "Notes") of the Company
from the holders ("Holders") thereof. As of the date of this Prospectus there
were outstanding $432,000,000 principal amount at maturity of Old Notes. The
terms of the New Notes are identical in all material respects to the Old
Notes, except that the offer of the New Notes will have been registered under
the Securities Act of 1933, as amended (the "Securities Act") and, therefore,
the New Notes will not be subject to certain transfer restrictions,
registration rights and 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).
The Old Notes were issued at 57.801% of their principal amount
and the purchase discount on the Notes accretes from January 28, 1998 until
February 1, 2003. Cash interest will begin to accrue on the Notes on February
1, 2003 and will be payable semi-annually on February 1 and August 1 of each
year, commencing August 1, 2003 at a rate of 11 1/4% per annum. See
"Description of Notes" and "Certain United States Federal Tax Considerations."
No interest will have accrued on the Old Notes on the date of exchange for the
New Notes and therefore no interest will be paid thereon.
Holders of the Notes will be required to include the original
issue discount as interest income in advance of the receipt of the cash
payments to which such income is attributable. See "Description of the Notes"
and "Certain United States Federal Tax Considerations--U.S. Holders."
The Notes are redeemable at the option of the Company in whole
or in part, at any time or from time to time, on or after February 1, 2003,
initially at 105.625% of their principal amount, plus accrued and unpaid
interest, declining ratably to 100% of their principal amount, plus accrued
and unpaid interest, on or after February 1, 2006.
The Notes are unsecured senior subordinated indebtedness of the
Company, subordinated in right of payment to all Senior Indebtedness (as
defined herein) of the Company, including the 15% Notes and indebtedness under
the Revolving Credit Agreement and Vendor Financing Arrangement (each as
defined herein). After giving effect to the Refinancing (as defined herein),
at December 31, 1997, the Company would have had $169.4 million of Senior
Indebtedness.
(Continued on next page)
-------------------------
FOR A DESCRIPTION OF CERTAIN FACTORS RELATING TO AN INVESTMENT IN THE NOTES,
SEE "RISK FACTORS" BEGINNING AT PAGE 9 HEREOF
-------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
o, 1998
(Cover Page Continued)
The New Notes are being offered hereunder in order to satisfy
certain obligations of the Company under the Registration Rights Agreement,
dated as of January 28, 1998, among the Company and Morgan Stanley & Co.
Incorporated (the "Registration Rights Agreement"). Based upon
interpretations contained in letters issued to third parties by the staff of
the Securities and Exchange Commission (the "Commission"), the Company
believes that the Notes issued pursuant to the Exchange Offer in exchange for
Old Notes may be offered for resale, resold and otherwise transferred by
Holders thereof (other than a broker-dealer, as set forth below, or any such
Holder which is an "affiliate" of the Company within the meaning of Rule 405
under the Securities Act), without compliance with the registration and
prospectus delivery provisions of the Securities Act, provided that such New
Notes are acquired in the ordinary course of such Holders' business and such
Holders have no arrangement or understanding with any person to participate in
the distribution of such New Notes. Eligible Holders wishing to accept the
Exchange Offer must represent to the Company in the Letter of Transmittal that
such conditions have been met and must represent, if such Holder is not a
broker-dealer, or is a broker-dealer but will not receive New Notes for its
own account in exchange for Old Notes, that neither such Holder nor the person
receiving such New Notes, if other than the Holder, is engaged in or intends
to participate in the distribution of such New Notes. Each broker-dealer that
receives New Notes for its own account pursuant to the Exchange Offer must
represent that the Old Notes tendered in exchange therefor were acquired as a
result of market-making activities or other trading activities and 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. The Company has agreed that, for a period of 180 days after the
Expiration Date (as defined herein), it will make this Prospectus available to
any broker-dealer for use in connection with any such resale. See "Plan of
Distribution."
The Company has not entered into any arrangements or
understandings with any person to distribute the New Notes to be received in
the Exchange Offer.
The Company will not receive any proceeds from the Exchange
Offer. The Company will pay all the expenses incident to the Exchange Offer.
Tenders of Old Notes pursuant to the Exchange Offer may be withdrawn at any
time prior to the Expiration Date. In the event the Company terminates the
Exchange Offer and does not accept for exchange any Old Notes, the Company
will promptly return all previously tendered Old Notes to the Holders thereof.
See "The Exchange Offer."
Prior to this Exchange Offer, there has been no public market
for the Notes. The Company does not intend to apply for listing of the New
Notes on any securities exchange or to seek approval for quotation through any
automated quotation system. There can be no assurance that an active public
market for the New Notes will develop.
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 THE REGISTRATION STATEMENT OR QUALIFICATION UNDER THE
SECURITIES LAWS OF ANY SUCH STATE.
THIS PROSPECTUS INCLUDES "FORWARD-LOOKING STATEMENTS" WITHIN THE MEANING OF
SECTION 27A OF THE SECURITIES ACT AND SECTION 21E OF THE SECURITIES EXCHANGE
ACT OF 1934, AS AMENDED. ALL STATEMENTS REGARDING THE COMPANY'S EXPECTED
FINANCIAL POSITION, BUSINESS AND FINANCING PLANS, INCLUDING THE COMPANY'S
PLANS AND STRATEGY FOR ITS ADVANCED MESSAGING BUSINESS AND RELATED FINANCING,
ARE FORWARD-LOOKING STATEMENTS. ALTHOUGH THE COMPANY BELIEVES THAT THE
EXPECTATIONS REFLECTED IN SUCH FORWARD-LOOKING STATEMENTS ARE REASONABLE, IT
CAN GIVE NO ASSURANCE THAT SUCH EXPECTATIONS WILL PROVE TO HAVE BEEN CORRECT.
IMPORTANT FACTORS THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM
SUCH EXPECTATIONS ("CAUTIONARY STATEMENTS") ARE DISCLOSED IN THIS PROSPECTUS,
INCLUDING, WITHOUT LIMITATION, IN CONJUNCTION WITH THE FORWARD-LOOKING
STATEMENTS INCLUDED IN THIS PROSPECTUS AND UNDER "RISK FACTORS." ALL SUBSEQUENT
WRITTEN AND ORAL FORWARD-LOOKING STATEMENTS ATTRIBUTABLE TO THE COMPANY, ITS
SUBSIDIARIES OR PERSONS ACTING ON THE COMPANY'S BEHALF ARE EXPRESSLY QUALIFIED
IN THEIR ENTIRETY BY THE CAUTIONARY STATEMENTS.
This prospectus incorporates documents by reference which are
not presented herein or delivered herewith. These documents are available
upon request from Kelly Prentiss, PageMart Wireless, Inc., 3333 Lee Parkway,
Suite 100, Dallas, TX 75219, (214) 765-3874. In order to ensure timely
delivery of the documents, any request should be made by o , 1998.
TABLE OF CONTENTS
Page
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Available Information........................................................3
Incorporation of Certain Documents...........................................3
Summary......................................................................5
Risk Factors.................................................................9
Use of Proceeds.............................................................18
Selected Historical Financial and Operating Data............................19
The Exchange Offer..........................................................21
Description of the Notes....................................................28
Plan of Distribution........................................................54
ERISA Considerations........................................................55
Certain United States Federal Tax Considerations............................56
Legal Matters...............................................................61
Experts.....................................................................61
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange
Commission (the "Commission") a Registration Statement on Form S-4 (together
with any amendments thereto, the "Registration Statement") under the
Securities Act of 1933, as amended (the "Securities Act"), with respect to the
securities offered hereby. This Prospectus, which constitutes a part of the
Registration Statement, does not contain all the information contained in the
Registration Statement and the exhibits and the schedules thereto, certain
items of which are omitted in accordance with the rules and regulations of the
Commission. Statements made in this Prospectus as to the contents of any
contract, agreement or other document referred to are not necessarily
complete. With respect to each such contract, agreement or other document
filed as an exhibit to the Registration Statement, reference is made to the
exhibit for a more complete description of the matter involved, and each such
statement shall be deemed qualified in its entirety by such reference. For
further information with respect to the Company and the securities offered
hereby, reference is made to the Registration Statement and the exhibits and
the financial statements, notes and the schedules filed as a part thereof,
which may be inspected at the public reference facilities of the Commission,
at the addresses set forth below.
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith, files reports and other information with the Commission.
The Indenture under which the Notes were issued and under which the Notes will
be issued (the "Indenture") requires the Company to provide to holders of the
Notes annual reports that include audited annual consolidated financial
statements and an opinion thereon expressed by independent public accountants
and quarterly reports containing unaudited financial information for each of
the first three quarters of each fiscal year. The Registration Statement, as
well as such reports and other information filed with the Commission can be
examined without charge at, or copies obtained upon payment of prescribed fees
from, the Commission's Public Reference Section at Room 1024, Judiciary Plaza,
450 Fifth Street, N.W., Washington, D.C. 20549 and at the Commission's
regional offices at 500 West Madison Street, Suite 1400, Chicago, Illinois
60661 and 7 World Trade Center, 13th Floor, New York, NY 10048. Such material
may also be accessed electronically by means of the Commission's home page on
the Internet at http://www.sec.gov.
INCORPORATION OF CERTAIN DOCUMENTS
The following documents or portions of document filed by the
Company (File No. 0-28196) with the Commission are incorporated herein by
reference: Annual Report on Form 10-K for the fiscal year ended December 31,
1997, including any amendments or reports filed for the purpose of updating
such description.
All reports and other documents filed by the Company pursuant
to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act since December 31,
1997, prior to the termination of the offering of the securities offered
hereby, shall be deemed to be incorporated by reference herein and to be a
part hereof from the date of filing of such reports and documents. Any
statement contained in a document incorporated by reference herein shall be
deemed modified or superseded for purposes of this Prospectus to the extent
that a statement contained or incorporated by reference herein modifies or
supersedes such statement. Any statement so modified or superseded shall not
be deemed, except as so modified or superseded, to constitute a part of this
Prospectus.
The Company will provide without charge to each person to whom
this Prospectus is delivered a copy of any or all of such documents which are
incorporated herein by reference (other than exhibits to such documents unless
such exhibits are specifically incorporated by reference into the documents
that this Prospectus incorporates). Written or oral requests for copies
should be directed to Kelly Prentiss, PageMart Wireless, Inc., at the
Company's executive offices located at 3333 Lee Parkway, Suite 100, Dallas, TX
75219, (214) 765-3874.
SUMMARY
The following summary is qualified in its entirety by the more
detailed information and financial statements, including the notes thereto,
included and incorporated by reference in this Prospectus. Unless the context
otherwise requires, references herein to the "Company" or "PageMart Wireless"
refer to PageMart Wireless, Inc. and its subsidiaries.
THE COMPANY
The Company is one of the fastest growing providers of wireless
messaging services in the United States. The Company has grown to become the
sixth largest paging carrier in the United States, based on 2,530,737
subscribers at December 31, 1997. The Company's number of subscribers has
increased at annual growth rates of 60%, 50% and 36% in 1995, 1996 and 1997,
respectively. The Company has made no acquisitions, and all subscriber growth
has been internally generated.
The Company offers local, multi-city, statewide, regional and
nationwide paging and other one-way wireless services in all 50 states,
covering 90% of the population of the United States. The Company also
provides paging services to the countries that are parties to the North
American Free Trade Agreement ("NAFTA") and beyond, including Canada, Puerto
Rico, the U.S. Virgin Islands and the Bahamas. In October 1997, the Company
expanded services into Mexico through its network affiliation with Buscatel, a
subsidiary of Telefonos de Mexico ("TelMex"), Mexico's largest
telecommunications company, and into Panama and El Salvador through network
affiliation agreements with leading telecommunications companies in those
countries. In January 1998, the company expanded services into Guatemala and
Costa Rica, and expects to launch services in Nicaragua and Honduras in the
first half of 1998.
THE EXCHANGE OFFER
Securities Offered... Up to $432,000,000 principal amount at maturity of
New Notes. The terms of the New Notes and the Old
Notes are identical in all material respects,
except the offer of the New Notes will have been
registered under the Securities Act and, therefore,
the New Notes will not be subject to certain
transfer restrictions, registration rights and
related special interest provisions applicable to
the Old Notes.
The Exchange Offer... The Company is offering, upon the terms and subject
to the conditions of the Exchange Offer, to
exchange $1,000 principal amount of New Notes for
each $1,000 principal amount of Old Notes. See
"The Exchange Offer" for a description of the
procedures for tendering the Old Notes. The
issuance of the New Notes is intended to satisfy
obligations of the Company contained in the
Registration Rights Agreement (the "Registration
Rights Agreement") dated as of January 28, 1998,
between the Company and Morgan Stanley & Co.
Incorporated, as the initial purchaser with respect
to the initial sale of the Old Notes (the "Initial
Purchaser").
Tenders; Expiration
Date; Withdrawal... The Exchange Offer will expire at 5:00 p.m., New York
City time, on o, 1998, or such later date and time
to which it is extended. The tender of Old Notes
pursuant to the Exchange Offer may be withdrawn at
any time prior to the Expiration Date. Any Old
Notes not accepted for exchange for any reason will
be returned without expense to the tendering Holder
thereof as promptly as practicable after the
expiration or termination of the Exchange Offer.
Federal Income Tax
Considerations..... The exchange pursuant to the Exchange Offer will not
result in any income, gain or loss to the Holders or
the Company for federal income tax purposes. See
"Certain United States Federal Tax Considerations."
Use of Proceeds...... There will be no proceeds to the Company from the
exchange pursuant to the Exchange Offer.
Exchange Agent....... The United States Trust Company of New York is serving
as Exchange Agent in connection with the Exchange
Offer.
CONSEQUENCES OF EXCHANGING OLD NOTES
PURSUANT TO THE EXCHANGE OFFER
Based upon interpretations contained in letters issued to third
parties by the staff of the Commission, the Company believes that any Holder
of Old Notes (other than a broker-dealer, as set forth below, or any Holder
who is an "affiliate" of the Company within the meaning of Rule 405 under the
Securities Act) who exchanges its Old Notes for New Notes pursuant to the
Exchange Offer may offer such New Notes for resale, resell such New Notes, or
otherwise transfer such New Notes without compliance with the registration and
prospectus delivery provisions of the Securities Act, provided such New Notes
are acquired in the ordinary course of the Holder's business and such Holder
has no arrangement or understanding with any person to participate in a
distribution of such New Notes. Eligible Holders wishing to accept the
Exchange Offer must represent to the Company in the Letter of Transmittal that
such conditions have been met and must represent, if such Holder is not a
broker-dealer, or is a broker-dealer but will not receive New Notes for its own
account in exchange for Old Notes, that neither such Holder nor the person
receiving such New Notes, if other than the Holder, is engaged in or intends
to participate in the distribution of such New Notes. Each broker-dealer that
receives New Notes for its own account pursuant to the Exchange Offer must
represent that the Old Notes tendered in exchange therefor were acquired as a
result of market-making activities or other trading activities and must
acknowledge that it will deliver a prospectus in connection with any resale of
such New Notes; however, by so acknowledging and by delivering a prospectus,
the broker-dealer will not be deemed to admit that it is an "underwriter"
within the meaning of the Securities Act. See "Plan of Distribution." To
comply with the securities laws of certain jurisdictions, it may be necessary
to qualify for sale or register the New Notes prior to offering or selling
such New Notes. The Company does not currently intend to take any action to
register or qualify the New Notes for resale in any such jurisdictions. If a
Holder of Old Notes does not exchange such Old Notes for New Notes pursuant to
the Exchange Offer, such Old Notes will continue to be subject to the
restrictions on transfer contained in the legend thereon. 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. Any Holder who tenders
in the Exchange Offer with the intention to participate, or for the purpose of
participating, in a distribution of New Notes will not be able to rely on the
position of the staff of the Commission enunciated in Exxon Capital Holdings
Corporation (available May 13, 1988) or similar no-action letters and, in the
absence of an exemption therefrom, must comply with the registration and
prospectus delivery requirements of the Securities Act in connection with a
secondary resale transaction. Failure to comply with such requirements in
such instance may result in such Holder incurring liability under the
Securities Act for which the Holder is not indemnified by the Company. See
"The Exchange Offer--Consequences of Failure to Exchange."
The Company has not entered into any arrangements or
understandings with any person to distribute the New Notes to be received in
the Exchange Offer.
SUMMARY DESCRIPTION OF THE NEW NOTES
The terms of the New Notes and the Old Notes are identical in
all material respects, except that the offer of the New Notes will have been
registered under the Securities Act and, therefore, the New Notes will not be
subject to certain transfer restrictions, registration rights and will not
contain certain provisions providing for an increase in the interest rate
under certain circumstances relating to the Registration Rights Agreement.
Notes Offered........ Up to $432,000,000 aggregate principal amount at
maturity of 11 1/4% Senior Subordinated Discount
Exchange Notes due 2008.
Maturity............. February 1, 2008
Yield and Interest... The Notes are being sold at a substantial discount
from their principal amount at maturity. For a
discussion of the federal income tax treatment of
the Notes and the original issue discount rules, see
"Certain United States Federal Tax Considerations."
From and after February 1, 2003, the Notes will bear
interest, which will be payable in cash, at a rate
of 11 1/4% per annum on each February 1 and August
1, commencing August 1, 2003.
Optional Redemption.. The Notes may be redeemed at any time on or after
February 1, 2003, at the option of the Company, in
whole or in part, at 105.625% of their principal
amount at maturity, plus accrued and unpaid
interest, declining to 100% of their principal
amount at maturity plus accrued interest on and
after February 1, 2006.
Ranking.............. The Notes will be senior subordinated indebtedness of
the Company, ranking subordinated in right of
payment to all Senior Indebtedness, including the
15% Notes and indebtedness under the Revolving
Credit Agreement and the Vendor Financing
Arrangement (each as defined herein). After giving
pro forma effect to the Refinancing, at December 31,
1997, the Company would have had $419.1 million of
indebtedness, including $169.4 million of Senior
Indebtedness. The Notes will be effectively
subordinated to existing and future liabilities of
the Company's subsidiaries, including trade
payables. See "Risk Factors--High Leverage;
Deficiency of Earnings to Cover Fixed Charges;
Restrictive Covenants" and "--Subordination of the
Notes."
Covenants............ The indenture pursuant to which the Notes will be
issued (the "Indenture") contains certain covenants
that, among other things, limit the ability of the
Company and its subsidiaries to incur indebtedness,
pay dividends, prepay subordinated indebtedness,
repurchase capital stock, engage in transactions
with stockholders and affiliates, create liens, sell
assets and engage in mergers and consolidations.
See "Description of the Notes--Covenants."
Change of Control.... Upon a Change of Control (as defined herein), the
Company will be required to make an offer to
purchase the Notes at a purchase price equal to 101%
of their Accreted Value on the date of purchase plus
accrued interest, if any. See "Description of the
Notes--Repurchase of Notes upon a Change of
Control." There can be no assurance that the Company
will have sufficient funds available at the time of
a Change of Control to make any required debt
repayment (including repurchases of the Notes).
RISK FACTORS
See "Risk Factors" beginning after the Summary for a discussion
of certain factors relating to an investment in the Notes.
RISK FACTORS
Prior to making an investment decision, prospective investors
should carefully consider, along with the other matters referred to in this
Prospectus, the specific factors set forth below. The Company cautions readers
that any forward-looking statements contained in this Prospectus or made by
management of the Company involve risks and uncertainties, and are subject to
change based on various important factors. The following factors, among
others, in some cases have affected and in the future could affect the
Company's financial performance and actual results, and could cause actual
results to differ materially from those expressed in any such forward-looking
statements--economic conditions generally in the United States and consumer
confidence; the ability of the Company to manage its high debt levels; the
impact of technological change in the telecommunications industry; the future
cost of network infrastructure and subscriber equipment; the impact of
competition and pricing of paging and wireless services; changes in regulation
by the Federal Communications Commission ("FCC") and various state regulatory
agencies; and the ability of the Company to obtain financing to construct,
operate and market the transmission network for advanced messaging services.
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 legends
thereon. 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 intend to register the Old Notes under
the Securities Act. The Company believes that, based upon interpretations
contained in letters issued to third parties by the staff of the Commission,
New Notes issued pursuant to the Exchange Offer in exchange for Old Notes may
be offered for resale, resold or otherwise transferred by each Holder thereof
(other than a broker-dealer, as set forth below, or any such Holder which is
an "affiliate" of the Company within the meaning of Rule 405 under the
Securities Act) without compliance with the registration and prospectus
delivery provisions of the Securities Act provided that such New Notes are
acquired in the ordinary course of such Holder's business and such Holder has
no arrangement or understanding with any person to participate in the
distribution of such New Notes. Eligible Holders wishing to accept the
Exchange Offer must represent to the Company in the Letter of Transmittal that
such conditions have been met and must represent, if such Holder is not a
broker-dealer, or is a broker-dealer but will not receive New Notes for its
own account in exchange for Old Notes, that neither such Holder nor the person
receiving such New Notes, if other than the Holder, is engaged in or intends
to participate in the distribution of such New Notes. If any Holder has any
arrangement or understanding with respect to the distribution of the New Notes
to be acquired pursuant to the Exchange Offer, such Holder (i) will not be
able to rely on the applicable interpretations of the staff of the Commission
and (ii) in the absence of an exemption therefrom, must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any resale transaction. Each broker-dealer that receives New
Notes for its own account pursuant to the Exchange Offer must represent that
the Old Notes tendered in exchange therefor were acquired as a result of
market-making activities or other trading activities and 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 the 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. The Company
has agreed that, starting on the Expiration Date (as defined herein) and
ending on the close of business on the 180th day following the Expiration
Date, it will make this Prospectus available to any broker-dealer for use in
connection with any such resale. See "Plan of Distribution." However, to
comply with the securities laws of certain jurisdictions, if applicable, the
New Notes may not be offered or sold unless they have been registered or
qualified for sale in such jurisdictions or an exemption from registration or
qualification is available and is complied with. The Company currently does
not intend to register or qualify the sale of the New Notes in any such
jurisdictions. In addition, the tender of Old Notes pursuant to the Exchange
Offer will reduce the principal amount of the Old Notes outstanding, which may
have an adverse effect upon, and increase the volatility of, the market price
of the Old Notes due to reduction in liquidity.
The Company has not entered into any arrangements or
understandings with any person to distribute the New Notes to be received in
the Exchange Offer.
Exchange Offer Procedures
To participate in the Exchange Offer, and avoid the
restrictions on Old Notes, each Holder of Old Notes (which term, for purposes
of the Exchange Offer, includes any participant in the Book-Entry Transfer
Facility (as defined herein) system whose name appears on a security position
listing as a holder of such Old Notes) who wishes to tender Old Notes for
exchange pursuant to the Exchange Offer must transmit to The United States
Trust Company of New York (the "Exchange Agent") on or prior to the Expiration
Date either (i) a properly completed Letter of Transmittal or facsimile
thereof, including all other documents required by such Letter of Transmittal,
or (ii) an Agent's Message (as defined herein) transmitted by means of the
Book-Entry Transfer Facility's ATOP system (as defined herein) and received by
the Exchange Agent and forming part of a Book-Entry Confirmation (as defined
herein) in which such Holder acknowledges and agrees to be bound by the terms
of the Letter of Transmittal. In addition, in order to deliver Old Notes (i)
certificates for such Old Notes must be received by the Exchange Agent along
with the Letter of Transmittal, (ii) a timely Book-Entry Confirmation of
book-entry transfer of such Old Notes into the Exchange Agent's account at 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. See "The Exchange Offer."
History of Operating Losses
The Company has sustained losses from operating activities in
each year of operations since its organization in 1989, including an operating
loss of $2.6 million for the year ended December 31, 1997 and an aggregate of
$38.5 million of operating losses for the three-year period ended December 31,
1997. The Company expects to continue to incur operating losses for the next
several years. In addition, management anticipates that the Company's average
monthly revenue per unit ("ARPU") will decline in the foreseeable future
principally due to a higher mix of subscribers added through private brand
strategic alliance programs, which yield lower ARPU. In recent periods the
Company's ARPU has been declining and its selling expenses per subscriber have
been increasing. Although the Company had positive earnings before interest,
taxes, depreciation and amortization ("EBITDA") of $8.6 million for the year
ended December 31, 1996 and $27.3 million for the year ended December 31,
1997, prior to 1996 the Company had negative EBITDA in each year of its
operations. EBITDA is not derived pursuant to generally accepted accounting
principles ("GAAP") and therefore should not be construed as an alternative to
operating income, as an alternative to cash flows from operating activities
(as determined in accordance with GAAP) or as a measure of liquidity. The
Company's operating losses and negative EBITDA resulted principally from
expenditures associated with the establishment of the Company's one-way
operations infrastructure and the growth of its subscriber base. Although the
Company expects that its one-way operations will continue to generate positive
EBITDA, as the Company begins development and implementation of advanced
messaging services, the Company will incur substantial additional operating
losses and negative EBITDA during the start-up phase for advanced messaging
services. Any positive cash flow from the Company's one-way operations will be
used primarily to fund the Company's advanced messaging operations for the
next several years. There can be no assurance that the Company's consolidated
operations will become profitable or continue to have positive EBITDA or that
its one-way operations will continue to generate positive EBITDA. If the
Company cannot achieve operating profitability or continue to generate
positive EBITDA, it may not be able to make required debt service payments,
including payment on the Notes. See "Selected Historical Financial and
Operating Data."
High Leverage; Deficiency of Earnings to Cover Fixed Charges; Restrictive
Covenants
The Company is highly leveraged, primarily as a result of debt
financing incurred to fund the construction of the Company's nationwide
operations infrastructure, the growth of its subscriber base and to finance
the acquisition of the Narrowband Personal Communications Services ("NPCS")
licenses it acquired in the FCC NPCS auctions. At December 31, 1997, the
Company's long-term debt was $289.3 million and its stockholders' deficit was
$32.4 million. In addition, the accretion of original issue discount on the
Company's outstanding indebtedness will cause a substantial increase in
indebtedness. The Company's deficiency of earnings before fixed charges to
cover fixed charges for each of the three years ended December 31, 1995, 1996
and 1997, was $53.1 million, $48.6 million and $43.9 million, respectively.
See "Selected Historical Financial and Operating Data." On a pro forma basis
after giving effect to the Refinancing, the Company's deficiency of earnings
before fixed charges to cover fixed charges would have been $64.7 million and
$58.3 million for the year ended December 31, 1996 and 1997, respectively.
The Indenture and the 15% Indenture (as defined herein) contain
certain restrictive covenants. Such restrictions affect, and in many respects
significantly limit or prohibit, among other things, the ability of the
Company to incur additional indebtedness, make prepayments of certain
indebtedness, make investments, engage in transactions with affiliates, issue
capital stock of restricted subsidiaries, create liens, sell assets and engage
in mergers and consolidations. The limitations in the Indenture and the 15%
Indenture are subject to a number of important qualifications and exceptions.
In particular, while the Indenture and 15% Indenture will generally restrict
the Company's ability to incur indebtedness by requiring compliance with
specified leverage ratios, they will permit the Company to incur an unlimited
amount of additional indebtedness to finance the acquisition of equipment,
inventory and network assets. However, the 15% Indenture will prohibit the
Company from securing more than $175 million of indebtedness (other than
intercompany indebtedness). See "Description of the Notes--Covenants."
Subordination of the Notes
The Notes will be unsecured, general obligations of the
Company, subordinated in right of payment to all existing and future Senior
Indebtedness of the Company, including indebtedness under the 15% Notes, the
Revolving Credit Agreement and the Vendor Financing Arrangement. In May 1995,
the Company entered into a four year Revolving Credit Agreement with BT
Commercial Corporation, as Agent, and Bankers Trust Company, as Issuing Bank,
which provides for a $50 million revolving line of credit (the "Revolving
Credit Agreement"). In March 1997, the Company entered into a vendor
financing arrangement with an infrastructure vendor (the "Vendor Financing
Arrangement"), providing for the financing of one-way or advanced messaging
services infrastructure equipment over a period of 60 months up to a maximum
aggregate amount of $30 million. At December 31, 1997, on a pro forma basis
after giving effect to the Refinancing, the Company would have had
approximately $169.4 million of Senior Indebtedness (consisting of borrowings
under the Vendor Financing Arrangement and the 15% Notes) and the Company
would have had an aggregate of $54.7 million of additional availability under
the Revolving Credit Agreement and the Vendor Financing Arrangement. In the
event of the bankruptcy, liquidation or reorganization of the Company, the
assets of the Company would be available to pay obligations on the Notes only
after all Senior Indebtedness of the Company has been repaid in full. As a
result, sufficient assets may not exist to pay amounts due on the Notes. In
addition, the subordination provisions of the Indenture provide that no cash
payments may be made with respect to the Notes during the continuance of a
payment default under any Senior Indebtedness of the Company. Furthermore, if
certain nonpayment defaults exist with respect to certain Senior Indebtedness,
the holders of such Senior Indebtedness would be able to prevent payments on
the Notes for certain periods of time. See "Description of the Notes--Ranking."
Neither the Indenture nor the 15% Indenture limits the amount
of indebtedness (which may be Senior Indebtedness) of the Company that may be
incurred to finance the cost to acquire equipment, inventory, or network
assets. However, the 15% Indenture will prohibit the Company from securing
more than $175 million of indebtedness (other than intercompany indebtedness).
Risks of Implementation and Financing of Advanced Messaging Services
The development and implementation of advanced messaging
services will require the application of new technology and the addition of
equipment to the network used in the Company's existing one-way messaging
business. Advanced data messaging services marketed by other companies have
shown a degree of market acceptance, although the broad based appeal of
advanced messaging services has yet to be proven. The success of advanced
messaging services could be affected by matters beyond the Company's control
such as market acceptance, the future cost of subscriber units, technological
changes in wireless messaging services, marketing and pricing strategies of
competitors, regulatory developments and general economic conditions.
The ReFLEX25[Trademark] technology that will be used in the
Company's advanced messaging network has operated successfully in the test
network environment and the Company is prepared to implement this technology
throughout its existing network. However, the Company must complete the
development of its AXIS[Trademark] terminal (as defined below) and the
integration of the terminal with Glenayre equipment before commercial
operations may begin. In addition, the Company, Motorola, Inc. ("Motorola")
and Glenayre Technologies, Inc. ("Glenayre") are still developing and
conducting testing of ReFLEX25[Trademark] technology, infrastructure equipment
and subscriber units to improve operational efficiency for a nationwide
product offering. Also, constructing the advanced messaging network requires
amending current site leases or entering into new site leases for the
receivers and other equipment. There can be no assurance that all of the site
leases will be completed within the time necessary to maintain the
construction schedule. The Company does not believe that any of these issues
will affect the ultimate ability of the network to operate in a commercially
viable manner, although there can be no assurance of this. If any of these
issues are not resolved on a timely basis, the Company's scheduled commercial
introduction of advanced messaging services nationwide could be delayed, which
could adversely affect the Company's results of operations.
As the Company begins development and implementation of
advanced messaging services, the Company expects to incur significant
additional operating losses during the start-up phase for such services, and
it will be necessary for the Company to make substantial investments. The
Company anticipates requiring additional sources of capital to fund the
construction of an advanced messaging network, including expenditures relating
to the buildout requirements of the FCC. The Company anticipates investing
approximately $100 million in 1998 (which will be funded primarily with the
proceeds of the offering of the Notes) to construct and deploy an NPCS
network, which the Company expects to enable it to market advanced messaging
services nationwide by the end of 1998. Thereafter, the Company anticipates
that its advanced messaging operations may require up to $100 million of
additional investment to fund operations and marketing and to add capacity to
the network as the Company's advanced messaging customer base grows. In
addition, the Company may require up to $50 million of secured vendor
financing to fund the purchase of subscriber units. Although the Company
currently does not have a source to fund the purchase of the subscriber units,
the Company believes that it will not require such financing until 1999. The
Company's ability to incur indebtedness is limited by the covenants contained
in the Indenture, the 15% Indenture, the Vendor Financing Arrangement and the
Revolving Credit Agreement and as a result, any additional financing may need
to be in the form of new equity capital. There can be no assurance that
sufficient financing will be available to the Company and if available, on
attractive terms. The Company does not anticipate any significant revenues
from advanced messaging services during 1998. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations--Liquidity and
Capital Resources" in the Company's Annual Report on Form 10-K for the year
ended December 31, 1997.
No Assurance That Growth Strategy Will be Achieved
The successful implementation of the Company's strategy to
increase cash flow through the expansion of its subscriber base and the
development and implementation of advanced messaging services is necessary for
the Company to meet its capital expenditures, working capital and debt service
requirements. The Company expects to continue to incur operating losses for
the next several years. The Company's strategy assumes that the wireless
messaging industry will continue to grow rapidly, and that the Company will
continue to grow substantially faster than the industry. The Company does not
expect to continue to grow at its historical rate, and there can be no
assurance that the Company will be able to achieve the growth contemplated by
its business strategy. If such growth is not achieved, the Company may not be
able to make required payments on its outstanding indebtedness (including the
Notes) and may have to refinance its outstanding indebtedness in order to
repay such obligations. No assurance can be given that the Company will be
able to refinance its outstanding indebtedness (including the Notes).
Competitive Market
The Company faces significant competition in all of its
markets. Many of the Company's competitors, which include regional and
national paging companies, providers of broadband personal communications
services ( "PCS") and certain regional telephone companies, possess
significantly greater financial, technical and other resources than the
Company. If any of such companies were to devote additional resources to the
paging or other wireless messaging businesses or focus its strategy on the
Company's marketing and product niches, the Company's results of operations
could be adversely affected. Some of these larger competitors may also be able
to use their substantial financial resources to increase the already
substantial pricing competition in the markets in which the Company operates,
which may have an adverse effect on the Company's results of operations. For
competitive and marketing reasons, the Company generally sells each new
subscriber unit for less than its acquisition cost. In addition, a number of
telecommunications companies (including PCS providers) have constructed or are
in the process of constructing nationwide networks that offer services similar
to the Company's services, including the provision of advanced messaging
services and two-way messaging.
Industry reports indicate, and the Company believes, that the
retail distribution of pagers has become increasingly common in the paging
industry. Retail distribution is a key element of the Company's business
strategy. Retail distributors have typically selected only one paging carrier
for their stores, and the Company faces competition in its efforts to place
units through retail distributors. If the Company is unable to maintain its
current sales relationships with retail distributors or obtain new sales
relationships with other retail distributors, it may not be able to achieve
the growth contemplated by its business strategy. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations--General" in the
Company's Annual Report on Form 10-K for the year ended December 31, 1997.
Adverse Effect of Subscriber Disconnections
The results of operations of paging service providers such as
the Company are significantly affected by subscriber disconnections. In order
to realize net growth in units in service, disconnected users must be
replaced, and additional users must be added. However, the sales and marketing
costs associated with attracting new subscribers are substantial relative to
the costs of providing service to existing customers, and expenses associated
with each new unit placement exceed the sales price and service initiation fee
received by the Company. Because the paging business is characterized by high
fixed costs, disconnections directly and adversely affect operating income. In
addition, because the Company plans to sell an increasing number of its
subscriber units through retail distribution channels, the Company's overall
rate of disconnections may increase since the Company expects that subscribers
who purchase pagers through retail outlets will tend to cancel their
subscriptions at a higher rate than subscribers obtained through other
distribution channels. The Company's average monthly disconnection rates for
the years ended December 31, 1995, 1996 and 1997 were 2.5%, 2.4% and 2.5% per
month, respectively. An increase in its rate of disconnections would adversely
affect the Company's results of operations.
Dependence on Key Personnel
The success of the Company will be dependent, to a significant
extent, upon the continued services of the key executive officers of the
Company. The Company does not have employment agreements with any of its
current executive officers, although all current executive officers have
entered into non-competition agreements with the Company. The loss or
unavailability of one or more of its executive officers or the inability to
attract or retain key employees in the future could have an adverse effect
upon the Company's operations.
Possible Inability To Manage Growth
The Company has enjoyed a high rate of growth. The Company's
future performance will depend, in part, upon its ability to manage its growth
effectively. The Company will be required to improve and expand its operating,
financial, accounting, information and customer service systems, and to
expand, train and manage its employee base. These factors and others could
adversely affect the Company's existing customer base as well as future
expansion. The Company's inability to expand in accordance with its plans or
to manage its growth could have a material adverse effect on its business,
financial condition and results of operations.
Technological Changes
The telecommunications industry is characterized by rapid
technological change. Future technology advances in the industry may result in
the availability of new services or products that could compete directly with
the paging and other wireless messaging services that are currently provided
or are being developed by the Company. Changes in technology could also lower
the cost of competitive products and services to a level where the Company's
products and services become less competitive or the Company is required to
reduce the prices of its services. The Company expects to respond to
technological changes by continuing to make investments in new and improved
systems and related service capability.
Several wireless two-way communication technologies, including
cellular telephone service, PCS, specialized mobile radio, low-speed data
networks and mobile satellite services, are currently in use or under
development. Although these technologies are currently more expensive than
paging services or are not yet broadly available, future implementation and
technological improvements could result in increased capacity and efficiency
for wireless two-way communication and, accordingly, could result in increased
competition for the Company. Some of these service providers are bundling
paging services with two-way voice service in a combined handset. Large
manufacturers dominate technological development in the wireless
communications industry, and changes in their methods of distributing one-way
wireless messaging products could reduce the Company's access to technology
and may have an adverse effect on the Company's operations. There can be no
assurance that the Company will not be adversely affected by such
technological change. See "--Dependence on Key Suppliers."
Dependence on Key Suppliers
The Company does not manufacture any of the subscriber units or
infrastructure equipment used in its operations. The Company buys subscriber
units primarily from Motorola as well as some other manufacturers and
therefore is dependent on such manufacturers to obtain sufficient inventory
for new subscriber and replacement needs. The Company purchases terminals,
transmitters, receivers and other infrastructure equipment primarily from
Motorola and Glenayre and thus is dependent on such manufacturers for
sufficient infrastructure equipment to meet its expansion and replacement
requirements. There can be no assurance that the Company will not experience
significant delays in obtaining subscriber units and infrastructure equipment
in the future. Although the Company believes that sufficient alternative
sources of subscriber units and infrastructure equipment exist for its one-way
network, the Company believes that Motorola and Glenayre are the only two
qualified sources of infrastructure equipment for its NPCS network. See
"Business--Advanced Messaging Operations--NPCS Network Buildout--Equipment" in
the Company's Annual Report on Form 10-K for the year ended December 31, 1997.
There can be no assurance that the Company would not be adversely affected if
it were unable to obtain these items from current supply sources or on terms
comparable to existing terms.
Potential for Change in Regulatory Environment
The Company and the wireless communications industry are
subject to regulation by the FCC and various state regulatory agencies. As a
common carrier provider of "commercial mobile radio services" ( "CMRS"), the
Company must provide interconnection upon reasonable request, must not engage
in any unreasonably discriminatory practices and is subject to complaints
regarding any unlawful practices. The Company is also subject to provisions
that authorize the FCC to provide remedial relief to an aggrieved party upon
finding of a violation of the Communications Act of 1934, as amended (the
"Communications Act") and related consumer protection provisions.
From time to time, legislation and regulations which could
potentially adversely affect the Company are proposed by federal and state
legislators and regulators. Legislation is currently in effect in Texas
requiring paging companies to contribute a portion of their taxable
revenues to a Telecommunications Infrastructure Fund created by the state
legislature. Management does not believe that the Texas law will have a
material adverse affect on the Company's operations. The FCC recently
released regulations implementing the universal service fund provisions of
the Communications Act. Beginning in February 1998, paging companies are
required to make monthly contributions to one fund for support mechanisms
for schools, libraries, and rural health care providers (the
"Schools/Libraries Fund") on the basis of interstate, international and
intrastate telecommunications revenues from end-users, and to make
contributions to another fund for high-cost, rural, and insular and low-
income support mechanisms (the "High-Cost/Low-Income Fund") based on
interstate and international end user telecommunications revenues. Based
on reported end-user telecommunications revenues for the first six months
of 1997 and projected demand for universal service support, the FCC has
determined that for the first quarter of 1998 telecommunications carriers
must contribute 0.72% of one-half of their interstate, international and
intrastate revenues reported for the first half of 1997 to the
School/Libraries Fund and 3.19% of one-half of their interstate and
international revenues reported for the first half of 1997 to the High-
Cost/Low-Income Fund. These payment provisions, including the percentages,
may be modified with respect to future contributions to the universal
service fund. Petitions for review of the FCC's universal service order
have been filed with federal appellate courts. In addition, an FCC order
requiring long-distance carriers to compensate pay telephone providers for
800 number, similar toll-free-to-the-caller number and access code
(collectively, "800 Number") calls was recently released. The long
distance carriers are expected either to pass this cost through to paging
companies that provide 800 Number service to their subscribers, thereby
increasing the Company's costs of providing 800 Numbers; or to block pay
phone calls to 800 Numbers, thereby causing inconvenience to the Company's
800 Number subscribers. Petitions for review and stay of this order have
also been filed with a federal appellate court. In connection with an
ongoing dispute with various local exchange carriers ( "LECs") over the
interpretation of FCC regulations governing compensation for
interconnection, the Company made certain payments to the LECs under
protest or withheld payment entirely pending resolution by the FCC. In
response to a request by one LEC that the FCC "clarify" the disputed
regulations, the FCC's staff has made it clear that under the FCC's current
rules, no compensation is due to the LECs for such interconnection. The
existing interconnection rules are, however, being reconsidered by the FCC,
and may be changed in the future to require certain payments by the Company
for interconnection or dedicated facilities.
There can be no assurance that Federal or other state
legislation will not be adopted, or that the FCC or the various state agencies
will not adopt regulations or take other actions, that would adversely affect
the business of the Company.
Risks of International Operations
The Company intends to continue to expand internationally. The
Company's Canadian affiliate has obtained a license for a frequency in Canada
and the Company has obtained a license for a frequency in the Bahamas. The
Company has also signed network affiliation agreements with leading paging
providers in Mexico, El Salvador, Nicaragua, Guatemala, Honduras, Costa Rica,
Panama, Puerto Rico and Haiti. The Company may seek joint venture partners in
certain countries, in particular where domestic regulations prohibit foreign
control of telecommunications companies. If the Company seeks to expand by
obtaining licenses for frequencies in any foreign country then it will need to
construct or acquire a transmission network and thereafter to begin sales and
marketing efforts. However, there can be no assurance that the Company will be
able to obtain licenses in foreign countries, that it will be successful in
finding joint venture partners or that its foreign operations, if established,
will be profitable. Acquiring licenses, constructing or acquiring a
transmission network and commencing operations could require the Company to
provide funding for such operations and could require the Company to seek
additional debt or equity capital. In countries where the Company is or may
become a minority holder in a joint venture controlled by another party, such
as the Company's existing joint venture in Canada, the success of such joint
venture's operations will depend substantially on the efforts of the Company's
venture partner and may be impeded if disputes arise between the parties.
International operations are subject to various risks not present in domestic
operations such as fluctuations in currency exchange ratios, nationalization
or expropriation of assets, import/export controls, political instability,
variations in the protection of intellectual property rights, limitations on
foreign investment, restrictions on the ability to convert currency and the
additional expenses and risks inherent in conducting operations in
geographically distant locations, with customers speaking different languages
and having different cultural approaches to the conduct of business. To
mitigate the effects of foreign currency fluctuations on the results of its
foreign operations, the Company anticipates utilizing forward exchange
contracts and engaging in other efforts to hedge foreign currency
transactions. However, there can be no assurance as to the effectiveness of
such mitigation efforts in limiting any adverse effects of foreign currency
fluctuations on the Company's foreign operations and on the Company's overall
results of operations.
Significant Ownership; Conflicts of Interest
The Morgan Stanley Leveraged Equity Fund II, L.P. ("MSLEF II"),
Morgan Stanley Capital Partners III, L.P. ("MSCP III"), Morgan Stanley Capital
Investors, L.P., Morgan Stanley Venture Capital Fund, L.P. ("MSVCF"), Morgan
Stanley Venture Capital Fund II, L.P., Morgan Stanley Venture Capital Fund II
C.V., MSCP III 892 Investors, L.P. and Morgan Stanley Venture Investors, L.P.
(collectively, the "Morgan Stanley Shareholders") own approximately 50.8% of
the outstanding Common Stock and 48.5% of the outstanding voting Common Stock,
as of January 31, 1998. The general partner and/or the managing general
partner of each of the general partners of the Morgan Stanley Shareholders is
a wholly-owned subsidiary of Morgan Stanley, Dean Witter, Discover & Co.
("MSDWD"). Three of the seven directors of the Company are employees of Morgan
Stanley & Co. Incorporated ("Morgan Stanley"), the Placement Agent for the Old
Notes, which is a wholly-owned subsidiary of MSDWD. As a result of its
ownership interest in the Company and certain rights pursuant to the Amended
and Restated Agreement among certain Stockholders dated as of May 10, 1996,
among the Morgan Stanley Shareholders, the Company and certain other
stockholders, the Morgan Stanley Shareholders have a significant influence
over the affairs of the Company.
