<PAGE>
As filed with the Securities and Exchange Commission on May 26, 1995
Registration File No. 33-85296
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________________
AMENDMENT NO. 1 TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
______________________________
GEOTEK COMMUNICATIONS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE
(State or other jurisdiction of incorporation or organization)
22-2358635
(I.R.S. Employer Identification Number)
20 CRAIG ROAD
MONTVALE, NEW JERSEY 07645
(201) 930-9305
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
ANDREW SIEGEL, ESQ.
GENERAL COUNSEL AND SECRETARY
GEOTEK COMMUNICATIONS, INC.
20 CRAIG ROAD
MONTVALE, NEW JERSEY 07645
(201) 930-9305
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
______________________________
With a copy to:
Wayne D. Bloch, Esq.
Gerald F. Stahlecker III, Esq.
Klehr, Harrison, Harvey, Branzburg & Ellers
1401 Walnut Street
Philadelphia, PA 19102
(215) 568-6060
Approximate date of commencement of proposed sale to the public: As soon
as practicable after the Registration Statement becomes effective.
______________________________
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. /X/
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CALCULATION OF REGISTRATION FEE
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PROPOSED PROPOSED
TITLE OF EACH CLASS AMOUNT MAXIMUM MAXIMUM AMOUNT OF
OF SECURITIES TO TO BE OFFERING PRICE AGGREGATE REGISTRATION
BE REGISTERED REGISTERED PER SHARE OFFERING PRICE FEE
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<S> <C> <C> <C> <C>
Common Stock, $36,000,000 -- $36,000,000 $12,413.79
$.01 par value 1,000,000 shares $7.75 $7,750,000 $ 2,672.41(1)(2)
Total $15,086.20(2)
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<FN>
(1) In accordance with section (c) of Rule 457 under the Securities Act of
1933, the registration fee payable in connection herewith has been
calculated based upon the closing sale price for the Registrant's Common
Stock on May 22, 1995 (as reported on the NASDAQ National Market).
(2) $1,015.09 of such registration fee was paid at the time of the original
filing of this registration statement.
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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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<PAGE>
PROSPECTUS
GEOTEK COMMUNICATIONS, INC.
ISSUANCE AND SALE OF UP TO $36,000,000 OF COMMON STOCK AND
RESALE BY SELLING SHAREHOLDERS OF UP TO $36,000,000 OF COMMON STOCK
AND 1,000,000 SHARES OF COMMON STOCK
This Prospectus concerns the issuance and sale to the Selling Shareholders
(as defined herein), from time to time, of up to an aggregate of $36,000,000 of
the common stock, par value $.01 per share (the "Common Stock"), of Geotek
Communications, Inc., a Delaware corporation ("Geotek" or the "Company"), upon
the conversion of senior secured convertible notes, due March 1998, in the
aggregate principal amount of $36,000,000 (the "Notes"). The Notes were issued
by the Company to the Selling Shareholders on March 30, 1995 and are convertible
into Common Stock in accordance with an incremental conversion schedule
beginning on September 30, 1995. See "Selling Shareholders and Related
Information." All shares of Common Stock issuable upon conversion of the Notes
are hereinafter referred to as the "Note Shares."
This Prospectus also concerns the offer and sale by the Selling
Shareholders, from time to time, of the Note Shares and up to an aggregate of
1,000,000 shares of Common Stock issuable upon the exercise of warrants issued
by the Company to the Selling Shareholders in connection with their purchase of
the Notes and certain other notes issued by the Company in June 1994 (the
"Warrant Shares," and collectively with the Note Shares, the "Shares"). See
"Selling Shareholders and Related Information."
The Company's Common Stock is listed on the NASDAQ National Market ("NNM")
under the symbol "GOTK" and on the Pacific Stock Exchange ("PSE") under the
symbol "GEO." On May 22, 1995, the closing sale price for the Company's Common
Stock, as quoted on the NNM, was $7.75 per share.