Certain decisions concerning the operations or financial
structure of the Company may present conflicts of interest between the owners
of the Company's existing capital stock and the holders of the Notes. For
example, if the Company encounters financial difficulties, or is unable to pay
its debts as they mature, the interests of the Company's existing equity
investors might conflict with those of the holders of the Notes. In addition,
the existing equity investors may have an interest in pursuing acquisitions,
divestitures, financings or other transactions that, in their judgment, could
enhance their equity investment, even though such transactions might involve
risk to the holders of the Notes.
Original Issue Discount Consequences
A holder of a Note will be required to include in such holder's
income, for federal income tax purposes, the original issue discount with
respect to the Note as it accrues, although no cash payments of interest on
the Notes are expected to be made until 2003. In addition, because the Notes
are applicable high yield discount obligations, as defined in the Internal
Revenue Code, the Company's deductions with respect to part of such original
issue discount will be deferred until the related payments are made by the
Company and the remainder of such original issue discount will not be
deductible. See "Certain United States Federal Tax Considerations--U.S.
Holders."
Furthermore, if a bankruptcy case is commenced by or against
the Company under the United States Bankruptcy Code after the issuance of the
Notes, the claim of a holder of Notes may be limited to an amount equal to the
sum of the issue price as determined by the bankruptcy court and that portion
of the original issue discount which is deemed to accrue from the issue date
to the date of any such bankruptcy filing.
Lack of Public Market
The New Notes are being offered to the holders of the Old
Notes. The Old Notes were issued in January 1998 to a limited number of
institutional investors. The New Notes are new securities for which there is
currently no market. The Company does not intend to apply for listing of the
New Notes on any securities exchange or to seek approval for quotation through
any automated quotation system. There can be no assurance that an active
public market for the New Notes will develop. If a market for the New Notes
were to develop, the market price for the New Notes can be expected to
fluctuate depending upon prevailing interest rates, the market for similar
securities and other factors.
Morgan Stanley has indicated to the Company that it intends to
make a market in the Notes, but it is under no obligation to do so and such
market-making could be discontinued at any time. If Morgan Stanley conducts
any market-making activities, it may be required to deliver a "market-
making prospectus" when effecting offers and sales in the New Notes because
of the beneficial ownership of the capital stock of the Company by the
Morgan Stanley Shareholders. For so long as a market-making prospectus is
required to be delivered, the ability of Morgan Stanley to make a market in
the Notes may, in part, be dependent on the ability of the Company to
maintain a current market-making prospectus. See "Description of the
Notes--Registration Rights."
USE OF PROCEEDS
The Company will not receive any cash proceeds from the
issuance of the New Notes offered hereby. The net proceeds of the offering of
the Old Notes were approximately $239.6 million, after deducting estimated
underwriting discounts and commissions and other expenses payable by the
Company. Simultaneously, with the closing of the offering of the Old Notes,
the Company refinanced certain of its outstanding indebtedness (the
"Refinancing"), and modified its corporate structure. The Refinancing
consisted of the following: (i) purchasing all of the outstanding 12 1/4%
Notes (as defined herein) ($136.5 million principal amount at maturity), (ii)
amending certain terms of the covenants and agreements in the indenture
relating to the 15% Notes, and (iii) merging PageMart, Inc. into the Company,
with the Company as the surviving corporation. Approximately $130.7 million
of the proceeds of the offering were used to purchase the 12 1/4% Notes. The
Company intends to use the remaining proceeds of the offering (approximately
$107.8 million) to fund the initial construction and deployment of the
Company's NPCS transmission network sufficient to enable the Company to market
advanced messaging services nationwide by the end of 1998 and for general
corporate purposes.
SELECTED HISTORICAL FINANCIAL AND OPERATING DATA
The following table sets forth summary historical financial
information and operating data for each of the five fiscal years ended
December 31, 1997. The financial information and operating data for each of
the five fiscal years ended December 31, 1997 were derived from, and should be
read in conjunction with, "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and the Consolidated Financial Statements
of the Company and the notes thereto incorporated by reference in this
Prospectus.
<TABLE>
<CAPTION>
Fiscal Year Ended December 31,
------------------------------------------------------------------------
1993 1994 1995 1996 1997
-------- -------- -------- -------- --------
(in thousands, except unit, ARPU and per subscriber data)
<S> <C> <C> <C> <C> <C>
Statement of Operations Data:
Recurring revenues......................... $ 24,184 $ 56,648 $101,503 $153,041 $206,907
Equipment sales and activation fees........ 26,483 53,185 57,688 68,551 70,871
-------- -------- -------- -------- --------
Total revenues............................. 50,667 109,833 159,191 221,592 277,778
Cost of equipment sold..................... 28,230 57,835 63,982 78,896 86,175
Operating expenses......................... 47,448 85,322 118,557 155,265 194,194
-------- -------- -------- -------- --------
Operating loss............................. (25,011) (33,324) (23,348) (12,569) (2,591)
Interest expense........................... (6,538) (12,933) (30,720) (35,041) (38,499)
Interest income............................ 428 858 1,997 1,140 501
Other...................................... -- (414) (1,042) (2,128) (3,298)
-------- -------- -------- -------- --------
Net loss.............................. $(31,121) $(45,813) $(53,113) $(48,598) $(43,887)
======== ======== ======== ======== ========
Balance Sheet Data (at period end):
Current assets............................. $51,279 $44,397 $62,535 $70,562 $84,133
Total assets............................... 78,773 142,059 263,829 313,620 361,876
Current liabilities........................ 20,198 37,966 56,508 62,503 104,973
Long-term debt, less current maturities.... 78,359 92,632 219,364 240,687 289,344
Stockholders equity (deficit).............. (19,784) 11,461 (12,043) 10,430 (32,441)
Other Data:
Units in service (at period end)........... 327,303 772,730 1,240,024 1,859,407 2,530,737
Net subscriber additions................... 210,269 445,427 467,294 619,383 671,330
ARPU(1).................................... 9.81 8.64 8.62 8.04 7.80
Operating profit (loss) before selling
expenses per domestic subscriber
per month(2).............................. (0.98) 0.90 2.11 2.25 2.54
Selling expenses per net domestic
subscriber addition(3).................... 91 81 91 87 100
EBITDA(4).................................. (19,930) (25,219) (10,076) 8,623 27,261
Capital expenditures....................... 10,810 16,719 33,503 63,804 67,506
Depreciation and amortization.............. 5,081 8,105 13,272 21,192 29,852
Deficiency of earnings to fixed charges(5). (31,121) (45,813) (53,113) (48,598) (43,887)
</TABLE>
- ---------------
(1) Average monthly revenue per Unit ("ARPU") is calculated by dividing (i)
domestic recurring revenues, consisting of fees for airtime, voice mail,
customized coverage options, excess usage and other recurring revenues and
fees associated with the subscriber base for the quarter by (ii) the
average number of domestic units in service for the quarter. ARPU is
stated as the monthly average for the final quarter of the period.
(2) Operating profit (loss) before selling expenses (selling expenses include
loss on sale of equipment) per subscriber for the Company's domestic
one-way messaging operations is calculated by dividing (i) recurring
revenue less technical expenses, general and administrative expenses, and
depreciation and amortization for the final quarter of the period by (ii)
the average number of domestic units in service for the final quarter of
the period. Stated as the monthly average for the final quarter of the
period.
(3) Selling expenses per net domestic subscriber addition for the Company's
domestic one-way messaging operations is calculated by dividing (i) selling
expenses, including loss on sale of equipment, for the period by (ii) the
net domestic subscriber additions for the period.
(4) EBITDA represents earnings (loss) before interest, taxes, depreciation and
amortization. EBITDA is a financial measure commonly used in the paging
industry. EBITDA is not derived pursuant to GAAP and therefore should not
be construed as an alternative to operating income, as an alternative to
cash flows from operating activities (as determined in accordance with
GAAP) or as a measure of liquidity. The calculation of EBITDA does not
include the commitments of the Company for capital expenditures and payment
of debt and should not be deemed to represent funds available to the
Company. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations" in the Company's Annual Report on Form 10-K
for the year ended December 31, 1997 for a discussion of the financial
operations and liquidity of the Company as determined in accordance with
GAAP.
(5) For purposes of calculating the deficiency of earnings to fixed charges,
(i) earnings is defined as net loss plus fixed charges and (ii) fixed
charges is defined as interest expense plus amortization of debt issuance
costs and the interest portion of rental and lease expense.
THE EXCHANGE OFFER
Terms of the Exchange Offer; Period for Tendering Old Notes
Upon the terms and subject to the conditions set forth in this
Prospectus and in the accompanying Letter of Transmittal (which together
constitute the Exchange Offer), the Company will accept for exchange Old Notes
which are properly tendered on or prior to the Expiration Date and not
withdrawn as permitted below. As used herein, the term "Expiration Date"
means 5:00 p.m., New York City time, on o, 1998; provided, however, that if
the Company, in its sole discretion, has extended the period of time for which
the Exchange Offer is open, the term "Expiration Date" means the latest time
and date to which the Exchange Offer is extended.
As of the date of this Prospectus, $432,000,000 aggregate
principal amount of the Old Notes were outstanding. This Prospectus, together
with the Letter of Transmittal, is first being sent on or about the date set
forth on the cover page hereof to all Holders of Old Notes known to the
Company. The Company's obligations to accept Old Notes for exchange pursuant
to the Exchange Offer is subject to certain conditions as set forth under
"--Certain Conditions to the Exchange Offer" below.
The Company expressly reserves the right, at any time or from
time to time, to extend the period of time during which the Exchange Offer is
open, and thereby delay acceptance of any Old Notes, by giving oral or written
notice of such extension to the Exchange Agent and notice of such extension to
the Holders as described below. During any such extension, all Old Notes
previously tendered will remain subject to the Exchange Offer and may be
accepted for exchange by the Company. Any Old Notes not accepted for exchange
for any reason will be returned or credited to an account maintained with the
Book-Entry Transfer Facility, as applicable, without expense to the tendering
Holder thereof as promptly as practicable after the expiration or termination
of the Exchange Offer.
The Company expressly reserves the right to amend or terminate
the Exchange Offer, and not to accept for exchange any Old Notes not
theretofore accepted for exchange, upon the occurrence of any of the
conditions of the Exchange Offer specified below under "--Certain Conditions
to the Exchange Offer." The Company will give oral or written notice of any
extension, amendment, non-acceptance or termination to the Holders of the Old
Notes as promptly as practicable, such notice in the case of any extension to
be issued by means of a press release or other public announcement (or notice
to the registered Holders) no later than 9:00 a.m., New York City time, on the
next business day after the previously scheduled Expiration Date.
Holders of Old Notes do not have any appraisal or dissenters'
rights 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 thereunder.
Procedures for Tendering Old Notes
The tender to the Company of Old Notes by a Holder thereof as
set forth below and the acceptance thereof by the Company will constitute a
binding agreement between the tendering Holder and the Company upon the terms
and subject to the conditions set forth in this Prospectus and in the
accompanying Letter of Transmittal. Except as set forth below, a Holder
(which term, for purposes of the Exchange Offer, includes any participant in
the Book-Entry Transfer Facility system whose name appears on a security
position listing as a holder of such Old Notes) who wishes to tender Old Notes
for exchange pursuant to the Exchange Offer must transmit to the Exchange
Agent on or prior to the Expiration Date either (i) a properly completed and
duly executed Letter of Transmittal or a facsimile thereof, including all
other documents required by such Letter of Transmittal, to the Exchange Agent
at the address set forth below under "Exchange Agent" or (ii) a
computer-generated message (an "Agent's Message"), transmitted by means of
the Book-Entry Transfer Facility's ATOP system and received by the Exchange
Agent and forming a part of a Book-Entry Confirmation, in which such Holder
acknowledges and agrees to be bound by the terms of the Letter of
Transmittal. In addition, in order to deliver Old Notes (i) certificates
for such Old Notes must be received by the Exchange Agent along with the
Letter of Transmittal, (ii) a timely confirmation by a book-entry transfer
(a "Book-Entry Confirmation") of such Old Notes 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. THE METHOD OF DELIVERY OF OLD NOTES, LETTERS OF
TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS IS AT THE ELECTION AND RISK OF
THE HOLDERS. IF SUCH DELIVERY IS BY MAIL, IT IS RECOMMENDED THAT
REGISTERED MAIL, PROPERLY INSURED, WITH RETURN RECEIPT REQUESTED, BE USED.
IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE TIMELY DELIVERY.
NO LETTERS OF TRANSMITTAL OR OLD NOTES SHOULD BE SENT TO THE COMPANY.
Signatures on a Letter of Transmittal or a notice of
withdrawal, as the case may be, must be guaranteed unless the Old Notes
surrendered for exchange pursuant thereto are tendered (i) by a registered
Holder of the Old Notes who has not completed the box entitled "Special
Issuance Instructions" or "Special Delivery Instructions" on the Letter of
Transmittal or (ii) for the account of an Eligible Institution (as defined
herein). 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
guarantees must be a firm which is a member of a registered national
securities exchange or a member of the National Association of Securities
Dealers, Inc. or by a commercial bank or trust company having an office or
correspondent in the United States (collectively, "Eligible Institutions").
If Old Notes are registered in the name of a person other than the person
signing the Letter of Transmittal, the Old Notes surrendered for exchange must
be endorsed by, or be accompanied by a written instrument or instruments of
transfer or exchange, in satisfactory form as determined by the Company in its
sole discretion, duly executed by the registered Holder with the signature
thereon guaranteed by an Eligible Institution.
All questions as to validity, form, eligibility (including time
of receipt) and acceptance of Old Notes tendered for exchange will be
determined by the Company in its sole discretion, which determination shall be
final and binding. The Company reserves the absolute right to reject any and
all tenders of any particular Old Notes not properly tendered or to not accept
any particular Old Notes which acceptance might, in the judgment of the
Company or its counsel, be unlawful. The Company also reserves the absolute
right in its sole discretion to waive any defects or irregularities or
conditions of the Exchange Offer as to any particular Old Notes either before
or after the Expiration Date (including the right to waive the ineligibility
of any Holder who seeks to tender Old Notes in the Exchange Offer). The
interpretation of the terms and conditions of the Exchange Offer as to any
particular Old Notes either before or after the Expiration Date (including the
Letter of Transmittal and the instructions thereto) by the Company shall be
final and binding on all parties. Unless waived, any defects or
irregularities in connection with the tenders of Old Notes for exchange must
be cured within such reasonable period of time as the Company shall determine.
Neither the Company, the Exchange Agent nor any other person shall be under
any duty to give notification of any defect or irregularity with respect to
any tender of Old Notes for exchange, nor shall any of them incur any
liability for failure to give such notification.
If the Letter of Transmittal is signed by a person or persons
other than the Holders of Old Notes, such Letter of Transmittal must be
accompanied by appropriate powers of attorney, in either case signed exactly
as the name or names of the registered Holder or Holders appear on the Old
Notes or security position listing maintained by DTC, as the case may be.
If the Letter of Transmittal or any Old Notes or powers of
attorney are signed by trustees, executors, administrators, guardians,
attorneys-in-fact, officers of corporations or others acting in a fiduciary or
representative capacity, such person should so indicate when signing and,
unless waived by the Company, proper evidence satisfactory to the Company of
its authority to so act must be submitted.
By tendering (including transmission of an Agent's Message),
each Holder of Old Notes will represent to the Company that, among other
things, (i) the New Notes acquired pursuant to the Exchange Offer are being
obtained in the ordinary course of business of the person receiving such New
Notes, whether or not such person is such Holder, (ii) neither the Holder of
Old Notes nor any such other person has an arrangement or understanding with
any person to participate in the distribution of such New Notes, (iii) if the
Holder is not a broker-dealer, or is a broker-dealer but will not receive New
Notes for its own account in exchange for Old Notes, neither the Holder nor
any such other person is engaged in or intends to participate in the
distribution of such New Notes and (iv) neither the Holder nor any such other
person is an "affiliate," within the meaning of Rule 405 under the Securities
Act, of the Company. By tendering (including transmission of an Agent's
Message) each Holder of Old Notes that is a broker-dealer (whether or not it is
also an "affiliate") that will receive New Notes for its own account pursuant
to the Exchange Offer will represent that Old Notes to be exchanged for New
Notes were acquired by it as a result of market-making activities or other
trading activities and will acknowledge that it will deliver a prospectus
meeting the requirements of the Securities Act in connection with any resale
of such New Notes; however, by so acknowledging and by delivering a
prospectus, it will not be deemed to admit that it is an "underwriter" within
the meaning of the Securities Act.
Acceptance of Old Notes for Exchange; Delivery of New Notes
Upon satisfaction or waiver of all of the conditions to the
Exchange Offer, the Company will accept, promptly after the Expiration Date,
all Old Notes properly tendered and will issue the New Notes promptly after
acceptance of the Old Notes. See "--Certain Conditions to the Exchange Offer"
below. For purposes of the Exchange Offer, the Company shall be deemed to
have accepted properly tendered Old Notes for exchange when, as and if the
Company has given oral or written notice thereof, to the Exchange Agent.
In all cases, issuance of New Notes for Old Notes that are
accepted for exchange pursuant to the Exchange Offer will be made only after
timely receipt by the Exchange Agent of certificates for such Old Notes or a
timely Book-Entry Confirmation of such Old Notes to the Exchange Agent's
account at the Book-Entry Transfer Facility pursuant to the book-entry
transfer procedures described below and either (i) a properly completed and
duly executed Letter of Transmittal or facsimile thereof, including all other
documents required by such Letter of Transmittal or (ii) a properly
transmitted Agent's Message. If any tendered Old Notes are not accepted for
any reason set forth in the terms and conditions of the Exchange Offer or if
certificates representing Old Notes are submitted for a greater principal
amount than the Holder desires to exchange, such unaccepted or non-exchanged
Old Notes will be returned without expense to the tendering Holder thereof or
credited to an account maintained with such Book-Entry Transfer Facility, as
the case may be, as promptly as practicable after the expiration or
termination of the Exchange Offer.
Interest on the New Notes
The Notes were issued at 57.801% of their principal amount and
the purchase discount on the Notes accretes from January 28, 1998 until
February 1, 2003. Commencing February 1, 2003, cash interest on the Notes
will accrue at the rate of 11 1/4% per annum and will be payable in cash
semi-annually on each February 1 and August 1, commencing on August 1, 2003.
Prior to August 1, 2003, there will be no periodic payment of interest. No
interest will have accrued on the Old Notes on the date of the exchange for
the New Notes and therefore no interest will be paid on the Old Notes to
Holders who exchange such Old Notes for New Notes. If the Exchange Offer is
not consummated by July 28, 1998, interest on the Notes (in addition to the
accrual of the original issue discount during the period ending February 1,
2003 and in addition to interest otherwise due on the Notes after such date)
will accrue at the rate of .5% per annum on the Accreted Value on the
preceding Semi-Annual Accrual Date from July 28, 1998 payable in cash
semi-annually February 1 and August 1 of each year commencing February 1,
1999, until the consummation of a registered exchange or the effectiveness of
a shelf registration statement. See "Description of the Notes--Registration
Rights." Upon the consummation of the Exchange Offer after July 28, 1998, the
Special Interest payable on the Old Notes will cease to accrue from the date
of such consummation and all accrued and unpaid Special Interest as of the
consummation of the Exchange Offer shall be paid promptly thereafter to the
holders of record of the Old Notes immediately prior to the time of such
occurrence. Following the consummation of the Exchange Offer the interest
terms of the Old Notes that are not exchanged shall revert to the original
terms set forth in the Old Notes as described on the cover page of the Offering
Memorandum dated January 22, 1998, with respect to the Old Notes. Holders of
Old Notes accepted for exchange will be deemed to have waived the right to
receive any other payments or accrued interest on the Old Notes.
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 promptly after the date of this Prospectus. All
deliveries of Old Notes represented by Global Old Notes (as defined) must be
made by book-entry transfer to the account maintained by the Exchange Agent at
the Book-Entry Transfer Facility. 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 in accordance
with the Book-Entry Transfer Facility's Automated Tender Offer Program (
"ATOP") procedures for transfer. However, the exchange for the Notes so
tendered will only be made after timely confirmation of such book-entry
transfer of Notes into the Exchange Agent's account, and timely receipt by
the Exchange Agent of an Agent's Message (as such term is defined in the
next sentence) and any other documents required by the Letter of
Transmittal. The term "Agent's Message" means a message, transmitted by
the Book-Entry Transfer Facility and received by the Exchange Agent and
forming a part of a Book-Entry Confirmation, which states that the Book-
Entry Transfer Facility has received an express acknowledgment from a
participant tendering Notes that 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.
Guaranteed Delivery Procedures
If a registered Holder of the Old Notes desires to tender such
Old Notes and the Old Notes are not immediately available, time will not
permit such Holder's Old Notes or other required documents to reach the
Exchange Agent on or prior to the Expiration Date, or the procedure for
book-entry transfer cannot be completed on a timely basis, a tender may be
effected if (i) the tender is made through an Eligible Institution, (ii) on or
prior to the Expiration Date, the Exchange Agent receives from such Eligible
Institution either a properly completed and duly executed Letter of
Transmittal (or a facsimile thereof) and Notice of Guaranteed Delivery,
substantially in the form provided by the Company (by telegram, telex,
facsimile transmission, mail or hand delivery), setting forth the name and
address of such Holder of Old Notes and the amount of Old Notes tendered,
stating that the tender is being made thereby and guaranteeing that within
five New York Stock Exchange ("NYSE") trading days after the date of execution
of the Notice of Guaranteed Delivery, the certificates of all physically
tendered Old Notes, in proper form for transfer, or a Book-Entry Confirmation,
as the case may be, and all other documents required by the Letter of
Transmittal will be deposited by the Eligible Institution with the Exchange
Agent, and (iii) the certificates for all physically tendered Old Notes, in
proper form for transfer, or a Book-Entry Confirmation, as the case may be,
and all other documents required by the Letter of Transmittal, are received by
the Exchange Agent within five NYSE trading days after the date of execution
of the Notice of Guaranteed Delivery.
Withdrawal Rights
Tenders of Old Notes may be withdrawn at any time prior to the
Expiration Date.
For a withdrawal to be effective, either (i) a written notice
of withdrawal must be received by the Exchange Agent at one of the addresses
set forth below under "Exchange Agent," or (ii) the appropriate procedures of
the Book-Entry Transfer Facility's ATOP system must be complied with. Any such
notice of withdrawal must specify the name of the person having tendered the
Old Notes to be withdrawn, identify the Old Notes to be withdrawn (including
the principal amount of such Old Notes), and (where certificates for Old Notes
have been transmitted) specify the name in which such Old Notes are
registered, if different from that of the withdrawing Holder. 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, whose
determination shall be final and binding on all parties. Any Old Notes so
withdrawn will be deemed not to have been validly tendered for exchange for
purposes of the Exchange Offer. Any Old Notes which have been tendered for
exchange but which are not exchanged for any reason will be returned to the
Holder thereof without cost to such Holder (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) as soon as practicable
after withdrawal, rejection of tender or termination of the Exchange Offer.
Properly withdrawn Old Notes may be retendered by following one of the
procedures described under "Procedures for Tendering Old Notes" above at any
time on or prior to the Expiration Date.
Certain Conditions to the Exchange Offer
Notwithstanding any other provisions of the Exchange Offer, the
Company shall not be required to accept for exchange, or to issue New Notes in
exchange for, any Old Notes and may terminate or amend the Exchange Offer, if
at any time before the acceptance of such Old Notes for exchange or the
exchange of the New Notes for such Old Notes, any of the following events
shall occur:
(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.
The foregoing conditions are for the sole benefit of the
Company and may be asserted by the Company regardless of the circumstances
giving rise to such condition or may be waived by the Company in whole or in
part at any time and from time to time in its sole discretion. The failure by
the Company at any time to exercise the foregoing rights shall not be deemed a
waiver of any such right and each such right shall be deemed an ongoing right
which may be asserted at any time and from time to time.
In addition, the Company will not accept for exchange any Old
Notes tendered, and no New Notes will be issued in exchange for any such Old
Notes, if at such time any stop order shall be threatened or in effect with
respect to either the Registration Statement of which this Prospectus
constitutes a part or the qualification of the Indenture under the Trust
Indenture Act of 1939, as amended.
Exchange Agent
The United States Trust Company of New York has been appointed
as the Exchange Agent for the Exchange Offer. The executed Letters of
Transmittal should be delivered to the Exchange Agent at one of the addresses
set forth below. 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:
Delivery To: The United States Trust Company of New York, as Exchange Agent
If by Registered or Certified Mail:
The United States Trust Company of New York
P.O. Box 844
Attn: Corporate Trust Services
Cooper Station
New York, New York 10276-0844
If by Overnight Courier or by Hand after 4:30 P.M:
The United States Trust Company of New York
770 Broadway, 13th Floor
New York, New York 10003
Attn: Corporate Trust Services
If by Hand before 4:30 P.M.:
The United States Trust Company of New York
111 Broadway
Lower Level
Attn: Corporate Trust Services
New York, New York 10006
or
If by Facsimile:
212-780-0592
Confirm by Telephone:
800-548-6565
DELIVERY OF THE LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN
AS SET FORTH ABOVE OR TRANSMISSION VIA FACSIMILE OTHER THAN AS SET FORTH ABOVE
WILL NOT CONSTITUTE A VALID DELIVERY.
Fees and Expenses
The principal solicitation is being made by mail; however,
additional solicitation may be made by facsimile, telephone or in person by
officers and regular employees of the Company and its affiliates. No
additional compensation will be paid to any such officers and employees who
engage in soliciting tenders. The Company will not make any payment 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 and are estimated in the aggregate
to be approximately $140,000.
Transfer Taxes
Holders who tender their Old Notes for exchange will not be
obligated to pay any transfer taxes in connection therewith, except that
Holders who instruct the Company to register New Notes in the name of, or
request that Old Notes not tendered or not accepted in the Exchange Offer be
returned to, a person other than the registered tendering Holder will be
responsible for the payment of any applicable transfer tax thereon. If,
however, a transfer tax is imposed for any reason other than the transfer of
Old Notes to the Company or its order pursuant to the Exchange Offer, the
amount of any such transfer taxes (whether imposed on the 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, the amount of
such transfer taxes will be billed directly to such tendering Holder.
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 legends
thereon. 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 intend to register the Old Notes under
the Securities Act. The Company believes that, based upon interpretations
contained in letters issued to third parties by the staff of the Commission,
New Notes issued pursuant to the Exchange Offer in exchange for Old Notes may
be offered for resale, resold or otherwise transferred by each Holder thereof
(other than a broker-dealer, as set forth below, or any such Holder which is
an "affiliate" of the Company within the meaning of Rule 405 under the
Securities Act) without compliance with the registration and prospectus
delivery provisions of the Securities Act provided that such New Notes are
acquired in the ordinary course of such Holder's business and such Holder has
no arrangement or understanding with any person to participate in the
distribution of such New Notes. Eligible Holders wishing to accept the
Exchange Offer must represent to the Company in the Letter of Transmittal that
such conditions have been met and must represent, if such Holder is not a
broker-dealer, or is a broker-dealer but will not receive New Notes for its
own account in exchange for Old Notes, that neither such Holder nor the person
receiving such New Notes, if other than the Holder, is engaged in or intends
to participate in the distribution of such New Notes. If any Holder has any
arrangement or understanding with respect to the distribution of the New Notes
to be acquired pursuant to the Exchange Offer, such Holder (i) will not be
able to rely on the applicable interpretations of the staff of the Commission
and (ii) in the absence of an exemption therefrom, must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any resale transaction. Each broker-dealer that receives New
Notes for its own account pursuant to the Exchange Offer must represent that
the Old Notes tendered in exchange therefor were acquired as a result of
market-making activities or other trading activities and 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 the 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. The Company
has agreed that, starting on the Expiration Date and ending on the close of
business of the 180th day following the Expiration Date, it will make this
Prospectus available to any broker-dealer for use in connection with any such
resale. See "Plan of Distribution." However, to comply with the securities
laws of certain jurisdictions, if applicable, the New Notes may not be offered
or sold unless they have been registered or qualified for sale in such
jurisdictions or an exemption from registration or qualification is available
and is complied with. The Company currently does not intend to register or
qualify the sale of the New Notes in any such jurisdictions. In addition, the
tender of Old Notes pursuant to the Exchange Offer will reduce the principal
amount of the Old Notes outstanding, which may have an adverse effect upon,
and increase the volatility of, the market price of the Old Notes due to a
reduction in liquidity.
The Company has not entered into any arrangements or
understandings with any person to distribute the New Notes to be received in
the Exchange Offer.
DESCRIPTION OF THE NOTES
The New Notes will be issued under an Indenture, dated as of
January 28, 1998, between the Company, as issuer, and the United States Trust
Company of New York (the "Trustee"). A copy of the Indenture is available upon
request from the Company. 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, all the provisions of the Indenture,
including the definitions of certain terms therein and those terms made a part
thereof by the Trust Indenture Act of 1939, as amended. Whenever particular
defined terms of the Indenture not otherwise defined herein are referred to,
such defined terms are incorporated herein by reference. For definitions of
certain capitalized terms used in the following summary, see "--Certain
Definitions."
The terms of the New Notes are identical in all material
respects to the terms of the Old Notes, except that the offer of the New Notes
will have been registered under the Securities Act and, therefore, the New
Notes will not be subject to certain transfer restrictions and registration
rights relating to the Old Notes, and except that, if the Exchange Offer is
not consummated or a shelf registration statement is not filed with the
Commission by July 28, 1998, interest on the Old Notes (in addition to the
accrual of original issue discount during the period ending February 1, 2003
and in addition to interest otherwise due on the Old Notes after such date)
will accrue at the rate of .5% per annum of the Accreted Value on the
preceding Semi-Annual Accrual Date from July 28, 1998 payable in cash
semiannually on February 1 and August 1 of each year, commencing February 1,
1999, until the consummation of a registered exchange offer or the
effectiveness of a shelf registration statement. See "-- Registration Rights."
General
The Notes will be unsecured senior subordinated obligations of
the Company, initially limited to $432.0 million aggregate principal amount at
maturity, and will mature on February 1, 2008. Although for federal income tax
purposes a significant amount of original issue discount, taxable as ordinary
income, will be recognized by a Holder as such discount accrues from the issue
date of the Notes, no interest will be payable on the Notes prior to August 1,
2003. From and after February 1, 2003, interest on the Notes will accrue at
the rate shown on the front cover of this Prospectus from February 1, 2003 or
from the most recent Interest Payment Date to which interest has been paid or
provided for, payable semiannually (to Holders of record at the close of
business on January 15 or July 15 immediately preceding the Interest Payment
Date) on February 1 and August 1 of each year, commencing August 1, 2003.
Interest will be computed on the basis of a 360-day year of twelve 30-day
months.
Principal of, premium, if any, and interest on the Notes will
be payable, and the Notes may be exchanged or transferred, at the office or
agency of the Company in the Borough of Manhattan, the City of New York (which
initially will be the corporate trust office of the Trustee at United States
Trust Company of New York, 770 Broadway, New York, New York 10003, Attention:
Corporate Trust Department); provided that, at the option of the Company,
payment of interest may be made by check mailed to the Holders at their
addresses as they appear in the Security Register.
The Notes will be issued only in fully registered form, without
coupons, in denominations of $1,000 of principal amount and any integral
multiple thereof. No service charge will be made for any registration of
transfer or exchange of Notes, but the Company may require payment of a sum
sufficient to cover any transfer tax or other similar governmental charge
payable in connection therewith.
Subject to the covenants described below under "Covenants" and
applicable law, the Company may issue additional Notes under the Indenture.
The Notes offered hereby and any additional Notes subsequently issued would
be treated as a single class for all purposes under the Indenture.
Optional Redemption
The Notes will be redeemable, at the Company's option, in whole
or in part, at any time or from time to time, on or after February 1, 2003 and
prior to maturity, upon not less than 30 nor more than 60 days' prior notice
mailed by first class mail to each Holder's last address as it appears in the
Note Register, at the following Redemption Prices (expressed in percentages of
principal amount at maturity), plus accrued and unpaid interest, if any, to
the Redemption Date (subject to the right of Holders of record on the relevant
Regular Record Date that is on or prior to the Redemption Date to receive
interest due on an Interest Payment Date), if redeemed during the 12-month
period commencing February 1, of the years set forth below:
Year Redemption Price
---- ----------------
2003 105.625%
2004 103.750
2005 101.875
2006 and thereafter 100.000
In addition, at any time prior to February 1, 2001, the Company
may redeem up to 35% of the principal amount of the Notes with the proceeds of
one or more sales of Capital Stock (other than Redeemable Stock) of the
Company, at any time or from time to time in part, at a Redemption Price
(expressed as a percentage of Accreted Value on the Redemption Date) of
111.250%; provided that at least $280.8 million aggregate principal amount at
maturity of Notes remains outstanding after each such redemption.
In the case of any partial redemption, selection of the Notes
for redemption will be made by the Trustee in compliance with the requirements
of the principal national securities exchange, if any, on which the Notes are
listed or, if the Notes are not listed on a national securities exchange, by
lot or by such other method as the Trustee in its sole discretion shall deem
to be fair and appropriate; provided that no Note of $1,000 in principal
amount at maturity or less shall be redeemed in part. If any Note is to be
redeemed in part only, the notice of redemption relating to such Note shall
state the portion of the principal amount thereof to be redeemed. A new Note
in principal amount equal to the unredeemed portion thereof will be issued in
the name of the Holder thereof upon cancellation of the original Note.
Ranking
The Notes will be senior subordinated indebtedness of the
Company. The payment of the Senior Subordinated Obligations will, to the
extent set forth in the Indenture, be subordinated in right of payment to the
prior payment in full, in cash or cash equivalents, of all Senior
Indebtedness. After giving pro forma effect to the Refinancing, as of December
31, 1997, the Company would have had on an unconsolidated basis $169.4 million
of Indebtedness (other than the Notes), all of which would have been Senior
Indebtedness, $50 million of availability under the Credit Agreement (subject
to borrowing base restrictions) and $30 million ($16 million was outstanding
at December 31, 1997) of availability under the Vendor Financing Arrangement.
In addition, all existing and future liabilities (including Trade Payables) of
the subsidiaries of the Company will be effectively senior to the Notes.
Upon any payment or distribution of assets or securities of the
Company of any kind or character, whether in cash, property or securities,
upon any dissolution or winding up or total or partial liquidation or
reorganization of the Company, whether voluntary or involuntary, or in
bankruptcy, insolvency, receivership or other proceedings, all amounts due or
to become due upon all Senior Indebtedness (including any interest accruing
subsequent to an event of bankruptcy, whether or not such interest is an
allowed claim enforceable against the debtor under the United States
Bankruptcy Code) shall first be paid in full, in cash or cash equivalents,
before the Holders of the Notes or the Trustee on behalf of the Holders of the
Notes shall be entitled to receive any payment by the Company on account of
Senior Subordinated Obligations or any payment to acquire any of the Notes for
cash, property or securities, or any distribution with respect to the Notes of
any cash, property or securities. Before any payment may be made by, or on
behalf of, the Company on any Senior Subordinated Obligations, upon any such
dissolution, winding up, liquidation or reorganization, any payment or
distribution of assets or securities of the Company of any kind or character,
whether in cash, property or securities, to which the Holders of the Notes or
the Trustee on behalf of the Holders of the Notes would be entitled, but for
the subordination provisions of the Indenture, shall be made by the Company or
by any receiver, trustee in bankruptcy, liquidating trustee, agent or other
similar Person making such payment or distribution or by the Holders of the
Notes or the Trustee if received by them or it, directly to the holders of the
Senior Indebtedness (pro rata to such holders on the basis of the respective
amounts of Senior Indebtedness held by such holders) or their representatives
or to any trustee or trustees under any indenture pursuant to which any such
Senior Indebtedness may have been issued, as their respective interests
appear, to the extent necessary to pay all such Senior Indebtedness in full,
in cash or cash equivalents after giving effect to any concurrent payment,
distribution or provision therefor to or for the holders of such Senior
Indebtedness.
No direct or indirect payment by or on behalf of the Company of
Senior Subordinated Obligations, whether pursuant to the terms of the Notes or
upon acceleration or otherwise shall be made if, at the time of such payment,
there exists a default in the payment of all or any portion of the obligations
on any Senior Indebtedness of the Company (including, without limitation, a
payment default arising from the acceleration of any Senior Indebtedness) and
such default shall not have been cured or waived or the benefits of this
sentence waived by or on behalf of the holders of such Senior Indebtedness. In
addition, during the continuance of any other event of default with respect to
any Designated Senior Indebtedness pursuant to which the maturity thereof may
be accelerated, upon receipt by the Trustee of written notice from the trustee
or other representative for the holders of such Designated Senior Indebtedness
(or the holders of at least a majority in principal amount of such Designated
Senior Indebtedness then outstanding), no payment of Senior Subordinated
Obligations may be made by or on behalf of the Company upon or in respect of
the Notes for a period (a "Payment Blockage Period") commencing on the date of
receipt of such notice and ending 179 days thereafter (unless, in each case,
such Payment Blockage Period shall be terminated by written notice to the
Trustee from such trustee of, or other representatives for, such holders or by
payment in full in cash or cash equivalents of such Designated Senior
Indebtedness). Not more than one Payment Blockage Period may be commenced with
respect to the Notes during any period of 360 consecutive days; provided that,
subject to the limitation contained in the next sentence, the commencement of
a Payment Blockage Period by the representatives for, or the holders of,
Designated Senior Indebtedness other than under the Credit Agreement shall not
bar the commencement of another Payment Blockage Period by the Bank Agent
within such period of 360 consecutive days. Notwithstanding anything in the
Indenture to the contrary, there must be 180 consecutive days in any 360-day
period in which no Payment Blockage Period is in effect. No event of default
that existed or was continuing (it being acknowledged that any subsequent
action that would give rise to an event of default pursuant to any provision
under which an event of default previously existed or was continuing shall
constitute a new event of default for this purpose) on the date of the
commencement of any Payment Blockage Period with respect to the Designated
Senior Indebtedness initiating such Payment Blockage Period shall be, or shall
be made, the basis for the commencement of a second Payment Blockage Period by
the representative for, or the holders of, such Designated Senior
Indebtedness, whether or not within a period of 360 consecutive days, unless
such event of default shall have been cured or waived for a period of not less
than 90 consecutive days.
To the extent any payment of Senior Indebtedness (whether by or
on behalf of the Company, as proceeds of security or enforcement of any right
of setoff or otherwise) is declared to be fraudulent or preferential, set
aside or required to be paid to any receiver, trustee in bankruptcy,
liquidating trustee, agent or other similar Person under any bankruptcy,
insolvency, receivership, fraudulent conveyance or similar law, then if such
payment is recovered by, or paid over to, such receiver, trustee in
bankruptcy, liquidating trustee, agent or other similar Person, the Senior
Indebtedness or part thereof originally intended to be satisfied shall be
deemed to be reinstated and outstanding as if such payment had not occurred.
To the extent the obligation to repay any Senior Indebtedness is declared to be
fraudulent, invalid, or otherwise set aside under any bankruptcy, insolvency,
receivership, fraudulent conveyance or similar law, then the obligation so
declared fraudulent, invalid or otherwise set aside (and all other amounts
that would come due with respect thereto had such obligation not been so
affected) shall be deemed to be reinstated and outstanding as Senior
Indebtedness for all purposes hereof as if such declaration, invalidity or
setting aside had not occurred.
By reason of the subordination provisions described above, in
the event of liquidation or insolvency, creditors of the Company who are not
holders of Senior Indebtedness may recover less, ratably, than holders of
Senior Indebtedness and may recover more, ratably, than Holders of the Notes.
Registration Rights
Holders of New Notes are not entitled to any registration
rights with respect to the New Notes. Holders of Old Notes are entitled to
certain registration rights pursuant to the Registration Rights Agreement.
The Company has agreed with the Initial Purchaser pursuant to the terms of the
Registration Rights Agreement, for the benefit of the Holders of the Old
Notes, that the Company will use its reasonable best efforts, to file and
cause to become effective a registration statement (the "Exchange Offer
Registration Statement,") with respect to a registered offer to exchange the
Old Notes for an issue of notes of the Company with terms identical to the Old
Notes (except that the New Notes will not contain terms with respect to
transfer restrictions, registration rights or the additional interest
provisions described below). Upon such registration statement being declared
effective, the Company shall offer the New Notes in return for surrender of
the Old Notes. The Exchange Offer shall remain open for not less than 20
business days after the date notice of the Exchange Offer is mailed to Holders
of the Old Notes. For each Old Note surrendered to the Company under the
Exchange Offer, the Holder will receive a New Note of the same series and of
equal principal amount. The Registration Statement of which this Prospectus
is a part constitutes the Exchange Offer Registration Statement.
In the event that applicable interpretations of the staff of
the Commission do not permit the Company to effect the Exchange Offer, the
Company shall use its best efforts to cause to become effective a shelf
registration statement with respect to resales of the Notes (a "Shelf
Registration Statement"). The Company agrees to use its best efforts to keep
the Shelf Registration Statement continuously effective until the second
anniversary of the effective date thereof (or, if the Company is required to
file such Shelf Registration Statement solely as a result of the opinion of
counsel for the Placement Agent that a Registration Statement must be filed
and a Prospectus must be delivered by the Placement Agent in connection with
any offering or sale of Registrable Notes because such Registrable Notes
represent an unsold allotment for the original offering thereof, until 180
days after the effective date of such Shelf Registration Statement) or such
shorter period that will terminate when all of the Registrable Notes covered
by the Shelf Registration Statement have been sold pursuant to the Shelf
Registration Statement.
In the event that the Exchange Offer is not consummated and a
Shelf Registration Statement is not declared effective on or prior to July 28,
1998, interest on the Old Notes (in addition to the accrual of original issue
discount during the period ending February 1, 2003 and in addition to interest
otherwise due on the Notes after such date) will accrue at the rate of .5% per
annum of the Accreted Value on the preceding Semi-Annual Accrual Date from
July 28, 1998 payable in cash semiannually on February 1 and August 1 of each
year, commencing February 1, 1999, until the Exchange Offer is consummated or
the Shelf Registration Statement is declared effective.
If the Company affects the Exchange Offer, the Company will be
entitled to close the Exchange Offer 20 business days after the commencement
thereof, provided that it has accepted all Old Notes theretofore validly
surrendered in accordance with the terms of the Exchange Offer. Old Notes not
tendered in the Exchange Offer shall bear interest at the rate set forth on
the cover page of the Offering Memorandum dated January 22, 1998 and be
subject to all of the terms and conditions specified in the Indenture and to
the transfer restrictions described in the Offering Memorandum dated January
22, 1998 under "Transfer Restrictions."
This summary of certain provisions of the Registration Rights
Agreement does not purport to be complete and is subject to, and is qualified
in its entirety by reference to, all the provisions of the Registration Rights
Agreement, a copy of which is available from the Company upon request.
Certain Definitions
Set forth below is a summary of certain of the defined terms
used in the covenants and other provisions of the Indenture. Reference is made
to the Indenture for the definition of any other capitalized term used herein
for which no definition is provided.
"12 1/4% Indenture" means the Indenture dated as of October
19, 1993, between PageMart, Inc., a Delaware corporation, and United States
Trust Company of New York, a New York corporation, as Trustee relating to the
12 1/4% Notes, as amended from time to time.
"15% Indenture" means the Indenture dated as of January 17,
1995, between the Company (f/k/a PageMart Nationwide Inc.) and United States
Trust Company of New York, a New York corporation, as Trustee relating to the
15% Notes, as amended from time to time.
"12 1/4% Notes" means the 12 1/4% Senior Discount Notes of
PageMart, Inc. due 2003 issued pursuant to the 12 1/4% Indenture.
"15% Notes" means the 15% Senior Discount Notes of the Company
due 2005 issued pursuant to the 15% Indenture.
"Accreted Value" is defined to mean, for any Specified Date,
the amount calculated pursuant to (i), (ii), (iii) or (iv) for each $1,000
principal amount at maturity of Notes:
(i) if the Specified Date occurs on one of the following dates
(each a "Semi-Annual Accrual Date"), the Accreted Value will equal the amount
set forth below for such Semi-Annual Accrual Date:
<TABLE>
<CAPTION>
Semi-Annual Accreted
Accrual Date Value
------------ --------
<S> <C>
August 1, 1998.......................... $ 611.08
February 1, 1999........................ $ 645.45
August 1, 1999.......................... $ 681.76
February 1, 2000........................ $ 720.11
August 1, 2000.......................... $ 760.62
February 1, 2001........................ $ 803.40
August 1, 2001.......................... $ 848.59
February 1, 2002........................ $ 896.32
August 1, 2002.......................... $ 946.74
February 1, 2003........................ $1,000.00
</TABLE>
(ii) if the Specified Date occurs before the first Semi-Annual
Accrual Date, the Accreted Value will equal the sum of (a) $578.01 and (b) an
amount equal to the product of (1) the Accreted Value for the first Semi-Annual
Accrual Date less $578.01 multiplied by (2) a fraction, the numerator of which
is the number of days from the issue date of the Notes to the Specified Date,
using a 360-day year of twelve 30-day months, and the denominator of which is
the number of days elapsed from the issue date of the Notes to the first
Semi-Annual Accrual Date, using a 360-day year of twelve 30-day months;
(iii) if the Specified Date occurs between two Semi-Annual Accrual
Dates, the Accreted Value will equal the sum of (a) the Accreted Value for the
Semi-Annual Accrual Date immediately preceding such Specified Date and (b) an
amount equal to the product of (1) the Accreted Value for the immediately
following Semi-Annual Accrual Date less the Accreted Value for the immediately
preceding Semi-Annual Accrual Date multiplied by (2) a fraction, the numerator
of which is the number of days from the immediately preceding Semi-Annual
Accrual Date to the Specified Date, using a 360-day year of twelve 30-day
months, and the denominator of which is 180; or
(iv) if the Specified Date occurs after the last Semi-Annual
Accrual Date, the Accreted Value will equal $1,000.
"Acquired Indebtedness" means Indebtedness of a Person existing
at the time such Person became a Restricted Subsidiary and not Incurred in
connection with, or in contemplation of, such Person becoming a Restricted
Subsidiary.
"Adjusted Consolidated Net Income" means, for any period, the
aggregate net income (or loss) of the Company and its Restricted Subsidiaries
for such period determined in conformity with GAAP; provided that the
following items shall be excluded in computing Adjusted Consolidated Net
Income (without duplication): (i) the net income (or loss) of any Person that
is not a Restricted Subsidiary, except (x) with respect to net income, to the
extent of the amount of dividends or other distributions actually paid to the
Company or any of its Restricted Subsidiaries by such Person during such
period and (y) with respect to net losses, to the extent of the amount of
Investments made by the Company or any Restricted Subsidiary in such Person
during such period; (ii) solely for the purposes of calculating the amount of
Restricted Payments that may be made pursuant to clause (C) of the first
paragraph of the "Limitation on Restricted Payments" covenant described below
(and in such case, except to the extent includable pursuant to clause (i)
above), the net income (or loss) of any Person accrued prior to the date it
becomes a Restricted Subsidiary or is merged into or consolidated with the
Company or any of its Restricted Subsidiaries or all or substantially all of
the property and assets of such Person are acquired by the Company or any of
its Restricted Subsidiaries; (iii) the net income of any Restricted Subsidiary
to the extent that the declaration or payment of dividends or similar
distributions by such Restricted Subsidiary of such net income is not at the
time permitted by the operation of the terms of its charter or any agreement,
instrument, judgment, decree, order, statute, rule or governmental regulation
applicable to such Restricted Subsidiary; (iv) any gains or losses (on an
after-tax basis) attributable to Asset Sales; (v) except for purposes of
calculating the amount of Restricted Payments that may be made pursuant to
clause (C) of the first paragraph of the "Limitation on Restricted Payments"
covenant described below, any amount paid as dividends on Preferred Stock of
the Company or any Restricted Subsidiary owned by Persons other than the
Company and any of its Restricted Subsidiaries; and (vi) all extraordinary
gains and extraordinary losses.
"Adjusted Consolidated Net Tangible Assets" means the total
amount of assets of the Company and its Restricted Subsidiaries (less
applicable depreciation, amortization and other valuation reserves), except to
the extent resulting from write-ups of capital assets (excluding write-ups in
connection with accounting for acquisitions in conformity with GAAP), after
deducting therefrom (i) all current liabilities of the Company and its
Restricted Subsidiaries (excluding intercompany items) and (ii) all goodwill,
trade names, trademarks, patents, unamortized debt discount and expense and
other like intangibles, all as set forth on the most recent quarterly or
annual consolidated balance sheet of the Company and its Restricted
Subsidiaries, prepared in conformity with GAAP and filed with the Commission or
provided to the Trustee pursuant to the "Commission Reports and Reports to
Holders" covenant.
"Affiliate" means, as applied to any Person, any other Person
directly or indirectly controlling, controlled by, or under direct or indirect
common control with, such Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled
by" and "under common control with"), as applied to any Person, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities, by contract or otherwise.
"Asset Acquisition" means (i) an investment by the Company or
any of its Restricted Subsidiaries in any other Person pursuant to which such
Person shall become a Restricted Subsidiary or shall be merged into or
consolidated with the Company or any of its Restricted Subsidiaries or (ii) an
acquisition by the Company or any of its Restricted Subsidiaries of the
property and assets of any Person other than the Company or any of its
Restricted Subsidiaries that constitute substantially all of a division or
line of business of such Person.
"Asset Disposition" means the sale or other disposition by the
Company or any of its Restricted Subsidiaries (other than to the Company or
another Restricted Subsidiary) of (i) all or substantially all of the Capital
Stock of any Restricted Subsidiary or (ii) all or substantially all of the
assets that constitute a division or line of business of the Company or any of
its Restricted Subsidiaries.
"Asset Sale" means any sale, transfer or other disposition
(including by way of merger, consolidation or sale-leaseback transaction) in
one transaction or a series of related transactions by the Company or any of
its Restricted Subsidiaries to any Person other than the Company or any of its
Restricted Subsidiaries of (i) all or any of the Capital Stock of any
Restricted Subsidiary, (ii) all or substantially all of the property and assets
of an operating unit or business of the Company or any of its Restricted
Subsidiaries or (iii) any other property and assets (other than the Capital
Stock or other Investment in an Unrestricted Subsidiary) of the Company or any
of its Restricted Subsidiaries outside the ordinary course of business of the
Company or such Restricted Subsidiary and, in each case, that is not governed
by the provisions of the Indenture applicable to mergers, consolidations and
sales of all or substantially all of the assets of the Company; provided that
"Asset Sale" shall not include (a) sales or other dispositions of inventory,
receivables and other current assets, (b) sales, transfers or other
dispositions of assets constituting Restricted Payments permitted to be made
under the "Limitation on Restricted Payments" covenant or (c) sales or other
dispositions of assets for consideration at least equal to the fair market
value of the assets sold or disposed of, to the extent that the consideration
received would constitute property or assets of the kinds described in clause
(B) of the "Limitation on Asset Sales" covenant.
"Average Life" means, at any date of determination with respect
to any debt security, the quotient obtained by dividing (i) the sum of the
products of (a) the number of years from such date of determination to the
dates of each successive scheduled principal payment of such debt security and
(b) the amount of such principal payment by (ii) the sum of all such principal
payments.
"Bank Agent" shall mean BT Commercial Corporation, or its
successor as agent for the lenders under the Credit Agreement.
"Capital Stock" means, with respect to any Person, any and all
shares, interests, participations or other equivalents (however designated,
whether voting or non-voting) in equity of such Person, whether outstanding on
the Closing Date or issued thereafter, including, without limitation, all
Common Stock and Preferred Stock.
"Capitalized Lease" means, as applied to any Person, any lease
of any property (whether real, personal or mixed) of which the discounted
present value of the rental obligations of such Person as lessee, in
conformity with GAAP, is required to be capitalized on the balance sheet of
such Person.
"Capitalized Lease Obligations" means the discounted present
value of the rental obligations under a Capitalized Lease.
"Change of Control" means such time as (i) a "person" or
"group" (within the meaning of Sections 13(d) and 14(d)(2) of the Exchange
Act) becomes the ultimate "beneficial owner" (as defined in Rule 13d-3 under
the Exchange Act) of more than 30% and such ownership is greater than the
amount of the total voting power of the Voting Stock of the Company, on a
fully diluted basis, than is held by the Existing Stockholders on such date of
the total voting power of the Voting Stock of the Company on a fully diluted
basis; or (ii) individuals who on the Closing Date constitute the Board of
Directors (together with any new directors whose election by the Board of
Directors or whose nomination by the Board of Directors for election by the
Company's stockholders was approved by a vote of at least two-thirds of the
members of the Board of Directors then in office who either were members of
the Board of Directors on the Closing Date or whose election or nomination for
election was previously so approved) cease for any reason to constitute a
majority of the members of the Board of Directors then in office.
"Closing Date" means the date on which the Notes are originally
issued under the Indenture.
"Consolidated EBITDA" means, for any period, Adjusted
Consolidated Net Income for such period plus, to the extent such amount was
deducted in calculating such Adjusted Consolidated Net Income, (i)
Consolidated Interest Expense, (ii) income taxes (other than income taxes
(either positive or negative) attributable to extraordinary and non-
recurring gains or losses or sales of assets), (iii) depreciation expense,
(iv) amortization expense and (v) all other non-cash items reducing
Adjusted Consolidated Net Income (other than items that will require cash
payments and for which an accrual or reserve is, or is required by GAAP to
be, made), less all non-cash items increasing Adjusted Consolidated Net
Income, all as determined on a consolidated basis for the Company and its
Restricted Subsidiaries in conformity with GAAP; provided that, if any
Restricted Subsidiary is not a Wholly Owned Restricted Subsidiary,
Consolidated EBITDA shall be reduced (to the extent not otherwise reduced
in accordance with GAAP) by an amount equal to (A) the amount of the
Adjusted Consolidated Net Income attributable to such Restricted Subsidiary
multiplied by (B) the percentage ownership interest in the income of such
Restricted Subsidiary not owned on the last day of such period by the
Company or any of its Restricted Subsidiaries.
"Consolidated Interest Expense" means, for any period, the
aggregate amount of interest in respect of Indebtedness (including, without
limitation, amortization of original issue discount on any Indebtedness and
the interest portion of any deferred payment obligation, calculated in
accordance with the effective interest method of accounting; all commissions,
discounts and other fees and charges owed with respect to letters of credit
and bankers' acceptance financing; the net costs associated with Interest Rate
Agreements; and Indebtedness that is Guaranteed or secured by the Company or
any of its Restricted Subsidiaries) and all but the principal component of
rentals in respect of Capitalized Lease Obligations paid, accrued or scheduled
to be paid or to be accrued by the Company and its Restricted Subsidiaries
during such period; excluding, however, (i) any amount of such interest of any
Restricted Subsidiary if the net income of such Restricted Subsidiary is
excluded in the calculation of Adjusted Consolidated Net Income pursuant to
clause (iii) of the definition thereof (but only in the same proportion as the
net income of such Restricted Subsidiary is excluded from the calculation of
Adjusted Consolidated Net Income pursuant to clause (iii) of the definition
thereof) and (ii) any premiums, fees and expenses (and any amortization
thereof) payable in connection with the offering of the Notes, all as
determined on a consolidated basis (without taking into account Unrestricted
Subsidiaries) in conformity with GAAP.
"Consolidated Leverage Ratio" means, on any Transaction Date,
the ratio of (i) the aggregate amount of Indebtedness of the Company and its
Restricted Subsidiaries on a consolidated basis outstanding on such Transaction
Date to (ii) the aggregate amount of Consolidated EBITDA for the then most
recent four fiscal quarters for which financial statements of the Company have
been filed with the Commission or provided to the Trustee pursuant to the
"Commission Reports and Reports to Holders" covenant described below (such
four fiscal quarter period being the "Four Quarter Period"); provided that, in
making the foregoing calculation, (A) pro forma effect shall be given to any
Indebtedness to be Incurred or repaid on the Transaction Date; (B) pro forma
effect shall be given to Asset Dispositions and Asset Acquisitions (including
giving pro forma effect to the application of proceeds of any Asset
Disposition) that occur from the beginning of the Four Quarter Period through
and including the Transaction Date (the "Reference Period"), as if they had
occurred and such proceeds had been applied on the first day of such Reference
Period; and (C) pro forma effect shall be given to asset dispositions and
asset acquisitions (including giving pro forma effect to the application of
proceeds of any asset disposition) that have been made by any Person that has
become a Restricted Subsidiary or has been merged with or into the Company or
any Restricted Subsidiary during such Reference Period and that would have
constituted Asset Dispositions or Asset Acquisitions had such transactions
occurred when such Person was a Restricted Subsidiary as if such asset
dispositions or asset acquisitions were Asset Dispositions or Asset
Acquisitions that occurred on the first day of such Reference Period; provided
that to the extent that clause (B) or (C) of this sentence requires that pro
forma effect be given to an Asset Acquisition or Asset Disposition, such pro
forma calculation shall be based upon the four full fiscal quarters
immediately preceding the Transaction Date of the Person, or division or line
of business of the Person, that is acquired or disposed of for which financial
information is available.
"Consolidated Net Worth" means, at any date of determination,
stockholders' equity as set forth on the most recently available quarterly or
annual consolidated balance sheet of the Company and its Restricted
Subsidiaries (which shall be as of a date not more than 90 days prior to the
date of such computation, and which shall not take into account Unrestricted
Subsidiaries), less any amounts attributable to Redeemable Stock or any equity
security convertible into or exchangeable for Indebtedness, the cost of
treasury stock and the principal amount of any promissory notes receivable
from the sale of the Capital Stock of the Company or any of its Restricted
Subsidiaries, each item to be determined in conformity with GAAP (excluding
the effects of foreign currency exchange adjustments under Financial
Accounting Standards Board Statement of Financial Accounting Standards No. 52).
"Credit Agreement" means the Credit Agreement dated as of May
11, 1995, as amended, by and among the Company (f/k/a PageMart Nationwide
Inc.), the lenders named therein, BT Commercial Corporation, as Agent and
Bankers Trust Company, as Issuing Bank, together with the related documents
thereof (including without limitation any guarantees and security documents),
in each case as such agreements may be amended (including any amendment and
restatement thereof), supplemented, renewed, extended, substituted, replaced
or otherwise modified from time to time, including any agreement extending the
maturity of, refinancing or otherwise restructuring (including, but not
limited to, the inclusion of additional borrowers thereunder that are
Subsidiaries of the Company) all or any portion of the Indebtedness under such
agreement or any successor agreement, with the same or different lenders as
such agreement may be amended, renewed, extended, substituted, replaced,
restated and otherwise modified from time to time.
"Currency Agreement" means any foreign exchange contract,
currency swap agreement or other similar agreement or arrangement.
"Default" means any event that is, or after notice or passage
of time or both would be, an Event of Default.
"Designated Senior Indebtedness" means the Indebtedness under
the Credit Agreement and the 15% Notes and any other Indebtedness constituting
Senior Indebtedness that, at the date of determination, has an aggregate
principal amount outstanding of at least $25 million and that is specifically
designated by the Company, in the instrument creating or evidencing such
Senior Indebtedness as "Designated Senior Indebtedness."
"Existing Stockholders" means (i) The Morgan Stanley Leveraged
Equity Fund II, L.P., Morgan Stanley Capital Partners III, L.P., Morgan
Stanley Capital Investors, L.P., Morgan Stanley Venture Capital Fund, L.P.,
Morgan Stanley Venture Capital Fund II, L.P., Morgan Stanley Venture Capital
Fund II, C.V., Morgan Stanley Venture Investors, L.P., Accel Telecom L.P.,
Accel III L.P. and Accel Investors '89 L.P. and (ii) solely for purposes of
determining whether any other person's ownership of Voting Stock exceeds the
voting power of the Voting Stock held by the Existing Stockholders, First
Plaza Group Trust, Pulsar Internacional, S.A. de C.V., John D. Beletic and
Roger D. Linquist.
"fair market value" means the price that would be paid 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, as determined in good faith by the Board of Directors, whose
determination shall be conclusive if evidenced by a Board Resolution; provided
that for purposes of clause (xi) of the second paragraph of the "Limitation on
Indebtedness" covenant, (x) the fair market value of any security registered
under the Exchange Act shall be the average of the closing prices, regular
way, of such security for the 20 consecutive trading days immediately
preceding the sale of Capital Stock and (y) in the event the aggregate fair
market value of any other property (other than cash or cash equivalents)
received by the Company exceeds $10 million, the fair market value of such
property shall be determined by a nationally recognized investment banking
firm and set forth in their written opinion which shall be delivered to the
Trustee.
"GAAP" means generally accepted accounting principles in the
United States of America as in effect as of the Closing Date, including,
without limitation, those 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 approved
by a significant segment of the accounting profession. All ratios and
computations contained or referred to in the Indenture shall be computed in
conformity with GAAP applied on a consistent basis, except that calculations
made for purposes of determining compliance with the terms of the covenants
and with other provisions of the Indenture shall be made without giving effect
to (i) the amortization of any expenses incurred in connection with the
offering of the Notes and (ii) except as otherwise provided, the amortization
of any amounts required or permitted by Accounting Principles Board Opinion
Nos. 16 and 17.
"Guarantee" means any obligation, contingent or otherwise, of
any Person directly or indirectly guaranteeing any Indebtedness of any other
Person and, without limiting the generality of the foregoing, 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 of such other Person (whether arising by virtue of partnership
arrangements, or by agreements to keep-well, to purchase assets, goods,
securities or services (unless such purchase arrangements are on arm's-length
terms and are entered into in the ordinary course of business), to
take-or-pay, or to maintain financial statement conditions or otherwise) or
(ii) entered into for purposes of assuring in any other manner the obligee of
such Indebtedness of the payment thereof or to protect such obligee against
loss in respect thereof (in whole or in part); provided that the term
"Guarantee" shall not include endorsements for collection or deposit in the
ordinary course of business. The term "Guarantee" used as a verb has a
corresponding meaning.
"Incur" means, with respect to any Indebtedness, to incur,
create, issue, assume, Guarantee or otherwise become liable for or with
respect to, or become responsible for, the payment of, contingently or
otherwise, such Indebtedness, including an "Incurrence" of Acquired
Indebtedness; provided that neither the accrual of interest nor the accretion
of original issue discount shall be considered an Incurrence of Indebtedness.
"Indebtedness" means, with respect to any Person at any date of
determination (without duplication), (i) all indebtedness of such Person for
borrowed money, (ii) all obligations of such Person evidenced by bonds,
debentures, notes or other similar instruments, (iii) all obligations of such
Person in respect of letters of credit or other similar instruments (including
reimbursement obligations with respect thereto), (iv) all obligations of such
Person to pay the deferred and unpaid purchase price of property or services,
which purchase price is due more than six months after the date of placing
such property in service or taking delivery and title thereto or the
completion of such services, except Trade Payables, (v) all Capitalized Lease
Obligations of such Person, (vi) all Indebtedness of other Persons secured by
a Lien on any asset of such Person, whether or not such Indebtedness is
assumed by such Person; provided that the amount of such Indebtedness shall be
the lesser of (A) the fair market value of such asset at such date of
determination and (B) the amount of such Indebtedness, (vii) all Indebtedness
of other Persons Guaranteed by such Person to the extent such Indebtedness is
Guaranteed by such Person and (viii) to the extent not otherwise included in
this definition, obligations under Currency Agreements and Interest Rate
Agreements. The amount of Indebtedness of any Person at any date shall be the
outstanding balance at such date of all unconditional obligations as described
above and, with respect to contingent obligations, the maximum liability upon
the occurrence of the contingency giving rise to the obligation, provided (A)
that the amount outstanding at any time of any Indebtedness issued with
original issue discount is the face amount of such Indebtedness less the
remaining unamortized portion of the original issue discount of such
Indebtedness at such time as determined in conformity with GAAP, (B) that
money borrowed and set aside at the time of the Incurrence of any Indebtedness
in order to prefund the payment of the interest on such Indebtedness shall not
be deemed to be "Indebtedness" so long as such money is held to secure the
payment of such interest and (C) that Indebtedness shall not include any
liability for federal, state, local or other taxes.
"Interest Rate Agreement" means any interest rate protection
agreement, interest rate future agreement, interest rate option agreement,
interest rate swap agreement, interest rate cap agreement, interest rate
collar agreement, interest rate hedge agreement, option or future contract or
other similar agreement or arrangement.
"Investment" in any Person means any direct or indirect
advance, loan or other extension of credit (including, without limitation, by
way of Guarantee or similar arrangement; but excluding advances to customers
in the ordinary course of business that are, in conformity with GAAP, recorded
as accounts receivable on the balance sheet of the Company or its Restricted
Subsidiaries) or capital contribution to (by means of any transfer of cash or
other property to others or any payment for property or services for the
account or use of others), or any purchase or acquisition of Capital Stock,
bonds, notes, debentures or other similar instruments issued by, such Person
and shall include (i) the designation of a Restricted Subsidiary as an
Unrestricted Subsidiary and (ii) the fair market value of the Capital Stock
(or any other Investment), held by the Company or any of its Restricted
Subsidiaries, of (or in) any Person that has ceased to be a Restricted
Subsidiary, including without limitation, by reason of any transaction
permitted by clause (iii) of the "Limitation on the Issuance and Sale of
Capital Stock of Restricted Subsidiaries" covenant; provided that the fair
market value of the Investment remaining in any Person that has ceased to be a
Restricted Subsidiary shall not exceed the aggregate amount of Investments
previously made in such Person valued at the time such Investments were made
less the net reduction of such Investments. For purposes of the definition of
"Unrestricted Subsidiary" and the "Limitation on Restricted Payments" covenant
described below, (i) "Investment" shall include the fair market value of the
assets (net of liabilities (other than liabilities to the Company or any of
its Restricted Subsidiaries)) of any Restricted Subsidiary at the time that
such Restricted Subsidiary is designated an Unrestricted Subsidiary, (ii) the
fair market value of the assets (net of liabilities (other than liabilities to
the Company or any of its Restricted Subsidiaries)) of any Unrestricted
Subsidiary at the time that such Unrestricted Subsidiary is designated a
Restricted Subsidiary shall be considered a reduction in outstanding
Investments and (iii) any property transferred to or from an Unrestricted
Subsidiary shall be valued at its fair market value at the time of such
transfer.
"Lien" means any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind (including, without limitation, any
conditional sale or other title retention agreement or lease in the nature
thereof or any agreement to give any security interest).
"Moody's" means Moody's Investors Service, Inc. and its
successors.
"Net Cash Proceeds" means, (a) with respect to any Asset Sale,
the proceeds of such Asset Sale in the form of cash or cash equivalents,
including payments in respect of deferred payment obligations (to the extent
corresponding to the principal, but not interest, component thereof) when
received in the form of cash or cash equivalents (except to the extent such
obligations are financed or sold with recourse to the Company or any
Restricted Subsidiary) and proceeds from the conversion of other property
received when converted to cash or cash equivalents, net of (i) brokerage
commissions and other fees and expenses (including fees and expenses of
counsel and investment bankers) related to such Asset Sale, (ii) provisions
for all taxes (whether or not such taxes will actually be paid or are payable)
as a result of such Asset Sale without regard to the consolidated results of
operations of the Company and its Restricted Subsidiaries, taken as a whole,
(iii) payments made to repay Indebtedness or any other obligation outstanding
at the time of such Asset Sale that either (A) is secured by a Lien on the
property or assets sold or (B) is required to be paid as a result of such sale
and (iv) appropriate amounts to be provided by the Company or any Restricted
Subsidiary as a reserve against any liabilities associated with such Asset
Sale, including, without limitation, pension and other post-employment
benefit liabilities, liabilities related to environmental matters and
liabilities under any indemnification obligations associated with such
Asset Sale, all as determined in conformity with GAAP and (b) with respect
to any issuance or sale of Capital Stock, the proceeds of such issuance or
sale in the form of cash or cash equivalents, including payments in respect
of deferred payment obligations (to the extent corresponding to the
principal, but not interest, component thereof) when received in the form
of cash or cash equivalents (except to the extent such obligations are
financed or sold with recourse to the Company or any Restricted Subsidiary)
and proceeds from the conversion of other property received when converted
to cash or cash equivalents, net of attorney's fees, accountants' fees,
underwriters' or placement agents' fees, discounts or commissions and
brokerage, consultant and other fees incurred in connection with such
issuance or sale and net of taxes paid or payable as a result thereof.
"Offer to Purchase" means an offer to purchase Notes by the
Company from the Holders commenced by mailing a notice to the Trustee and each
Holder stating: (i) the covenant pursuant to which the offer is being made and
that all Notes validly tendered will be accepted for payment on a pro rata
basis; (ii) the purchase price and the date of purchase (which shall be a
Business Day no earlier than 30 days nor later than 60 days from the date such
notice is mailed) (the "Payment Date"); (iii) that any Note not tendered will
continue to accrue interest (or original issue discount) pursuant to its
terms; (iv) that, unless the Company defaults in the payment of the purchase
price, any Note accepted for payment pursuant to the Offer to Purchase shall
cease to accrue interest (or original issue discount) on and after the Payment
Date; (v) that Holders electing to have a Note purchased pursuant to the Offer
to Purchase will be required to surrender the Note, together with the form
entitled "Option of the Holder to Elect Purchase" on the reverse side of the
Note completed, to the Paying Agent at the address specified in the notice
prior to the close of business on the Business Day immediately preceding the
Payment Date; (vi) that Holders will be entitled to withdraw their election if
the Paying Agent receives, not later than the close of business on the third
Business Day immediately preceding the Payment Date, a telegram, facsimile
transmission or letter setting forth the name of such Holder, the principal
amount at maturity of Notes delivered for purchase and a statement that such
Holder is withdrawing his election to have such Notes purchased; and (vii)
that Holders whose Notes are being purchased only in part will be issued new
Notes equal in principal amount to the unpurchased portion of the Notes
surrendered; provided that each Note purchased and each new Note issued shall
be in a principal amount at maturity of $1,000 or integral multiples thereof.
On the Payment Date, the Company shall (i) accept for payment on a pro rata
basis Notes or portions thereof tendered pursuant to an Offer to Purchase;
(ii) deposit with the Paying Agent money sufficient to pay the purchase price
of all Notes or portions thereof so accepted; and (iii) deliver, or cause to
be delivered, to the Trustee all Notes or portions thereof so accepted
together with an Officers' Certificate specifying the Notes or portions
thereof accepted for payment by the Company. The Paying Agent shall promptly
mail to the Holders of Notes so accepted payment in an amount equal to the
purchase price, and the Trustee shall promptly authenticate and mail to such
Holders a new Note equal in principal amount at maturity to any unpurchased
portion of the Note surrendered; provided that each Note purchased and each
new Note issued shall be in a principal amount at maturity of $1,000 or
integral multiples thereof. The Company will publicly announce the results of
an Offer to Purchase as soon as practicable after the Payment Date. The
Trustee shall act as the Paying Agent for an Offer to Purchase. The Company
will comply with Rule 14e-1 under the Exchange Act and any other securities
laws and regulations thereunder to the extent such laws and regulations are
applicable, in the event that the Company is required to repurchase Notes
pursuant to an Offer to Purchase.
"Permitted Investment" means (i) an Investment in the Company
or a Restricted Subsidiary or a Person which will, upon the making of such
Investment, become a Restricted Subsidiary or be merged or consolidated with
or into or transfer or convey all or substantially all its assets to, the
Company or a Restricted Subsidiary; provided that such person's primary
business is related, ancillary or complementary to the businesses of the
Company and its Restricted Subsidiaries on the date of such Investment; (ii)
Temporary Cash Investments; (iii) payroll, travel and similar advances to
cover matters that are expected at the time of such advances ultimately to be
treated as expenses in accordance with GAAP; (iv) stock, obligations or
securities received in satisfaction of judgments; and (v) Investments received
as consideration in Asset Sales to the extent permitted under the "Limitation
on Asset Sales" covenant.
"Redeemable Stock" means any class or series of Capital Stock
of any Person that by its terms or otherwise is (i) required to be redeemed
prior to the Stated Maturity of the Notes, (ii) redeemable at the option of
the holder of such class or series of Capital Stock at any time prior to the
Stated Maturity of the Notes or (iii) convertible into or exchangeable for
Capital Stock referred to in clause (i) or (ii) above or Indebtedness having a
scheduled maturity prior to the Stated Maturity of the Notes; provided that
any Capital Stock that would not constitute Redeemable Stock but for
provisions thereof giving holders thereof the right to require such Person to
repurchase or redeem such Capital Stock upon the occurrence of an "asset sale"
or "change of control" occurring prior to the Stated Maturity of the Notes
shall not constitute Redeemable Stock if the "asset sale" or "change of
control" provisions applicable to such Capital Stock are no more favorable to
the holders of such Capital Stock than the provisions contained in "Limitation
on Asset Sales" and "Repurchase of Notes upon a Change of Control" covenants
described below and such Capital Stock specifically provides that such Person
will not repurchase or redeem any such stock pursuant to such provision prior
to the Company's repurchase of such Notes as are required to be repurchased
pursuant to the "Limitation on Asset Sales" and "Repurchase of Notes upon a
Change of Control" covenants described below.
"Restricted Subsidiary" means any Subsidiary of the Company
other than an Unrestricted Subsidiary.
"Senior Indebtedness" means the following obligations of the
Company, whether outstanding on the Closing Date or thereafter Incurred: (i)
all Indebtedness and all other monetary obligations (including expenses,
indemnities, fees and other monetary obligations) of the Company under the
Credit Agreement, any Interest Rate Agreement or Currency Agreement relating
to Indebtedness under the Credit Agreement, the 12 1/4% Notes, the 15% Notes
and the Vendor Financing Arrangement and (ii) all Indebtedness and all other
monetary obligations of the Company (other than the Notes), including
principal and interest on such Indebtedness, unless such Indebtedness, by its
terms or by the terms of any agreement or instrument pursuant to which such
Indebtedness is issued, is pari passu with, or subordinated in right of
payment to, the Notes; provided that the term "Senior Indebtedness" shall not
include (a) any Indebtedness of the Company that, when Incurred, was without
recourse to the Company, (b) any Indebtedness of the Company to a Subsidiary
of the Company, or to a joint venture in which the Company has an interest,
(c) any Indebtedness of the Company, to the extent not permitted by the
"Limitation on Indebtedness" covenant or the "Limitation on Senior
Subordinated Indebtedness" covenant described below (but as to any such
Indebtedness under the Credit Agreement, no such violation shall be deemed to
exist for purposes of this clause (c) if the Bank Agent shall have received an
Officers' Certificate to the effect that the issuance of such Indebtedness
does not violate such covenant), (d) any Indebtedness to any employee of the
Company or any of its respective Subsidiaries, (e) any liability for taxes
owed or owing by the Company or (f) any Trade Payables. Senior Indebtedness
will also include interest accruing subsequent to events of bankruptcy of the
Company and its respective Subsidiaries at the rate provided for in the
document governing such Senior Indebtedness, whether or not such interest is
an allowed claim enforceable against the debtor in a bankruptcy case under
bankruptcy law.
"Senior Subordinated Obligations" means any principal of,
premium, if any, or interest (including, without limitation, any additional
interest payable by reason of the Company's failure to consummate an exchange
offer to cause a shelf registration to become effective) on the Notes payable
pursuant to the terms of the Notes or upon acceleration, including any amounts
received upon the exercise of rights of rescission or other rights of action
(including claims for damages) or otherwise, to the extent relating to the
purchase price of the Notes or amounts corresponding to such principal,
premium, if any, or interest on the Notes.
"Significant Subsidiary" means, at any date of determination,
any Restricted Subsidiary that, together with its Subsidiaries, (i) for the
most recent fiscal year of the Company, accounted for more than 10% of the
consolidated revenues of the Company and its Restricted Subsidiaries or (ii)
as of the end of such fiscal year, was the owner of more than 10% of the
consolidated assets of the Company and its Restricted Subsidiaries, all as set
forth on the most recently available consolidated financial statements of the
Company for such fiscal year.
"Specified Date" means any Redemption Date, any Payment Date
for an Offer to Purchase or any date on which the Notes first become due and
payable after an Event of Default.
"S&P" means Standard & Poor's Ratings Services and its
successors.
"Stated Maturity" means, (i) with respect to any debt security,
the date specified in such debt security as the fixed date on which the final
installment of principal of such debt security is due and payable and (ii)
with respect to any scheduled installment of principal of or interest on any
debt security, the date specified in such debt security as the fixed date on
which such installment is due and payable.
"Subsidiary" means, with respect to any Person, any
corporation, association or other business entity of which more than 50% of
the voting power of the outstanding Voting Stock is owned, directly or
indirectly, by such Person and one or more other Subsidiaries of such Person.
"Temporary Cash Investment" means any of the following: (i)
direct obligations of the United States of America or any agency thereof or
obligations fully and unconditionally guaranteed by the United States of
America or any agency thereof, (ii) time deposit accounts, certificates of
deposit and money market deposits maturing within 180 days of the date of
acquisition thereof issued by a bank or trust company which is organized under
the laws of the United States of America, any state thereof or any foreign
country recognized by the United States of America, and which bank or trust
company has capital, surplus and undivided profits aggregating in excess of
$50 million (or the foreign currency equivalent thereof) and has outstanding
debt which is rated "A" (or such similar equivalent rating) or higher by at
least one nationally recognized statistical rating organization (as defined in
Rule 436 under the Securities Act) or any money-market fund sponsored by a
registered broker dealer or mutual fund distributor, (iii) repurchase
obligations with a term of not more than 30 days for underlying securities
of the types described in clause (i) above entered into with a bank meeting
the qualifications described in clause (ii) above, (iv) commercial paper,
maturing not more than 90 days after the date of acquisition, issued by a
corporation (other than an Affiliate of the Company) organized and in
existence under the laws of the United States of America, any state thereof
or any foreign country recognized by the United States of America with a
rating at the time as of which any investment therein is made of "P-1" (or
higher) according to Moody's or "A-1" (or higher) according to S&P, and (v)
securities with maturities of six months or less from the date of
acquisition issued or fully and unconditionally guaranteed by any state,
commonwealth or territory of the United States of America, or by any
political subdivision or taxing authority thereof, and rated at least "A"
by S&P or Moody's.
"Trade Payables" means, with respect to any Person, any
accounts payable or any other indebtedness or monetary obligation to trade
creditors created, assumed or Guaranteed by such Person or any of its
Subsidiaries arising in the ordinary course of business in connection with the
acquisition of goods or services.
"Transaction Date" means, with respect to the Incurrence of any
Indebtedness by the Company or any of its Restricted Subsidiaries, the date
such Indebtedness is to be Incurred and, with respect to any Restricted
Payment, the date such Restricted Payment is to be made.
"Unrestricted Subsidiary" means (i) any Subsidiary of the
Company that at the time of determination shall be designated an Unrestricted
Subsidiary by the Board of Directors in the manner provided below; and (ii)
any Subsidiary of an Unrestricted Subsidiary. The Board of Directors may
designate any Restricted Subsidiary (including any newly acquired or newly
formed Subsidiary of the Company) to be an Unrestricted Subsidiary unless such
Subsidiary owns any Capital Stock of, or owns or holds any Lien on any
property of, the Company or any Restricted Subsidiary; provided that (A) any
Guarantee by the Company or any Restricted Subsidiary of any Indebtedness of
the Subsidiary being so designated shall be deemed an "Incurrence" of such
Indebtedness and an "Investment" by the Company or such Restricted Subsidiary
(or both, if applicable) at the time of such designation; (B) either (I) the
Subsidiary to be so designated has total assets of $1,000 or less or (II) if
such Subsidiary has assets greater than $1,000, such designation would be
permitted under the "Limitation on Restricted Payments" covenant described
below and (C) if applicable, the Incurrence of Indebtedness and the Investment
referred to in clause (A) of this proviso would be permitted under the
"Limitation on Indebtedness" and "Limitation on Restricted Payments" covenants
described below. The Board of Directors may designate any Unrestricted
Subsidiary to be a Restricted Subsidiary; provided that (i) no Default or Event
of Default shall have occurred and be continuing at the time of or after
giving effect to such designation and (ii) all Liens and Indebtedness of such
Unrestricted Subsidiary outstanding immediately after such designation would,
if Incurred at such time, have been permitted to be Incurred (and shall be
deemed to have been Incurred) for all purposes of the Indenture. Any such
designation by the Board of Directors shall be evidenced to the Trustee by
promptly filing with the Trustee a copy of the Board Resolution giving effect
to such designation and an Officers' Certificate certifying that such
designation complied with the foregoing provisions.
"Vendor Financing Arrangement" means the Financing and Security
Agreement between Glenayre Electronics, Inc. and the Company dated March 21,
1997, as amended from time to time.
"Voting Stock" means with respect to any Person, Capital Stock
of any class or kind ordinarily having the power to vote for the election of
directors, managers or other voting members of the governing body of such
Person.
"Wholly Owned" means, with respect to any Subsidiary of any
Person, the ownership of all of the outstanding Capital Stock of such
Subsidiary (other than any director's qualifying shares or Investments by
foreign nationals mandated by applicable law) by such Person or one or more
Wholly Owned Subsidiaries of such Person.
Covenants
Limitation on Indebtedness
(a) The Company will not, and will not permit any of its
Restricted Subsidiaries to, Incur any Indebtedness (other than the Notes and
Indebtedness existing on the Closing Date); provided that the Company may
Incur Indebtedness if, after giving effect to the Incurrence of such
Indebtedness and the receipt and application of the proceeds therefrom, the
Consolidated Leverage Ratio would be greater than zero and less than (x) 7:1,
for Indebtedness Incurred on or prior to December 31, 2000 or (y) 6:1, for
Indebtedness Incurred thereafter.
Notwithstanding the foregoing, the Company and any Restricted
Subsidiary (except as specified below) may Incur each and all of the
following: (i) Indebtedness of the Company outstanding at any time in an
aggregate principal amount not to exceed the greater of (x) $150 million and
(y) an amount equal to 4.5 times the Company's Consolidated EBITDA for the
then most recent four fiscal quarters for which financial statements of the
Company have been filed with the Commission or provided to the Trustee
pursuant to the "Commission Reports and Reports to Holders" covenant, in each
case less any amount of such Indebtedness permanently repaid as provided under
the "Limitation on Asset Sales" covenant described below; (ii) Indebtedness
owed (A) to the Company evidenced by a promissory note or (B) to any
Restricted Subsidiary; provided that any event which results in any such
Restricted Subsidiary ceasing to be a Restricted Subsidiary or any subsequent
transfer of such Indebtedness (other than to the Company or another Restricted
Subsidiary) shall be deemed, in each case, to constitute an Incurrence of such
Indebtedness not permitted by this clause (ii); (iii) Indebtedness issued in
exchange for, or the net proceeds of which are used to refinance or refund,
then outstanding Indebtedness (other than Indebtedness Incurred under clause
(i), (ii), (iv), (vii), (ix) or (xi) of this paragraph) and any refinancings
thereof in an amount not to exceed the amount so refinanced or refunded (plus
premiums, accrued interest, fees and expenses); provided that Indebtedness the
proceeds of which are used to refinance or refund the Notes or Indebtedness
that is pari passu with, or subordinated in right of payment to, the Notes
shall only be permitted under this clause (iii) if (A) in case the Notes are
refinanced in part or the Indebtedness to be refinanced is pari passu with the
Notes, such new Indebtedness, by its terms or by the terms of any agreement or
instrument pursuant to which such new Indebtedness is outstanding, is
expressly made pari passu with, or subordinate in right of payment to, the
remaining Notes, (B) in case the Indebtedness to be refinanced is subordinated
in right of payment to the Notes, such new Indebtedness, by its terms or by
the terms of any agreement or instrument pursuant to which such new
Indebtedness is issued or remains outstanding, is expressly made subordinate
in right of payment to the Notes at least to the extent that the Indebtedness
to be refinanced is subordinated to the Notes and (C) such new Indebtedness,
determined as of the date of Incurrence of such new Indebtedness, does not
mature prior to the Stated Maturity of the Indebtedness to be refinanced or
refunded, and the Average Life of such new Indebtedness is at least equal to
the remaining Average Life of the Indebtedness to be refinanced or refunded;
and provided further that in no event may Indebtedness of the Company be
refinanced by means of any Indebtedness of any Restricted Subsidiary pursuant
to this clause (iii); (iv) Indebtedness (A) in respect of performance, surety
or appeal bonds provided in the ordinary course of business, (B) under
Currency Agreements and Interest Rate Agreements; provided that such
agreements (a) are designed solely to protect the Company or its Restricted
Subsidiaries against fluctuations in foreign currency exchange rates or
interest rates and (b) do not increase the Indebtedness of the obligor
outstanding at any time other than as a result of fluctuations in foreign
currency exchange rates or interest rates or by reason of fees, indemnities and
compensation payable thereunder and (C) arising from agreements providing for
indemnification, adjustment of purchase price or similar obligations, or from
Guarantees or letters of credit, surety bonds or performance bonds securing
any obligations of the Company or any of its Restricted Subsidiaries pursuant
to such agreements, in any case Incurred in connection with the disposition of
any business, assets or Restricted Subsidiary (other than Guarantees of
Indebtedness Incurred by any Person acquiring all or any portion of such
business, assets or Restricted Subsidiary for the purpose of financing such
acquisition), in a principal amount not to exceed the gross proceeds actually
received by the Company or any Restricted Subsidiary in connection with such
disposition; (v) Indebtedness under letters of credit and bankers' acceptances
issued in the ordinary course of business; (vi) Acquired Indebtedness;
provided that, with respect to this clause (vi), after giving effect to the
Incurrence thereof, the Company's Consolidated Leverage Ratio is not more than
it was immediately prior to the Incurrence of such Acquired Indebtedness;
(vii) Indebtedness, in an amount not to exceed $2 million at any one time
outstanding, Incurred by the Company in connection with the purchase,
redemption, acquisition, cancellation or other retirement for value of shares
of Capital Stock of the Company or any Restricted Subsidiary, options on any
such shares or related stock appreciation rights or similar securities held
by officers or employees or former officers or employees (or their estates or
beneficiaries under their estates), upon death, disability, retirement,
termination of employment or pursuant to any agreement under which such shares
of stock or related rights were issued; provided that (A) such Indebtedness,
by its terms or by the terms of any agreement or instrument pursuant to which
such Indebtedness is issued, is expressly made subordinate in right of payment
to the Notes, (B) such Indebtedness, by its terms or by the terms of any
agreement or instrument pursuant to which such Indebtedness is issued,
provides that no payments of principal of such Indebtedness by way of sinking
fund, mandatory redemption or otherwise (including defeasance) may be made by
the Company at any time prior to the Stated Maturity of the Notes and (C) the
scheduled maturity of all principal of such Indebtedness is beyond the Stated
Maturity of the Notes; (viii) Indebtedness of the Company, to the extent the
net proceeds thereof are promptly (A) used to purchase Notes tendered in an
Offer to Purchase made as a result of a Change in Control or (B) deposited to
defease the Notes as described below under "Defeasance"; (ix) Guarantees of
the Notes and Guarantees of Indebtedness of the Company by any Restricted
Subsidiary provided the Guarantee of such Indebtedness is permitted by and
made in accordance with the "Limitation on Issuance of Guarantees by
Restricted Subsidiaries" covenant described below; (x) Indebtedness Incurred
to finance the cost (including the cost of design, development, acquisition,
construction, installation, improvement, transportation or integration) of
equipment, inventory or network assets (including under any Capitalized Lease
and the cost of the Capital Stock of a Person that becomes a Restricted
Subsidiary to the extent of the fair market value of the equipment, inventory
or network assets of such Person at the time it becomes a Restricted
Subsidiary) to be acquired by the Company or a Restricted Subsidiary after the
Closing Date; (xi) Indebtedness of the Company not to exceed, at any time
outstanding, two times the sum of (A) the Net Cash Proceeds received by the
Company after the Closing Date from the issuance and sale of its Capital Stock
(other than Redeemable Stock) to a Person that is not a Subsidiary of the
Company, to the extent such Net Cash Proceeds have not been used pursuant to
clause (C)(2) of the first paragraph or clause (iii), (iv) or (vi) of the
second paragraph of the "Limitation on Restricted Payments" covenant described
below to make a Restricted Payment and (B) 80% of the fair market value of
property (other than cash and cash equivalents) received by the Company after
the Closing Date from the sale of its Capital Stock (other than Redeemable
Stock) to a Person that is not a Subsidiary of the Company, to the extent such
sale of Capital Stock has not been used pursuant to clause (iii), (iv) or
(vii) of the second paragraph of the "Limitation on Restricted Payments"
covenant described below to make a Restricted Payment; provided that such
Indebtedness does not mature prior to the Stated Maturity of the Notes and has
an Average Life longer than the Notes; and (xii) Guarantees of Indebtedness,
in an aggregate principal amount not to exceed $10 million, of any Person the
primary business of which is located outside the United States and is related,
ancillary or complementary to the business of the Company and its Restricted
Subsidiaries.
(b) Notwithstanding any other provision of this "Limitation on
Indebtedness" covenant, the maximum amount of Indebtedness that the Company or
a Restricted Subsidiary may Incur pursuant to this "Limitation on Indebtedness"
covenant shall not be deemed to be exceeded, with respect to any outstanding
Indebtedness due solely to the result of fluctuations in the exchange rates of
currencies.