It is presently anticipated that sales of Shares by the Selling
Shareholders hereunder will be effected, from time to time, (i) in ordinary
transactions on the PSE; (ii) through dealers or in ordinary broker transactions
on the NNM or otherwise; (iii) "at the market" to or through market makers or
into an existing market for the Shares; (iv) in other ways not involving market
makers or established trading markets, including direct sales to purchasers or
sales effected through agents; (v) through transactions in options (whether
exchange-listed or otherwise); or (vi) in combinations of any such methods of
sale. The Shares held by the Selling Shareholders will be sold at market prices
prevailing at the time of sale or at negotiated prices. Shares held by the
Selling Shareholders may also be sold hereunder by brokers, dealers, banks or
other persons or entities who receive such Shares as a pledgee of the Selling
Shareholders. The Selling Shareholders and brokers and dealers through whom
sales of Shares may be effected may be deemed to be "underwriters," as defined
under the Securities Act of 1933 (the "Securities Act"), and any profits
realized by them in connection with the sale of the Shares may be considered to
be underwriting compensation.
____________________________________
THE SECURITIES OFFERED HEREBY ARE HIGHLY SPECULATIVE AND INVOLVE A HIGH
DEGREE OF RISK. SEE "RISK FACTORS."
____________________________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
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UNDERWRITING PROCEEDS TO
PRICE DISCOUNTS PROCEEDS TO THE SELLING
TO PUBLIC AND COMMISSIONS THE COMPANY SHAREHOLDERS
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<S> <C> <C> <C> <C>
Per Share........... $(1) $(1)(2) $0(3)(4) $(1)(4)
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Total............... $(1) $(1)(2) $0(3)(4) $(1)(4)
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(1) The Note Shares will be issued and sold to the Selling Shareholders upon
conversion of the Notes at conversion prices equal to 87.5% of the weighted
average of the sale prices of the Common Stock on the trading day next
preceding the date of conversion. It is anticipated that the Shares
registered for resale by the Selling Shareholders hereunder will be sold in
market or private transactions at prevailing prices, from time to time.
<PAGE>
(2) No underwriting discounts or commissions are payable in connection with the
issuance of the Note Shares upon conversion of the Notes.
(3) Upon issuance of the Note Shares in connection with the conversion of the
Notes, the principal amounts otherwise payable by the Company under the
Notes, up to $36,000,000 in the aggregate, will be satisfied. The Company
will not receive any proceeds from the sale of Shares by the Selling
Shareholders.
(4) The Company will pay all expenses of the offering of the Shares to which
this Prospectus relates, other than, in connection with sales of Shares by
the Selling Shareholders, any underwriting or broker-dealer discounts or
commissions agreed to be paid by the Selling Shareholders.
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____________________________________
The Date of this Prospectus is May 26, 1995
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<PAGE>
ADDITIONAL INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed by the Company can be inspected and
copied at the public reference facilities maintained by the Commission at Room
1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the Commission's
Regional Offices located at 7 World Trade Center, New York, NY 10048, and
Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. Copies of such material can also be obtained at prescribed
rates from the Public Reference Section of the Commission, Washington, D.C.
20549. The Company's Common Stock is listed on both the NNM and the PSE and
such reports, proxy statements and other information filed with the Commission
should also be available for inspection at the offices of the National
Association of Securities Dealers, Inc., Report Section, 1735 K Street, N.W.,
Washington, D.C. 20006, and at the PSE facilities located at 115 Sansome Street,
San Francisco, California.
The Company has filed with the Commission a registration statement on Form
S-3 under the Securities Act with respect to the securities offered hereby (such
registration statement, together with all exhibits thereto, is hereinafter
referred to as the "Registration Statement"). This Prospectus does not contain
all the information set forth in the Registration Statement, certain parts of
which are omitted in accordance with the rules and regulations of the
Commission. For further information with respect to the Company and the
securities offered hereby, reference is hereby made to the Registration
Statement. Statements contained in this Prospectus as to the contents of any
document filed with, or incorporated by reference in, the Registration Statement
are not necessarily complete, and in each instance are qualified in all respects
by such reference.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The Company incorporates by reference into this Prospectus the documents
listed below:
(1) The Company's Annual Report on Form 10-K for the year ended December
31, 1994 (as amended on Form 10-K/A filed on or about May 26, 1995);
(2) The Company's Quarterly Report on Form 10-Q for the three month
period ended March 31, 1995;
(3) The Company's Current Reports on Form 8-K, dated June 18, 1993 (as
amended on Form 8-K/A filed on or about July 12, 1993), July 5, 1994 (as amended
on Form 8-K/A filed on or about September 14, 1994), August 2, 1994 (as amended
on Form 8-K/A filed on or about October 13, 1994 and Form 8-K/A filed on or
about May 25, 1995), and February 27, 1995; and
(4) The description of the Company's Common Stock contained in the
Company's Registration Statement on Form 8-A, dated December 15, 1992.