(c) For purposes of determining any particular amount of
Indebtedness under this "Limitation on Indebtedness" covenant, (1) Guarantees,
Liens or obligations with respect to letters of credit supporting Indebtedness
otherwise included in the determination of such particular amount shall not be
included and (2) any Liens granted pursuant to the equal and ratable
provisions referred to in the "Limitation on Liens" covenant described below
shall not be treated as Indebtedness. For purposes of determining compliance
with this "Limitation on Indebtedness" covenant, in the event that an item of
Indebtedness meets the criteria of more than one of the types of Indebtedness
described in the above clauses, the Company, in its sole discretion, shall
classify such item of Indebtedness and only be required to include the amount
and type of such Indebtedness in one of such clauses.
Limitation on Senior Subordinated Indebtedness
The Company shall not Incur any Indebtedness that is
subordinate in right of payment to any Senior Indebtedness unless such
Indebtedness is pari passu with, or subordinated in right of payment to, the
Notes; provided that the foregoing limitation shall not apply to distinctions
between categories of Senior Indebtedness of the Company that exist by reason
of any Liens or Guarantees arising or created in respect of some but not all
such Senior Indebtedness.
Limitation on Liens
The Company shall not Incur any Indebtedness secured by a Lien
("Secured Indebtedness") which is not Senior Indebtedness unless
contemporaneously therewith effective provision is made to secure the Notes
equally and ratably with (or, if the Secured Indebtedness is subordinated in
right of payment to the Notes, prior to) such Secured Indebtedness for so long
as such Secured Indebtedness is secured by a Lien.
Limitation on Restricted Payments
The Company will not, and will not permit any Restricted
Subsidiary to, directly or indirectly, (i) declare or pay any dividend or make
any distribution on or with respect to its Capital Stock (other than (x)
dividends or distributions payable solely in shares of its Capital Stock
(other than Redeemable Stock) or in options, warrants or other rights to
acquire shares of such Capital Stock and (y) pro rata dividends or
distributions on Common Stock of Restricted Subsidiaries held by minority
stockholders) held by Persons other than the Company or any of its Restricted
Subsidiaries, (ii) purchase, redeem, retire or otherwise acquire for value any
shares of Capital Stock of (A) the Company or an Unrestricted Subsidiary
(including options, warrants or other rights to acquire such shares of Capital
Stock) held by any Person or (B) a Restricted Subsidiary (including options,
warrants or other rights to acquire such shares of Capital Stock) held by any
Affiliate of the Company (other than a Wholly Owned Restricted Subsidiary) or
any holder (or any Affiliate of such holder) of 5% or more of the Capital
Stock of the Company, (iii) make any voluntary or optional principal payment,
or voluntary or optional redemption, repurchase, defeasance, or other
acquisition or retirement for value, of Indebtedness of the Company that is
subordinated in right of payment to the Notes or (iv) make any Investment,
other than a Permitted Investment, in any Person (such payments or any other
actions described in clauses (i) through (iv) above being collectively
"Restricted Payments") if, at the time of, and after giving effect to, the
proposed Restricted Payment: (A) a Default or Event of Default shall have
occurred and be continuing, (B) the Company could not Incur at least $1.00 of
Indebtedness under the first paragraph of the "Limitation on Indebtedness"
covenant or (C) the aggregate amount of all Restricted Payments (the amount,
if other than in cash, to be determined in good faith by the Board of
Directors, whose determination shall be conclusive and evidenced by a Board
Resolution) made after the Closing Date shall exceed the sum of (1) 50% of the
aggregate amount of the Adjusted Consolidated Net Income (or, if the Adjusted
Consolidated Net Income is a loss, minus 100% of the amount of such loss)
(determined by excluding income resulting from transfers of assets by the
Company or a Restricted Subsidiary to an Unrestricted Subsidiary) accrued on a
cumulative basis during the period (taken as one accounting period) beginning
on the first day of the fiscal quarter immediately following the Closing Date
and ending on the last day of the last fiscal quarter preceding the
Transaction Date for which reports have been filed with the Commission or
provided to the Trustee pursuant to the "Commission Reports and Reports to
Holders" covenant plus (2) the aggregate Net Cash Proceeds received by the
Company after the Closing Date from the issuance and sale permitted by the
Indenture of its Capital Stock (other than Redeemable Stock) to a Person who
is not a Subsidiary of the Company, including an issuance or sale permitted by
the Indenture of Indebtedness of the Company for cash subsequent to the
Closing Date upon the conversion of such Indebtedness into Capital Stock
(other than Redeemable Stock) of the Company, or from the issuance to a Person
who is not a Subsidiary of the Company of any options, warrants or other
rights to acquire Capital Stock of the Company (in each case, exclusive of any
Redeemable Stock or any options, warrants or other rights that are redeemable
at the option of the holder, or are required to be redeemed, prior to the
Stated Maturity of the Notes), in each case except to the extent such Net Cash
Proceeds are used to Incur Indebtedness pursuant to clause (xi) of the second
paragraph under the "Limitation on Indebtedness" covenant plus (3) an amount
equal to the net reduction in Investments (other than reductions in Permitted
Investments) in any Person resulting from payments of interest on
Indebtedness, dividends, repayments of loans or advances, or other transfers
of assets, in each case to the Company or any Restricted Subsidiary or from
the Net Cash Proceeds from the sale of any such Investment (except, in each
case, to the extent any such payment or proceeds are included in the
calculation of Adjusted Consolidated Net Income), or from redesignations of
Unrestricted Subsidiaries as Restricted Subsidiaries (valued in each case as
provided in the definition of "Investments"), not to exceed, in each case, the
amount of Investments previously made by the Company or any Restricted
Subsidiary in such Person or Unrestricted Subsidiary.
The foregoing provision shall not be violated by reason of: (i)
the payment of any dividend within 60 days after the date of declaration
thereof if, at said date of declaration, such payment would comply with the
foregoing paragraph; (ii) the redemption, repurchase, defeasance or other
acquisition or retirement for value of Indebtedness that is subordinated in
right of payment to the Notes including premium, if any, and accrued and
unpaid interest, with the proceeds of, or in exchange for, Indebtedness
Incurred under clause (iii) of the second paragraph of part (a) of the
"Limitation on Indebtedness" covenant; (iii) the repurchase, redemption or
other acquisition of Capital Stock of the Company or an Unrestricted
Subsidiary (or options, warrants or other rights to acquire such Capital
Stock) in exchange for, or out of the proceeds of a substantially concurrent
offering of, shares of Capital Stock (other than Redeemable Stock) of the
Company (or options, warrants or other rights to acquire such Capital Stock);
(iv) the making of any principal payment or the repurchase, redemption,
retirement, defeasance or other acquisition for value of Indebtedness of the
Company which is subordinated in right of payment to the Notes in exchange
for, or out of the proceeds of, a substantially concurrent offering of,
shares of the Capital Stock (other than Redeemable Stock) of the Company (or
options, warrants or other rights to acquire such Capital Stock); (v) payments
or distributions, to dissenting stockholders pursuant to applicable law,
pursuant to or in connection with a consolidation, merger or transfer of
assets that complies with the provisions of the Indenture applicable to
mergers, consolidations and transfers of all or substantially all of the
property and assets of the Company; (vi) Investments in any Person the primary
business of which is related, ancillary or complementary to the business of
the Company and its Restricted Subsidiaries on the date of such Investments;
provided that the aggregate amount of Investments made pursuant to this clause
(vi) does not exceed the sum of (x) $15 million plus (y) the amount of Net
Cash Proceeds received by the Company after the Closing Date from the sale of
its Capital Stock (other than Redeemable Stock) to a Person who is not a
Subsidiary of the Company, except to the extent such Net Cash Proceeds are
used to Incur Indebtedness pursuant to clause (xi) under the "Limitation on
Indebtedness" covenant or to make Restricted Payments pursuant to clause
(C)(2) of the first paragraph, or clauses (iii) or (iv) of this paragraph, of
this "Limitation on Restricted Payments" covenant, plus (z) the net reduction
in Investments made pursuant to this clause (vi) resulting from distributions
on or repayments of such Investments or from the Net Cash Proceeds from the
sale of any such Investment (except in each case to the extent any such
payment or proceeds is included in the calculation of Adjusted Consolidated
Net Income) or from such Person becoming a Restricted Subsidiary (valued in
each case as provided in the definition of "Investments"), provided that the
net reduction in any Investment shall not exceed the amount of such
Investment; (vii) Investments acquired in exchange for Capital Stock (other
than Redeemable Stock) of the Company; (viii) the declaration or payment of
dividends on the Common Stock of the Company following a Public Equity
Offering of such Common Stock, of up to 6% per annum of the Net Cash Proceeds
received by the Company in such Public Equity Offering; (ix) repurchases of
Warrants pursuant to a Repurchase Offer; (x) any purchase of any fractional
share of Common Stock of the Company in connection with an exercise of the
Warrants; (xi) the purchase, redemption, acquisition, cancellation or other
retirement for value of shares of Capital Stock of the Company or any
Restricted Subsidiary, options on any such shares or related stock appreciation
rights or similar securities held by officers or employees or former officers
or employees (or their estates or beneficiaries under their estates), upon
death, disability, retirement, termination of employment or pursuant to any
agreement under which such shares of stock or related rights were issued;
provided that the aggregate cash consideration paid for such purchase,
redemption, acquisition, cancellation or other retirement of such shares of
Capital Stock or related rights after the Closing Date does not exceed an
aggregate amount of $5 million; (xii) the purchase, redemption, acquisition,
cancellation or other retirement for value of shares of Capital Stock of the
Company or any Restricted Subsidiary to the extent necessary, in the judgment
of the Board of Directors, to prevent the loss or secure the renewal or
reinstatement of any license or franchise held by the Company or any of its
Restricted Subsidiaries from any governmental agency; (xiii) Investments in
any Person the primary business of which is located outside the United States
and is related, ancillary or complementary to the business of the Company and
its Restricted Subsidiaries on the date of such Investments, provided that the
aggregate amount of Investments pursuant to this clause (xiii) does not exceed
(x) $10 million plus (y) the net reduction in Investments made pursuant to
this clause (xiii) resulting from distributions on or repayments of such
Investments or from the Net Cash Proceeds from the sale of any such Investment
(except in each case to the extent any such payment or proceeds is included in
the calculation of Adjusted Consolidated Net Income) or from such Person
becoming a Restricted Subsidiary (valued in each case as provided in the
definition of "Investments"), provided that the net reduction in any
Investment shall not exceed the amount of such Investment; or (xiv)
Investments in the form of Guarantees Incurred under clause (xii) of the
second paragraph of the "Limitation on Indebtedness" covenant; provided that,
except in the case of clauses (i) and (iii), no Default or Event of Default
shall have occurred and be continuing or occur as a consequence of the actions
or payments set forth therein.
Each Restricted Payment permitted pursuant to the preceding
paragraph (other than the Restricted Payment referred to in clause (ii)
thereof, an exchange of Capital Stock for Capital Stock or Indebtedness
referred to in clause (iii) or (iv) thereof and an Investment referred to in
clause (vi) or (vii) thereof), and the Net Cash Proceeds from any issuance of
Capital Stock referred to in clauses (iii) and (iv), shall be included in
calculating whether the conditions of clause (C) of the first paragraph of
this "Limitation on Restricted Payments" covenant have been met with respect to
any subsequent Restricted Payments. In the event the proceeds of an issuance
of Capital Stock of the Company are used for the redemption, repurchase or
other acquisition of the Notes, or Indebtedness that is pari passu with the
Notes, then the Net Cash Proceeds of such issuance shall be included in clause
(C) of the first paragraph of this "Limitation on Restricted Payments"
covenant only to the extent such proceeds are not used for such redemption,
repurchase or other acquisition of Indebtedness.
Limitation on Dividend and Other Payment Restrictions Affecting
Restricted Subsidiaries
The Company will not, and will not permit any Restricted
Subsidiary to, create or otherwise cause or suffer to exist or become
effective any consensual encumbrance or restriction of any kind on the ability
of any Restricted Subsidiary to (i) pay dividends or make any other
distributions permitted by applicable law on any Capital Stock of such
Restricted Subsidiary owned by the Company or any other Restricted Subsidiary,
(ii) pay any Indebtedness owed to the Company or any other Restricted
Subsidiary, (iii) make loans or advances to the Company or any other
Restricted Subsidiary or (iv) transfer any of its property or assets to the
Company or any other Restricted Subsidiary.
The foregoing provisions shall not restrict any encumbrances or
restrictions: (i) existing on the Closing Date in the Credit Agreement, the
Vendor Financing Arrangement, the 15% Indenture, the Indenture or any other
agreements in effect on the Closing Date, and any extensions, refinancings,
renewals or replacements of such agreements; provided that the encumbrances
and restrictions in any such extensions, refinancings, renewals or
replacements are no less favorable in any material respect to the Holders than
those encumbrances or restrictions that are then in effect and that are being
extended, refinanced, renewed or replaced; (ii) existing under or by reason of
applicable law; (iii) existing with respect to any Person or the property or
assets of such Person acquired by the Company or any Restricted Subsidiary,
existing at the time of such acquisition and not incurred in contemplation
thereof, which encumbrances or restrictions are not applicable to any Person
or the property or assets of any Person other than such Person or the property
or assets of such Person so acquired; (iv) in the case of clause (iv) of the
first paragraph of this "Limitation on Dividend and Other Payment Restrictions
Affecting Restricted Subsidiaries" covenant, (A) that restrict in a customary
manner the subletting, assignment or transfer of any property or asset that is
a lease, license, conveyance or contract or similar property or asset, (B)
existing by virtue of any transfer of, agreement to transfer, option or right
with respect to, or Lien on, any property or assets of the Company or any
Restricted Subsidiary not otherwise prohibited by the Indenture or (C) arising
or agreed to in the ordinary course of business, not relating to any
Indebtedness, and that do not, individually or in the aggregate, detract from
the value of property or assets of the Company or any Restricted Subsidiary in
any manner material to the Company or any Restricted Subsidiary; (v) with
respect to a Restricted Subsidiary and imposed pursuant to an agreement that
has been entered into for the sale or disposition of all or substantially all
of the Capital Stock of, or property and assets of, such Restricted
Subsidiary; or (vi) contained in the terms of any Indebtedness or any
agreement pursuant to which such Indebtedness was issued if (A) the
encumbrance or restriction applies only in the event of a payment default or a
default with respect to a financial covenant contained in such Indebtedness or
agreement, (B) the encumbrance or restriction is not materially more
disadvantageous to the Holders of the Notes than is customary in comparable
financings (as determined by the Company) and (C) the Company determines that
any such encumbrance or restriction will not materially affect the Company's
ability to make principal or interest payments on the Notes. Nothing contained
in this "Limitation on Dividend and Other Payment Restrictions Affecting
Restricted Subsidiaries" covenant shall prevent the Company or any Restricted
Subsidiary from (1) creating, incurring, assuming or suffering to exist any
Liens otherwise permitted in the "Limitation on Liens" covenant or (2)
restricting the sale or other disposition of property or assets of the Company
or any of its Restricted Subsidiaries that secure Indebtedness of the Company
or any of its Restricted Subsidiaries.
Limitation on the Issuance and Sale of Capital Stock of
Restricted Subsidiaries
The Company will not sell, and will not permit any Restricted
Subsidiary, directly or indirectly, to issue or sell, any shares of Capital
Stock of a Restricted Subsidiary (including options, warrants or other rights
to purchase shares of such Capital Stock) except (i) to the Company or a
Wholly Owned Restricted Subsidiary; (ii) issuances of director's qualifying
shares or sales to foreign nationals of shares of Capital Stock of foreign
Restricted Subsidiaries, to the extent required by applicable law; (iii) if,
immediately after giving effect to such issuance or sale, such Restricted
Subsidiary would no longer constitute a Restricted Subsidiary and any
Investment in such Person remaining after giving effect to such issuance or
sale would have been permitted to be made under the "Limitation on Restricted
Payments" covenant if made on the date of such issuance or sale; or (iv)
issuances and sales of Common Stock, if the Net Cash Proceeds from such
issuance or sale are applied, to the extent required to be applied, pursuant
to the "Limitation on Asset Sales" covenant described below.
Limitation on Issuances of Guarantees by Restricted Subsidiaries
The Company will not permit any Restricted Subsidiary, directly
or indirectly, to Guarantee any Indebtedness of the Company which is pari
passu with or subordinate in right of payment to the Notes ("Guaranteed
Indebtedness"), unless (i) such Restricted Subsidiary simultaneously executes
and delivers a supplemental indenture to the Indenture providing for a
Guarantee (a "Subsidiary Guarantee") of payment of the Notes by such
Restricted Subsidiary and (ii) such Restricted Subsidiary waives and will not
in any manner whatsoever claim or take the benefit or advantage of, any rights
of reimbursement, indemnity or subrogation or any other rights against the
Company or any other Restricted Subsidiary as a result of any payment by such
Restricted Subsidiary under its Subsidiary Guarantee; provided that this
paragraph shall not be applicable to any Guarantee of any Restricted
Subsidiary that existed at the time such Person became a Restricted Subsidiary
and was not Incurred in connection with, or in contemplation of, such Person
becoming a Restricted Subsidiary. If the Guaranteed Indebtedness is (A) pari
passu with the Notes, then the Guarantee of such Guaranteed Indebtedness shall
be pari passu with, or subordinated to, the Subsidiary Guarantee or (B)
subordinated to the Notes, then the Guarantee of such Guaranteed Indebtedness
shall be subordinated to the Subsidiary Guarantee at least to the extent that
the Guaranteed Indebtedness is subordinated to the Notes.
Notwithstanding the foregoing, any Subsidiary Guarantee by a
Restricted Subsidiary may provide by its terms that it shall be automatically
and unconditionally released and discharged upon (i) any sale, exchange or
transfer, to any Person not an Affiliate of the Company, of all of the
Company's and each Restricted Subsidiary's Capital Stock in, or all or
substantially all the assets of, such Restricted Subsidiary (which sale,
exchange or transfer is not prohibited by the Indenture) or (ii) the release
or discharge of the Guarantee which resulted in the creation of such Subsidiary
Guarantee, except a discharge or release by or as a result of payment under
such Guarantee.
Limitation on Transactions with Shareholders and Affiliates
The Company will not, and will not permit any Restricted
Subsidiary to, directly or indirectly, enter into, renew or extend any
transaction (including, without limitation, the purchase, sale, lease or
exchange of property or assets, or the rendering of any service) with any
holder (or any Affiliate of such holder) of 5% or more of any class of Capital
Stock of the Company or with any Affiliate of the Company or any Restricted
Subsidiary, except upon fair and reasonable terms no less favorable to the
Company or such Restricted Subsidiary than could be obtained, at the time of
such transaction or, if such transaction is pursuant to a written agreement,
at the time of the execution of the agreement providing therefor, in a
comparable arm's-length transaction with a Person that is not such a holder or
an Affiliate.
The foregoing limitation does not limit, and shall not apply to
(i) transactions (A) approved by a majority of the disinterested members of
the Board of Directors or (B) for which the Company or a Restricted Subsidiary
delivers to the Trustee a written opinion of a nationally recognized
investment banking firm stating that the transaction is fair to the Company or
such Restricted Subsidiary from a financial point of view; (ii) any
transaction solely between the Company and any of its Wholly Owned Restricted
Subsidiaries or solely between Wholly Owned Restricted Subsidiaries; (iii) the
payment of reasonable and customary regular fees to directors of the Company
who are not employees of the Company; (iv) any payments or other transactions
pursuant to any tax-sharing agreement between the Company and any other Person
with which the Company files a consolidated tax return or with which the
Company is part of a consolidated group for tax purposes; (v) the payment of
amounts to Morgan Stanley & Co. Incorporated or its Affiliates pursuant to
underwriting or placement agreements; (vi) any loans or advances to officers
or employees of the Company or any Restricted Subsidiary in the ordinary
course of business; (vii) any Restricted Payments not prohibited by the
"Limitation on Restricted Payments" covenant (including any Permitted
Investment); (viii) the sale, lease, transfer or other disposition by the
Company or any Restricted Subsidiary of Capital Stock or assets of any
Unrestricted Subsidiary having a fair market value of less than $5 million as
determined by the Board of Director; or (ix) any transactions solely between
shareholders of the Company (including amendments to any shareholder agreement
to which the Company is a party); provided that the Company is not affected in
any material way by any such transaction.
Limitation on Asset Sales
The Company will not, and will not permit any Restricted
Subsidiary to, consummate any Asset Sale, unless (i) the consideration
received by the Company or such Restricted Subsidiary is at least equal to the
fair market value of the assets sold or disposed of and (ii) at least 75% of
the consideration received consists of cash or Temporary Cash Investments or
the assumption of Indebtedness of the Company or such Restricted Subsidiary
provided that the Company and its Restricted Subsidiaries are irrevocably
released from all liability with respect to such Indebtedness. In the event
and to the extent that the Net Cash Proceeds received by the Company or any of
its Restricted Subsidiaries from one or more Asset Sales occurring on or after
the Closing Date in any period of 12 consecutive months exceed 10% of Adjusted
Consolidated Net Tangible Assets (determined as of the date closest to the
commencement of such 12-month period for which a consolidated balance sheet of
the Company and its Subsidiaries has been filed with the Commission pursuant
to the "Commission Reports and Reports to Holders" covenant), then the Company
shall or shall cause the relevant Restricted Subsidiary to (i) within twelve
months after the date Net Cash Proceeds so received exceed 10% of Adjusted
Consolidated Net Tangible Assets (A) apply an amount equal to such excess Net
Cash Proceeds to permanently repay Senior Indebtedness of the Company, or any
Restricted Subsidiary providing a Subsidiary Guarantee pursuant to the
"Limitation on Issuances of Guarantees by Restricted Subsidiaries" covenant
described above or Indebtedness of any other Restricted Subsidiary, in each
case owing to a Person other than the Company or any of its Restricted
Subsidiaries or (B) invest an equal amount, or the amount not so applied
pursuant to clause (A) (or enter into a definitive agreement committing to so
invest within 12 months after the date of such agreement), in property or
assets (other than current assets) of a nature or type or that are used in a
business (or in a company having property and assets of a nature or type, or
engaged in a business) similar or related to the nature or type of the
property and assets of, or the business of, the Company and its Restricted
Subsidiaries existing on the date of such investment (as determined in good
faith by the Board of Directors, whose determination shall be conclusive and
evidenced by a Board of Resolution) and (ii) apply (no later than the end of
the 12-month period referred to in clause (i)) such excess Net Cash Proceeds
(to the extent not applied pursuant to clause (i)) as provided in the
following paragraph of this "Limitation on Asset Sales" covenant. The amount
of such excess Net Cash Proceeds required to be applied (or to be committed to
be applied) during such 12-month period as set forth in clause (i) of the
preceding sentence and not applied as so required by the end of such period
shall constitute "Excess Proceeds."
If, as of the first day of any calendar month, the aggregate
amount of Excess Proceeds not theretofore subject to an Offer to Purchase
pursuant to this "Limitation on Asset Sales" covenant totals at least $10
million, the Company must commence, not later than the fifteenth Business Day
of such month, and consummate an Offer to Purchase from the Holders on a pro
rata basis an aggregate Accreted Value of Notes equal to the Excess Proceeds
on such date, at a purchase price equal to 100% of the Accreted Value of the
Notes on the relevant Payment Date, plus, in each case, accrued interest (if
any) to the Payment Date.
Repurchase of Notes Upon a Change of Control
The Company must commence, within 30 days of the occurrence of
a Change of Control, and consummate an Offer to Purchase for all Notes then
outstanding, at a purchase price equal to 101% of the Accreted Value thereof on
the relevant Payment Date, plus accrued interest (if any) to the Payment Date.
There can be no assurance that the Company will have sufficient
funds available at the time of any Change of Control to make any debt payment
(including repurchases of Notes) required by the foregoing covenant (as well
as may be contained in other securities of the Company which might be
outstanding at the time). The above covenant requiring the Company to
repurchase the Notes will, unless consents are obtained, require the Company
to repay all indebtedness then outstanding which by its terms would prohibit
such Note repurchase, either prior to or concurrently with such Note
repurchase.
Commission Reports and Reports to Holders
Whether or not the Company is then required to file reports
with the Commission, the Company shall file with the Commission all such
reports and other information as it would be required to file with the
Commission by Sections 13(a) or 15(d) under the Securities Exchange Act of
1934 if it were subject thereto. The Company shall supply the Trustee and each
Holder or shall supply to the Trustee for forwarding to each such Holder,
without cost to such Holder, copies of such reports and other information.
Events of Default
The following events will be defined as "Events of Default" in
the Indenture: (a) default in the payment of principal of (or premium, if any,
on) any Note when the same becomes due and payable at maturity, upon
acceleration, redemption or otherwise; whether or not such payment is
prohibited by the provisions described above under "--Ranking"; (b) default in
the payment of interest on any Note when the same becomes due and payable, and
such default continues for a period of 30 days, whether or not such payment is
prohibited by the provisions described above under "--Ranking"; (c) default in
the performance or breach of the provisions of the Indenture applicable to
mergers, consolidations and transfers of all or substantially all of the
assets of the Company or the failure to make or consummate an Offer to
Purchase in accordance with the "Limitation on Asset Sales" or "Repurchase of
Notes upon a Change of Control" covenant; (d) the Company defaults in the
performance of or breaches any other covenant or agreement of the Company in
the Indenture or under the Notes (other than a default specified in clause
(a), (b) or (c) above) and such default or breach continues for a period of 30
consecutive days after written notice by the Trustee or the Holders of 25% or
more in aggregate principal amount of the Notes; (e) there occurs with respect
to any issue or issues of Indebtedness of the Company or any Significant
Subsidiary having an outstanding principal amount of $10 million or more in the
aggregate for all such issues of all such Persons, whether such Indebtedness
now exists or shall hereafter be created, (I) an event of default that has
caused the holder thereof to declare such Indebtedness to be due and payable
prior to its Stated Maturity and such Indebtedness has not been discharged in
full or such acceleration has not been rescinded or annulled within 30 days of
such acceleration and/or (II) the failure to make a principal payment at the
final (but not any interim) fixed maturity and such defaulted payment shall
not have been made, waived or extended within 30 days of such payment default;
(f) any final judgment or order (not covered by insurance) for the payment of
money in excess of $10 million in the aggregate for all such final judgments
or orders against all such Persons (treating any deductibles, self-insurance
or retention as not so covered) shall be rendered against the Company or any
Significant Subsidiary and shall not be paid or discharged, and there shall be
any period of 30 consecutive days following entry of the final judgment or
order that causes the aggregate amount for all such final judgments or orders
outstanding and not paid or discharged against all such Persons to exceed $10
million during which a stay of enforcement of such final judgment or order, by
reason of a pending appeal or otherwise, shall not be in effect; (g) a court
having jurisdiction in the premises enters a decree or order for (A) relief in
respect of the Company or any Significant Subsidiary in an involuntary case
under any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, (B) appointment of a receiver, liquidator, assignee,
custodian, trustee, sequestrator or similar official of the Company or any
Significant Subsidiary or for all or substantially all of the property and
assets of the Company or any Significant Subsidiary or (C) the winding up or
liquidation of the affairs of the Company or any Significant Subsidiary and,
in each case, such decree or order shall remain unstayed and in effect for a
period of 60 consecutive days; or (h) the Company or any Significant
Subsidiary (A) commences a voluntary case under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect, or consents to the
entry of an order for relief in an involuntary case under any such law, (B)
consents to the appointment of or taking possession by a receiver, liquidator,
assignee, custodian, trustee, sequestrator or similar official of the Company
or any Significant Subsidiary or for all or substantially all of the property
and assets of the Company or any Significant Subsidiary or (C) effects any
general assignment for the benefit of creditors.
If an Event of Default (other than an Event of Default specified in
clause (g) or (h) above that occurs with respect to the Company) occurs and is
continuing under the Indenture, the Trustee or the Holders of at least 25% in
aggregate principal amount of the Notes, then outstanding, by written notice
to the Company (and to the Trustee if such notice is given by the Holders),
may, and the Trustee at the request of such Holders shall, declare the
Accreted Value of, premium, if any, and accrued interest on the Notes to be
immediately due and payable. Upon a declaration of acceleration (the
"Acceleration Notice"), such Accreted Value of, premium, if any, and accrued
interest shall be immediately due and payable; provided, however, that if
there are any amounts outstanding under the Credit Agreement, such declaration
shall not become effective until the earlier of (i) an acceleration of the
Indebtedness under the Credit Agreement and (ii) 5 Business Days after receipt
by the Company and the Bank Agent of such Acceleration Notice. In the event of
a declaration of acceleration because an Event of Default set forth in clause
(e) above has occurred and is continuing, such declaration of acceleration
shall be automatically rescinded and annulled if the event of default
triggering such Event of Default pursuant to clause (e) shall be remedied or
cured by the Company or the relevant Significant Subsidiary or waived by the
holders of the relevant Indebtedness within 60 days after the declaration of
acceleration with respect thereto. If an Event of Default specified in clause
(g) or (h) above occurs with respect to the Company, the Accreted Value of,
premium, if any, and accrued interest on the Notes then outstanding shall ipso
facto become and be immediately due and payable without any declaration or
other act on the part of the Trustee or any Holder. The Holders of at least a
majority in principal amount of the outstanding Notes by written notice to the
Company and to the Trustee, may waive all past defaults and rescind and annul
a declaration of acceleration and its consequences if (i) all existing Events
of Default, other than the nonpayment of the Accreted Value of, premium, if
any, and interest on the Notes that have become due solely by such declaration
of acceleration, have been cured or waived and (ii) the rescission would not
conflict with any judgment or decree of a court of competent jurisdiction. For
information as to the waiver of defaults, see "--Modification and Waiver."
The Holders of at least a majority in aggregate principal
amount of the outstanding Notes may direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or
exercising any trust or power conferred on the Trustee. However, the Trustee
may refuse to follow any direction that conflicts with law or the Indenture,
that may involve the Trustee in personal liability, or that the Trustee
determines in good faith may be unduly prejudicial to the rights of Holders of
Notes not joining in the giving of such direction and may take any other action
it deems proper that is not inconsistent with any such direction received from
Holders of Notes. A Holder may not pursue any remedy with respect to the
Indenture or the Notes unless: (i) the Holder gives the Trustee written notice
of a continuing Event of Default; (ii) the Holders of at least 25% in
aggregate principal amount of outstanding Notes make a written request to the
Trustee to pursue the remedy; (iii) such Holder or Holders offer the Trustee
indemnity satisfactory to the Trustee against any costs, liability or expense;
(iv) the Trustee does not comply with the request within 60 days after receipt
of the request and the offer of indemnity; and (v) during such 60-day period,
the Holders of a majority in aggregate principal amount of the outstanding
Notes do not give the Trustee a direction that is inconsistent with the
request. However, such limitations do not apply to the right of any Holder of
a Note to receive payment of the Accreted Value of, premium, if any, or
interest on, such Note or to bring suit for the enforcement of any such
payment, on or after the due date expressed in the Notes, which right shall
not be impaired or affected without the consent of the Holder.
The Indenture will require certain officers of the Company to
certify, on or before a date not more than 90 days after the end of each
fiscal year, that a review has been conducted of the activities of the Company
and its Restricted Subsidiaries and the Company's and its Restricted
Subsidiaries' performance under the Indenture and that the Company has
fulfilled all obligations thereunder, or, if there has been a default in the
fulfillment of any such obligation, specifying each such default and the
nature and status thereof. The Company will also be obligated to notify the
Trustee of any default or defaults in the performance of any covenants or
agreements under the Indenture.
Consolidation, Merger and Sale of Assets
The Company will not consolidate with, merge with or into, or
sell, convey, transfer, lease or otherwise dispose of all or substantially all
of its property and assets (as an entirety or substantially an entirety in one
transaction or a series of related transactions) to, any Person or permit any
Person to merge with or into the Company unless: (i) the Company shall be the
continuing Person, or the Person (if other than the Company) formed by such
consolidation or into which the Company is merged or that acquired or leased
such property and assets of the Company shall be a corporation organized and
validly existing under the laws of the United States of America or any
jurisdiction thereof and shall expressly assume, by a supplemental indenture,
executed and delivered to the Trustee, all of the obligations of the Company
on all of the Notes and under the Indenture; (ii) immediately after giving
effect to such transaction, no Default or Event of Default shall have occurred
and be continuing; (iii) immediately after giving effect to such transaction
on a pro forma basis, (A) the Company or any Person becoming the successor
obligor of the Notes, as the case may be, shall have a Consolidated Net Worth
equal to or greater than the Consolidated Net Worth of the Company immediately
prior to such transaction or (B) the Company or any Person becoming the
successor obligor of the Notes, as the case may be, shall have a Consolidated
Leverage Ratio no more than the greater of (I) 7:1, on or prior to December
31, 2000, or 6:1, thereafter and (II) the Consolidated Leverage Ratio of the
Company immediately prior to such transaction; provided that this clause (iii)
shall not apply to a consolidation or merger with or into a Wholly Owned
Restricted Subsidiary with a positive net worth; provided that, in connection
with any such merger or consolidation, no consideration (other than Capital
Stock (other than Redeemable Stock) in the surviving Person or the Company)
shall be issued or distributed to the stockholders of the Company; and (iv)
the Company delivers to the Trustee an Officers' Certificate (attaching the
arithmetic computations to demonstrate compliance with clause (iii)) and
Opinion of Counsel, in each case stating that such consolidation, merger or
transfer and such supplemental indenture complies with this provision and that
all conditions precedent provided for herein relating to such transaction have
been complied with; provided, however, that clause (iii) above does not apply
if, in the good faith determination of the Board of Directors of the Company,
whose determination shall be evidenced by a Board Resolution, the principal
purpose of such transaction is to change the state of incorporation of the
Company; and that any such transaction shall not have as one of its purposes
the evasion of the foregoing limitations.
Defeasance
Defeasance and Discharge. The Indenture will provide that the
Company will be deemed to have paid and will be discharged from any and all
obligations in respect of the Notes on the 123rd day after the deposit
referred to below, and the provisions of the Indenture will no longer be in
effect with respect to the Notes (except for, among other matters, certain
obligations to register the transfer or exchange of the Notes, to replace
stolen, lost or mutilated Notes, to maintain paying agencies and to hold
monies for payment in trust) if, among other things, (A) the Company has
deposited with the Trustee, in trust, money and/or U.S. Government Obligations
that through the payment of interest and principal in respect thereof in
accordance with their terms will provide money in an amount sufficient to pay
the principal of, premium, if any, and accrued interest on the Notes on the
Stated Maturity of such payments in accordance with the terms of the Indenture
and the Notes, (B) the Company has delivered to the Trustee (i) either (x) an
Opinion of Counsel to the effect that Holders will not recognize income, gain
or loss for federal income tax purposes as a result of the Company's exercise
of its option under this "Defeasance" provision and will be subject to federal
income tax on the same amount and in the same manner and at the same times as
would have been the case if such deposit, defeasance and discharge had not
occurred, which Opinion of Counsel must be based upon (and accompanied by a
copy of) a ruling of the Internal Revenue Service to the same effect unless
there has been a change in applicable federal income tax law after the Closing
Date such that a ruling is no longer required or (y) a ruling directed to the
Trustee received from the Internal Revenue Service to the same effect as the
aforementioned Opinion of Counsel and (ii) an Opinion of Counsel to the effect
that the creation of the defeasance trust does not violate the Investment
Company Act of 1940 and after the passage of 123 days following the deposit,
the trust fund will not be subject to the effect of Section 547 of the United
States Bankruptcy Code or Section 15 of the New York Debtor and Creditor Law,
(C) immediately after giving effect to such deposit on a pro forma basis, no
Event of Default, or event that after the giving of notice or lapse of time or
both would become an Event of Default, shall have occurred and be continuing
on the date of such deposit or during the period ending on the 123rd day after
the date of such deposit, and such deposit shall not result in a breach or
violation of, or constitute a default under, any other agreement or instrument
to which the Company or any of its Subsidiaries is a party or by which the
Company or any of its Subsidiaries is bound, (D) the Company is not prohibited
from making payments in respect of the Notes by the provisions described under
"--Ranking" and (E) if at such time the Notes are listed on a national
securities exchange, the Company has delivered to the Trustee an Opinion of
Counsel to the effect that the Notes will not be delisted as a result of such
deposit, defeasance and discharge.
Defeasance of Certain Covenants and Certain Events of Default.
The Indenture further will provide that the provisions of the Indenture will
no longer be in effect with respect to clauses (iii) and (iv) under
"Consolidation, Merger and Sale of Assets" and all the covenants described
herein under "Covenants," clause (c) under "Events of Default" with respect to
such clauses (iii) and (iv) under "Consolidation, Merger and Sale of Assets,"
clause (d) under "Events of Default" with respect to such other covenants and
clauses (e) and (f) under "Events of Default" shall be deemed not to be Events
of Default upon, among other things, the deposit with the Trustee, in trust,
of money and/or U.S. Government Obligations that through the payment of
interest and principal in respect thereof in accordance with their terms will
provide money in an amount sufficient to pay the principal of, premium, if
any, and accrued interest on the Notes on the Stated Maturity of such payments
in accordance with the terms of the Indenture and the Notes, the satisfaction
of the provisions described in clauses (B)(ii), (C), (D) and (E) of the
preceding paragraph and the delivery by the Company to the Trustee of an
Opinion of Counsel to the effect that, among other things, the Holders will not
recognize income, gain or loss for federal income tax purposes as a result of
such deposit and defeasance of certain covenants and Events of Default and
will be subject to federal income tax on the same amount and in the same manner
and at the same times as would have been the case if such deposit and
defeasance had not occurred.
Defeasance and Certain Other Events of Default. In the event
the Company exercises its option to omit compliance with certain covenants and
provisions of the Indenture with respect to the Notes as described in the
immediately preceding paragraph and the Notes are declared due and payable
because of the occurrence of an Event of Default that remains applicable, the
amount of money and/or U.S. Government Obligations on deposit with the Trustee
will be sufficient to pay amounts due on the Notes at the time of their Stated
Maturity but may not be sufficient to pay amounts due on the Notes at the time
of the acceleration resulting from such Event of Default. However, the Company
will remain liable for such payments.
Modification and Waiver
Modifications and amendments of the Indenture may be made by
the Company and the Trustee with the consent of the Holders of not less than a
majority in aggregate principal amount of the outstanding Notes; provided,
however, that no such modification or amendment may, without the consent of
each Holder affected thereby, (i) change the Stated Maturity of the principal
of, or any installment of interest on, any Note, (ii) reduce the Accreted
Value or principal amount of, or premium, if any, or interest on, any Note,
(iii) change the place or currency of payment of principal of, or premium, if
any, or interest on, any Note, (iv) impair the right to institute suit for the
enforcement of any payment on or after the Stated Maturity (or, in the case of
a redemption, on or after the Redemption Date) of any Note, (v) reduce the
above-stated percentage of outstanding Notes the consent of whose Holders is
necessary to modify or amend the Indenture, (vi) waive a default in the
payment of principal of, premium, if any, or interest on the Notes, (vii)
modify the subordination provisions in a manner adverse to the Holders or
(viii) reduce the percentage or aggregate principal amount of outstanding
Notes the consent of whose Holders is necessary for waiver of compliance with
certain provisions of the Indenture or for waiver of certain defaults.
No Personal Liability of Incorporators, Stockholders, Officers, Directors, or
Employees
The Indenture provides that no recourse for the payment of the
principal of, premium, if any, or interest on any of the Notes or for any
claim based thereon or otherwise in respect thereof, and no recourse under or
upon any obligation, covenant or agreement of the Company in the Indenture, or
in any of the Notes or because of the creation of any Indebtedness represented
thereby, shall be had against any incorporator, stockholder, officer,
director, employee or controlling person of the Company or of any successor
Person thereof. Each Holder, by accepting the Notes, waives and releases all
such liability.
Concerning the Trustee
The Indenture provides that, except during the continuance of a
Default, the Trustee will not be liable, except for the performance of such
duties as are specifically set forth in such Indenture. If an Event of Default
has occurred and is continuing, the Trustee will use the same degree of care
and skill in its exercise of the rights and powers invested in it under the
Indenture as a prudent person would exercise under the circumstances in the
conduct of such person's own affairs.
The Indenture and provisions of the Trust Indenture Act of
1939, as amended, incorporated by reference therein contain limitations on the
rights of the Trustee, should it become a creditor of the Company, to obtain
payment of claims in certain cases or to realize on certain property received
by it in respect of any such claims, as security or otherwise. The Trustee is
permitted to engage in other transactions; provided, however, that if it
acquires any conflicting interest, it must eliminate such conflict or resign.
PLAN OF DISTRIBUTION
Each broker-dealer that receives New Notes for its own account
pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such New Notes. This Prospectus,
as it may be amended or supplemented from time to time, may be used by a
broker-dealer in connection with resales of New Notes received in exchange for
Old Notes where such Old Notes were acquired as a result of market-making
activities or other trading activities. The Company has agreed that, starting
on the Expiration Date and ending on the close of business on the 180th day
following the Expiration Date, it will make this Prospectus, as amended or
supplemented, available to any broker-dealer for use in connection with any
such resale.
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 or dealer that
participates in a distribution of such New Notes may be deemed to be an
"underwriter" within the meaning of the Securities Act and any profit on
any such resale of New Notes and any commissions or concessions received by
any such persons may be deemed to be underwriting compensation under the
Securities Act. The Letter of Transmittal states that by acknowledging
that it will deliver and by delivering a prospectus, a broker-dealer will
not be deemed to admit that it is an "underwriter" within the meaning of
the Securities Act.
For a period of 180 days after the Expiration Date, the Company
will promptly send additional copies of this Prospectus and any amendment or
supplement to this Prospectus to any broker-dealer that requests such
documents in the Letter of Transmittal. The Company has agreed to pay all
expenses incident to the Exchange Offer other than commissions or concessions
of any brokers or dealers and will indemnify the holders of the Old Notes
(including any broker-dealers) against certain liabilities, including
liabilities under the Securities Act.
The Company has not entered into any arrangements or
understandings with any person to distribute the New Notes to be received in
the Exchange Offer.
ERISA CONSIDERATIONS
A fiduciary of a pension, profit-sharing, retirement, or other
employee benefit plan ("Plan") subject to Title I of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), should consider the
fiduciary standards under ERISA in the context of the Plan's particular
circumstances before authorizing an investment of a portion of such Plan's
assets in the Notes. Accordingly, such fiduciary should consider (i) whether
the investment satisfies the diversification requirements of Section
404(a)(1)(C) of ERISA, (ii) whether the investment is in accordance with the
documents and instruments governing the Plan as required by Section
404(a)(1)(D) of ERISA, and (iii) whether the investment is prudent under ERISA.
In addition to the imposition of general fiduciary standards of
investment prudence and diversification, ERISA and the corresponding
provisions of the Internal Revenue Code of 1986, as amended, prohibit a wide
range of transactions involving the assets of a Plan or a plan subject to
Section 4975 of the Code (hereinafter a Plan and such plans are collectively
referred to as an "ERISA Plan") and persons who have certain specified
relationships to the ERISA Plan ("parties in interest" within the meaning of
ERISA, "disqualified persons" within the meaning of the Code). A prohibited
transaction described in Section 406 of ERISA or Section 4975 of the Code
could arise if the Company were, or were to become, a party in interest or a
disqualified person with respect to an ERISA Plan purchasing the Notes.
Certain exemptions from the prohibited transaction rules could be applicable
to the purchase of the Notes by an ERISA Plan depending on the type and
circumstances of the fiduciary of the ERISA Plan making the decision to
acquire the Notes. Included among these exemptions are: Prohibited Transaction
Class Exemption ("PTCE") 90-1, regarding investments by insurance company
pooled separate accounts; PTCE 91-38, regarding investments by bank collective
investment funds; and PTCE 84-14, regarding transactions effected by a
qualified professional asset manager. Thus, a fiduciary of an ERISA Plan
considering an investment in the Notes also should consider whether the
acquisition or the continued holding of the Notes might constitute or give
rise to a non-exempt prohibited transaction. No ERISA Plan with respect to
which the Company is a party in interest or a disqualified person may purchase
the Notes, unless a statutory or administrative exemption is available.
Certain employee benefit plans, such as governmental plans and
church plans (if no election has been made under Section 410(d) of the Code),
are not subject to the restrictions of ERISA, and assets of such Plans may be
invested in the Notes without regard to the ERISA considerations described
above. The investment in the Notes by such employee benefit plans may,
however, be subject to other applicable federal and state laws, which should
be carefully considered by such employee benefit plans before investing in the
Notes.
The Department of Labor (the "DOL") has issued final
regulations (the "Regulations") as to what constitutes assets of an employee
benefit plan under ERISA. Under the Regulations, if an ERISA Plan acquires an
equity interest in an entity, which interest is neither a "publicly offered
security" nor a security issued by an investment company registered under the
Investment Company Act of 1940, as amended, the ERISA Plan's assets would
include, for purposes of the fiduciary responsibility provisions of ERISA,
both the equity interest and an undivided interest in each of the entity's
underlying assets unless one of certain specified exceptions applies. One such
exception is the "operating company" exception. An entity will qualify as an
"operating company" if it is primarily engaged, directly or through a majority
owned subsidiary or subsidiaries, in the production or sale of a product or
service other than the investment of capital. The Company has determined that
it qualifies as an "operating company" within the meaning of the Regulations.
Accordingly, the Company believes that an investment by an ERISA Plan in the
Notes should not cause any of the underlying assets of the Company to be "plan
assets" within the meaning of the Regulations.
The Regulations define an "equity interest" as "any interest in
an entity other than an instrument that is treated as indebtedness under
applicable local law and which has no substantial equity features." The
Company believes that the Notes should be treated as indebtedness under New
York law, which the Company believes is the "applicable local law" for
purposes of the Regulations. In the preamble to the Regulations, the DOL has
stated that "whether any particular investment has substantial equity features
is an inherently factual question that must be resolved on a case by case
basis" and that in making such determination "it would be appropriate . . . to
take into account whether the equity features of an instrument are such that a
plan's investment in the instrument would be a practical vehicle for the
indirect provision of investment management services." The Company does not
believe that the Notes constitute an "equity interest" in the Company for
purposes of the Regulations. Even if the Notes were so characterized, however,
the Company believes, based upon its determination that the Company qualifies
as an "operating company" within the meaning of the Regulations, that an
investment by an ERISA Plan in the Notes should not cause any of the
underlying assets of the Company to be "plan assets" within the meaning of the
Regulations.
Every investor considering the acquisition of the Notes should
consult with its counsel with respect to the potential applicability of ERISA
and Section 4975 of the Code to such investment.
CERTAIN UNITED STATES FEDERAL TAX CONSIDERATIONS
The following is a summary of certain United States federal tax
consequences of the exchange of the Old Notes for the New Notes and the
ownership and disposition of the Notes. This summary is based on the Internal
Revenue Code of 1986, as amended to the date hereof (the "Code"),
administrative pronouncements, judicial decisions and existing and proposed
Treasury Regulations, changes to any of which subsequent to the date of this
Prospectus may affect the tax consequences described herein, possibly with
retroactive effect. This summary discusses only Notes held as capital assets
within the meaning of Section 1221 of the Code. It does not discuss all of the
tax consequences that may be relevant to a holder in light of his particular
circumstances or to holders subject to special rules, such as certain
financial institutions, insurance companies, tax-exempt organizations, dealers
in securities, holders who hold the Notes as part of a straddle or a hedging
or conversion transaction or persons who have ceased to be United States
citizens or to be taxed as resident aliens. Persons considering the purchase
of Notes should consult their tax advisors with regard to the application of
the United States federal income tax laws to their particular situations as
well as any tax consequences arising under the laws of any state, local or
foreign taxing jurisdiction.
As used herein, the term "U.S. Holder" means a beneficial owner
of a Note that for United States federal income tax purposes is (i) a citizen
or resident of the United States, (ii) a corporation, partnership or other
entity created or organized in or under the laws of the United States or of
any political subdivision thereof, or (iii) a trust or estate the income of
which is subject to United States federal income taxation regardless of its
source.
As used herein, the term "U.S. Alien Holder" means an owner of
a Note that is, for United States federal income tax purposes, (i) a
nonresident alien individual, (ii) a foreign corporation, (iii) a nonresident
alien fiduciary of a foreign estate or trust or (iv) a foreign partnership one
or more of the members of which is, for United States federal income tax
purposes, a nonresident alien individual, a foreign corporation or a
nonresident alien fiduciary of a foreign estate or trust.
Tax Consequences of the Exchange of Old Notes for New Notes
There will be no federal income tax consequences to Holders
exchanging Old Notes for New Notes pursuant to the Exchange Offer. For
federal income tax purposes, the New Notes will be considered a continuation
of the Old Notes and the exchange of Old Notes for New Notes hereunder will
not alter the federal income tax consequences, including the accrual of
original issue discount ("OID") on the Old Notes, as described below, of
owning the Notes to Holders. A Holder will have the same adjusted basis and
holding period in the New Note as it had in the Old Note immediately before
the exchange. Accordingly, the discussion below relating to Notes is equally
applicable to the Old Notes and the New Notes.
U.S. Holders
Original Issue Discount ("OID")
The excess of a Note's "stated redemption price at maturity"
over its "issue price" will generally constitute OID for federal income tax
purposes. The stated redemption price at maturity of a Note will equal the sum
of all cash payments (whether denominated as principal or interest) other than
payments of "qualified stated interest" (defined generally as stated interest
that is unconditionally payable in cash or in property (other than the debt
instruments of the issuer), at least annually at a single fixed rate that
appropriately takes into account the length of intervals between payments)
payable on the Notes. The issue price of a Note is equal to the first price to
the public (not including bond houses, brokers, or similar persons or
organizations acting in the capacity of underwriters, placement agents, or
wholesalers) at which a substantial amount of the Old Notes is sold for money
even if part of the issue is subsequently sold at a different price. Because
interest on the Notes is not payable until August 1, 2003, the stated interest
on the Notes will not be treated as qualified stated interest but will be
added to the stated redemption price at maturity of the Notes. In addition,
the Notes will be issued at a price that is less than their stated redemption
price at maturity. As a result, the Notes will be treated as having been
issued with original issue discount equal to the excess of their stated
redemption price (payments of stated interest and principal) over their issue
price. Regardless of their method of accounting, U.S. Holders of the Notes
will be required to include an amount equal to the sum of "daily portions" of
such OID attributable to each day during the taxable year on which the U.S.
Holder holds the Note in income for federal income tax purposes as it accrues,
in accordance with a constant yield method based on a compounding of interest,
before the receipt of cash payments attributable to such income. Under this
method, U.S. Holders of the Notes generally will be required to include in
income increasingly greater amounts of OID in successive accrual periods.
Payments of stated interest on a Note will not be separately included in
income, but rather will be treated first as payments of previously accrued OID
and then as payments of principal and consequently will reduce a U.S. Holder's
basis in a Note, as described below under "Sale, Exchange or Retirement of the
Notes."
The Company does not intend to treat the possibility of an
optional redemption or repurchase of the Notes as giving rise to any
additional accrual of OID or recognition of ordinary income upon redemption,
sale or exchange of a Note. U.S. Holders may wish to consider that United
States Treasury Regulations regarding the treatment of certain contingencies
were recently issued and may wish to consult their tax advisers in this regard.
Market Discount and Premium
If a U.S. Holder purchased a Note for an amount that was less
than its "adjusted issue price", the amount of the difference would be treated
as "market discount" for federal income tax purposes, unless such difference
was less than a specified de minimis amount. The adjusted issue price of a
Note is defined as the sum of the issue price of the Note and the aggregate
amount of previously accrued OID, less any prior principal and interest
payments on the Note.
Under the market discount rules of the Code, a U.S. Holder will
be required to treat any prior payment on, or any gain on the sale, exchange,
retirement or other disposition of, a Note as ordinary income to the extent of
the market discount which has not previously been included in income (pursuant
to an election by the U.S. Holder to include such market discount in income as
it accrues) and is treated as having accrued on such Note at the time of such
payment or disposition. If such Note is disposed of in a nontaxable
transaction (other than as provided in Code Sections 1276(c) and (d)), accrued
market discount will be includible as ordinary income to the U.S. Holder as if
such Holder had sold the Note at its then fair market value. In addition, the
U.S. Holder may be required to defer, until the maturity of the Note or its
earlier disposition (including a nontaxable transaction other than as provided
in Code Sections 1276(c) and (d)), the deduction of all or a portion of the
interest expense on any indebtedness incurred or maintained to purchase or
carry such Note.
A U.S. Holder who purchased a Note for an amount that was
greater than its adjusted issue price but less than its stated redemption
price at maturity would be considered to have purchased such Note at an
"acquisition premium." Under the acquisition premium rules of the Code and
the regulations thereunder, unless such Holder makes the election described
under "Election to Treat all Interest as Original Issue Discount" below, the
amount of OID which such Holder must include in its gross income with respect
to such Note for any taxable year will be reduced by the portion of such
acquisition premium properly allocable to such year.
Election to Treat All Interest as Original Issue Discount
A U.S. Holder may elect to include in gross income all interest
that accrues on a Note using the constant-yield method described above under
the heading "Original Issue Discount", with the modifications described below.
For purposes of this election, interest includes stated interest, OID, de
minimis OID, market discount, de minimis market discount and unstated
interest, as adjusted by any amortizable bond premium or acquisition premium.
In applying the constant-yield method to a Note with respect to
which this election has been made, the issue price of the Note will equal the
electing U.S. Holder's adjusted basis in the Note immediately after its
acquisition and the issue date of the Note will be the date of its acquisition
by the electing U.S. Holder. This election will generally apply only to the
Note with respect to which it is made and may not be revoked without the
consent of the Internal Revenue Service.
If the election to apply the constant-yield method to all
interest on a Note is made with respect to a Note with market discount, the
electing U.S. Holder will be treated as having made the election discussed
above under "Market Discount" to include market discount in income currently
over the life of all debt instruments held or thereafter acquired by such U.S.
Holder.
Applicable High Yield Discount Obligations
The Notes are "applicable high yield discount obligations"
("AHYDOs"), as defined in the Code, because the yield to maturity of such
Notes exceeds the "applicable federal rate" (the "AFR") in effect at the time
of their issuance plus five percentage points. Under the rules applicable to
AHYDOs, a portion of the OID that accrues on the Notes will not be deductible
by the Company at any time. The non-deductible portion of the OID will be an
amount that bears the same ratio to such OID as (i) the excess of the yield to
maturity of the Notes over the AFR plus six percentage points bears to (ii)
the yield to maturity of the Notes. To the extent that the non-deductible
portion of OID would have been treated as a dividend if it had been
distributed with respect to the Company's stock, it will be treated as a
dividend to holders of the Notes for purposes of the rules relating to the
dividends received deduction for corporate holders. Any remaining OID on the
Notes will not be deductible by the Company until such OID is paid.
Sale, Exchange or Retirement of the Notes
Upon the sale, exchange or retirement of a Note, a U.S. Holder
will recognize taxable gain or loss equal to the difference between the amount
realized on the sale, exchange or retirement and such U.S. Holder's adjusted
tax basis in the Note. A U.S. Holder's adjusted tax basis in a Note will
generally equal the issue price of such Note, increased by the amount of any
market discount and OID previously included in income by such U.S. Holder with
respect to such Note and reduced by any principal and stated interest payments
received by the U.S. Holder. Except as otherwise described under "Market
Discount and Premium" above, gain or loss realized on the sale, exchange or
retirement of a Note will be capital gain or loss. The Taxpayer Relief Act of
1997 includes substantial changes to the federal taxation of capital gains
recognized by certain noncorporate taxpayers, such as individuals, including a
20% maximum tax rate for certain gains from the sale of capital assets held
for more than 18 months. The deduction of capital losses is subject to certain
limitations. Prospective investors should consult their tax advisors regarding
the treatment of capital gains and losses.
Backup Withholding and Information Reporting
Certain noncorporate U.S. Holders may be subject to backup
withholding at a rate of 31% on payments of principal and interest (including
OID) on, and the proceeds of a disposition of, a Note. Backup withholding will
apply only if the U.S. Holder (i) fails to furnish its Taxpayer Identification
Number ("TIN") which, in the case of an individual, would be his or her Social
Security Number, (ii) furnishes an incorrect TIN, (iii) is notified by the
Internal Revenue Service ("IRS") that it has failed to properly report
payments of interest and dividends or (iv) under certain circumstances, fails
to certify, under penalty of perjury, that it has furnished a correct TIN and
has not been notified by the IRS that it is subject to backup withholding.
Under newly issued Treasury regulations, in the case of interest paid after
December 31, 1998, a U.S. Holder generally will be subject to backup
withholding at a 31% rate unless certain IRS certification procedures are
complied with, directly or through an intermediary. U.S. Holders should
consult their tax advisors regarding their qualification for exemption from
backup withholding and the procedure for obtaining such an exemption if
applicable.
The amount of any backup withholding from a payment to a U.S.
Holder will be allowed as a credit against such U.S. Holder's United States
federal income tax liability and may entitle such U.S. Holder to a refund,
provided that the required information is furnished to the IRS.
The Company will furnish annually to the IRS and to record
holders of the Notes (other than with respect to certain exempt holders)
information relating to the stated interest and the OID accruing during the
calender year. Such information will be based on the amount of OID that would
have accrued to a U.S. Holder who acquired the Old Note on original issue.
U.S. Alien Holders
Under present United States federal law, and subject to the
discussion below concerning backup withholding,
(a) payments of principal, interest (including OID or market
discount, if any) and premium on the Notes by the Company or its
paying agent to any U.S. Alien Holder will not be subject to 30%
United States federal withholding tax, provided that, in the case of
interest, (i) such Holder does not own, actually or constructively,
10 percent or more of the total combined voting power of all classes
of stock of the Company entitled to vote, is not a controlled foreign
corporation related, directly or indirectly, to the Company through
stock ownership, and is not a bank receiving interest described in
Section 881(c)(3)(A) of the Code and (ii) the certification set forth
in Section 871(h) or Section 881(c) of the Code has been fulfilled
with respect to the beneficial owner, as discussed below,
(b) a U.S. Alien Holder of a Note will not be subject to United
States federal income tax on gain realized on the sale, exchange or other
disposition of such Note, unless (i) such Holder is an individual who is
present in the United States for 183 days or more in the taxable year of
the disposition, and certain other conditions are met, or (ii) such gain
is effectively connected with the conduct by such Holder of a trade or
business in the United States and
(c) under Code Section 2105(b) with respect to United States federal
estate tax law, a Note held by an individual who is not a citizen or
resident of the United States at the time of his death generally will
not be subject to United States federal estate tax as a result of such
individual's death, provided that the individual does not own, actually
or constructively, 10% or more of the total combined voting power of all
classes of stock of the Company entitled to vote and, at the time of
such individual's death, payments with respect to such Note would not
have been effectively connected to the conduct by such individual of a
trade or business in the United States.
The certification required referred to in paragraph (a)(ii)
will be fulfilled if the beneficial owner of a Note certifies on IRS Form W-8,
under penalties of perjury, that it is not a U.S. person and provides its name
and address, and (i) such beneficial owner files such Form W-8 with the
withholding agent or (ii), in the case of a Note held by securities clearing
organization, bank or other financial institution holding customers'
securities in the ordinary course of its trade or business holding the Note on
behalf of the beneficial owner, such financial institution files with the
withholding agent a statement that it has received the Form W-8 from the
Holder and furnishes the withholding agent with a copy thereof. With respect
to Notes held by a foreign partnership, under current law, the Form W-8 may be
provided by the foreign partnership. However, for interest (including OID) and
disposition proceeds paid with respect to a Note after December 31, 1998,
unless the foreign partnership has entered into an withholding agreement with
the IRS, a foreign partnership will be required, in addition to providing an
intermediary Form W-8, to attach an appropriate certification by each partner.
Prospective investors, including foreign partnerships and their partners,
should consult their tax advisers regarding possible additional reporting
requirements.
If a U.S. Alien Holder of a Note is engaged in a trade or
business in the United States, and if interest (including OID or market
discount) on the Note (or gain realized on its sale or disposition) is
effectively connected with the conduct of such trade or business, the U.S.
Alien Holder, although exempt from the withholding tax discussed in the
preceding paragraphs, will generally be subject to regular United States
income tax on such effectively connected income in the same manner as if it
were a U.S. Holder. See "U.S. Holders" above. In lieu of the certificate
described in the preceding paragraph, such a Holder will be required to
provide to the withholding agent a properly executed IRS Form 4224 (or, after
December 31, 1998, a Form W-8) to claim an exemption from withholding tax. In
addition, if such U.S. Alien Holder is a foreign corporation, it may be
subject to a 30% branch profits tax (unless reduced or eliminated by an
applicable treaty) of its effectively connected earnings and profits for the
taxable year, subject to certain adjustments. For purposes of the branch
profits tax, interest (including OID or market discount) on and any gain
recognized on the sale, exchange or other disposition of a Note will be
included in the effectively connected earnings and profits of such U.S. Alien
Holder if such interest or gain, as the case may be, is effectively connected
with the conduct by the U.S. Alien Holder of a trade or business in the United
States.
Backup Withholding and Information Reporting
Under current United States federal income tax law, backup
withholding tax of 31% will not apply to payments by the Company on a Note if
the certifications required by Sections 871(h) and 881(c) are received,
provided in each case that the Company or its paying agent, as the case may
be, does not have actual knowledge that the payee is a United States person.
Under current Treasury Regulations, payments on the sale,
exchange or other disposition of a Note made to or through a foreign office of
a broker generally will not be subject to backup withholding. However, if such
broker is a United States person, a controlled foreign corporation for United
States federal income tax purposes, a foreign person 50 percent or more of
whose gross income is effectively connected with a United States trade or
business for a specified three-year period or (in the case of payments made
after December 31, 1998) a foreign partnership with certain connections to the
United States, then information reporting will be required unless the broker
has in its records documentary evidence that the beneficial owner is not a
United States person and certain other conditions are met or the beneficial
owner otherwise establishes an exemption. Backup withholding may apply to any
payment that such broker is required to report if the broker has actual
knowledge that the payee is a United States person. Payments to or through the
United States office of a broker will be subject to backup withholding and
information reporting unless the Holder certifies, under penalties of perjury,
that it is not a United States person or otherwise establishes an exemption.
U.S. Alien Holders of Notes should consult their tax advisers
regarding the application of information reporting and backup withholding in
their particular situations, the availability of an exemption therefrom, and
the procedure for obtaining such an exemption, if available. Any amounts
withheld from a payment to a U.S. Alien Holder under the backup withholding
rules will be allowed as a credit against such Holder's United States federal
income tax liability and may entitle such Holder to a refund, provided that
the required information is furnished to the IRS.
LEGAL MATTERS
The legality of the New Notes offered hereby will be passed
upon for the Company by Davis Polk & Wardwell, New York, New York. Davis Polk
& Wardwell has performed, and will continue to perform, legal services for
MSVCF, MSLEF II and MSCP III, companies controlled by MSLEF II, MSCP III and
MSDWD and acted as counsel to MSLEF II and MSCP III in connection with its
investments in the Company.
EXPERTS
The Consolidated Financial Statements of the Company as of
December 31, 1996 and 1997, and for each of the three years in the period
ended December 31, 1997 incorporated by reference in this Prospectus from the
Company's Current Report on Form 10-K, filed February 20, 1998, have been
audited by Arthur Andersen LLP, independent public accountants, as indicated
in their reports with respect thereto and are incorporated herein by reference
in reliance upon the authority of said firm as experts in giving said reports.
PageMart
Wireless, Inc.
[Alternate Cover Page]
SUBJECT TO COMPLETION, DATED MARCH __, 1998
PROSPECTUS
PageMart Wireless, Inc.
11 1/4% Senior Subordinated Discount Exchange Notes Due 2008
There will not be any payment of interest on the Notes prior to August 1, 2003.
From and after February 1, 2003, the Notes will bear interest, which will be
payable in cash at a rate of 11 1/4% per annum on each February 1 and August
1, commencing August 1, 2003. At any time on or after February 1, 2003, the
Notes may be redeemed at the option of PageMart Wireless, Inc. (the
"Company"), in whole or in part, at 105.625% of their principal amount at
maturity, plus accrued and unpaid interest, declining to 100% of their
principal amount at maturity plus accrued interest on or after February 1,
2006. See "Description of Notes."
The Notes are senior subordinated indebtedness of the Company, ranking
subordinated in right of payment to all Senior Indebtedness (as defined
herein) of the Company, including the 15% Notes and indebtedness under the
Revolving Credit Agreement and Vendor Financing Arrangement (each as defined
herein). After giving effect to the Refinancing (as defined herein) at
December 31, 1997, the Company would have had $169.4 million of Senior
Indebtedness.
-------------------------
SEE "RISK FACTORS" BEGINNING ON PAGE o FOR A DISCUSSION OF CERTAIN FACTORS THAT
SHOULD BE CONSIDERED IN CONNECTION WITH THE OFFERING AND AN INVESTMENT IN
THE NOTES.
-------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
-------------------------
This Prospectus is to be used by Morgan Stanley & Co. Incorporated
("Morgan Stanley"), in connection with offers and sales of the Notes in
market-making transactions at negotiated prices related to prevailing market
prices at the time of sale. Morgan Stanley may act as principal or as agent
in such transactions. The Company will receive no portion of the proceeds of
the sales of such Notes and will bear the expenses incident to the
registration thereof. If Morgan Stanley conducts any market-making
activities, it may be required to deliver a "market-making prospectus" when
effecting offers and sales in the Notes because of the equity ownership of the
Company by The Morgan Stanley Leveraged Equity Fund II, L.P. ("MSLEF II"),
Morgan Stanley Capital Partners, III, L.P. ("MSCP III"), Morgan Stanley
Venture Capital Fund, L.P. ("MSVCF") and certain other investment
partnerships, all of which are affiliates of Morgan Stanley. As of January
31, 1998, these investment partnerships own in the aggregate approximately
50.8% of the outstanding common stock of the Company and 48.5% of the
outstanding voting common stock of the Company. For as long as a
market-making prospectus is required to be delivered, the ability of Morgan
Stanley to make a market in the Notes may, in part, be dependent on the
ability of the Company to maintain a current market-making prospectus.
, 1998
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 THE REGISTRATION STATEMENT OR QUALIFICATION UNDER THE
SECURITIES LAWS OF ANY SUCH STATE.
-----------------
TABLE OF CONTENTS
-----------------
Page
----
Available Information......................................................
Incorporation of Certain Documents.........................................
Summary....................................................................
Risk Factors...............................................................
Selected Historical Financial and Operating Data...........................
Description of the Notes...................................................
Plan of Distribution.......................................................
ERISA Considerations.......................................................
Legal Matters..............................................................
Experts....................................................................
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange
Commission (the "Commission") a Registration Statement on Form S-3 (together
with any amendments thereto, the "Registration Statement") under the
Securities Act of 1933, as amended (the "Securities Act"), with respect to the
securities offered hereby. This Prospectus, which constitutes a part of the
Registration Statement, does not contain all the information contained in the
Registration Statement and the exhibits and the schedules thereto, certain
items of which are omitted in accordance with the rules and regulations of the
Commission. Statements made in this Prospectus as to the contents of any
contract, agreement or other document referred to are not necessarily
complete. With respect to each such contract, agreement or other document
filed as an exhibit to the Registration Statement, reference is made to the
exhibit for a more complete description of the matter involved, and each such
statement shall be deemed qualified in its entirety by such reference. For
further information with respect to the Company and the securities offered
hereby, reference is made to the Registration Statement and the exhibits and
the financial statements, notes and the schedules filed as a part thereof,
which may be inspected at the public reference facilities of the Commission,
at the addresses set forth below.
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith, files reports and other information with the Commission.
The Indenture under which the Notes were issued and under which the Notes will
be issued (the "Indenture") requires the Company to provide to holders of the
Notes annual reports that include audited annual consolidated financial
statements and an opinion thereon expressed by independent public accountants
and quarterly reports containing unaudited financial information for each of
the first three quarters of each fiscal year. The Registration Statement, as
well as such reports and other information filed with the Commission can be
examined without charge at, or copies obtained upon payment of prescribed fees
from, the Commission's Public Reference Section at Room 1024, Judiciary Plaza,
450 Fifth Street, N.W., Washington, D.C. 20549 and at the Commission's
regional offices at 500 West Madison Street, Suite 1400, Chicago, Illinois
60661 and 7 World Trade Center, 13th Floor, New York, NY 10048. Such material
may also be accessed electronically by means of the Commission's home page on
the Internet at http://www.sec.gov.
[Alternate page]
SUMMARY
The following summary is qualified in its entirety by the more
detailed information and financial statements, including the notes thereto,
included and incorporated by reference in this Prospectus. Unless the context
otherwise requires, references herein to the "Company" or "PageMart Wireless"
refer to PageMart Wireless, Inc. and its subsidiaries.
THE COMPANY
The Company is one of the fastest growing providers of wireless
messaging services in the United States. The Company has grown to become the
sixth largest paging carrier in the United States, based on 2,530,737
subscribers at December 31, 1997. The Company's number of subscribers has
increased at annual growth rates of 60%, 50% and 36% in 1995, 1996 and 1997,
respectively. The Company has made no acquisitions, and all subscriber growth
has been internally generated.
The Company offers local, multi-city, statewide, regional and
nationwide paging and other one-way wireless services in all 50 states,
covering 90% of the population of the United States. The Company also
provides paging services to the countries that are parties to the North
American Free Trade Agreement ("NAFTA") and beyond, including Canada, Puerto
Rico, the U.S. Virgin Islands and the Bahamas. In October 1997, the Company
expanded services into Mexico through its network affiliation with Buscatel, a
subsidiary of Telefonos de Mexico ("TelMex"), Mexico's largest
telecommunications company, and into Panama and El Salvador through network
affiliation agreements with leading telecommunications companies in those
countries. In January 1998, the company expanded services into Guatemala and
Costa Rica, and expects to launch services in Nicaragua and Honduras in the
first half of 1998.
SUMMARY DESCRIPTION OF THE NOTES
The Notes have been registered under the Securities Act and,
therefore, the Notes will not be subject to certain transfer restrictions,
registration rights and will not contain certain provisions providing for an
increase in the interest rate under certain circumstances relating to the
Registration Rights Agreement.
Notes Offered........ Up to $432,000,000 aggregate principal amount at
maturity of 11 1/4% Senior Subordinated Discount
Exchange Notes due 2008.
Maturity............. February 1, 2008
Yield and Interest... The Notes are being sold at a substantial discount
from their principal amount at maturity. From and
after February 1, 2003, the Notes will bear
interest, which will be payable in cash, at a rate
of 11 1/4% per annum on each February 1 and August
1, commencing August 1, 2003.
Optional Redemption.. The Notes may be redeemed at any time on or after
February 1, 2003, at the option of the Company, in
whole or in part, at 105.625% of their principal
amount at maturity, plus accrued and unpaid
interest, declining to 100% of their principal
amount at maturity plus accrued interest on and
after February 1, 2006.
Ranking.............. The Notes are senior subordinated indebtedness of the
Company, ranking subordinated in right of payment
to all Senior Indebtedness, including the 15% Notes
and indebtedness under the Revolving Credit
Agreement and the Vendor Financing Arrangement
(each as defined herein). After giving pro forma
effect to the Refinancing, at December 31, 1997,
the Company would have had $419.1 million of
indebtedness, including $169.4 million of Senior
Indebtedness. The Notes will be effectively
subordinated to existing and future liabilities of
the Company's subsidiaries, including trade
payables. See "Risk Factors--High Leverage;
Deficiency of Earnings to Cover Fixed Charges;
Restrictive Covenants" and "--Subordination of the
Notes."
Covenants............ The indenture pursuant to which the Notes will be
issued (the "Indenture") contains certain covenants
that, among other things, limit the ability of the
Company and its subsidiaries to incur indebtedness,
pay dividends, prepay subordinated indebtedness,
repurchase capital stock, engage in transactions
with stockholders and affiliates, create liens,
sell assets and engage in mergers and
consolidations. See "Description of the Notes--
Covenants."
Change of Control.... Upon a Change of Control (as defined herein), the
Company will be required to make an offer to
purchase the Notes at a purchase price equal to
101% of their Accreted Value on the date of
purchase plus accrued interest, if any. See
"Description of the Notes--Repurchase of Notes upon
a Change of Control." There can be no assurance
that the Company will have sufficient funds
available at the time of a Change of Control to
make any required debt repayment (including
repurchases of the Notes).
RISK FACTORS
See "Risk Factors" beginning after the Summary for a discussion
of certain factors relating to an investment in the Notes.
[Alternate Page]
RISK FACTORS
Prior to making an investment decision, prospective investors
should carefully consider, along with the other matters referred to in this
Prospectus, the specific factors set forth below. The Company cautions readers
that any forward-looking statements contained in this Prospectus or made by
management of the Company involve risks and uncertainties, and are subject to
change based on various important factors. The following factors, among
others, in some cases have affected and in the future could affect the
Company's financial performance and actual results, and could cause actual
results to differ materially from those expressed in any such forward-looking
statements--economic conditions generally in the United States and consumer
confidence; the ability of the Company to manage its high debt levels; the
impact of technological change in the telecommunications industry; the future
cost of network infrastructure and subscriber equipment; the impact of
competition and pricing of paging and wireless services; changes in regulation
by the Federal Communications Commission ("FCC") and various state regulatory
agencies; and the ability of the Company to obtain financing to construct,
operate and market the transmission network for advanced messaging services.
History of Operating Losses
The Company has sustained losses from operating activities in
each year of operations since its organization in 1989, including an operating
loss of $2.6 million for the year ended December 31, 1997 and an aggregate of
$38.5 million of operating losses for the three-year period ended December 31,
1997. The Company expects to continue to incur operating losses for the next
several years. In addition, management anticipates that the Company's average
monthly revenue per unit ("ARPU") will decline in the foreseeable future
principally due to a higher mix of subscribers added through private brand
strategic alliance programs, which yield lower ARPU. In recent periods the
Company's ARPU has been declining and its selling expenses per subscriber have
been increasing. Although the Company had positive earnings before interest,
taxes, depreciation and amortization ("EBITDA") of $8.6 million for the year
ended December 31, 1996 and $27.3 million for the year ended December 31,
1997, prior to 1996 the Company had negative EBITDA in each year of its
operations. EBITDA is not derived pursuant to generally accepted accounting
principles ("GAAP") and therefore should not be construed as an alternative to
operating income, as an alternative to cash flows from operating activities
(as determined in accordance with GAAP) or as a measure of liquidity. The
Company's operating losses and negative EBITDA resulted principally from
expenditures associated with the establishment of the Company's one-way
operations infrastructure and the growth of its subscriber base. Although the
Company expects that its one-way operations will continue to generate positive
EBITDA, as the Company begins development and implementation of advanced
messaging services, the Company will incur substantial additional operating
losses and negative EBITDA during the start-up phase for advanced messaging
services. Any positive cash flow from the Company's one-way operations will be
used primarily to fund the Company's advanced messaging operations for the
next several years. There can be no assurance that the Company's consolidated
operations will become profitable or continue to have positive EBITDA or that
its one-way operations will continue to generate positive EBITDA. If the
Company cannot achieve operating profitability or continue to generate
positive EBITDA, it may not be able to make required debt service payments,
including payment on the Notes. See "Selected Historical Financial and
Operating Data."
[Alternate Page]
Lack of Public Market
The Notes are new securities for which there is currently no
market. The Company does not intend to apply for listing of the Notes on any
securities exchange or to seek approval for quotation through any automated
quotation system. There can be no assurance that an active public market for
the Notes will develop. If a market for the Notes were to develop, the market
price for the Notes can be expected to fluctuate depending upon prevailing
interest rates, the market for similar securities and other factors.
Morgan Stanley has indicated to the Company that it intends to make a
market in the Notes, but it is under no obligation to do so and such
market-making could be discontinued at any time. If Morgan Stanley conducts any
market-making activities, it may be required to deliver a "market-making
prospectus" when effecting offers and sales in the Notes because of the
beneficial ownership of the capital stock of the Company by the Morgan Stanley
Shareholders. For so long as a market-making prospectus is required to be
delivered, the ability of Morgan Stanley to make a market in the Notes may, in
part, be dependent on the ability of the Company to maintain a current market-
making prospectus. See "Description of the Notes--Registration Rights."
[Alternate Page]
DESCRIPTION OF THE NOTES
The Notes were issued under an Indenture, dated as of January
28, 1998, between the Company, as issuer, and the United States Trust Company
of New York (the "Trustee"). A copy of the Indenture is available upon request
from the Company. 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, all the provisions of the Indenture, including the
definitions of certain terms therein and those terms made a part thereof by
the Trust Indenture Act of 1939, as amended. Whenever particular defined terms
of the Indenture not otherwise defined herein are referred to, such defined
terms are incorporated herein by reference. For definitions of certain
capitalized terms used in the following summary, see "--Certain Definitions."
General
The Notes are unsecured senior subordinated obligations of the
Company, initially limited to $432.0 million aggregate principal amount at
maturity, and will mature on February 1, 2008. Although for federal income tax
purposes a significant amount of original issue discount, taxable as ordinary
income, will be recognized by a Holder as such discount accrues from the issue
date of the Notes, no interest will be payable on the Notes prior to August 1,
2003. From and after February 1, 2003, interest on the Notes will accrue at
the rate shown on the front cover of this Prospectus from February 1, 2003 or
from the most recent Interest Payment Date to which interest has been paid or
provided for, payable semiannually (to Holders of record at the close of
business on January 15 or July 15 immediately preceding the Interest Payment
Date) on February 1 and August 1 of each year, commencing August 1, 2003.
Interest will be computed on the basis of a 360-day year of twelve 30-day
months.
Principal of, premium, if any, and interest on the Notes will
be payable, and the Notes may be exchanged or transferred, at the office or
agency of the Company in the Borough of Manhattan, the City of New York (which
initially will be the corporate trust office of the Trustee at United States
Trust Company of New York, 770 Broadway, New York, New York 10003, Attention:
Corporate Trust Department); provided that, at the option of the Company,
payment of interest may be made by check mailed to the Holders at their
addresses as they appear in the Security Register.
The Notes will be issued only in fully registered form, without
coupons, in denominations of $1,000 of principal amount and any integral
multiple thereof. No service charge will be made for any registration of
transfer or exchange of Notes, but the Company may require payment of a sum
sufficient to cover any transfer tax or other similar governmental charge
payable in connection therewith.
Subject to the covenants described below under "Covenants" and
applicable law, the Company may issue additional Notes under the Indenture.
The Notes offered hereby and any additional Notes subsequently issued would
be treated as a single class for all purposes under the Indenture.
[Alternate Page]
PLAN OF DISTRIBUTION
This Prospectus is to be used by Morgan Stanley in connection
with offers and sales of the Notes in market-making transactions at negotiated
prices relating to prevailing market prices at the time of sale. Morgan
Stanley may act as principal or agent in such transactions. Morgan Stanley
has no obligation to make a market in the Notes, and may discontinue its
market-making activities at any time without notice, at its sole discretion.
There is currently no established public market for the
Notes. The Company does not currently intend to apply for listing of the
Notes on any securities exchange. Therefore, any trading that does develop
will occur on the over-the-counter market. The Company has been advised by
Morgan Stanley that it intends to make a market in the Notes but it has no
obligation to do so and any market-making may be discontinued at any time.
No assurance can be given that an active public market for the Notes will
develop.
Morgan Stanley acted as placement agent in connection with the
original private placement of the Notes and received a placement fee of $8.1
million in connection therewith. Morgan Stanley also acted as the lead
managing underwriter in connection with the initial public offering of the
Company's Class A Common Stock, in which the underwriters received
underwriting discounts and commissions of approximately $5.5 million in the
aggregate. Morgan Stanley is affiliated with entities that beneficially own
approximately 50.8% of the outstanding Common Stock as of January 31, 1998.
Although there are no agreements to do so, Morgan Stanley, as
well as others, may act as broker or dealer in connection with the sale of
Notes contemplated by this Prospectus and may receive fees or commissions in
connection therewith.
The Company has agreed to indemnify Morgan Stanley against
certain liabilities under the Securities Act or to contribute to payments that
Morgan Stanley may be required to make in respect of such liabilities.
PageMart
Wireless, Inc.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14 of Form S-3. Other Expenses of Issuances and
Distribution.
The following table sets forth costs and expenses, other than
underwriting discounts and commissions payable by Holdings in connection with
the Exchange Offer being registered. All amounts are estimates except the
registration fee.
Amount to
Be Paid
---------
Registration fee...................................... $75,112
Printing.............................................. 20,000
Legal fees and expenses............................... 40,000
Accounting fees and expenses.......................... 15,000
Trustee fees and expenses............................. 5,000
Blue Sky fees and expenses and legal fees............. 0
Miscellaneous......................................... 5,000
Total................................................ 160,112
Item 15 of Form S-3, Item 20 of Form S-4. Indemnification of Directors and
Officers
Section 145 of the General Corporation Law of the State of
Delaware permits the Company, subject to the standards set forth therein, to
indemnify any person in connection with any action, suit or proceeding brought
or threatened by reason of the fact that such person is or was a director,
officer, employee or agent of the Company or is or was serving as such with
respect to another corporation or entity at the request of the Company.
Article IX, Section B of the Company's Restated Certificate of Incorporation
and Section 7, Article IV of the Company's Bylaws provide for full
indemnification of its officers, directors, employees and agents to the extent
permitted by Section 145.
The Company provides insurance from commercial carriers against
certain liabilities incurred by the directors and officers of the Company.
Item 16 of Form S-3, Item 21 of Form S-4. Exhibits and Financial Statement
Schedules
(a) Exhibits
Exhibit No. Exhibits
- ---------- --------
1.1 -- Placement Agreement dated as of January 22, 1998 among the
Company and Morgan Stanley & Co. Incorporated
4.1* -- Form of Notes (included in Exhibit 4.2 as Exhibit A thereto)
4.2* -- Indenture, dated as of January 28, 1998, between the Company and
United States Trust Company of New York, as Trustee, relating
to the 11 1/4% Senior Subordinated Discount Notes due 2008
4.3 -- Registration Rights Agreement dated as of January 28, 1998
between the Company and Morgan Stanley & Co. Incorporated
5.1 -- Opinion of Davis Polk & Wardwell as to the legality of the Notes
12.1 -- Computation of ratio of earnings (loss) to fixed charges
23.1 -- Consent of Arthur Andersen LLP
23.2 -- Consent of Davis Polk & Wardwell (included in Exhibit 5.1)
99.1 -- Form of Letter of Transmittal
99.2 -- Form of Notice of Guaranteed Delivery
99.3 -- Form of Letter to DTC Participants
99.4 -- Form of Letter to Clients
99.5 -- Form of Instruction to Book Entry Transfer Participant
- ---------------
* Each of these exhibits is hereby incorporated by reference to the Form 10-K
of PageMart Wireless, Inc. for the fiscal year ended December 31, 1997.
Item 17 of Form S-3; Item 22 of For S-4. Undertakings
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Registrant pursuant to the provisions described in Item 15 of Form S-3
and Item 20 of Form S-4, 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 hereunder, the Registrant will, unless in the opinion of its
counsel the matter has been settled by controlled precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the
final adjudication of such issue.
The undersigned Registrant hereby undertakes that:
(1) To file during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement 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) For the purpose of determining any liability under the Securities
Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(4) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the Registration Statement shall be deemed to
be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
The undersigned registrant hereby undertakes to respond to
requests for information that is incorporated by reference into the prospectus
pursuant to Item 4, 10(b), 11 or 13 of this form, within one business day of
receipt of such request, and to send the incorporated documents by first class
mail or other equally prompt means. This includes information contained in
documents filed subsequent to the effective date of the registration statement
through the date of responding to the request.
The undersigned registrant hereby undertakes to supply by means
of a post-effective amendment all information concerning a transaction that
was not the subject of and included in the registration statement when it
became effective.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, the registrant certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on Forms S-3 and S-4 and has
duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Dallas, State of Texas,
on this 31st day of March 1998.
PAGEMART WIRELESS, INC.
(Registrant)
By: /s/ JOHN D. BELETIC
------------------------------------
John D. Beletic
Chairman and Chief Executive Officer
We, the undersigned directors and officers of PAGEMART
WIRELESS, INC., do hereby constitute and appoint John D. Beletic and G. Clay
Myers, and each of them, our true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution in each of them, to do any
and all acts and things in our respective names and on our respective behalves
in the capacities indicated below that John D. Beletic and G. Clay Myers, or
any of them, may deem necessary or advisable to enable PAGEMART WIRELESS, INC.
to comply with the Securities Act of 1933, as amended, any rules, regulations
and requirements of the Securities and Exchange Commission, in connection with
this Registration Statement, including specifically, but not limited to, power
and authority to sign for us in our respective names in the capacities
indicated below any and all amendments including post-effective amendments and
supplements hereto and any abbreviated registration statements filed pursuant
to Rule 462(b) related hereto and to file the same, with all exhibits thereto
and other documents therewith, with the Securities and Exchange Commission;
and we do hereby ratify and confirm all that, John D. Beletic and G. Clay
Myers, or their substitutes, or any of them, may lawfully 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 by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ JOHN D. BELETIC
- ---------------------------- Chairman and Chief Executive March 31, 1998
John D. Beletic Officer (Principal Executive
Officer)
/s/ G. CLAY MYERS
- ---------------------------- Vice President, Finance, Chief March 31, 1998
G. Clay Myers Financial Officer and Treasurer
(Principal Financial and
Accounting Officer)
/s/ ROBERT H. NIEHAUS
- ---------------------------- Director March 31, 1998
Robert H. Niehaus
/s/ GUY L. DE CHAZAL
- ---------------------------- Director March 31, 1998
Guy L. de Chazal
/s/ ARTHUR PATTERSON
- ---------------------------- Director March 31, 1998
Arthur Patterson
/s/ LEIGH J. ABRAMSON
- ---------------------------- Director March 31, 1998
Leigh J. Abramson
/s/ ALEJANDRO PEREZ ELIZONDO
- ---------------------------- Director March 31, 1998
Alejandro Perez Elizondo
/s/ PAMELA D.A. REEVE
- ---------------------------- Director March 31, 1998
Pamela D.A. Reeve
</TABLE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Exhibits
- ----------- --------
<S> <C>
1.1 -- Placement Agreement dated as of January 22, 1998 among the Company
and Morgan Stanley & Co. Incorporated
4.3 -- Registration Rights Agreement dated as of January 28, 1998 between
the Company and Morgan Stanley & Co. Incorporated
5.1 -- Opinion of Davis Polk & Wardwell as to the legality of the Notes
12.1 -- Computation of ratio of earnings (loss) to fixed charges
23.1 -- Consent of Arthur Andersen LLP
23.2 -- Consent of Davis Polk & Wardwell (included in Exhibit 5.1)
99.1 -- Form of Letter of Transmittal
99.2 -- Form of Notice of Guaranteed Delivery
99.3 -- Form of Letter to DTC Participants
99.4 -- Form of Letter to Clients
99.5 -- Form of Instruction to Book Entry Transfer Participant
</TABLE>
EXHIBIT 1.1
EXECUTION COPY
PAGEMART WIRELESS, INC.
PLACEMENT AGREEMENT
January 22, 1998
Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
Ladies and Gentlemen:
PAGEMART WIRELESS, INC., a Delaware corporation (the "Company")
proposes to issue and sell to you (the "Placement Agent") $432,000,000
principal amount at maturity ($249,700,320 initial Accreted Value) of 11 1/4%
Senior Subordinated Discount Notes due 2008 (the "Notes"). The Notes will be
issued pursuant to the provisions of an Indenture dated as of January 28, 1998
(the "Indenture") between the Company and United States Trust Company of New
York, as trustee (the "Trustee").
Simultaneously with the offering, the Company will consummate a
refinancing of certain of its outstanding indebtedness and a modification of
its corporate structure (the "Refinancing"). The Refinancing consists of the
following: (i) the purchase of all 12 1/4% Senior Discount Notes due 2003
(the "12 1/4% Notes") of PageMart, Inc. ("PageMart") tendered to PageMart in
its tender offer (the "Tender Offer") for all outstanding 12 1/4% Notes and
the elimination of most of the covenants and agreements in the indenture
relating to the 12 1/4% Notes (the "12 1/4% Indenture"); (ii) the amendment of
the terms of certain of the covenants and agreements in the indenture (the
"Original 15% Indenture") relating to the Company's 15% Senior Discount
Exchange Notes due 2005 (the "15% Notes") (the Original 15% Indenture as
amended, the "15% Indenture"); and (iii) the merger of PageMart with and into
the Company pursuant to a Certificate of Ownership and Merger (the "Merger
Certificate") between PageMart and the Company and as a result of which the
Company will be the surviving corporation (the "Merger"). The Merger is
conditioned upon the receipt of the consent and approval of the Merger by the
Federal Communications Commission (the "FCC").
The Notes will be offered without being registered under the
Securities Act of 1933, as amended (the "Securities Act"), to qualified
institutional buyers in compliance with the exemption from registration
provided by Rule 144A under the Securities Act, in offshore transactions in
reliance on Regulation S under the Securities Act ("Regulation S") and to
institutional accredited investors (as defined in Rule 501(a)(1), (2), (3) or
(7) under the Securities Act) that deliver a letter in the form annexed to the
Final Memorandum (as defined below).
In connection with the sale of the Notes, the Company has prepared
a preliminary offering memorandum (the "Preliminary Memorandum") and will
prepare a final offering memorandum (the "Final Memorandum" and, with the
Preliminary Memorandum, each a "Memorandum") setting forth or including a
description of the terms of the Notes, the terms of the offering, a
description of the Company and any material developments relating to the
Company occurring after the date of the most recent financial statements
included therein. As used herein, the term "Memorandum" shall include in each
case the documents incorporated by reference therein. The terms "supplement",
"amendment" and "amend" as used herein with respect to a Memorandum shall
include all documents deemed to be incorporated by reference in the
Preliminary Memorandum or Final Memorandum that are filed subsequent to the
date of such Memorandum with the Securities and Exchange Commission (the
"Commission") pursuant to the Securities Exchange Act of 1934, as amended (the
"Exchange Act").