All reports and other documents filed by the Company pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Exchange Act subsequent to the date of this
Prospectus and prior to the filing of a post-effective amendment to the
Registration Statement which indicates that all securities offered hereby have
been sold or which deregisters all securities then remaining unsold, shall be
deemed to be incorporated by reference herein and to be a part hereof from the
date of the filing of such reports and documents. Any statement contained in a
document incorporated by reference herein shall be deemed to be modified or
superseded for all purposes to the extent that a statement contained herein or
in any other subsequently filed document which also is incorporated by reference
herein modifies
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<PAGE>
or supersedes such statement. Any statement so modified or superseded shall not
be deemed, except as so modified or superseded, to constitute a part of this
Prospectus.
The Company hereby undertakes to provide, without charge, to each person to
whom a copy of this Prospectus has been delivered, upon the written or oral
request of such person, a copy of all documents incorporated by reference in
this Prospectus, other than exhibits to such documents unless such exhibits are
specifically incorporated by reference herein. Requests for such copies should
be directed to Corporate Secretary, Geotek Communications, Inc., 20 Craig Road,
Montvale, New Jersey 07645; telephone number (201) 930-9305.
The Company will furnish its shareholders with annual reports containing
audited financial statements and reports by independent accountants. In
addition, the Company will distribute unaudited quarterly reports to its
shareholders for the first three quarters of each fiscal year.
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<PAGE>
RISK FACTORS
The Shares described herein involve a substantial degree of risk.
Prospective purchasers should carefully consider, among other things, the
following factors:
LIMITED OPERATING HISTORY; MANAGEMENT OF GROWTH
The Company entered the wireless communications industry in 1992 and,
therefore, has limited experience in developing, establishing and operating
wireless communications systems. To date, most of the Company's wireless
communications services experience has been in foreign markets and has involved
different technology than that to be employed by the Company in its United
States target markets. In addition, the Company's only experience to date in
the United States with respect to such services has been testing the Company's
digital wireless communications network ("GEONET-TM-") in Philadelphia,
Pennsylvania. Prospective purchasers of the Shares offered hereunder,
therefore, have limited historical financial information about the Company on
which to make a determination as to the prospects for the Company's wireless
communications operations or financial condition and as to an investment in the
Shares offered hereby.
Although the Company has added experienced senior management and hired over
28 people for various field service positions during the last year, the Company
will need to rapidly and significantly increase the number of technical, sales,
management and administrative personnel that it employs as the roll-out of
GEONET-TM- progresses. The Company's success will depend upon its ability to
continue to attract, motivate, train and manage additional employees.
Management's ability to manage the Company's growth effectively also will
require it to significantly expand its operational, financial and management
systems. The failure of the Company to manage its growth effectively would have
a material adverse effect on the Company's future operations.
DEFICIENCY OF EARNINGS TO FIXED CHARGES; CONTINUED LOSSES
On a consolidated basis, the Company experienced net losses from continuing
operations of $2.4 million, $50.4 million and $42.4 million for the years ended
December 31, 1992, December 31, 1993 and December 31, 1994, respectively. In
addition, the Company had a deficiency of earnings before interest, taxes,
depreciation and amortization ("EBITDA") of $0.9 million, $15.2 million and
$34.2 million for the years ended December 31, 1992, December 31, 1993 and
December 31, 1994, respectively. The Company anticipates that its net operating
losses from operations and its EBITDA deficiency will increase significantly
during the roll-out of GEONET-TM-. There can be no assurance that the Company
will ever operate at profitable levels or have positive EBITDA. Until
sufficient cash flow is generated from operations, the Company will have to
utilize its capital resources or external sources of funding to satisfy its
working capital needs.