The purchasers of the Notes and their direct and indirect
transferees will be entitled to the benefits of a Registration Rights
Agreement, to be dated as of the Closing Date and to be substantially in the
form attached hereto as Exhibit A (the "Registration Rights Agreement"),
pursuant to which the Company will file one or more registration statements
with the Commission registering with the Commission the Notes or the Exchange
Notes referred to (and as defined) in such Registration Rights Agreement.
1. Representations and Warranties. The Company represents and
warrants to, and agrees with, you that as of the date hereof:
(a) (i) Each document, if any, filed or to be filed pursuant to
the Exchange Act and incorporated by reference in either Memorandum
complied or will comply when so filed in all material respects with the
Exchange Act and the applicable rules and regulations of the Commission
thereunder and (ii) the Preliminary Memorandum does not contain and the
Final Memorandum, in the form used by the Placement Agent to confirm
sales and on the Closing Date, will not contain any untrue statement of
a material fact or omit to state a material fact necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading, except that the representations and warranties set
forth in this Section 1(a) do not apply to statements or omissions in
either Memorandum based upon information relating to the Placement Agent
furnished to the Company in writing by the Placement Agent expressly for
use therein.
(b) The Company has been duly incorporated, is validly existing
as a corporation in good standing under the laws of the State of
Delaware, has the corporate power and authority to own its property and
to conduct its business as described in each Memorandum and is duly
qualified to transact business and is in good standing in each
jurisdiction in which the conduct of its business or its ownership or
leasing of property requires such qualification, except to the extent
that the failure to be so qualified or be in good standing would not
have a material adverse effect on the Company and its subsidiaries,
taken as a whole.
(c) Each subsidiary of the Company has been duly incorporated,
is validly existing as a corporation in good standing under the laws of
the jurisdiction of its incorporation, has the corporate power and
authority to own its property and to conduct its business as described
in each Memorandum and is duly qualified to transact business and is in
good standing in each jurisdiction in which the conduct of its business
or its ownership or leasing of property requires such qualification,
except to the extent that the failure to be so qualified or be in good
standing would not have a material adverse effect on the Company and its
subsidiaries, taken as a whole.
(d) This Agreement has been duly authorized, executed and
delivered by the Company.
(e) The Registration Rights Agreement has been duly authorized,
executed and delivered by, and is a valid and binding agreement of, the
Company, enforceable in accordance with its terms except as (x) the
enforceability thereof may be limited by bankruptcy, insolvency or
similar laws affecting creditors' rights generally, (y) the availability
of equitable remedies may be limited by equitable principles of general
applicability and (z) any rights to indemnity and contribution may be
limited by federal and state securities laws and public policy
considerations.
(f) The Notes have been duly authorized and, when executed,
authenticated and delivered in accordance with the terms of the
Indenture and paid for by the Placement Agent in accordance with the
terms of this Agreement, will (x) be valid and binding obligations of
the Company enforceable in accordance with their terms, except as (A)
the enforceability thereof may be limited by bankruptcy, insolvency or
similar laws affecting creditors' rights generally and (B) rights of
acceleration, if applicable, and the availability of equitable remedies
may be limited by equitable principles of general applicability and (y)
be entitled to the benefits of the Indenture.
(g) The Indenture has been duly authorized and, when executed and
delivered by the Company and the Trustee, will be a valid and binding
agreement of the Company, enforceable in accordance with its terms
except as (x) the enforceability thereof may be limited by bankruptcy,
insolvency or similar laws affecting creditors' rights generally and (y)
rights of acceleration, if applicable, and the availability of equitable
remedies may be limited by equitable principles of general applicability.
(h) The Merger and the execution, delivery and performance of
the Merger Certificate have been duly and validly authorized by the
Company and PageMart, all corporate action necessary to approve the
Merger has been accomplished and no consent, approval, authorization or
order of or qualification with, any government body or agency is
required for the consummation of the Merger, except such as have been
obtained pursuant to the Communications Act of 1934 as amended (the
"Communications Act") and the rules, regulations and policies of the FCC
and except such consents, approvals, authorizations, orders or
qualifications as will be obtained as of the Closing Date (as defined
herein).
(i) Upon consummation of the Refinancing, the execution and
delivery by the Company of, and the performance by the Company of its
obligations under, this Agreement, the Indenture, the Notes, the
Registration Rights Agreement and the Merger Certificate, will not
contravene any provision of applicable law or the certificate of
incorporation or by-laws of the Company, or any agreement or other
instrument binding upon the Company or any of its subsidiaries that is
material to the Company and its subsidiaries, taken as a whole, or any
judgment, order or decree of any governmental body, agency or court
having jurisdiction over the Company or any of its subsidiaries, and no
consent, approval, authorization or order of, or qualification with, any
governmental body or agency is required for the consummation of the
Merger, the performance by the Company of its obligations under this
Agreement, the Indenture, the Notes, the Registration Rights Agreement
or the Merger Certificate, except such as have been obtained pursuant to
the Communications Act and the rules, regulations and policies of the
FCC, and except such as may be required by the securities or Blue Sky
laws of the various states in connection with the offer and sale of the
Notes and by Federal and state securities laws with respect to the
Company's obligations under the Registration Rights Agreement and except
such consents, approvals, authorizations, orders or qualifications as
will be obtained as of the Closing Date.
(j) There has not occurred any material adverse change, or any
development that could reasonably be expected to cause a prospective
material adverse change, in the condition, financial or otherwise, or in
the earnings, business or operations of the Company and its
subsidiaries, taken as a whole, from that set forth in the Preliminary
Memorandum.
(k) There are no legal or governmental proceedings pending or
threatened to which the Company or any of its subsidiaries is a party or
to which any of the properties of the Company or any of its subsidiaries
is subject that could reasonably be expected to have a material adverse
effect on the Company and its subsidiaries, taken as a whole, or on the
power or ability of the Company to perform its obligations under this
Agreement, the Indenture, the Registration Rights Agreement, the Notes,
or the Merger Certificate or to consummate the Merger or the transactions
contemplated by the Final Memorandum.
(l) Each of the Company and its respective subsidiaries has all
necessary consents, authorizations, approvals, orders, certificates and
permits of and from, and has made all declarations and filings with, all
federal, state, local and other governmental authorities, all
self-regulatory organizations and all courts and other tribunals, to
own, lease, license and use its properties and assets and to conduct its
business in the manner described in the Preliminary Memorandum, except
to the extent that the failure to obtain or file would not have a
material adverse effect on the Company and its subsidiaries, taken as a
whole.
(m) Simultaneously with or prior to the Closing (as defined
herein), each element of the Refinancing shall have been consummated.
(n) Neither the Company nor any affiliate (as defined in Rule
501(b) of Regulation D under the Securities Act, an "Affiliate") of the
Company (other than the Placement Agent) has directly, or through any
agent, (i) sold, offered for sale, solicited offers to buy or otherwise
negotiated in respect of any security (as defined in the Securities Act)
which is or will be integrated with the sale of the Notes in a manner
that would require the registration under the Securities Act of the
Notes or (ii) engaged in any form of general solicitation or general
advertising in connection with the offering of the Notes (as those terms
are used in Regulation D under the Securities Act) or in any manner
involving a public offering within the meaning of Section 4(2) of the
Securities Act.
(o) The Company is not an "investment company" as such term is
defined in the Investment Company Act of 1940, as amended.
(p) It is not necessary in connection with the offer, sale and
delivery of the Notes to the Placement Agent in the manner contemplated
by this Agreement to register the Notes under the Securities Act or to
qualify the Indenture under the Trust Indenture Act of 1939, as amended.
(q) None of the Company or any of its Affiliates or any person
acting on its or their behalf (other than the Placement Agent) has
engaged in any directed selling efforts (within the meaning of
Regulation S) with respect to the Notes and the Company, and its
Affiliates and any person acting on its or their behalf (other than the
Placement Agent) have complied with the offering restrictions
requirement of Regulation S.
2. Offering. You have advised the Company that you will make an
offering of the Notes purchased by you hereunder on the terms set forth in the
Final Memorandum as soon as practicable after this Agreement is entered into
as in your judgment is advisable.
3. Purchase and Delivery. The Company hereby agrees to sell to
the Placement Agent, and the Placement Agent, upon the basis of the
representations and warranties herein contained, but subject to the conditions
hereinafter stated, agrees to purchase from the Company, the Notes at a
purchase price of $559.224675 per Note plus accrued amortization of original
issue discount, if any, from January 28, 1998 to the date of payment and
delivery.
Payment for the Notes shall be made against delivery of the Notes
at a closing (the "Closing") to be held at the offices of Shearman & Sterling,
599 Lexington Avenue, New York, New York, at 10:00 A.M., local time, on
January 28, 1998, or at such other time on the same or such other date, not
later than February 11, 1998, as shall be designated in writing by you. The
time and date of such payment are herein referred to as the "Closing Date".
Payment for the Notes shall be made by wire transfer to an account specified
by the Company in federal funds or other funds immediately available in New
York City.
Certificates for the Notes shall be in definitive or global form
and registered in such names and in such denominations as you shall request
not less than two full business days prior to the Closing Date. The
certificates evidencing the Notes shall be delivered to you on the Closing
Date with any transfer taxes payable in connection with the transfer of the
Notes to you duly paid, against payment of the purchase price therefor.
4. Conditions to Closing. The obligations of the Placement
Agent under this Agreement to purchase the Notes will be subject to the
following conditions:
(a) Subsequent to the execution and delivery of this Agreement
and on or prior to the Closing Date,
(i) there shall not have occurred any downgrading, nor
shall any notice have been given of any intended or potential
downgrading or of any review for a possible change that does not
indicate the direction of the possible change, in the rating
accorded any of the Company's or PageMart's securities by any
"nationally recognized statistical rating organization", as such
term is defined for purposes of Rule 436(g)(2) under the
Securities Act; and
(ii) there shall not have occurred any change, or any
development involving a prospective change, in the financial
condition, business or results of operations, of the Company and
its subsidiaries, taken as a whole, from that set forth in the
Preliminary Memorandum that, in your judgment, is material and
adverse and that makes it, in your judgment, impracticable to
market the Notes on the terms and in the manner contemplated in
the Final Memorandum.
(b) You shall have received on the Closing Date a certificate
from the Company, dated the Closing Date and signed by an executive
officer of the Company, to the effect set forth in clause (a)(i) above
and to the effect that the representations and warranties of the Company
contained in this Agreement are true and correct as of the Closing Date
and that the Company has complied in all material respects with all of
the agreements and satisfied all of the conditions on its part to be
performed or satisfied on or before the Closing Date.
Each of the officers signing and delivering such certificate may
rely upon the best of his knowledge as to proceedings threatened.
(c) You shall have received on the Closing Date an opinion of
Davis Polk & Wardwell, counsel for the Company, dated the Closing Date,
to the effect set forth in Exhibit B.
(d) You shall have received on the Closing Date an opinion of
the General Counsel of the Company, dated the Closing Date, to the
effect set forth in Exhibit C.
(e) You shall have received on the Closing Date an opinion of
Paul, Weiss, Rifkind, Wharton & Garrison, special FCC counsel for the
Company, dated the Closing Date, to the effect set forth in Exhibit D.
(f) You shall have received on the Closing Date an opinion of
O'Connor & Hannan, special FCC counsel for the Company, dated the
Closing Date, to the effect set forth in Exhibit E.
(g) You shall have received on the Closing Date an opinion of
Shearman & Sterling, counsel for the Placement Agent, dated the Closing
Date.
(h) You shall have received, on each of the date hereof and the
Closing Date, a letter dated the date hereof or the Closing Date, as the
case may be, in form and substance satisfactory to you, from Arthur
Andersen LLP, independent public accountants, containing statements and
information of the type ordinarily included in accountants' "comfort
letters" to underwriters with respect to the financial statements and
certain financial information contained in or incorporated by reference
into each Memorandum.
(i) You shall have received on the date hereof the Registration
Rights Agreement effective as of the Closing Date and executed by the
Company.
(j) You shall have received on the date hereof a true and
correct copy of the consent of the lenders under the Company's Revolving
Credit Agreement (as defined in the Final Memorandum) necessary to
consummate the Refinancing and all transactions related thereto, and to
spend the amounts necessary to construct the Company's Narrowband
Personal Communication Services network as described in the Final
Memorandum.
(k) You shall have received on the date hereof duly executed
copies of the Merger Certificate executed by the Company and PageMart,
and, on the Closing Date, the Merger Certificate shall be in full force
and effect.
(l) Each element of the Refinancing will have occurred prior to,
or will occur concurrently with, the Closing.
(m) You shall have received such other documents and
certificates as are reasonably requested by you or your counsel.
5. Covenants of the Company. In further consideration of the
agreements of the Placement Agent contained in this Agreement, the Company
covenants as follows:
(a) To furnish to you, without charge, during the period
mentioned in paragraph (c) below, as many copies of the Final
Memorandum, any documents incorporated by reference therein and any
supplements and amendments thereto as you may reasonably request.
(b) Before amending or supplementing either Memorandum, to
furnish to you a copy of each such proposed amendment or supplement and
not to use any such proposed amendment or supplement to which you
reasonably object.
(c) If, during such period after the date hereof and prior to
the date on which all of the Notes shall have been sold by the Placement
Agent, any event shall occur or condition exist as a result of which it
is necessary in your judgment to amend or supplement the Final
Memorandum in order to make the statements therein, in light of the
circumstances when such Memorandum is delivered to the Placement Agent,
not misleading, or if, in the opinion of counsel to the Placement Agent
it is necessary to amend or supplement such Memorandum to comply with
applicable law, forthwith to prepare and furnish to the Placement Agent,
at the Company's own expense, either amendments or supplements to such
Memorandum so that the statements in such Memorandum as so amended or
supplemented will not, in light of the circumstances when such
Memorandum is delivered to the Placement Agent, be misleading or so that
such Memorandum, as so amended or supplemented, will comply with
applicable law.
(d) To endeavor to qualify the Notes for offer and sale under
the securities or Blue Sky laws of such jurisdictions as the Placement
Agent shall reasonably request.
(e) Whether or not any sale of Notes to you is consummated, to
pay all expenses incident to the performance of its obligations under
this Agreement, including: (i) the preparation of each Memorandum and
all amendments and supplements thereto, (ii) the preparation, issuance
and delivery of the Notes, (iii) the fees and disbursements of the
Company's counsel and accountants and the Trustee and its counsel, (iv)
the qualification of such Notes under securities or Blue Sky laws in
accordance with the provisions of Section 5(d) hereof, including filing
fees and the fees and disbursements of counsel for the Placement Agent
in connection therewith and in connection with the preparation of any
Blue Sky memoranda, (v) the printing and delivery to the Placement Agent
in quantities as hereinabove stated of copies of each Memorandum and any
amendments or supplements thereto, (vi) all document production charges
and expenses of counsel to the Placement Agent (but not including their
fees for professional services) in connection with the preparation of
this Agreement and (vii) the fees and expenses, if any, incurred in
connection with the admission of the Notes for trading in any
appropriate market system.
(f) Neither the Company, nor any of its Affiliates will sell,
offer for sale or solicit offers to buy or otherwise negotiate in
respect of any security (as defined in the Securities Act) which would
be integrated with the sale of the Notes in a manner which would require
the registration under the Securities Act of the Notes.
(g) Not to solicit any offer to buy, or offer or sell, the Notes
by means of any form of general solicitation or general advertising (as
those terms are used in Regulation D under the Securities Act) or in any
manner involving a public offering within the meaning of Section 4(2) of
the Securities Act.
(h) To use its best efforts to permit the Notes to be designated
PORTAL securities in accordance with the rules and regulations adopted
by the National Association of Securities Dealers, Inc. relating to
trading in the PORTAL Market.
(i) None of the Company or its Affiliates or any person acting
on its or their behalf (other than the Placement Agent) will engage in
any directed selling efforts (as that term is defined in Regulation S)
with respect to the Notes, and the Company and its Affiliates and each
person acting on its or their behalf (other than the Placement Agent)
will comply with the offering restrictions of Regulation S.
(j) To apply the net proceeds from the sale of the Notes
pursuant to this Agreement in the manner described under "Use of
Proceeds" in the Final Memorandum.
(k) The Company agrees, for the sole benefit of the Placement
Agent;
(i) prior to the consummation of the Exchange Offer (as
such term is defined in the Registration Rights Agreement) or the
effectiveness of a Shelf Registration Statement (as such term is
defined in the Registration Rights Agreement) if, in the
reasonable judgment of the Placement Agent, the Placement Agent or
any of its affiliates (as such term is defined in the rules and
regulations under the Securities Act) is required to deliver an
offering memorandum in connection with sales of, or market-making
activities with respect to, the Notes or the Exchange Notes, (A)
to periodically amend or supplement the Final Memorandum so that
the information contained in the Final Memorandum complies with
the requirements of Rule 144A of the Securities Act, (B) to amend
or supplement the Final Memorandum when necessary to reflect any
material changes in the information provided therein so that the
Final Memorandum will not contain any untrue statement of a
material fact or omit to state any material fact necessary in
order to make the statements therein, in light of the
circumstances existing as of the date the Final Memorandum is so
delivered, not misleading and (C) to provide the Placement Agent
with copies of each such amended or supplemental Final Memorandum,
as the Placement Agent may reasonably request;
(ii) following the consummation of the Exchange Offer or the
effectiveness of a Shelf Registration Statement and for so long as
the Notes or the Exchange Notes are outstanding if, in the
reasonable judgement of the Placement Agent, the Placement Agent
or any of its affiliates (as such term is defined in the rules and
regulations under the Securities Act) is required to deliver a
prospectus in connection with sales of, or market-making activities
with respect to, such securities, (A) to periodically amend the
applicable registration statement so that the information
contained therein complies with the requirements of Section 10(a)
of the Securities Act, (B) if requested by the Placement Agent,
within 45 days following the end of the Company's most recent
fiscal quarter, file a supplement to the prospectus (which
supplement may be incorporated by reference) included in the
applicable registration statement which sets forth the financial
results of the Company for the previous quarter, (C) to amend the
applicable registration statement or supplement the related
prospectus or the documents incorporated therein when necessary to
reflect any material changes in the information provided therein
so that the registration statement and the prospectus will not
contain any untrue statement of a material fact or omit to state
any material fact necessary in order to make the statements
therein, in light of the circumstances existing as of the date the
prospectus is so delivered, not misleading and (D) to provide the
Placement Agent with copies of each such amendment or supplement
as the Placement Agent may reasonably request;
(iii) notwithstanding clauses (i) and (ii) above, (A) prior
to amending the Final Memorandum or to filing any post-effective
amendment to any registration statement or to supplementing any
related prospectus, to furnish to the Placement Agent and its
counsel, copies of all such documents proposed to be amended,
filed or supplemented, and (B) it will not issue any amendment to
the Final Memorandum, any post-effective amendment to a
registration statement or any supplement to a prospectus to which
the Placement Agent or its counsel shall reasonably object;
(iv) it shall notify the Placement Agent and its counsel
and (if requested by any such person) confirm such advice in
writing, (A) when any amendment to the Final Memorandum has been
issued, when any prospectus supplement or amendment or
post-effective amendment has been filed, and, with respect to any
post-effective amendment, when the same has become effective, (B)
of any request by the Commission for any post-effective amendment
or supplement to a registration statement, any supplement or
amendment to a prospectus or for additional information, (C) the
issuance by the Commission of any stop order suspending the
effectiveness of a registration statement or the initiation of any
proceedings for that purpose, (D) of the receipt by the Company of
any notification with respect to the suspension of the
qualification of the Notes or the Exchange Notes for sale in any
jurisdiction or the initiation or threatening of any proceedings
for such purpose and (E) of the happening of any event which makes
any statement made in the Final Memorandum, a registration
statement, a prospectus or any amendment or supplement thereto
untrue or which requires the making of any change in the Final
Memorandum, a registration statement, a prospectus or any
amendment or supplement thereto, in order to make the statements
therein not misleading;
(v) it consents to the use of the Final Memorandum and any
prospectus referred to in this paragraph (k) or any amendment or
supplement thereto, by the Placement Agent in connection with the
offering and sale of the Notes or Exchange Notes, as the case may
be;
(vi) it will comply with the provisions of this paragraph
(k) at its own expense;
(vii) and hereby expressly acknowledges that the
indemnification and contribution provisions of Section 7 of the
Purchase Agreement shall be specifically applicable and relate to
each offering memorandum, registration statement, prospectus,
amendment or supplement referred to in this paragraph (k).
6. Offering of the Notes; Restrictions on Transfer. (a) The
Placement Agent represents and warrants that it is a qualified institutional
buyer as defined in Rule 144A under the Securities Act (a "QIB"). The
Placement Agent agrees with the Company that (x) it will not solicit offers
for, or offer or sell, the Notes by any form of general solicitation or
general advertising (as those terms are used in Regulation D under the
Securities Act) or in any manner involving a public offering within the
meaning of Section 4(2) of the Securities Act and (y) it will solicit offers
for such Notes only from, and will offer such Notes only to, persons that it
reasonably believes to be (A) in the case of offers inside the United States,
(i) QIBs or (ii) other institutional accredited investors (as defined in Rule
501(a)(1), (2), (3) or (7) under the Securities Act) ("institutional
accredited investors") that, prior to their purchase of the Notes, deliver to
the Placement Agent a letter containing the representations and agreements set
forth in Appendix A to the Final Memorandum and (B) in the case of offers
outside the United States, to persons other than U.S. persons ("foreign
purchasers", which term shall include dealers or other professional
fiduciaries in the United States acting on a discretionary basis for foreign
beneficial owners (other than an estate or trust)) that, in each case, in
purchasing such Notes are deemed to have represented and agreed as provided in
the Final Memorandum under the caption "Transfer Restrictions."
(b) The Placement Agent represents, warrants, and agrees with
respect to offers and sales outside the United States that:
(i) it understands that no action has been or will be taken in
any jurisdiction by the Company that would permit a public offering of
the Notes, or possession or distribution of either Memorandum or any
other offering or publicity material relating to the Notes, in any
country or jurisdiction where action for that purpose is required;
(ii) the Placement Agent will comply with all applicable laws and
regulations in each jurisdiction in which it acquires, offers, sells or
delivers Notes or has in its possession or distributes either Memorandum
or any such other material, in all cases at its own expense;
(iii) the Notes have not been and will not be registered under the
Securities Act and may not be offered or sold within the United States
or to, or for the account or benefit of, U.S. persons except in
accordance with Regulation S under the Securities Act or pursuant to an
exemption from, or in a transaction not subject to, the registration
requirements of the Securities Act;
(iv) the Placement Agent has offered the Notes and will offer and
sell the Notes (A) as part of their distribution at any time and (B)
otherwise until 40 days after the later of the commencement of the
Offering and the Closing Date, only in accordance with Rule 903 of
Regulation S. Accordingly, neither the Placement Agent, its Affiliates
nor any persons acting on its or their behalf have engaged or will
engage in any directed selling efforts (within the meaning of Regulation
S) with respect to the Notes, and the Placement Agent, its Affiliates
and any such persons have complied and will comply with the offering
restrictions requirement of Regulation S;
(v) the Placement Agent has (A) not offered or sold and will not
offer or sell any Notes to persons in the United Kingdom except to
persons whose ordinary activities involve them in acquiring, holding,
managing or disposing of investments (as principal or agent) for the
purposes of their businesses or otherwise in circumstances which have
not resulted and will not result in an offer to the public in the United
Kingdom within the meaning of the Public Offers of Securities Regulations
1995 (the "Regulations"); (B) complied and will comply with all
applicable provisions of the Financial Services Act 1986 and the
Regulations with respect to anything done by it in relation to the Notes
in, from or otherwise involving the United Kingdom; and (C) only issued
or passed on and will only issue or pass on to any person in the United
Kingdom any document received by it in connection with the issue of the
Notes if that person is of a kind described in Article 11(3) of the
Financial Services Act 1986 (Investment Advertisements) (Exemptions)
Order 1996 or is a person to whom such document may otherwise lawfully
be issued or passed on;
(vi) the Placement Agent understands that the Notes have not been
and will not be registered under the Securities and Exchange Law of
Japan, and represents that it has not offered or sold, and agrees that
it will not offer or sell, any Notes, directly or indirectly in Japan or
to any resident of Japan except (A) pursuant to an exemption from the
registration requirements of the Securities and Exchange Law of Japan and
(B) in compliance with any other applicable requirements of Japanese
law; and
(vii) the Placement Agent agrees that, at or prior to confirmation
of sales of the Notes, it will have sent to each distributor, dealer or
person receiving a selling concession, fee or other remuneration that
purchases Notes from it during the restricted period a confirmation or
notice substantially to the following effect:
"The Notes covered hereby have not been registered under the U.S.
Securities Act of 1933 (the "Securities Act") and may not be
offered and sold within the United States to, or for the account
or benefit of, U.S. persons (i) as part of their distribution at
any time or (ii) otherwise until 40 days after the later of the
commencement of the offering and the Closing Date, except in
either case in accordance with Regulation S (or Rule 144A if
available) under the Securities Act."
Terms used in this Section 6 and not otherwise defined herein have the
meanings given to them by Regulation S.
7. Indemnification and Contribution. (a) The Company agrees to
indemnify and hold harmless the Placement Agent, and each person, if any, who
controls the Placement Agent within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act, or is under common control
with, or is controlled by, the Placement Agent, from and against any and all
losses, claims, damages and liabilities (including, without limitation, any
legal or other expenses reasonably incurred by the Placement Agent or any such
controlling or affiliated person in connection with defending or investigating
any such action or claim) caused by any untrue statement or alleged untrue
statement of a material fact contained in either Memorandum (as amended or
supplemented, if the Company shall have furnished any amendments or
supplements thereto), or caused by any omission or alleged omission to state
therein a material fact necessary to make the statements therein in light of
the circumstances under which they were made not misleading, except insofar as
such losses, claims, damages or liabilities are caused by any such untrue
statement or omission or alleged untrue statement or omission based upon
information relating to the Placement Agent furnished to the Company in
writing by you expressly for use therein, provided, however, that the
foregoing indemnity agreement with respect to any Memorandum sent or given to
holders of Notes in preliminary form shall not inure to the benefit of the
Placement Agent from whom the person asserting any such losses, claims,
damages or liabilities purchased the Notes, if a copy of the Memorandum in
final form (as then amended or supplemented) was not sent or given by or on
behalf of such Placement Agent to such person at or prior to the time such
person purchased the Notes, and if the Memorandum in final form (as amended or
supplemented) would have cured the defect giving rise to such losses, claims,
damages or liabilities, unless such failure is the result of noncompliance by
the Company with Section 5(a) hereof.
(b) The Placement Agent agrees to indemnify and hold harmless the
Company, its directors, officers and each person, if any, who controls the
Company within the meaning of either 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 the Placement Agent, but only with reference to
information relating to the Placement Agent furnished to the Company in
writing by you expressly for use in either Memorandum or any amendments or
supplements thereto.
(c) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of which
indemnity may be sought pursuant to either paragraph (a) or (b) above, such
person (the "indemnified party") shall promptly notify the person against whom
such indemnity may be sought (the "indemnifying party") in writing and the
indemnifying party, upon request of the indemnified party, shall retain counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party and any others the indemnifying party may designate in such proceeding
and shall pay the fees and disbursements of such counsel related to such
proceeding. In any such proceeding, any indemnified party 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 party unless (i) the indemnifying
party and the indemnified party shall have mutually agreed to the retention of
such counsel or (ii) the named parties to any such proceeding (including any
impleaded parties) include both the indemnifying party and the indemnified
party and representation of both parties by the same counsel, in the opinion
of the indemnified party's counsel, would be inappropriate due to actual or
potential differing interests between them. It is understood that the
indemnifying party shall not, in connection with any proceeding or related
proceedings in the same jurisdiction, be liable for the fees and expenses of
more than one separate firm (in addition to any local counsel) for all such
indemnified parties and that all such fees and expenses shall be reimbursed as
they are incurred. Such firm shall be designated in writing by Morgan Stanley
& Co. Incorporated, in the case of parties indemnified pursuant to paragraph
(a) above, and by the Company, in the case of parties indemnified pursuant to
paragraph (b) above. The indemnifying party shall not be liable for any
settlement of any proceeding effected without its written consent but, if
settled with such consent or if there be a final judgment for the plaintiff,
the indemnifying party agrees to indemnify the indemnified party from and
against any loss or liability by reason of such settlement or judgment.
Notwithstanding the foregoing sentence, if at any time an indemnified party
shall have requested an indemnifying party to reimburse the indemnified party
for fees and expenses of counsel as contemplated by the second and third
sentences of this paragraph, the indemnifying party agrees that it shall be
liable for any settlement of any proceeding effected without its written
consent if (i) such settlement is entered into more than 60 days after receipt
by such indemnifying party of the aforesaid request and (ii) such indemnifying
party shall not have reimbursed the indemnified party in accordance with such
request prior to the date of such settlement. No indemnifying party shall,
without the prior written consent of the indemnified party, effect any
settlement of any pending or threatened proceeding in respect of which any
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party, unless such settlement includes an
unconditional release of such indemnified party from all liability on claims
that are the subject matter of such proceeding.
(d) To the extent the indemnification provided for in paragraph
(a) or (b) of this Section 7 is unavailable to an indemnified party or
insufficient in respect of any losses, claims, damages or liabilities, then
each indemnifying party under such paragraph, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or payable
by such indemnified party as a result of such losses, claims, damages or
liabilities (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company, on the one hand, and the Placement Agent, on
the other hand, from the offering of such Notes or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Company on
the one hand and the Placement Agent on the other hand in connection with the
statements or omissions that resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable considerations. The
relative benefits received by the Company on the one hand and the Placement
Agent on the other hand in connection with the offering of such Notes shall be
deemed to be in the same respective proportions as the net proceeds from the
offering of such Notes (before deducting expenses) received by the Company and
the total discounts and commissions received by the Placement Agent in respect
thereof bear to the aggregate offering price of such Notes. The relative
fault of the Company on the one hand and of the Placement Agent on the other
hand 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 or by the Placement Agent and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
(e) The Company and the Placement Agent agree that it would not
be just or equitable if contribution pursuant to this Section 7 were
determined by pro rata allocation or by any other method of allocation that
does not take account of the equitable considerations referred to in paragraph
(d) above. The amount paid or payable by an indemnified party as a result of
the losses, claims, damages and liabilities referred to in paragraph (d) above
shall be deemed to include, subject to the limitations set forth above, any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 7, the Placement Agent shall
not be required to contribute any amount in excess of the amount by which the
total price at which the Notes resold by it in the initial placement of such
Notes were offered to investors exceeds the amount of any damages that the
Placement Agent has otherwise been required to pay 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. The indemnity and contribution
provisions contained in this Section 7 and the representations and warranties
of the Company contained in this Agreement shall remain operative and in full
force and effect regardless of (i) any termination of this Agreement, (ii) any
investigation made by or on behalf of the Placement Agent or any person
controlling the Placement Agent or by or on behalf of the Company, its
officers or directors or any person controlling the Company and (iii)
acceptance of and payment for any of the Notes. The remedies provided for in
this Section 7 are not exclusive and shall not limit any rights or remedies
which may otherwise be available to any indemnified party at law or in equity.
8. Termination. This Agreement shall be subject to termination
by notice given by you to the Company, if (a) after the execution and delivery
of this Agreement and prior to the Closing Date (i) trading generally shall
have been suspended or materially limited on or by any of the New York Stock
Exchange, the American Stock Exchange, the National Association of Securities
Dealers, Inc., the Chicago Board of Options Exchange, the Chicago Mercantile
Exchange or the Chicago Board of Trade, (ii) trading of any securities of the
Company shall have been suspended on any exchange or in any over-the-counter
market, (iii) a general moratorium on commercial banking activities in New
York shall have been declared by either Federal or New York State authorities
or (iv) there shall have occurred any outbreak or escalation of hostilities or
any change in financial markets or any calamity or crisis that, in your
judgment, is material and adverse and (b) such event individually or together
with any other such event makes it, in your judgment, impracticable to market
the Notes on the terms and in the manner contemplated in the Final Memorandum.
9. Miscellaneous. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if
the signatures thereto and hereto were upon the same instrument.
If this Agreement shall be terminated by the Placement Agent
because of any failure or refusal on the part of the Company to comply with
the terms or to fulfill any of the conditions of this Agreement, or if for any
reason the Company shall be unable to perform its obligations under this
Agreement, the Company will reimburse the Placement Agent for all
out-of-pocket expenses (including the fees and disbursements of its counsel)
reasonably incurred by the Placement Agent in connection with this Agreement
or the offering contemplated hereunder.
This Agreement shall be governed by and construed in accordance
with the internal laws of the State of New York.
The headings of the sections of this Agreement have been inserted
for convenience of reference only and shall not be deemed a part of this
Agreement.
Please confirm your agreement to the foregoing by signing in the
space provided below for that purpose and returning to us a copy hereof,
whereupon this Agreement shall constitute a binding agreement between us.
Very truly yours,
PAGEMART WIRELESS, INC.
By /s/ G. Clay Myers
---------------------------------
Name: G. Clay Myers
Title: Vice President, Finance
and Chief Financial Officer
Agreed, January 22, 1998
Morgan Stanley & Co. Incorporated
By /s/ Robert M. Shepardson
--------------------------
Name: Robert M. Shepardson
Title: Principal
EXHIBIT A
Form of Registration Rights Agreement
EXHIBIT B
Form of Opinion of Davis Polk & Wardwell
Pursuant to Section 4(c) of the Placement Agreement, Davis Polk &
Wardwell, counsel for the Company, shall furnish an opinion dated the
Closing Date to the effect that:
(i) the Company has been duly incorporated, is validly
existing as a corporation in good standing under the laws of the
State of Delaware and has the corporate power and authority to own
its property and to conduct its business as described in the Final
Memorandum;
(ii) each subsidiary of the Company has been duly
incorporated, is validly existing as a corporation in good
standing under the laws of the jurisdiction of its incorporation
and has the corporate power and authority to own its property and
to conduct its business as described in the Final Memorandum;
(iii) the Placement Agreement has been duly authorized,
executed and delivered by the Company;
(iv) the Registration Rights Agreement has been duly
authorized, executed and delivered by, and is a valid and binding
agreement of, the Company, enforceable in accordance with its
terms except as (x) the enforceability thereof may be limited by
bankruptcy, insolvency or similar laws affecting creditors' rights
generally and except as enforcement thereof is subject to general
principles of equity (regardless of whether enforcement is
considered in a proceeding in equity or at law), (y) the
availability of equitable remedies may be limited by equitable
principles of general applicability and (z) any rights to
indemnity and contribution may be limited by federal and state
securities laws and public policy considerations;
(v) the Indenture pursuant to which the Notes are to be
issued has been duly authorized, executed and delivered by, and,
assuming due authorization and delivery by the Trustee, is a valid
and binding agreement of, the Company, enforceable in accordance
with its terms, except as (x) the enforceability thereof may be
limited by bankruptcy, insolvency or similar laws affecting
creditors' rights generally and except as enforcement thereof is
subject to general principles of equity (regardless of whether
enforcement is considered in a proceeding in equity or at law) and
(y) rights of acceleration, if applicable, and the availability of
equitable remedies may be limited by equitable principles of
general applicability;
(vi) the Notes have been duly authorized and, when executed,
authenticated and delivered to and paid for by the Placement Agent
in accordance with the terms of the Placement Agreement and
assuming due authentication by the Trustee, will be (x) valid and
binding obligations of the Company enforceable in accordance with
their terms, except as (A) the enforceability thereof may be
limited by bankruptcy, insolvency or similar laws affecting
creditors' rights generally and except as enforcement thereof is
subject to general principles of equity (regardless of whether
enforcement is considered in a proceeding in equity or at law) and
(B) rights of acceleration, if applicable, and the availability of
equitable remedies may be limited by equitable principles of
general applicability and (y) entitled to the benefits of the
Indenture;
(vii) the Merger and the Merger Certificate have been duly
authorized by the Company and PageMart, all corporate action
necessary to approve the Merger has been accomplished and no
consent, approval, authorization or order of or qualification
with, any governmental body or agency is required for the
consummation of the Merger, except such as may have been obtained
pursuant to the Communications Act and the rules, regulations and
policies of the FCC;
(viii) to the best of such counsel's knowledge, the
execution and delivery by the Company of, and the performance by
the Company of its obligations under, the Placement Agreement, the
Indenture, the Notes, the Registration Rights Agreement and the
Merger Certificate, and the issuance, sale and delivery of the
Notes, will not contravene (x) any provision of applicable law or
(y) the certificate of incorporation or by-laws of the Company,
and no consent, approval, authorization or order of or
qualification with, any governmental body or agency is required
for the performance by the Company of its obligations under the
Placement Agreement, the Indenture, the Notes, the Registration
Rights Agreement and the Merger Certificate or the issuance, sale
and delivery of the Notes, except such as may be required by (A)
the securities or Blue Sky laws of the various states in
connection with the offer and sale of the Notes, (B) the
Communications Act, and the rules, regulations and policies of the
FCC, in connection with the consummation of the Merger or (C) the
public utilities laws of the various states and the rules,
regulations and policies of the state public utilities regulatory
authorities thereunder, and except such that would not have a
material adverse effect on the Company and its subsidiaries taken
as a whole;
(ix) such counsel is not aware of any legal or governmental
proceedings pending or threatened to which the Company or any of
its subsidiaries is a party or to which any of the properties of
the Company or any of its subsidiaries is subject other than
proceedings fairly summarized in all material respects in the
Final Memorandum or proceedings which such counsel believes are
not likely to have a material adverse effect on the power or
ability of the Company to perform its obligations under the
Placement Agreement, the Indenture, the Notes, the Merger
Certificate and the Registration Rights Agreement or the issuance,
sale and delivery of the Notes or to consummate the Merger or the
transactions contemplated by the Final Memorandum;
(x) the Company is not an "investment company", as defined
in the Investment Company Act of 1940, as amended;
(xi) the statements in (or incorporated by reference in)
the Final Memorandum under the captions "Description of the
Notes", "Private Placement" and "Transfer Restrictions", insofar
as such statements constitute a summary of the legal matters,
documents or proceedings referred to therein, fairly present the
information called for with respect to such legal matters,
documents and proceedings and fairly summarize the matters
referred to therein;
(xii) the statements in the Final Memorandum under the
caption "Certain United States Federal Income Tax Considerations"
are accurate and fairly summarize the matters referred to therein;
(xiii) such counsel (i) is of the opinion that each document
incorporated by reference in the Final Memorandum (except for
financial statements and schedules and other financial and
statistical data included therein as to which such counsel need
not express any opinion), complied as to form when filed with the
Commission in all material respects with the Exchange Act and the
rules and regulations of the Commission thereunder and (ii) has no
reason to believe that (except for financial statements and
schedules and other financial and statistical data as to which
such counsel need not express any belief) the Final Memorandum
when issued contained, or as of the date such opinion is delivered
contains, any untrue statement of a material fact or omitted or
omits to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which
they were made, not misleading; and
(xiv) based upon the representations, warranties and
agreements of the Company in Sections 1(n), 1(q), 5(f), 5(g) and
5(i) of the Placement Agreement and of the Placement Agent in
Section 6 of the Placement Agreement, it is not necessary in
connection with the offer, sale and delivery of the Notes to the
Placement Agent under the Placement Agreement or in connection
with the initial resale of such Notes by the Placement Agent in
accordance with Section 6 of the Placement Agreement to register
the Notes under the Securities Act of 1933, it being understood
that no opinion is expressed as to any subsequent resale of any
Notes.
With respect to paragraph (xiii) above, counsel may state
that their opinion and belief are based upon their participation in the
preparation of the Final Memorandum (and any amendments or supplements
thereto) and review and discussion of the contents thereof and review of
the documents incorporated by reference therein, but are without
independent check or verification except with respect to paragraphs (xi)
and (xii) above. Such counsel need not express any opinion with respect
to matters governed by or related to (x) the Communications Act or the
rules, regulations or policies of the FCC or (y) the public utilities
laws of the various states or the rules, regulations or policies of the
state public utilities regulatory authorities thereunder.
EXHIBIT C
Form of Opinion of the General Counsel of the Company
Pursuant to Section 4(d) of the Placement Agreement, the General
Counsel of the Company shall furnish an opinion dated the Closing Date
to the effect that:
the statements "Item 3 - Legal Proceedings" of the Company's
Annual Report on Form 10-K for the fiscal year ended December 31,
1996, in "Item 1 - Legal Proceedings" of the Company's Quarterly
Reports on Form 10-Q for the quarters ended March 31, 1997, June
30, 1997 and September 30, 1997 and in "Item 5 - Other Events" of
the Company's Current Report on Form 8-K filed with the Commission
on November 3, 1997 included or incorporated by reference in the
Final Memorandum, insofar as such statements constitute a summary
of the legal matters, documents or proceedings referred to therein,
fairly present the information called for with respect to such
legal matters, documents and proceedings and fairly summarize the
matters referred to therein.
EXHIBIT D
Form of Opinion of Paul, Weiss, Rifkind, Wharton & Garrison
Pursuant to Section 4(e) of the Placement Agreement, Paul, Weiss,
Rifkind, Wharton & Garrison, special FCC counsel for the Company, shall
furnish an opinion dated the Closing Date to the effect that:
(i) the statements in the Final Memorandum under the
captions "Risk Factors--Potential for Change in Regulatory
Environment" and "Business--Government Regulation" (except for any
and all statements regarding (a) the Company's or any of its
subsidiaries' FCC licenses, including, but not limited to,
statements regarding compliance by any such entity with any
requirements or conditions of said FCC licenses; and (b)
management's awareness of or belief regarding certain matters),
insofar as such statements constitute a summary of the legal
matters, documents or proceedings referred to therein, are
accurate in all material respects and fairly summarize the matters
referred to therein; and
(ii) no consent, approval, order or authorization of, or
filing with, the FCC on the part of the Company or its
subsidiaries is required in connection with the consummation of
the Merger, except such as may have been obtained pursuant to the
Communications Act and the rules, regulations and policies of the
FCC, and except for routine notification of the FCC subsequent to
the consummation of the Merger.
EXHIBIT E
Form of Opinion of O'Connor & Hannan
Pursuant to Section 4(f) of the Placement Agreement, O'Connor &
Hannan, special FCC counsel for the Company, shall furnish an opinion
dated the Closing Date to the effect that:
(i) the Company and its subsidiaries have all the FCC
authorizations, consents and approvals (collectively, "FCC
Licenses") that are required to carry on the Company's and its
subsidiaries' businesses as now conducted. The FCC Licenses have
been duly and validly issued and are in full force and effect. To
the best of such counsel's knowledge, the Company, and its
subsidiaries are not in violation of any of the terms and
conditions of the FCC Licenses;
(ii) there is no outstanding adverse judgment, decree, or
order that has been issued by the FCC against the Company or its
subsidiaries or, to the best of such counsel's knowledge, any
action, proceeding, or investigation pending or threatened by the
FCC against the Company or its subsidiaries which would materially
and adversely affect the Merger or the operations of the Company
or its subsidiaries. To the best of such counsel's knowledge, the
Company and its subsidiaries are in compliance with the
Communications Act and the rules, regulations and policies of the
FCC;
(iii) no consent, approval, order or authorization of, or
filing with, the FCC on the part of the Company or its
subsidiaries with regard to any of the FCC Licenses and FCC
applications, other than pro forma transfer of control
applications which have been granted by the FCC, is required in
connection with the issuance, sale and delivery of the Notes
pursuant to this Agreement;
(iv) the Company and its subsidiaries will be in compliance
with Section 310(a) and Section 310(b) of the Communications Act
and the rules, regulations, and policies of the FCC thereunder;
(v) the consummation of the Merger will not result in a
violation of or be in conflict with, and the Closing will not
result in a violation of, or be in conflict with, any terms of the
Communications Act and the rules, regulations and policies of the
FCC thereunder; and
(vi) the statements contained in the Offering Memorandum
under the captions "Risk Factors--Potential for Changes in
Regulatory Environment" and "Business--Government Regulation",
insofar as such statements constitute a summary of the legal
matters, documents or proceedings referred to therein, are
accurate in all material respects and fairly summarize the matters
referred to therein.
EXHIBIT 4.3
EXHIBIT A
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REGISTRATION RIGHTS AGREEMENT
Dated as of January 28, 1998
between
PAGEMART WIRELESS, INC.
and
MORGAN STANLEY & CO. INCORPORATED
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EXECUTION COPY
- -----------------------------------------------------------------------------
REGISTRATION RIGHTS AGREEMENT
Dated as of January 28, 1998
between
PAGEMART WIRELESS, INC.
and
MORGAN STANLEY & CO. INCORPORATED
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made and
entered into as of January 28, 1998, between PAGEMART WIRELESS, INC., a
Delaware corporation (the "Company"), and MORGAN STANLEY & CO. INCORPORATED
(the "Placement Agent").
This Agreement is made pursuant to the Placement Agreement dated
January 22, 1998, between the Company and the Placement Agent (the "Placement
Agreement"), which provides for the sale by the Company to the Placement Agent
of an aggregate of $432,000,000 principal amount at maturity ($249,700,320
initial accreted value) 11 1/4% Senior Subordinated Discount Notes due 2008
(the "Notes") of the Company. In order to induce the Placement Agent to enter
into the Placement Agreement, the Company has agreed to provide to the
Placement Agent and its direct and indirect transferees the registration
rights set forth in this Agreement. The execution of this Agreement is a
condition to the closing under the Placement Agreement.
In consideration of the foregoing, the parties hereto agree as
follows:
1. Definitions.
As used in this Agreement, the following capitalized defined terms
shall have the following meanings:
"1933 Act" shall mean the Securities Act of 1933, as amended from
time to time.
"1934 Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time.
"Closing Date" shall mean the Closing Date as defined in the
Placement Agreement.
"Company" shall have the meaning set forth in the preamble to this
Agreement and shall also include the Company's successors.
"Exchange Notes" shall mean 11 1/4% Senior Subordinated Discount
Notes due 2008 issued by the Company under an indenture and containing
terms identical to the Notes (except that original issue discount
thereon shall accrue from the issue date of the Notes), to be offered to
Holders of Notes in exchange for Notes pursuant to the Exchange Offer.
"Exchange Offer" shall mean the exchange offer by the Company of
Exchange Notes for Registrable Notes pursuant to Section 2(a) hereof.
"Exchange Offer Registration" shall mean a registration under the
1933 Act effected pursuant to Section 2(a) hereof.
"Exchange Offer Registration Statement" shall mean an exchange
offer registration statement on an appropriate form and all amendments
and supplements to such registration statement, in each case including
the Prospectus contained therein, all exhibits thereto and all material
incorporated by reference therein.
"Holder" shall mean the Placement Agent, for so long as it owns any
Registrable Notes, and each of its successors, assigns and direct and
indirect transferees who become registered owners of Registrable Notes
under the Indenture; provided that for purposes of Sections 4 and 5 of
this Agreement, the term "Holder" shall include Participating
Broker-Dealers (as defined in Section 4(a)).
"Indenture" shall mean the Indenture relating to the Notes dated
as of January 28, 1998 between the Company and United States Trust
Company of New York, as trustee, as the same may be amended from time to
time in accordance with the terms thereof.
"Majority Holders" shall mean the Holders of a majority of the
aggregate principal amount at maturity of outstanding Registrable Notes;
provided that whenever the consent or approval of Holders of a specified
percentage of Registrable Notes is required hereunder, Registrable Notes
held by the Company shall not be counted in determining whether such
consent or approval was given by the Holders of such required percentage
or amount.
"Person" shall mean an individual, partnership, limited liability
company, corporation, trust or unincorporated organization, or a
government or agency or political subdivision thereof.
"Placement Agent" shall have the meaning set forth in the preamble
to this Agreement.
"Placement Agreement" shall have the meaning set forth in the
preamble to this Agreement.
"Prospectus" shall mean the prospectus included in a Registration
Statement, including any preliminary prospectus, and any such prospectus
as amended or supplemented by any prospectus supplement, including a
prospectus supplement with respect to the terms of the offering of any
portion of the Registrable Notes covered by a Shelf Registration
Statement, and by all other amendments and supplements to such
prospectus, and in each case including all material incorporated by
reference therein.
"Registrable Notes" shall mean the Notes; provided, however, that
the Notes shall cease to be Registrable Notes when (i) a Registration
Statement with respect to such Notes shall have been declared effective
under the 1933 Act and such Notes shall have been disposed of pursuant
to such Registration Statement, (ii) such Notes have been sold pursuant
to Rule 144(k) (or any similar provision then in force, but not Rule
144A) under the 1933 Act, (iii) such Notes shall have ceased to be
outstanding or (iv) the Exchange Offer is consummated.
"Registration Expenses" shall mean any and all expenses incident to
performance of or compliance by the Company with this Agreement,
including without limitation: (i) all SEC, stock exchange or National
Association of Securities Dealers, Inc. registration and filing fees,
(ii) all fees and expenses incurred in connection with compliance with
state securities or blue sky laws (including reasonable fees and
disbursements of counsel for any underwriters or Holders in connection
with blue sky qualification of any of the Exchange Notes or Registrable
Notes), (iii) all expenses of any Persons in preparing or assisting in
preparing, word processing, printing and distributing any Registration
Statement, any Prospectus, any amendments or supplements thereto, any
underwriting agreements, securities sales agreements and other documents
relating to the performance of and compliance with this Agreement, (iv)
all rating agency fees, (v) all fees and disbursements relating to the
qualification of the Indenture under applicable securities laws, (vi)
the fees and disbursements of the Trustee and its counsel, (vii) the
fees and disbursements of counsel for the Company and, in the case of a
Shelf Registration Statement, the fees and disbursements of one counsel
for the Holders (which counsel shall be selected by the Majority Holders
and which counsel may also be counsel for the Placement Agent) and
(viii) the fees and disbursements of the independent public accountants
of the Company, including the expenses of any special audits or "cold
comfort" letters required by or incident to such performance and
compliance, but excluding fees and expenses of counsel to the
underwriters (other than fees and expenses set forth in clause (ii)
above) or the Holders and underwriting discounts and commissions and
transfer taxes, if any, relating to the sale or disposition of
Registrable Notes by a Holder.
"Registration Statement" shall mean any registration statement of
the Company that covers any of the Exchange Notes or Registrable Notes
pursuant to the provisions of this Agreement and all amendments and
supplements to any such Registration Statement, including post-effective
amendments, in each case including the Prospectus contained therein, all
exhibits thereto and all material incorporated by reference therein.
"SEC" shall mean the Securities and Exchange Commission.
"Shelf Registration" shall mean a registration effected pursuant
to Section 2(b) hereof.
"Shelf Registration Statement" shall mean a "shelf" registration
statement of the Company pursuant to the provisions of Section 2(b) of
this Agreement which covers all of the Registrable Notes (but no other
securities unless approved by the Person or Persons who have requested
the Company to file the Shelf Registration Statement) on an appropriate
form under Rule 415 under the 1933 Act, or any similar rule that may be
adopted by the SEC, and all amendments and supplements to such
registration statement, including post-effective amendments, in each
case including the Prospectus contained therein, all exhibits thereto
and all material incorporated by reference therein.
"Trustee" shall mean the trustee with respect to the Notes under
the Indenture.
"Underwriters" shall have the meaning set forth in Section 3.
"Underwritten Registration" or "Underwritten Offering" shall mean a
registration in which Registrable Notes are sold to an Underwriter for
reoffering to the public.
2. Registration Under the 1933 Act.
(a) Exchange Offer Registration. To the extent not prohibited
by any applicable law or applicable interpretation of the Staff of the SEC,
the Company shall use its best efforts to cause to become effective an
Exchange Offer Registration Statement covering the offer by the Company to the
Holders to exchange all of the Registrable Notes for Exchange Notes and to
have such Registration Statement remain effective until the closing of the
Exchange Offer. The Company shall commence the Exchange Offer promptly after
the Exchange Offer Registration Statement has been declared effective by the
SEC and use its best efforts to have the Exchange Offer consummated not later
than 60 days after such effective date. The Company shall commence the
Exchange Offer by mailing the related exchange offer Prospectus and
accompanying documents to each Holder stating, in addition to such other
disclosures as are required by applicable law:
(i) that the Exchange Offer is being made pursuant to this
Registration Rights Agreement and that all Registrable Notes validly
tendered will be accepted for exchange;
(ii) the dates of acceptance for exchange (which shall be a
period of at least 20 days from the date such notice is mailed) (the
"Exchange Dates");
(iii) that any Registrable Note not tendered will remain
outstanding and continue to accrue original issue discount, but will not
retain any rights under this Registration Rights Agreement;
(iv) that Holders electing to have a Registrable Note exchanged
pursuant to the Exchange Offer will be required to surrender such
Registrable Note, together with the enclosed letters of transmittal, to
the institution and at the address (located in the Borough of Manhattan,
The City of New York) specified in the notice prior to the close of
business on the last Exchange Date; and
(v) that Holders will be entitled to withdraw their election,
not later than the close of business on the last Exchange Date, by
sending to the institution and at the address (located in the Borough of
Manhattan, The City of New York) specified in the notice a telegram,
telex, facsimile transmission or letter setting forth the name of such
Holder, the principal amount of Registrable Notes delivered for exchange
and a statement that such Holder is withdrawing his election to have
such Notes exchanged.
As soon as practicable after the last Exchange Date, the Company
shall:
(i) accept for exchange Registrable Notes or portions thereof
tendered and not validly withdrawn pursuant to the Exchange Offer; and
(ii) deliver, or cause to be delivered, to the Trustee for
cancellation all Registrable Notes or portions thereof so accepted for
exchange by the Company, and issue, and cause the Trustee under the
Indenture to promptly authenticate and mail to each Holder, an Exchange
Note equal in principal amount to the principal amount of the
Registrable Notes surrendered by such Holder.
The Company shall use its best efforts to complete the Exchange
Offer as provided above and shall comply with the applicable requirements of
the 1933 Act, the 1934 Act and other applicable laws and regulations in
connection with the Exchange Offer. The Exchange Offer shall not be subject
to any conditions, other than that the Exchange Offer does not violate
applicable law or any applicable interpretation of the Staff of the SEC. The
Company shall inform the Placement Agent of the names and addresses of the
Holders to whom the Exchange Offer is made, and the Placement Agent shall have
the right, subject to applicable law, to contact such Holders and otherwise
facilitate the tender of Registrable Notes in the Exchange Offer.
(b) Shelf Registration. In the event that (i) the Company
determines that the Exchange Offer Registration provided for in Section 2(a)
above is not available or may not be consummated as soon as practicable after
the last Exchange Date because it would violate applicable law or the
applicable interpretations of the Staff of the SEC, (ii) the Exchange Offer is
not for any other reason consummated by July 28, 1998 or (iii) in the opinion
of counsel for the Placement Agent a Registration Statement must be filed and a
Prospectus must be delivered by the Placement Agent in connection with any
offering or sale of Registrable Notes because such Registrable Notes represent
an unsold allotment for the original offering thereof, the Company shall use
its best efforts to cause to be filed as soon as practicable after such
determination, date or notice of such opinion of counsel is given to the
Company, as the case may be, a Shelf Registration Statement providing for the
sale by the Holders of all of the Registrable Notes and to have such Shelf
Registration Statement declared effective by the SEC. In the event the
Company is required to file a Shelf Registration Statement solely as a result
of the matters referred to in clause (iii) of the preceding sentence, the
Company shall file and have declared effective by the SEC both an Exchange
Offer Registration Statement pursuant to Section 2(a) with respect to all
Registrable Notes and a Shelf Registration Statement (which may be a combined
Registration Statement with the Exchange Offer Registration Statement) with
respect to offers and sales of Registrable Notes held by the Placement Agent
after completion of the Exchange Offer. The Company agrees to use its best
efforts to keep the Shelf Registration Statement continuously effective until
the second anniversary of the effective date thereof (or, if the Company is
required to file such Shelf Registration Statement solely as a result of the
matters referred to in clause (iii) of the first sentence of this Section
2(b), until 180 days after the effective date of such Shelf Registration
Statement) or such shorter period that will terminate when all of the
Registrable Notes covered by the Shelf Registration Statement have been sold
pursuant to the Shelf Registration Statement. The Company further agrees to
supplement or amend the Shelf Registration Statement if required by the rules,
regulations or instructions applicable to the registration form used by the
Company for such Shelf Registration Statement or by the 1933 Act or by any
other rules and regulations thereunder for shelf registration or if reasonably
requested by the Majority Holders with respect to information relating to the
Holders of Notes, and to use its best efforts to cause any such amendment to
become effective and such Shelf Registration Statement to become usable as
soon as thereafter practicable. The Company agrees to furnish to the Holders
of Registrable Notes copies of any such supplement or amendment promptly after
its being used or filed with the SEC.
(c) Expenses. The Company shall pay all Registration Expenses in
connection with the registration pursuant to Section 2(a) or Section 2(b).
Each Holder shall pay all underwriting discounts and commissions and transfer
taxes, if any, relating to the sale or disposition of such Holder's
Registrable Notes pursuant to the Shelf Registration Statement.
(d) Effective Registration Statement. An Exchange Offer
Registration Statement pursuant to Section 2(a) hereof or a Shelf Registration
Statement pursuant to Section 2(b) hereof will not be deemed to have become
effective unless it has been declared effective by the SEC; provided, however,
that, if, after it has been declared effective, the offering of Registrable
Notes pursuant to a Shelf Registration Statement is interfered with by any
stop order, injunction or other order or requirement of the SEC or any other
governmental agency or court, such Registration Statement will be deemed not
to have become effective during the period of such interference until the
offering of Registrable Notes pursuant to such Registration Statement may
legally resume.
(e) Increase in Interest Rate. In the event the Exchange Offer
is not consummated or the Shelf Registration Statement is not declared
effective on or prior to July 28, 1998, interest on the Notes (in addition to
the accrual of original issue discount during the period ending February 1,
2003 and in addition to the interest otherwise due on the Notes after such
date) will accrue, at a rate of .5% per annum of accreted value on the
preceding semiannual payment date (for purposes of this paragraph semiannual
payment date means each February 1 or August 1 commencing February 1, 1999),
from July 28, 1998, payable in cash semiannually, in arrears, on each February
1 and August 1, commencing February 1, 1999.
(f) Specific Enforcement. Without limiting the remedies
available to the Placement Agent and the Holders, the Company acknowledges
that any failure by the Company to comply with its obligations under Section
2(a) and Section 2(b) hereof may result in material irreparable injury to the
Placement Agent or the Holders for which there is no adequate remedy at law,
that it will not be possible to measure damages for such injuries precisely
and that, in the event of any such failure, the Placement Agent or any Holder
may obtain such relief as may be required to specifically enforce the
Company's obligations under Section 2(a) and Section 2(b) hereof.
3. Registration Procedures.
In connection with the obligations of the Company with respect to
the Registration Statements pursuant to Section 2(a) and Section 2(b) hereof,
the Company shall as expeditiously as possible:
(a) prepare and file with the SEC a Registration Statement on the
appropriate form under the 1933 Act, which form (x) shall be selected by
the Company and (y) shall, in the case of a Shelf Registration, be
available for the sale of the Registrable Notes by the selling Holders
thereof and (z) shall comply as to form in all material respects with
the requirements of the applicable form and include all financial
statements required by the SEC to be filed therewith, and use its best
efforts to cause such Registration Statement to become effective and
remain effective in accordance with Section 2 hereof;
(b) prepare and file with the SEC such amendments and
post-effective amendments to each Registration Statement as may be
necessary to keep such Registration Statement effective for the
applicable period and cause each Prospectus to be supplemented by any
required prospectus supplement and, as so supplemented, to be filed
pursuant to Rule 424 under the 1933 Act; to keep each Prospectus current
during the period described under Section 4(3) and Rule 174 under the
1933 Act that is applicable to transactions by brokers or dealers with
respect to the Registrable Notes or Exchange Notes;
(c) in the case of a Shelf Registration, furnish to each Holder
of Registrable Notes, to counsel for the Placement Agent, to counsel for
the Holders and to each Underwriter of an Underwritten Offering of
Registrable Notes, if any, without charge, as many copies of each
Prospectus, including each preliminary Prospectus, and any amendment or
supplement thereto and such other documents as such Holder or
Underwriter may reasonably request, in order to facilitate the public
sale or other disposition of the Registrable Notes; and the Company
consents to the use of such Prospectus and any amendment or supplement
thereto in accordance with applicable law by each of the selling holders
of Registrable Notes and any such Underwriters in connection with an
Underwritten Offering and sale of the Registrable Notes covered by and
in the manner described in such Prospectus or any amendment or supplement
thereto in accordance with applicable law;
(d) use its best efforts to register or qualify the Registrable
Notes under all applicable state securities or "blue sky" laws of such
jurisdictions as any Holder of Registrable Notes covered by a
Registration Statement shall reasonably request in writing by the time
the applicable Registration Statement is declared effective by the SEC,
to cooperate with the Holders in connection with any filings required to
be made with the National Association of Securities Dealers, Inc. and do
any and all other acts and things which may be reasonably necessary or
advisable to enable such Holder to consummate the disposition in each
such jurisdiction of such Registrable Notes owned by such Holder;
provided, however, that the Company shall not be required to (i) qualify
as a foreign corporation or as a dealer in securities in any
jurisdiction where it would not otherwise be required to qualify but for
this Section 3(d), (ii) file any general consent to service of process
or (iii) subject itself to taxation in any such jurisdiction if it is
not so subject;
(e) in the case of a Shelf Registration, notify a representative
Holder designated by the Majority Holders (the "Holder Representative")
and its counsel and counsel for the Placement Agent promptly and, if
requested by such Holder or counsel, confirm such advice in writing (i)
when a Registration Statement has become effective and when any
post-effective amendments and supplements thereto have been filed and
become effective, (ii) of any request by the SEC or any state securities
authority for amendments and supplements to a Registration Statement and
Prospectus or for additional information after the Registration
Statement has become effective, (iii) of the issuance by the SEC or any
state securities authority of any stop order suspending the
effectiveness of a Registration Statement or the initiation of any
proceedings for that purpose, (iv) if, between the effective date of a
Registration Statement and the closing of any sale of Registrable Notes
covered thereby, the representations and warranties of the Company
contained in any underwriting agreement, securities sales agreement or
other similar agreement, if any, relating to the offering cease to be
true and correct in all material respects or if the Company receives any
notification with respect to the suspension of the qualification of the
Registrable Notes for sale in any jurisdiction or the initiation of any
proceeding for such purpose, (v) of the happening of any event during
the period a Shelf Registration Statement is effective which makes any
statement made in such Registration Statement or the related Prospectus
untrue in any material respect or which requires the making of any
changes in such Registration Statement or Prospectus in order to make the
statements therein not misleading and (vi) of any determination by the
Company that a post-effective amendment to a Registration Statement
would be appropriate;
(f) make every reasonable effort to obtain the withdrawal of any
order suspending the effectiveness of a Registration Statement at the
earliest possible moment and provide immediate notice to each Holder of
the withdrawal of any such order;
(g) in the case of a Shelf Registration, furnish to the Holder
Representative, without charge, at least one conformed copy of each
Registration Statement and any post-effective amendment thereto (without
documents incorporated therein by reference or exhibits thereto, unless
requested);
(h) in the case of a Shelf Registration, cooperate with the
selling Holders of Registrable Notes to facilitate the timely
preparation and delivery of certificates representing Registrable Notes
to be sold and not bearing any restrictive legends and enable such
Registrable Notes to be in such denominations (consistent with the
provisions of the Indenture) and registered in such names as the selling
Holders may reasonably request at least two business days prior to the
closing of any sale of Registrable Notes;
(i) in the case of a Shelf Registration, upon the occurrence of
any event contemplated by Section 3(e)(v) hereof, use its best efforts
to prepare a supplement or post-effective amendment to a Registration
Statement or the related Prospectus or any document incorporated therein
by reference or file any other required document so that, as thereafter
delivered to the purchasers of the Registrable Notes, such Prospectus
will not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading. The
Company agrees to notify the Holders to suspend use of the Prospectus as
promptly as practicable after the occurrence of such an event, and the
Holders hereby agree to suspend use of the Prospectus until the Company
has amended or supplemented the Prospectus to correct such misstatement
or omission;
(j) a reasonable time prior to the filing of any Registration
Statement, any Prospectus, any amendment to a Registration Statement or
amendment or supplement to a Prospectus or any document which is to be
incorporated by reference into a Registration Statement or a Prospectus
after initial filing of a Registration Statement, provide copies of such
document to the Placement Agent and its counsel (and, in the case of a
Shelf Registration Statement, the Holder Representative and its counsel)
and make such of the representatives of the Company as shall be
reasonably requested by the Placement Agent or its counsel (and, in the
case of a Shelf Registration Statement, the Holder Representative or its
counsel) available for discussion of such document, and shall not at any
time file or make any amendment to the Registration Statement, any
Prospectus or any amendment of or supplement to a Registration Statement
or a Prospectus or any document which is to be incorporated by reference
into a Registration Statement or a Prospectus, of which the Placement
Agent and its counsel (and, in the case of a Shelf Registration
Statement, the Holder Representative and its counsel) shall not have
previously been advised and furnished a copy or to which the Placement
Agent or its counsel (and, in the case of a Shelf Registration
Statement, the Holder Representative or its counsel) shall reasonably
object;
(k) obtain a CUSIP number for all Exchange Notes, or Registrable
Notes, as the case may be, not later than the effective date of a
Registration Statement;
(l) cause the Indenture to be qualified under the Trust
Indenture Act of 1939, as amended (the "TIA"), in connection with the
registration of the Exchange Notes or Registrable Notes, as the case may
be, and cooperate with the Trustee and the Holders to effect such
changes to the Indenture as may be required for the Indenture to be so
qualified in accordance with the terms of the TIA and execute, and use
its best efforts to cause the 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 the Indenture to be so
qualified in a timely manner;
(m) in the case of a Shelf Registration, make available for
inspection by the Holder Representative, any Underwriter participating
in any disposition pursuant to such Shelf Registration Statement, and
attorneys and accountants designated by the Holder Representative, at
reasonable times and in a reasonable manner, all financial and other
records, pertinent documents and properties of the Company, and cause the
respective officers, directors and employees of the Company to supply
all information reasonably requested by any such representative,
Underwriter, attorney or accountant in connection with a Shelf
Registration Statement, in each case that would customarily be reviewed
or examined in connection with a "due diligence" review of the Company;
provided that the Company shall be obligated to participate in no more
than two such "due diligence" reviews pursuant to this Section 3(m)
during any 12-month period;
(n) if reasonably requested by any Holder of Registrable Notes
covered by a Registration Statement, (i) promptly incorporate in a
Prospectus supplement or post-effective amendment such information with
respect to such Holder as such Holder reasonably requests to be included
therein and (ii) make all required filings of such Prospectus supplement
or such post-effective amendment as soon as the Company has received
notification of the matters to be incorporated in such filing; and
(o) in the case of an Underwritten Offering pursuant to a Shelf
Registration, enter into such customary agreements and take all such
other customary actions in connection therewith (including those
reasonably requested by the Majority Holders) in order to expedite or
facilitate the disposition of such Registrable Notes and in such
connection, (i) to the extent possible, make such representations and
warranties to the Holders and any Underwriters of such Registrable Notes
with respect to the business of the Company and its subsidiaries, the
Registration Statement, Prospectus and documents incorporated by
reference or deemed incorporated by reference, if any, in each case, in
form, substance and scope as are customarily made by issuers to
underwriters in underwritten offerings and confirm the same if and when
requested, (ii) obtain opinions of counsel to the Company (which counsel
and opinions, in form, scope and substance, shall be reasonably
satisfactory to the Holders and such Underwriters and their respective
counsel) addressed to each selling holder and Underwriter of Registrable
Notes, covering the matters customarily covered in opinions requested in
underwritten offerings, (iii) obtain "cold comfort" letters from the
independent certified public accountants of the Company (and, if
necessary, any other certified public accountant 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 in the Registration Statement) addressed to each selling Holder
and Underwriter of Registrable Notes, 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 (iv)
deliver such documents and certificates as may be reasonably requested
by the Holders of a majority in principal amount of the Registrable
Notes being sold to the Underwriters, and which are customarily
delivered in underwritten offerings, to evidence the continued validity
of the representations and warranties of the Company made pursuant to
clause (i) above and to evidence compliance with any customary
conditions contained in an underwriting agreement; provided that the
Company shall be required to make no more than one Underwritten Offering
in any 12-month period and shall be required to make an Underwritten
Offering only upon the request of Holders of at least 25% of the
Registrable Notes outstanding at the time such request is delivered to
the Company. In the case of any Underwritten Offering, the Company
shall provide written notice to the Holders of all Registrable Notes of
such Underwritten Offering at least 30 days prior to the filing of a
prospectus supplement for such Underwritten Offering. Such notice shall
(x) offer each such Holder the right to participate in such Underwritten
Offering, (y) specify a date, which shall be no earlier than 10 days
following the date of such notice, by which such Holder must inform the
Company of its intent to participate in such Underwritten Offering and
(z) include the instructions such Holder must follow in order to
participate in such Underwritten Offering.
In the case of a Shelf Registration Statement, the Company may
require each Holder of Registrable Notes to furnish to the Company such
information regarding the Holder and the proposed distribution by such Holder
of such Registrable Notes as the Company may from time to time reasonably
request in writing.
In the case of a Shelf Registration Statement, each Holder agrees
that, upon receipt of any notice from the Company of the happening of any
event of the kind described in Section 3(e)(v) hereof, such Holder will
forthwith discontinue disposition of Registrable Notes pursuant to a
Registration Statement until such Holder's receipt of the copies of the
supplemented or amended Prospectus contemplated by Section 3(i) hereof, and,
if so directed by the Company, such Holder will deliver to the Company (at its
expense) all copies in its possession, other than permanent file copies then
in such Holder's possession, of the Prospectus covering such Registrable Notes
current at the time of receipt of such notice. If the Company shall give any
such notice to suspend the disposition of Registrable Notes pursuant to a
Registration Statement, the Company shall extend the period during which the
Registration Statement shall be maintained effective pursuant to this
Agreement by the number of days during the period from and including the date
of the giving of such notice to and including the date when the Holders shall
have received copies of the supplemented or amended Prospectus necessary to
resume such dispositions.
The Holders of Registrable Notes covered by a Shelf Registration
Statement who desire to do so may sell such Registrable Notes in an
Underwritten Offering, subject to the limitations set forth in the proviso to
the first sentence of this section 3(p). In any such Underwritten Offering,
the investment banker or investment bankers and manager or managers (the
"Underwriters") that will administer the offering will be selected by the
Holders of a majority in principal amount of the Registrable Notes included in
such offering.
4. Certain Matters Relating to Broker-Dealers and the Exchange
Offer.
(a) The Staff of the SEC has taken the position that any
broker-dealer that receives Exchange Notes for its own account in the Exchange
Offer in exchange for Notes that were acquired by such broker-dealer as a
result of market-making or other trading activities (a "Participating
Broker-Dealer"), may be deemed to be an "underwriter" within the meaning of
the 1933 Act and must deliver a prospectus meeting the requirements of the
1933 Act in connection with any resale of such Exchange Notes.
The Company understands that it is the Staff's position that if
the Prospectus contained in the Exchange Offer Registration Statement includes
a plan of distribution containing a statement to the above effect and the
means by which Participating Broker-Dealers may resell the Exchange Notes,
without naming the Participating Broker-Dealers or specifying the amount of
Exchange Notes owned by them, such Prospectus may be delivered by
Participating Broker-Dealers to satisfy their prospectus delivery obligation
under the 1933 Act in connection with resales of Exchange Notes for their own
accounts, so long as the Prospectus otherwise meets the requirements of the
1933 Act.
(b) In light of the above, notwithstanding the other provisions
of this Agreement, the Company agrees that the provisions of this Agreement as
they relate to a Shelf Registration shall also apply to an Exchange Offer
Registration to the extent, and with such reasonable modifications thereto as
may be, reasonably requested by the Placement Agent or by one or more
Participating Broker-Dealers, in each case as provided in clause (ii) below,
in order to expedite or facilitate the disposition of any Exchange Notes by
Participating Broker-Dealers consistent with the positions of the Staff
recited in Section 4(a) above; provided that:
(i) the Company shall not be required to amend or supplement the
Prospectus contained in the Exchange Offer Registration Statement, as
would otherwise be contemplated by Section 3(i), for a period exceeding
180 days after the last Exchange Date (as such period may be extended
pursuant to the penultimate paragraph of Section 3 of this Agreement)
and Participating Broker-Dealers shall not be authorized by the Company
to deliver and shall not deliver such Prospectus after such period in
connection with the resales contemplated by this Section 4; and
(ii) the application of the Shelf Registration procedures set
forth in Section 3 of this Agreement to an Exchange Offer Registration,
to the extent not required by the positions of the Staff of the SEC or
the 1933 Act and the rules and regulations thereunder, will be in
conformity with the reasonable request to the Company by the Placement
Agent or with the reasonable request in writing to the Company by one or
more broker-dealers who certify to the Placement Agent and the Company
in writing that they anticipate that they will be Participating
Broker-Dealers; and provided further that, in connection with such
application of the Shelf Registration procedures set forth in Section 3
to an Exchange Offer Registration, the Company shall be obligated (x) to
deal only with one entity representing the Participating Broker-Dealers,
which shall be the Placement Agent unless it elects not to act as such
representative, (y) to pay the fees and expenses of only one counsel
representing the Participating Broker-Dealers, which shall be counsel to
the Placement Agent unless such counsel elects not to so act and (z) to
cause to be delivered only one, if any, "cold comfort" letter with
respect to the Prospectus in the form existing on the last Exchange Date.
(c) The Placement Agent shall have no liability to the Company
or any Holder with respect to any request that it may make pursuant to Section
4(b) above.
5. Indemnification and Contribution.
(a) The Company agrees to indemnify and hold harmless the
Placement Agent, each Holder and each Person, if any, who controls the
Placement Agent or any Holder within the meaning of either Section 15 of the
1933 Act or Section 20 of the 1934 Act, or is under common control with, or is
controlled by, the Placement Agent or any Holder, from and against all losses,
claims, damages and liabilities (including, without limitation, any reasonable
legal or other expenses incurred by the Placement Agent, any Holder or any
such controlling or affiliated person in connection with defending or
investigating any such action or claim) caused by any untrue statement or
alleged untrue statement of a material fact contained in any Registration
Statement (or any amendment thereto) pursuant to which Exchange Notes or
Registrable Notes were registered under the 1933 Act, including all documents
incorporated therein by reference, or caused by any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, or caused by any
untrue statement or alleged untrue statement of a material fact contained in
any Prospectus (as amended or supplemented if the Company shall have furnished
any amendments or supplements thereto), or caused by any omission or alleged
omission to state therein a material fact necessary to make the statements
therein in light of the circumstances under which they were made not
misleading, except insofar as such losses, claims, damages or liabilities are
caused by any such untrue statement or omission or alleged untrue statement or
omission based upon information relating to the Placement Agent or any Holder
furnished to the Company in writing by the Placement Agent or any selling
Holder expressly for use therein provided, however, that the foregoing
indemnity agreement with respect to any Prospectus sent or given to the
Placement Agent or any selling holder of Exchange Notes or Registrable Notes
in preliminary form shall not inure to the benefit of the Placement Agent or
any such holder from whom the person asserting any such losses, claims,
damages or liabilities purchased the Exchange Notes or Registrable Notes, as
the case may be, if a copy of the Prospectus in final form (as then amended or
supplemented) was not sent or given by or on behalf of such Placement Agent or
any such holder to such person at or prior to the time such person purchased
the Exchange Notes or Registrable Notes, as the case may be, and if the
Prospectus in final form (as amended or supplemented) would have cured the
defect giving rise to such losses, claims, damages or liabilities, unless such
failure is the result of noncompliance by the Company with Section 3(a) or
Section 3(j) hereof. In connection with any Underwritten Offering permitted
by Section 3 hereof, the Company will also indemnify the Underwriters, if any,
selling brokers, dealers and similar securities industry professionals
participating in the distribution, their officers and directors and each
Person who controls such Persons within the meaning of either Section 15 of
the 1933 Act or Section 20 of the 1934 Act to the same extent as provided
above with respect to the indemnification of the Holders, if requested in
connection with any Registration Statement.
(b) Each Holder agrees, severally and not jointly, to indemnify
and hold harmless the Company, the Placement Agent and the other selling
Holders and each of their respective directors, its officers who sign the
Registration Statement and each Person, if any, who controls the Company, the
Placement Agent and any other selling Holder within the meaning of either
Section 15 of the 1933 Act or Section 20 of the 1934 Act to the same extent as
the foregoing indemnity from the Company to the Placement Agent and the
Holders, but only with reference to information relating to the Placement
Agent or such Holder furnished to the Company in writing by such Holder
expressly for use in any Registration Statement (or any amendment thereto) or
any Prospectus (or any amendment or supplement thereto).
(c) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of which
indemnity may be sought pursuant to either paragraph (a) or paragraph (b)
above, such person (the "indemnified party") shall promptly notify the person
against whom such indemnity may be sought (the "indemnifying party") in
writing and the indemnifying party, upon request of the indemnified party,
shall retain counsel reasonably satisfactory to the indemnified party to
represent the indemnified party and any others the indemnifying party may
designate in such proceeding and shall pay the fees and disbursements of such
counsel related to such proceeding. In any such proceeding, any indemnified
party 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 party
unless (i) the indemnifying party and the indemnified party shall have
mutually agreed to the retention of such counsel or (ii) the named parties to
any such proceeding (including any impleaded parties) include both the
indemnifying party and the indemnified party and representation of both
parties by the same counsel, in the opinion of such counsel, would be
inappropriate due to actual or potential differing interests between them. It
is understood that the indemnifying party shall not, in connection with any
proceeding or related proceedings in the same jurisdiction, be liable for (a)
the fees and expenses of more than one separate firm (in addition to any local
counsel) for the Placement Agent and all persons, if any, who control the
Placement Agent within the meaning of either Section 15 of the 1933 Act or
Section 20 of the 1934 Act, (b) the fees and expenses of more than one
separate firm (in addition to any local counsel) for the Company, its
directors, its officers who sign the Registration Statement and each person,
if any, who controls the Company within the meaning of either such Section and
(c) the fees and expenses of more than one separate firm (in addition to any
local counsel) for all Holders and all persons, if any, who control any
Holders within the meaning of either such Section, and that all such fees and
expenses shall be reimbursed as they are incurred. In such case involving the
Placement Agent and persons who control the Placement Agent, such firm shall
be designated in writing by the Placement Agent. In such case involving the
Holders and such persons who control Holders, such firm shall be designated in
writing by the Majority Holders. In all other cases, such firm shall be
designated by the Company. The indemnifying party shall not be liable for any
settlement of any proceeding effected without its written consent but, if
settled with such consent or if there be a final judgment for the plaintiff,
the indemnifying party agrees to indemnify the indemnified party from and
against any loss or liability by reason of such settlement or judgment.
Notwithstanding the foregoing sentence, if at any time an indemnified party
shall have requested an indemnifying party to reimburse the indemnified party
for fees and expenses of counsel as contemplated by the second and third
sentences of this paragraph, the indemnifying party agrees that it shall be
liable for any settlement of any proceeding effected without its written
consent if (i) such settlement is entered into more than 60 days after receipt
by such indemnifying party of the aforesaid request and (ii) such indemnifying
party shall not have reimbursed the indemnified party for such fees and
expenses of counsel in accordance with such request prior to the date of such
settlement. No indemnifying party shall, without the prior written consent of
the indemnified party, effect any settlement of any pending or threatened
proceeding in respect of which such indemnified party is or could have been a
party and indemnity could have been sought hereunder by such indemnified party,
unless such settlement includes an unconditional release of such indemnified
party from all liability on claims that are the subject matter of such
proceeding.
(d) If the indemnification provided for in paragraph (a) or
paragraph (b) of this Section 5 is unavailable to an indemnified party or
insufficient in respect of any losses, claims, damages or liabilities, then
each indemnifying party under such paragraph, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or payable
by such indemnified party as a result of such losses, claims, damages or
liabilities in such proportion as is appropriate to reflect the relative fault
of the indemnifying party or parties on the one hand and of the indemnified
party or parties on the other hand in connection with the statements or
omissions that resulted in such losses, claims, damages or liabilities, as
well as any other relevant equitable considerations. The relative fault of the
Company and the Holders 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 or by the Holders and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Holders' respective obligations to
contribute pursuant to this Section 5(d) are several in proportion to the
respective number of Registrable Notes of such Holder that were registered
pursuant to a Registration Statement.
(e) The Company and each Holder agree that it would not be just
or equitable if contribution pursuant to this Section 5 were determined by pro
rata allocation or by any other method of allocation that does not take
account of the equitable considerations referred to in paragraph (d) above.
The amount paid or payable by an indemnified party as a result of the losses,
claims, damages and liabilities referred to in paragraph (d) above shall be
deemed to include, subject to the limitations set forth above, any reasonable
legal or other expenses incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 5, no Holder shall be required to indemnify or
contribute any amount in excess of the amount by which the total price at
which Registrable Notes were sold by such Holder exceeds the amount of any
damages that such Holder has otherwise been required to pay 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 1933 Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The remedies provided for in
this Section 5 are not exclusive and shall not limit any rights or remedies
which may otherwise be available to any indemnified party at law or in equity.
The indemnity and contribution provisions contained in this
Section 5 shall remain operative and in full force and effect regardless of
(i) any termination of this Agreement, (ii) any investigation made by or on
behalf of the Placement Agent, any Holder or any person controlling the
Placement Agent or any Holder, or by or on behalf of the Company, its
respective officers or directors or any person controlling the Company, (iii)
acceptance of any of the Exchange Notes and (iv) any sale of Registrable Notes
pursuant to a Shelf Registration Statement.
6. Miscellaneous.
(a) No Inconsistent Agreements. The Company has not entered
into, and on or after the date of this Agreement will not enter into, any
agreement which 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 Company's other issued and outstanding securities under any such
agreements.
(b) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given unless the Company has obtained the written consent of
Holders of at least a majority in aggregate principal amount of the
outstanding Registrable Notes affected by such amendment, modification,
supplement, waiver or consent; provided, however, that no amendment,
modification, supplement, waiver or consent to any departure from the
provisions of Section 5 hereof shall be effective as against any Holder of
Registrable Notes unless consented to in writing by such Holder.
(c) Notices. All notices and other communications provided for
or permitted hereunder shall be made in writing by hand-delivery, registered
first-class mail, telex, telecopier, or any courier guaranteeing overnight
delivery (i) if to a Holder, at the most current address given by such Holder
to the Company by means of a notice given in accordance with the provisions of
this Section 6(c), which address initially is, with respect to the Placement
Agent, the address set forth in the Placement Agreement; and (ii) if to the
Company, initially at the Company's address set forth in the Placement
Agreement and thereafter at such other address, notice of which is given in
accordance with the provisions of this Section 6(c).
All such notices and communications 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 is acknowledged, if telecopied;
and on the next business day if timely delivered to an air courier
guaranteeing overnight delivery.
Copies of all such notices, demands, or other communications shall
be concurrently delivered by the person giving the same to the Trustee, at the
address specified in the Indenture.
(d) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors, assigns and transferees of
each of the parties, including, without limitation and without the need for an
express assignment, subsequent Holders; provided that nothing herein shall be
deemed to permit any assignment, transfer or other disposition of Registrable
Notes in violation of the terms of the Placement Agreement. If any transferee
of any Holder shall acquire Registrable Notes, in any manner, whether by
operation of law or otherwise, such Registrable Notes shall be held subject to
all of the terms of this Agreement, and by taking and holding such Registrable
Notes such person shall be conclusively deemed to have agreed to be bound by
and to perform all of the terms and provisions of this Agreement and such
person shall be entitled to receive the benefits hereof. The Placement Agent
(in its capacity as Placement Agent) shall have no liability or obligation to
the Company with respect to any failure by a Holder to comply with, or any
breach by any Holder of, any of the obligations of such Holder under this
Agreement.
(e) Third Party Beneficiary. The Holders shall be third party
beneficiaries to the agreements made hereunder among the Company, on the one
hand, and the Placement Agent, on the other hand, and shall have the right to
enforce such agreements directly to the extent it deems such enforcement
necessary or advisable to protect its rights or the rights of Holders
hereunder.
(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 internal laws of the State of New York.
(i) Severability. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstance,
is held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the
remaining provisions contained herein shall not be affected or impaired
thereby.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first written above.
PAGEMART WIRELESS, INC.
By: /s/ G. Clay Myers
-------------------------
Name: G. Clay Myers
Title: Vice President, Finance
and Chief Financial Officer
Confirmed and accepted as of
the date first above written:
Morgan Stanley & Co. Incorporated
By: /s/ Robert M. Shepardson
--------------------------
Name: Robert M. Shepardson
Title: Principal
Exhibit 5.1
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
212-450-4000
March 27, 1998
PageMart Wireless, Inc.
3333 Lee Parkway
Suite 100
Dallas, TX 75219
Ladies and Gentlemen:
We have acted as special counsel to PageMart Wireless, Inc. (the
"Company") in connection with the Company's offer (the "Exchange Offer") to
exchange its 11 1/4% Senior Subordinated Discount Exchange Notes due 2008 (the
"New Notes") for any and all of its outstanding 11 1/4% Senior Subordinated
Discount Notes due 2008 (the "Old Notes").
We have examined originals or copies, certified or otherwise
identified to our satisfaction, of such documents, corporate records,
certificates of public officials and other instruments as we have deemed
necessary or advisable for the purpose of rendering this opinion. Upon the
basis of the foregoing and assuming the due execution and delivery of the
Old Notes and the New Notes, we are of the opinion that the New Notes, when
executed, authenticated and delivered in exchange for the Old Notes in
accordance with the Exchange Offer will be valid and binding obligations of
the Company enforceable in accordance with their terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium and similar
laws affecting creditors' rights generally and equitable principles.
We are members of the Bar of the State of New York and the foregoing
opinion is limited to the laws of the State of New York, the federal laws
of the United States of America and the General Corporation Law of the
State of Delaware.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement relating to the Exchange Offer. We also consent to
the reference to us under the caption "Legal Matters" in the Prospectus
contained in such Registration Statement.
This opinion is rendered solely to you in connection with the above
matter. This opinion may not be relied upon by you for any other purpose
or relied upon by or furnished to any other person without our prior
written consent.
Very truly yours,
DAVIS POLK & WARDWELL
EXHIBIT 12.1
PAGEMART WIRELESS, INC.
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(In thousands)
<TABLE>
<CAPTION>
Proforma Proforma
Year ended Year ended Year ended Year ended Year ended Year ended Year ended
December 31, December 31, December 31, December 31, December 31, December 31, December 31,
1993 1994 1995 1996 1997 1996 1997
------------ ------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Earnings:
Net loss.................. $(31,121) $(45,813) $(53,113) $(48,598) $(43,887) $(64,706) $(58,271)
Add: Fixed charges....... 6,538 12,933 30,720 35,041 38,499 51,149 52,883
-------- -------- -------- -------- -------- -------- --------
(24,583) (32,880) (22,393) (13,557) (5,388) (13,557) (5,388)
Fixed charges:
Interest in indebtedness.. 5,785 11,209 28,383 32,368 36,672 48,255 50,780
Amortization of debt
issuance costs.. 159 800 1,052 2,143 844 2,364 1,120
Interest portion of
rental and lease
expense................. 594 924 1,285 530 983 530 983
-------- -------- -------- -------- -------- -------- --------
6,538 12,933 30,720 35,041 38,499 51,149 52,883
Deficiency of earnings
available to cover
fixed charges............. $(31,121) $(45,813) $(53,113) $(48,598) $(43,887) $(64,706) $(58,271)
======== ======== ======== ======== ======== ======== ========
</TABLE>
EXHIBIT 23.1
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 3, 1998, included in PageMart Wireless, Inc. Form 10-K for the year
ended December 31, 1997 and to all references to our Firm included in this
Registration Statement No. o on Forms S-3 and S-4.
Arthur Andersen LLP
Dallas, Texas
March 31, 1998
LETTER OF TRANSMITTAL
PAGEMART WIRELESS, INC.
Offer to Exchange
11 1/4% Senior Subordinated Discount Exchange Notes due 2008
For Any and All Outstanding
11 1/4% Senior Subordinated Discount Notes Due 2008
Pursuant to the Prospectus, dated bullet, 1998
THIS EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M. NEW YORK TIME, ON
bullet, 1998, UNLESS EXTENDED (THE "EXPIRATION DATE"). TENDERS MAY BE
WITHDRAWN PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE.
Delivery To: United States Trust Company of New York, as Exchange Agent
If by Registered or Certified Mail:
United States Trust Company of New York
P.O. Box 844
Attn: Corporate Trust Services
Cooper Station
New York, New York 10276-0844
or
If by Overnight Courier or by Hand after 4:30PM:
United States Trust Company of New York
770 Broadway, 13th Floor
New York, New York 10003
Attn: Corporate Trust Services
or
If by Hand before 4:30PM:
United States Trust Company of New York
111 Broadway
Lower Level
Attn: Corporate Trust Services
New York, New York 10006
If by Facsimile:
(212) 780-0592
Confirm by Telephone:
(800) 548-6565
Delivery of this Instrument to an address other than as set
forth above, or transmission via facsimile other than as set forth above,
will not constitute a valid delivery.
The undersigned acknowledges receipt of and has reviewed the
Prospectus dated o, 1998 (the "Prospectus"), of PageMart Wireless, Inc.
(the "Company"), and this letter of transmittal (the "Letter"), which
together constitute the Company's offer (the "Exchange Offer") to exchange
$1,000 in principal amount of a new series of 11 1/4% Senior Subordinated
Discount Exchange Notes due 2008 (the "New Notes") for each $1,000 in
principal amount of outstanding 11 1/4% Senior Subordinated Discount Notes
due 2008 (the "Old Notes"). Capitalized terms used but not defined herein
have the meanings given to them in the Prospectus.
For each Old Note accepted for exchange not validly
withdrawn, the holder of such Old Note will receive a New Note having a
principal amount at maturity equal to that of the surrendered Old Note. If
the Exchange Offer is not consummated by July 28, 1998, interest (in
addition to the accrual of original issue discount during the period ending
February 1, 2003 and in addition to the interest otherwise due on the Notes
after such date) will accrue ("Special Interest"), at a rate of .5% per
annum of accreted value on the preceding semiannual payment date, from July
28, 1998 payable in cash semiannually, in arrears, on each February 1 and
August 1, commencing February 1, 1999 until the consummation of the
Exchange Offer or the effectiveness of a shelf registration statement.
Upon the consummation of the Exchange Offer after July 28, 1998, the
Special Interest payable on the Old Notes will cease to accrue from the
date of such consummation and all accrued and unpaid Special Interest as of
the consummation of the Exchange Offer shall be paid promptly thereafter to
the holders of record of the Old Notes immediately prior to the time of
such occurrence. Following the consummation of the Exchange Offer the
interest terms of the Old Notes that are not exchanged shall revert to the
original terms set forth in the Notes as described on the cover page of the
Offering Memorandum dated January 22, 1998, with respect to the Old Notes.
Holders of Old Notes accepted for exchange will be deemed to have waived
the right to receive any other payments or accrued interest on the Old
Notes. The Company expressly reserves the right, at any time or from time
to time, to extend the period of time during which the Exchange Offer is
open, and thereby delay acceptance of any Old Notes, by giving oral or
written notice of such extension to the Exchange Agent and notice of such
extension to the holders as described in the next sentence, in which event
the term "Expiration Date" shall mean the latest time and date to which the
Exchange Offer is extended. The Company shall notify the holders of the
Old Notes of any extension by means of a press release or other public
announcement prior to 9:00 A.M., New York City time, on the next business
day after the previously scheduled Expiration Date. Notwithstanding the
foregoing, pursuant to the Registration Rights Agreement, the Company has
agreed to keep the Exchange Offer open for not less than 20 days.
Either this Letter or an Agent's Message is to be completed
by a holder of Old Notes (which term, for purposes of the Exchange Offer,
includes any participant in the Book-Entry Transfer Facility system whose
name appears on a security position listing as the holder of such Old
Notes) in order to tender Old Notes. Certificates for Old Notes should be
forwarded with their Letter or, if tender of Old Notes is to be made by
book-entry transfer pursuant to the procedures set forth in the Prospectus
under "The Exchange Offer--Book-Entry Transfer," tender of Old Notes should
be made by book-entry transfer to the account maintained by the Exchange
Agent at the Depository Trust Company (the "Book-Entry Transfer Facility").
Holders of Old Notes whose certificates are not immediately available, or
who are unable to deliver their certificates or confirmation of the book-
entry tender of their Old Notes into the Exchange Agent's account at the
Book-Entry Transfer Facility (a "Book-Entry Confirmation") or all other
documents required by this Letter to the Exchange Agent on or prior to the
Expiration Date, must tender their Old Notes according to the guaranteed
delivery procedures set forth in the Prospectus under "The Exchange Offer--
Guaranteed Delivery Procedures". See Instruction 1. Delivery of documents
to the Book-Entry Transfer Facility does not constitute delivery to the
Exchange Agent.
The undersigned has completed the appropriate boxes below
and signed this Letter to indicate the action the undersigned desires to
take with respect to the Exchange Offer.
List below the Old Notes to which this Letter relates. If
the space provided below is inadequate, the certificate numbers and
principal amount at maturity of Old Notes should be listed on a separate
signed schedule affixed hereto.
<TABLE>
<CAPTION>
DESCRIPTION OF OLD NOTES
1 2 3
----------- ------------ -----------
Aggregate
Principal Principal
Amount at Amount
Name(s) and Address(es) of Registered Holder(s) Certificate Maturity of at Maturity
(Please fill in, if blank) Numbers(s)* Old Notes(s) Tendered**
- ----------------------------------------------- ----------- ------------ -----------
<S> <C> <C> <C>
Total
______________________
* Need not be completed if Old Notes are being tendered by book-entry transfer.
** Unless otherwise indicated in this column, a holder will be deemed to have tendered ALL of the Old Notes represented by
the Old Notes indicated in column 2. See Instruction 2. Old Notes tendered hereby must be in denominations of principal
amount at maturity of $1,000 and any integral multiple thereof. See Instruction 1.
</TABLE>
[ ] CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED BY BOOK-ENTRY
TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH THE
BOOK-ENTRY TRANSFER FACILITY AND COMPLETE THE FOLLOWING:
Name of Tendering Institution __________________________________________
The Depositary Trust Company
Account Number _____________________ Transaction Code Number ___________
By crediting the Old Notes to the Exchange Agent's account at the
Book-Entry Transfer Facility in accordance with the Book-Entry Transfer
Facility's Automated Tender Offer Program ("ATOP") and by complying with
applicable ATOP procedures with respect to the Exchange Offer, including
transmitting a computer-generated message (an "Agent's Message") to the
Exchange Agent in which the holder of the Old Notes acknowledges and agrees
to be bound by the terms of this Letter, the participant in the Book-Entry
Transfer Facility confirms on behalf of itself and the beneficial owners of
such Old Notes all provisions of this Letter applicable to it and such
beneficial owners as fully as if it had completed the information required
herein and executed and transmitted this Letter to the Exchange Agent.
[ ] 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:
Name(s) of Registered Holder(s) __________________________________
Name of Institution which guaranteed delivery ____________________
If Delivery by Book-Entry Transfer, Complete the Following:
Account Number _____________________ Transaction Code Number _____
[ ] CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL
COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS
THERETO.
Name: ___________________________________________________________
Address: ________________________________________________________
_________________________________________________________________
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
Upon the terms and subject to the conditions of the Exchange
Offer, the undersigned hereby tenders to the Company the aggregate
principal amount at maturity of Old Notes indicated above. Subject to, and
effective upon, the acceptance for exchange of the Old Notes tendered
hereby, the undersigned hereby sells, assigns and transfers to, or upon the
order of, the Company all right, title and interest in and to such Old
Notes as are being tendered hereby. Each participant in the Book-Entry
Transfer Facility transmitting by means of the Book-Entry Transfer Facility
a computer-generated message forming part of a Book-Entry Confirmation, on
behalf of itself and the beneficial owner of the Old Notes tendered
thereby, acknowledges receipt of the Prospectus and this Letter and agrees
to be bound by the terms and conditions of the Exchange Offer as set forth
in the Prospectus and this Letter.
The undersigned hereby represents and warrants that the
undersigned 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 accepted by the Company. The undersigned hereby
irrevocably constitutes and appoints the Exchange Agent its agent and
attorney-in-fact with full power of substitution, for purposes of
delivering this Letter and the Old Notes to the Company. The Power of
Attorney granted in this paragraph shall be deemed irrevocable from and
after the Expiration Date and coupled with an interest.
The undersigned also acknowledges that this Exchange Offer
is being made by the Company in reliance on an interpretation by the staff
of the Securities and Exchange Commission (the "SEC"), as set forth in no-
action letters issued to third parties, that the New Notes issued in
exchange for the Old Notes pursuant to the Exchange Offer may be offered
for resale, resold and otherwise transferred by holders thereof (other than
a broker-dealer, as set forth below, or any such holder that is an
"affiliate" of the Company within the meaning of Rule 405 under the
Securities Act of 1993, as amended (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 and such holders have no arrangement with
any person to participate in the distribution (within the meaning of the
Securities Act) of such New Notes. By tendering, each holder of Old Notes
represents to the Company that (i) the New Notes acquired pursuant to the
Exchange Offer are being obtained in the ordinary course of business of the
person receiving such New Notes, whether or not such person is such holder,
(ii) neither the holder of Old Notes nor any such other person has an
arrangement or understanding with any person to participate in the
distribution of such New Notes, (iii) if the holder is not a broker-dealer
or is a broker-dealer but will not receive New Notes for its own account in
exchange for Old Notes, neither the holder nor any such other person is
engaged in or intends to participate in a distribution of such New Notes
and (iv) neither the holder nor any such other person is an "affiliate" of
the Company within the meaning of Rule 405 under the Securities Act. By
tendering, each holder of Old Notes that is a broker-dealer (whether or not
it is also an "affiliate") that will receive New Notes for its own account
pursuant to the Exchange Offer, represents that the Old Notes to be
exchanged for the New Notes were acquired by it as a result of market-
making activities or other trading activities, and acknowledges that it
will deliver a prospectus meeting the requirements of the Securities Act in
connection with any resale of such New Notes; however, by so acknowledging
and by delivering a prospectus, the undersigned will not be deemed to admit
that it is an "underwriter" within the meaning of the Securities Act. The
undersigned acknowledges that in reliance on an interpretation by the staff
of the SEC, a broker-dealer may fulfill his prospectus delivery
requirements with respect to the New Notes (other than a resale of an
unsold allotment from the original sale of the Old Notes) with the
Prospectus which constitutes part of this Exchange Offer.
The undersigned will, upon request, execute and deliver any
additional documents deemed by the Company to be necessary or desirable to
complete the sale, assignment and transfer of the Old Notes tendered
hereby. All authority conferred or agreed to be conferred in this Letter
and every obligation of the undersigned hereunder shall be binding upon the
successors, assigns, heirs, executors, administrators, trustees in
bankruptcy and legal representatives of the undersigned and shall not be
affected by, and shall survive, the death or incapacity of the undersigned.
The tender may be withdrawn only in accordance with the procedure set forth
in "The Exchange Offer--Withdrawal Rights" section of the Prospectus.
Unless otherwise indicated herein in the box entitled
"Special Issuance Instructions" below, please deliver, if applicable, the
substitute certificates representing Old Notes for any Old Notes not
exchanged in the name of the undersigned or, in the case of a book-entry
delivery of Old Notes or New Notes issued in exchange for Old Notes, please
credit the account indicated above maintained at the Book-Entry Transfer
Facility. The undersigned recognizes that New Notes will be issued in the
form of a single global note in registered form issued to The Depository
Trust Company ("DTC") and registered in the name of Cede & Co., as nominee
of DTC. Unless otherwise indicated under the box entitled "Special
Delivery Instructions" below, please send the undersigned, if applicable,
substitute certificates representing Old Notes for any Old Notes not
exchanged to the undersigned at the address shown above in the box entitled
"Description of Old Notes", unless tender is being made through the Book-
Entry Transfer Facility.
THE UNDERSIGNED, BY COMPLETING THE BOX ENTITLED "DESCRIPTION
OF OLD NOTES" ABOVE AND SIGNING THIS LETTER, WILL BE DEEMED TO HAVE
TENDERED THE OLD NOTES AS SET FORTH IN SUCH BOX ABOVE.
<TABLE>
<CAPTION>
SPECIAL ISSUANCE INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
(See Instructions 3 and 4) (See Instructions 3 and 4)
<S> <C>
To be completed ONLY if certificates for Old To be completed ONLY if certificates for Old Notes
Notes not exchanged are to be issued in the name of not exchanged are to be sent to someone other than
and sent to someone other than the person or persons the person or persons whose signature(s) appear(s) on
whose signature(s) appear(s) on the Letter below, or this Letter below or to such person or persons at an
if Old Notes delivered by book-entry transfer which address other than shown in the box entitled
are not accepted for exchange or New Notes issued in "Description of Old Notes" on this Letter above.
exchange for Old Notes accepted for exchange are This section should not be completed if such Old
not to be credited to the undersigned's account Notes are to be delivered to the Book-Entry Transfer
maintained at the Book-Entry Transfer Facility. Facility for credit to the undersigned's account or to
an account specified under "Special Issuance
Issue: New Notes and/or Old Notes to: Instructions".
Name(s) _____________________________________________ Mail: Old Notes to:
(Please Type or Print)
_____________________________________________________ Name(s) _____________________________________________
(Please Type or Print) (Please Type or Print)
Address _____________________________________________ _____________________________________________________
(Please Type or Print)
_____________________________________________________
(Zip Code) Address _____________________________________________
(Please Type or Print)
_____________________________________________________
(Complete Substitute Form W-9) (Zip Code)
[ ] Credit New Notes or, if applicable, unexchanged Old
Notes delivered by book-entry transfer to the Book-
Entry Transfer Facility account set forth below.
_______________________________________________________
(Book-Entry Transfer Facility
Account Number, if applicable)
</TABLE>
IMPORTANT: THIS LETTER OR A FACSIMILE HEREOF (TOGETHER WITH THE CERTIFICATES
FOR OLD NOTES OR A BOOK-ENTRY CONFIRMATION AND ALL OTHER REQUIRED DOCUMENTS OR
THE NOTICE OF GUARANTEED DELIVERY) MUST BE RECEIVED BY THE EXCHANGE AGENT
PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE.
PLEASE READ THIS ENTIRE LETTER OF TRANSMITTAL
CAREFULLY BEFORE COMPLETING ANY BOX ABOVE
PLEASE SIGN HERE
(TO BE COMPLETED BY ALL TENDERING HOLDERS)
(Complete Accompanying Substitute Form W-9 on reverse side)
Dated:_________________________________________________________________, 1998
X_____________________________ ______________________________, 1998
X_____________________________ ______________________________, 1998
Signature(s) of Owner Date
Area Code and Telephone Number ________________________________________
If a holder is tendering any Old Notes, this Letter must be signed by the
registered holder(s) as the name(s) appear(s) on the certificate(s) for the
Old Notes or by any person(s) authorized to become registered holder(s) by
endorsements and documents transmitted herewith. If signature is by a
trustee, executor, administrator, guardian, officer or other person acting
in a fiduciary or representative capacity, please set forth full title.
See Instruction 3.
Name(s):_____________________________________________________________
_____________________________________________________________________
(Please Type or Print)
Capacity: ___________________________________________________________
Address: ___________________________________________________________
___________________________________________________________
(Include Zip Code)
The Depository Trust Company Account Number:_______________________________
SIGNATURE GUARANTEE
(If required by Instruction 3)
Signature(s) Guaranteed by
an Eligible Institution: ____________________________________________
(Authorized Signature)
____________________________________________________________
(Title)
____________________________________________________________
(Name and Firm)
Dated: ______________________________________________________________
Instructions
Forming part of the Terms and Conditions of the Exchange Offer for the
11 1/4% Senior Subordinated Discount Exchange Notes due 2008 in Exchange
for the 11 1/4% Senior Subordinated Discount Notes due 2008 of PageMart
Wireless, Inc.
1. Delivery of this Letter and Notes; Guaranteed Delivery Procedures.
Either this Letter or an Agent's Message is to be completed
by holders (which term, for purposes of the Exchange Offer, includes any
participant in the Book-Entry Transfer Facility system whose name appears
on a security position listing as the holder of such Old Notes) in order to
tender Old Notes. Certificates for Old Notes should be forwarded with this
Letter or, if tender of Old Notes is to be made by book-entry transfer
pursuant to the procedures set forth in the Prospectus under "The Exchange
Offer--Book-Entry Transfer," tender of Old Notes should be made by book-
entry transfer to the account maintained by the Exchange Agent at The
Depository Trust Company (the "Book-Entry Transfer Facility").
Certificates for all physically tendered Old Notes, or Book-Entry
Confirmation, as the case may be, as well as either (i) a properly
completed and duly executed Letter (or manually signed facsimile hereof)
and all other documents required by this Letter or (ii) an Agent's Message,
must be received by the Exchange Agent on or prior to the Expiration Date,
or the tendering holder must comply with the guaranteed delivery procedures
set forth below. Old Notes tendered hereby must be in denominations of
principal amount at maturity of $1,000 and any integral multiple thereof.
Noteholders whose certificates for Old Notes are not
immediately available or who cannot deliver their certificates and all
other required documents to the Exchange Agent on or prior to the
Expiration Date, or who cannot complete the procedure for book-entry
transfer on a timely basis, may tender their Old Notes pursuant to the
guaranteed delivery procedures set forth in the Prospectus under "The
Exchange Offer--Guaranteed Delivery Procedures." Pursuant to such
procedures, (i) such tender must be made through an Eligible Institution,
(ii) on or prior to the Expiration Date, the Exchange Agent must receive
from such Eligible Institution either a properly completed and duly
executed Letter (or a facsimile thereof) or a properly transmitted Agent's
Message and Notice of Guaranteed Delivery, substantially in the form
provided by the Company (by telegram, telex, facsimile transmission, mail
or hand delivery), setting forth the name and address of such holder of Old
Notes and the amount of Old Notes tendered, stating that the tender is
being made thereby and guaranteeing that within five New York Stock
Exchange ("NYSE") trading days after the date of execution of the Notice of
Guaranteed Delivery, a Book-Entry Confirmation, and all other documents
required by the Letter will be deposited by the Eligible Institution with
the Exchange Agent, and (iii) the certificates for all physically tendered
Old Notes, in the proper form for transfer, or Book-Entry Confirmation, as
the case may be, and all other documents required by this Letter, are
received by the Exchange Agent within five NYSE trading days after the date
of execution of the Notice of Guaranteed Delivery.
The method of delivery of this Letter, the Old Notes and all
other documents required by this Letter is at the election and risk of the
tendering holders, but the delivery will be deemed made only when actually
received or confirmed by the Exchange Agent. If required documents are
sent by mail, it is suggested that the mailing be made sufficiently in
advance of the Expiration Date to permit delivery to the Exchange Agent
prior to 5:00 p.m., New York City time, on or prior to the Expiration Date.
No Letters should be sent to the Company.
See the Prospectus under "The Exchange Offer."
2. Partial Tenders (not applicable to noteholders who tender by book-entry
transfer).
If less than all of the Old Notes evidenced by a submitted
certificate are to be tendered, the tendering holder(s) should fill in the
aggregate principal amount at maturity of Old Notes to be tendered in the
box above entitled "Description of Old Notes--Principal Amount at Maturity
Tendered." A reissued certificate representing the balance of nontendered
Old Notes will be sent to such tendering holder, unless otherwise provided
in the appropriate box on this letter, promptly after the Expiration Date.
All of the Old Notes delivered to the Exchange Agent will be deemed to have
been tendered unless otherwise indicated.
3. Signatures on this Letter; Bond Powers and Endorsements; Guarantee of
Signatures.
If this Letter is signed by the registered holder of the Old
Notes tendered hereby, the signature must correspond exactly with the name
as written on the face of the certificates without any change whatsoever.
If any tendered Old Notes are owned of record by two or more
joint owners, all of such owners must sign this Letter.
If any tendered Old Notes are registered in different names
on several certificates, it will be necessary to complete, sign and submit
as many separate copies of this Letter as there are different registrations
of certificates.
When this Letter is signed by the registered holder or
holders of the Old Notes specified herein and tendered hereby, no
endorsements of certificates or separate bond powers are required. If,
however, the New Notes are to be issued, or any untendered Old Notes are to
be reissued, to a person other than the registered holder, then
endorsements of any certificates transmitted hereby or separate bond powers
are required. Signatures on such certificate(s) or bond powers must be
guaranteed by an Eligible Institution.
If this Letter is signed by a person other than the
registered holder or holders of any certificate(s) specified herein, such
certificate(s) must be endorsed or accompanied by appropriate bond powers,
in either case signed exactly as the name or names of the registered holder
or holders appear(s) on the certificate(s) and signatures on such
certificate(s) or bond powers must be guaranteed by an Eligible
Institution.
If this Letter or any certificates or bond powers are signed
by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, such persons should so indicate when signing, and, unless waived
by the Company, proper evidence satisfactory to the Company of their
authority to so act must be submitted.
Endorsements on certificates for Old Notes or signatures on
bond powers required by this Instruction 3 must be guaranteed by a firm
which is a member of a registered national securities exchange or a member
of the National Association of Securities Dealers, Inc., or by a commercial
bank or trust company having an office or correspondent in the United
States (an "Eligible Institution").
Signatures on this Letter need not be guaranteed by an
Eligible Institution, provided the Old Notes are tendered: (i) by a
registered holder of Old Notes who has not completed the box entitled
"Special Issuance Instructions" or "Special Delivery Instructions" on this
Letter, or (ii) for the account of an Eligible Instruction.
4. Special Issuance and Delivery Instructions.
Tendering holders of Old Notes should indicate in the
applicable box the name and address to which substitute certificates
evidencing Old Notes not exchanged are to be issued or sent, if different
from the name or address of the person signing this Letter. In the case of
issuance in a different name, the employer identification or social
security number of the person named must also be indicated. Tendering
holders of Old Notes may request that New Notes be credited to such account
maintained at the Book-Entry Transfer Facility as such noteholder may
designate hereon. In addition, noteholders tendering Old Notes by book-
entry transfer may request that Old Notes not exchanged be credited to such
account maintained at the Book-Entry Transfer Facility as such noteholder
may designate hereon. If no such instructions are given, such New Notes
and Old Notes not exchanged, as the case may be, will be credited to the
account at the Book-Entry Transfer Facility of the person signing this
Letter.
5. Tax Identification Number.
Federal income tax law generally requires that a tendering
holder whose Old Notes are accepted for exchange must provide the Company
(as payor) with such holder's correct Taxpayer Identification Number
("TIN") on Substitute Form W-9 below, which in the case of tendering holder
who is an individual, is his or her social security number. If the Company
is not provided with the current TIN or an adequate basis for an exemption,
such tendering holder may be subject to a $50 penalty imposed by the
Internal Revenue Service. In addition, delivery to such tendering holder
of New Notes may be subject to backup withholding in an amount equal to 31%
of all reportable payments made after the exchange. If withholding results
in an overpayment for taxes, a refund may be obtained.
Exempt holders of Old Notes (including, among others, all
corporations and certain foreign individuals) are not subject to these
backup withholding and reporting requirements. See the enclosed Guidelines
of Certification of Taxpayer Identification Number on Substitute Form W-9
(the "W-9 Guidelines") for additional instructions.
To prevent backup withholding, each tendering holder of Old
Notes must provide its correct TIN by completing the "Substitute Form W-9"
set forth below, certifying that the TIN provided is correct (or that such
holder is awaiting a TIN) and that (i) the holder is exempt from backup
withholding, or (ii) the holder has not been notified by the Internal
Revenue Service that such holder is subject to a backup withholding as a
result of a failure to report all interest or dividends or (iii) the
Internal Revenue Service has notified the holder that such holder is no
longer subject to backup withholding. If the tendering holder of Old Notes
is a nonresident alien or foreign entity not subject to backup withholding,
such holder must give the Company a completed Form W-8, Certificate of
Foreign Status. These forms may be obtained from the Exchange Agent. If
the Old Notes are in more than one name or are not in the name of the
actual owner, such holder should consult the W-9 Guidelines for information
on which the TIN to report. If such holder does not have a TIN, such
holder should consult the W-9 Guideline for instructions on applying for a
TIN, check the box in Part 2 of the Substitute Form W-9 and write "applied
for" in lieu of its TIN. Note: Checking this box and writing "applied
for" on the form means that such holder has already applied for a TIN or
that such holder intends to apply for one in the near future. If such
holder does not provide its TIN to the Company within 60 days, backup
withholding will begin and continue until such holder furnishes its TIN to
the Company.
6. Transfer Taxes.
The Company will pay all transfer taxes, if any, applicable
to the transfer of Old Notes to it or its order pursuant to the Exchange
Offer, if, however, New Notes and/or substitute Old Notes not exchanged are
to be delivered to, or are to be registered or issued 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, or if a transfer tax is imposed for
any reason other than the transfer of Old Notes to the Company or its order
pursuant to the Exchange Offer, 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 herewith, the amount of
such transfer taxes will be billed directly to such tendering holder.
Except as provided in this Instruction 6, it will not be
necessary for transfer tax stamps to be affixed to the Old Notes specified
in this Letter.
7. Waiver of Conditions.
The Company reserves the absolute right to waive
satisfaction of any or all conditions enumerated in the Prospectus.
8. No Conditional Tenders.
No alternative, conditional, irregular or contingent traders
will be accepted. All tendering holders of Old Notes, by execution of this
Letter, shall waive any right to receive notices of the acceptance of their
Old Notes for exchange.
Neither the Company, the Exchange Agent nor any other person
is obligated to give notice of any defect or irregularity with respect to
any tender of Old Notes nor shall any of them incur any liability for
failure to give any such notice.
9. Mutilated, Lost, Stolen or Destroyed Old Notes.
Any holder whose Old Notes have been mutilated, lost, stolen
or destroyed should contact the Exchange Agent at the address indicated
above for further instructions.
10. Requests for Assistance or Additional Copies.
Questions relating to the procedure for tendering, as well
as requests for additional copies of the Prospectus and this Letter, may be
directed to the Exchange Agent, at the address and telephone number of
indicated above.
11. Incorporation of Letter of Transmittal.
This Letter shall be deemed to be incorporated in and
acknowledged and accepted by any tender through the Book-Entry Transfer
Facility's ATOP procedures by any participant in the Book-Entry Transfer
Facility on behalf of itself and the beneficial owners of any Old Notes so
tendered.
TO BE COMPLETED BY ALL TENDERING HOLDERS
(See Instruction 5)
PAYER'S NAME: PAGEMART WIRELESS, INC.
Part 1-PLEASE PROVIDE TIN: __________________________
YOUR TIN IN THE (Social Security Number or
SUBSTITUTE BOX AT RIGHT AND Employer Identification Number)
Form W-9 CERTIFY BY SIGNING
Department AND DATING BELOW.
of the
Treasury
Internal Part 2-TIN APPLIED for [ ]
Revenue
Service
CERTIFICATION: UNDER THE PENALTIES OF PERJURY,
I CERTIFY THAT
Payer's
Request (1) the number shown on this form is my correct Taxpayer
for Taxpayer Identification Number (or I am waiting fora number
Identification to be issued to me).
Number ("TIN")
and (2) I am not subject to backup withholding either
Certification because (a) I am exempt from backup withholding,
(2) or (b) I have not been notified by the
Internal Revenue Service (the "IRS") that I am
subject to backup withholding as a result of a
failure to report all interest or dividends, or
(c) the IRS has notified me that I am no longer
subject to backup withholding, and
(3) any other information provided on this form is
true and correct.
SIGNATURE ____________________________ DATE __________
You must cross out item (2) of the above certification if you have been
notified by the IRS that you are subject to backup withholding because of
underreporting of interest or dividends on your tax return and you have not
been notified by the IRS that you are no longer subject to backup
withholding.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX
IN PART 2 OF SUBSTITUTE FORM W-9
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a Taxpayer Identification Number
has not been issued to me, and either (a) I have mailed or delivered an
application to receive a Taxpayer Identification Number to appropriate
Internal Revenue Service Center or Social Security Administrative Office or
(b) I intend to mail or deliver an application in the near future. I
understand that if I do not provide a Taxpayer Identification Number for
the time of the exchange, 31 percent of all reportable payments made to me
thereafter will be withheld until I provide a number.
________________________________________ ____________________________
Signature Date
NOTICE OF GUARANTEED DELIVERY
for
11 1/4% Senior Subordinated Discount Notes due 2008
of
PAGEMART WIRELESS, INC.
As set forth in the Prospectus dated o, 1998 (the "Prospectus") of
PageMart Wireless, Inc. (the "Company") and in the accompanying Letter of
Transmittal and instructions thereto (the "Letter of Transmittal"), this
form or one substantially equivalent hereto must be used to accept the
Company's Exchange Offer (the "Exchange Offer") to exchange all of its
outstanding 11 1/4% Senior Subordinated Discount Notes due 2008 (the "Old
Notes") for its 11 1/4% Senior Subordinated Discount Exchange Notes due
2008, which have been registered under the Securities Act of 1933, as
amended, if certificates for the Old Notes are not immediately available or
if the Old Notes, the Letter of Transmittal or any other documents required
thereby cannot be delivered to the Exchange Agent, or the procedure for
book-entry transfer cannot be completed, prior to 5:00 P.M., New York City
time, on the Expiration Date (as defined in the Prospectus). This form may
be delivered by an Eligible Institution by hand or transmitted by facsimile
transmission, overnight courier or mail to the Exchange Agent as set forth
below. Capitalized terms used but not defined herein have the meaning
given to them in the Prospectus.
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON bullet,
1998, UNLESS EXTENDED (THE "EXPIRATION DATE"). TENDERS OF OLD NOTES MAY BE
WITHDRAWN AT ANY TIME PRIOR TO 5:00 P.M. ON THE LAST BUSINESS DAY PRIOR TO
THE EXPIRATION DATE.
Delivery To: United States Trust Company of New York, as Exchange Agent
If by Registered or Certified Mail:
United States Trust Company of New York
P.O. Box 844
Attn: Corporate Trust Services
Cooper Station
New York, New York 10276-0844
or
If by Overnight Courier or by Hand after 4:30PM:
Untied States Trust Company of New York
770 Broadway, 13th Floor
New York, NY 10003
Attn: Corporate Trust Services
or
If by Hand before 4:30PM:
United States Trust Company of New York
111 Broadway
Lower Level
Attn: Corporate Trust Services
New York, New York 10006
or
If by Facsimile:
(212) 780-0592
Confirm by Telephone:
(800) 548-6565
Delivery of this instrument to an address, or transmission via a
facsimile, other than as set forth above, does not constitute a valid
delivery.
This form is not to be used to guarantee signatures. If a signature
on the Letter of Transmittal to be used to tender Old Notes is required to
be guaranteed by an "Eligible Institution" under the instructions thereto,
such signature guarantee must appear in the applicable space provided in
the Letter of Transmittal.
Ladies and Gentlemen:
The undersigned hereby tenders to the Company, upon the terms and
subject to the conditions set forth in the Prospectus and the Letter of
Transmittal (which together constitute the "Exchange Offer"), receipt of
which is hereby acknowledged, ____________________ Old Notes pursuant to the
(amount of Old Notes)
guaranteed delivery procedures set forth in instruction 1 of the Letter of
Transmittal.
The undersigned understands that tenders of Old Notes will be
accepted only in principal amounts equal to $1,000 or integral multiples
thereof. The undersigned understands that tenders of Old Notes pursuant to
the Exchange Offer may not be withdrawn after 5:00 p.m., New York City
time, on the last business day prior to the Expiration Date. Tenders of
Old Notes may also be withdrawn if the Exchange Offer is terminated without
any such Old Notes being purchased thereunder or as otherwise provided in
the Prospectus.
All authority hereto conferred or agreed to be conferred by 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 heirs, personal
representatives, executors, administrators, successors, assigns, trustees
in bankruptcy and other legal representatives of the undersigned.
NOTE: SIGNATURES MUST BE PROVIDED WHERE INDICATED BELOW.
Certificate No(s). Name(s) of Record Holder(s)
for Old Notes (if any and if
available)
_____________________________ _____________________________
_____________________________
Please Print or Type
Principal Amount of Old Notes Address _____________________
_____________________________ _____________________________
Area Code and Telephone No.
_____________________________
Signature(s) ________________
_____________________________
Dated: ______________________
If Old Notes will be delivered
by book-entry transfer at The
Depository Trust Company,
The Depository Trust Company
Account No. _______________
This Notice of Guaranteed Delivery must be signed by (i) the registered
Holders(s) of Old Notes exactly as its (their) name(s) appear on certificates
for Old Notes or on a security position listing maintained by DTC as the owner
of Old Notes or (ii) by person(s) authorized to become registered Holder(s) by
endorsements and documents transmitted with this Notice of Guaranteed
Delivery. If signature is by a trustee, executor, administrator, guardian,
attorney-in-fact, officer or other person acting in a fiduciary or
representative capacity, such person must provide the following information:
Please print name(s) and address(es) of person signing above
Name(s): ___________________________________________________________
___________________________________________________________
Capacity: ___________________________________________________________
Address(es): ___________________________________________________________
___________________________________________________________
___________________________________________________________
GUARANTEE
(Not to be used for signature guarantee)
The undersigned, a member firm of a registered national securities
exchange or of the National Association of Securities Dealers, Inc., or 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 (the
"Exchange Act"), hereby (a) represents that the above named person(s)
"own(s)" the Old Note tendered hereby within the meaning of Rule 14e-4
under the Exchange Act, (b) represents that such tender of Old Notes
complies with Rule 14e-4 under the Exchange Act and (c) guarantees that
delivery to the Exchange Agent of certificates for the Old Notes tendered
hereby, in proper form for transfer or a confirmation of the book-entry
transfer of such Old Notes into the Exchange Agent's account at the
Depository Trust Company, pursuant to the procedures for book-entry
transfer set forth in the Prospectus, with delivery of either a properly
completed and duly executed Letter of Transmittal (or manually signed
facsimile thereof) with any required signatures and any other documents
required by the Letter of Transmittal or an Agent's Message, will be
received by the Exchange Agent within five New York Stock Exchange trading
days after the Expiration Date.
The undersigned acknowledges that it must deliver the Letter of
Transmittal or Agent's Message and Old Notes tendered hereby to the
Exchange Agent within the time period set forth therein and that failure to
do so could result in financial loss to the undersigned.
Name of Firm ________________ _____________________________
Authorized Signature
Address _____________________ Name ________________________
Please Print or Type
_____________________________ Title _______________________
Zip Code
Area Code and Telephone No.
_____________________________
Dated: ________________, 1998
NOTE: DO NOT SEND OLD NOTES WITH THIS FORM. OLD NOTES SHOULD BE SENT WITH
YOUR LETTER OF TRANSMITTAL SO THAT THEY ARE RECEIVED BY THE EXCHANGE AGENT
WITHIN FIVE BUSINESS DAYS AFTER THE EXPIRATION DATE.
Offer to Exchange
11 1/4% Senior Subordinated Discount Exchange Notes due 2008
for Any and All Outstanding
11 1/4% Senior Subordinated Discount Notes due 2008
of
PAGEMART WIRELESS, INC.
To Registered Holders and Depository
Trust Company Participants:
We are enclosing herewith the material listed below relating to the
offer by PageMart Wireless, Inc. (the "Company") to exchange its 11 1/4%
Senior Subordinated Discount Exchange Notes due 2008 (the "New Notes"),
pursuant to an offering registered under the Securities Act of 1933, as
amended (the "Securities Act"), for a like principal amount of its issued
and outstanding 11 1/4% Senior Subordinated Discount Notes due 2008 (the
"Old Notes") upon the terms and subject to the conditions set forth in the
Company's Prospectus, dated bullet, 1998, and the related Letter of
Transmittal (which together constitute the "Exchange Offer").
Enclosed herewith are copies of the following documents:
1. Prospectus dated bullet, 1998;
2. Letter of Transmittal;
3. Notice of Guaranteed Delivery;
4. Instruction to Registered Holder and/or Book-Entry
Transfer Participant from Owner; and
5. Letter which may be sent to your clients for whose
account you hold Old Notes in your name or in the name
of your nominee, to accompany the instruction form
referred to above, for obtaining such client's
instruction with regard to the Exchange Offer.
We urge you to contact your clients promptly. Please note that the
Offer will expire at 5:00 p.m., New York City time, on bullet, 1998, unless
extended.
The Offer is not conditioned upon any minimum number of Old Notes being
tendered.
To participate in the Exchange Offer by tendering notes by book-entry
transfer, a beneficial holder must cause a DTC Participant to tender such
holder's Old Notes to The United States Trust Company of New York's (the
"Exchange Agent") account maintained at the Depository Trust Company
("DTC") for the benefit of the Exchange Agent through DTC's Automated
Tender Offer Program ("ATOP"), including transmission of a computer-
generated message that acknowledges and agrees to be bound by the terms of
the Letter of Transmittal. By complying with DTC's ATOP procedures with
respect to the Exchange Offer, the DTC Participant confirms on behalf of
itself and the beneficial owners of tendered Old Notes all provisions of
the Letter of Transmittal applicable to it and such beneficial owners as
fully as if it completed, executed and returned the Letter of Transmittal
to the Exchange Agent.
Pursuant to the Letter of Transmittal, each holder of Old Notes will
represent to the Company that (i) the New Notes acquired in the Exchange
Offer are being obtained in the ordinary course of business of the person
receiving such New Notes, whether or not such person is such holder, (ii)
neither the holder of the Old Notes nor any such other person has an
arrangement or understanding with any person to participate in the
distribution of such New Notes, (iii) if the holder is not a broker-dealer
or is a broker-dealer but will not receive New Notes for its own account in
exchange for Old Notes, neither the holder nor any such other person is
engaged in or intends to participate in a distribution of the New Notes and
(iv) neither the holder nor any such other person is an "affiliate" of the
Company within the meaning of Rule 405 under the Securities Act of 1933, as
amended. If the tendering holder is a broker-dealer that will receive New
Notes for its own account in exchange for Old Notes, you will represent on
behalf of such broker-dealer that the Old Notes to be exchanged for the New
Notes were acquired by it as a result of market-making activities or other
trading activities, and acknowledge on behalf of such broker-dealer that it
will deliver a prospectus meeting the requirements of the Act in connection
with any resale of such New Notes. By acknowledging that it will deliver
and by delivering a prospectus meeting the requirements of the Act in
connection with any resale of such New Notes, the undersigned is not deemed
to admit that it is an "underwriter" within the meaning of the Act.
The enclosed Instruction to Registered Holder and/or Book-Entry
Transfer Participant from Owner contains an authorization by the beneficial
owners of the Old Notes for you to make the foregoing representations.
The Company will not pay any fee or commission to any broker or
dealer or to any other persons (other than the Exchange Agent) in
connection with the solicitation of tenders of Old Notes pursuant to the
Offer. The Company will pay or cause to be paid any transfer taxes payable
on the transfer of Old Notes to it, except as otherwise provided in
Instruction 6 of the enclosed Letter of Transmittal.
Additional copies of the enclosed material may be obtained from The
United States Trust Company of New York.
Very truly yours,
PAGEMART WIRELESS, INC.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
THE AGENT OF PAGEMART WIRELESS, INC. OR THE UNITED STATES TRUST COMPANY OF
NEW YORK OR AUTHORIZE YOU TO USE ANY DOCUMENT OR MAKE ANY STATEMENT ON
THEIR BEHALF IN CONNECTION WITH THE OFFER OTHER THAN THE DOCUMENTS ENCLOSED
HEREWITH AND THE STATEMENTS CONTAINED THEREIN.
Offer to Exchange
11 1/4% Senior Subordinated Discount Exchange Notes due 2008
for Any and All Outstanding
11 1/4% Senior Subordinated Discount Notes due 2008
of
PAGEMART WIRELESS, INC.
To Our Clients:
We are enclosing herewith a Prospectus, dated bullet, 1998, of PageMart
Wireless, Inc. (the "Company") and a related Letter of Transmittal (which
together constitute the "Exchange Offer") relating to the offer by the
Company to exchange its 11 1/4% Senior Subordinated Discount Exchange Notes
due 2008 (the "New Notes"), pursuant to an offering registered under the
Securities Act of 1933, as amended (the "Securities Act"), for a like
principal amount of its issued and outstanding 11 1/4% Senior Subordinated
Discount Notes due 2008 (the "Old Notes") upon the terms and subject to the
conditions set forth in the Exchange Offer.
Please note that the Offer will expire at 5:00 p.m., New
York City time, on bullet, 1998, unless extended.
The Offer is not conditioned upon any minimum number of Old
Notes being tendered.
We are the holder of record and/or participant in the book-
entry transfer facility of Old Notes held by us for your account. A tender
of such Old Notes can be made only by us as the record holder and/or
participant in the book-entry transfer facility and pursuant to your
instructions. The Letter of Transmittal is furnished to you for your
information only and cannot be used by you to tender Old Notes held by us
for your account.
We request instructions as to whether you wish to tender any
or all of the Old Notes held by us for your account pursuant to the terms
and conditions of the Exchange Offer. We also request that you confirm
that we may on your behalf make the representations contained in the Letter
of Transmittal.
Pursuant to the Letter of Transmittal, each holder of Old
Notes will represent to the Company that (i) the New Notes acquired in the
Exchange Offer are being obtained in the ordinary course of business of the
person receiving such New Notes, whether or not such person is such holder,
(ii) neither the holder of the Old Notes nor any such other person has an
arrangement or understanding with any person to participate in the
distribution of such New Notes, (iii) if the holder is not a broker-dealer
or is a broker-dealer but will not receive New Notes for its own account in
exchange for Old Notes, neither the holder nor any such other person is
engaged in or intends to participate in a distribution of the New Notes and
(iv) neither the holder nor any such other person is an "affiliate" of the
Company within the meaning of Rule 405 under the Securities Act of 1933, as
amended. If the tendering holder is a broker-dealer (whether or not it is
also an "affiliate") that will receive New Notes for its own account in
exchange for Old Notes, we will represent on behalf of such broker-dealer
that the Old Notes to be exchanged for the New Notes were acquired by it as
a result of market-making activities or other trading activities, and
acknowledge on behalf of such broker-dealer that it will deliver a
prospectus meeting the requirements of the Act in connection with any
resale of such New Notes. By acknowledging that it will deliver and by
delivering a prospectus meeting the requirements of the Act in connection
with any resale of such New Notes, the undersigned is not deemed to admit
that it is an "underwriter" within the meaning of the Act.
Very truly yours,
INSTRUCTION TO REGISTERED HOLDER AND/OR BOOK-ENTRY
TRANSFER PARTICIPANT FROM OWNER OF
PAGEMART WIRELESS, INC.
11 1/4% Senior Subordinated Discount Notes due 2008
To Registered Holder and/or Participant of the Book-Entry Transfer Facility:
The undersigned hereby acknowledges receipt of the Prospectus dated
bullet, 1998 (the "Prospectus") of PageMart Wireless, Inc. (the
"Company"), and the accompanying Letter of Transmittal (the "Letter of
Transmittal"), that together constitute the Company's offer (the "Exchange
Offer"). Capitalized terms used but not defined herein have the meanings
ascribed to them in the Prospectus.
This will instruct you, the registered holder and/or book-entry
transfer facility participant, as to the action to be taken by you relating
to the Exchange Offer with respect to the Old Notes held by you for the
account of the undersigned.
The aggregate face amount of the Old Notes held by you for the
account of the undersigned is (fill in amount):
$ of the 11 1/4% Senior Subordinated Discount Notes due
2008.
With respect to the Exchange Offer, the undersigned hereby instructs
you (check appropriate box):
[ ] To TENDER the following Old Notes held by you for the
account of the undersigned (insert principal amount of Old
Notes to be tendered, (if any):
$ of the 11 1/4% Senior Subordinated Discount Notes due
2008.
[ ] NOT to TENDER any Old Notes held by you for the account of
the undersigned.
If the undersigned instructs you to tender the Old Notes held by you
for the account of the undersigned, it is understood that you are
authorized to make, on behalf of the undersigned (and the undersigned, by
its signature below, hereby makes to you), the representation and
warranties contained in the Letter of Transmittal that are to be made with
respect to the undersigned as a beneficial owner, including but not limited
to the representations, that (i) the New Notes acquired pursuant to the
Exchange Offer are being obtained in the ordinary course of business of the
undersigned, (ii) neither the undersigned nor any such other person has an
arrangement or understanding with any person to participate in the
distribution of such New Notes, (iii) if the undersigned is not a broker-
dealer, or is a broker-dealer but will not receive New Notes for its own
account in exchange for Old Notes, neither the undersigned nor any such
other person is engaged in or intends to participate in the distribution of
such New Notes and (iv) neither the undersigned nor any such other person
is an "affiliate" of the Company within the meaning of Rule 405 under the
Securities Act of 1933, as amended (the "Securities Act"). If the
undersigned is a broker-dealer (whether or not it is also an "affiliate")
that will receive New Notes for its own account in exchange for Old Notes,
it represents that such Old Notes were acquired as a result of market-
making activities or other trading activities, and it acknowledges that it
will deliver a prospectus meeting the requirements of the Securities Act in
connection with any resale of such New Notes. By acknowledging that it
will deliver and by delivering a prospectus meeting the requirements of the
Securities Act in connection with any resale of such New Notes, the
undersigned is not deemed to admit that it is an "underwriter" within the
meaning of the Securities Act.
SIGN HERE
Name of beneficial owner(s): _______________________________
Signature(s):_______________________________________________
Name(s) (please print): ____________________________________
Address: ___________________________________________________
____________________________________________________________
Telephone Number: __________________________________________
Taxpayer identification or Social Security Number:
____________________________________________________________
Date: ______________________________________________________