NEED FOR ADDITIONAL FINANCING
The Company's existing cash on hand and expected cash flow from operations
will not be sufficient to fund its full roll-out of GEONET-TM- in the
United States. Based on the Company's projected roll-out schedule in its
36 United States target markets and its projected loading of subscribers in
these markets, the Company estimates that it will need at least an additional
$350.0 million of finacing to fund GEONET-TM-'s infrastructure costs as well
as operating losses and working capital needs. The Company's need for
additional financing will increase if the Company experiences delays in the
commercial implementation of GEONET-TM-, cost overruns or unanticipated cash
needs. Moreover, additional financing may be necessary to satisfy the terms
of certain financing transactions, including but not limited to, possible
mandatory redemption and repayment obligations of the Company in connection
with the Company's Series H Preferred Stock, Series I Preferred Stock,
Series K Preferred Stock and the Notes. Under certain circumstances, the
Company may be required on October 31, 2000 to redeem the Series
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H Preferred Stock for an aggregate price of $40.0 million (plus any accrued but
unpaid dividends). In lieu of paying such redemption price in cash, the Company
may satisfy this obligation by paying all or any portion of the redemption price
in shares of Common Stock. In such event, the number of shares of Common Stock
to be issued will be determined by multiplying the redemption price to be paid
in Common Stock by 150% and dividing the resulting price by the market price of
the Common Stock. In addition, in the event of certain circumstances
constituting a change in control of the Company, the Company is obligated to
offer to redeem the Series I Preferred Stock and Series K Preferred Stock
for their aggregate stated value, in each case approximately $10.0 million
(plus accrued but unpaid dividends), payable in cash or shares of Common Stock
at the Company's option. An event of default under the Notes could result in
an acceleration of the Company's obligations thereunder to repay the unpaid
balance of the $36.0 million original principal amount thereof, plus an
amount of interest equal to the amount the holders thereof would otherwise
be entitled to receive through maturity.
Additional financing also may be required to fund, or as a result of the
consummation of, acquisitions of additional spectrum and businesses. The amount
of additional funding required will depend upon the timing of such expenditures,
the availability of cash flow from operations and, to the extent applicable, the
availability of lease and vendor financing. It is presently anticipated that
additional financing, if obtained, would be obtained from one or more sources,
including, but not limited to, equity or debt financing (whether through public
or private offerings), exercise of currently outstanding options and warrants,
strategic partners, joint ventures or a combination thereof. There can be no
assurance that additional financing will be available to the Company on
desirable terms or at all.
COMMERCIAL IMPLEMENTATION OF GEONET-TM-
The Company's current business plan contemplates the commercial
implementation of GEONET-TM- in 36 target markets in the United States between
the Summer of 1995 and the end of 1997. In each of these markets, the Company
expects to gradually add subscribers and increase its service offerings. The
Company expects to continue to generate negative cash flow in each of its target
markets until it achieves an adequate subscriber base in each such market.
The successful and timely implementation of GEONET-TM- will depend upon a
number of factors, many of which are beyond the control of the Company,
including, but not limited to, the timely and cost-effective manufacture,
construction and integration of the system infrastructure and software, the
acquisition and control of additional radio spectrum, the procurement and
preparation of base station and remote sites, the receipt of all necessary
regulatory approvals, the establishment of effective sales and marketing
organizations and distribution channels and the need for additional financing.
See "-- Dependence on Third Party Providers; Adaptation of Technology for
Commercial Application," "-- Need for Spectrum; Need for Transmission Sites," "-
- - Government Regulation" and "-- Need for Additional Financing." The failure or
delay with respect to any of these items could adversely affect the timing of
the implementation of GEONET-TM- in one or more of the Company's target markets,
which could have a material adverse effect on the Company.
The Company will make continuing hardware and software modifications to
GEONET-TM- prior to, during and after the system's commercial roll-out. For
example, the Company must integrate the initial GEONET-TM- data applications,
which are expected to be completed in the fourth quarter of 1995, with the
initial GEONET-TM- voice applications. Subsequent applications will also need
to be integrated with existing GEONET-TM- applications. There can be no
assurance that the Company will be able to satisfactorily complete such
modifications and/or integration efforts or that they will be able to be
completed in a manner that enables the Company to offer its GEONET-TM- services
on a profitable basis. A failure by the Company to
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<PAGE>
satisfactorily complete any such modifications or integration efforts or to
complete them on a cost-effective basis could have a material adverse effect on
the Company.
To date, no other wireless service provider has been successful at
providing the level of integrated voice and data services contemplated to be
offered by the Company. Accordingly, in implementing GEONET-TM-, the Company
may encounter unforeseen technical issues. In addition, each of the Company's
United States target markets is expected to present unique technical issues due
to differences in geography and the level of local development. Technical
difficulties in the operation and/or performance of GEONET-TM- also may be
experienced as additional subscribers are added to the system in a given market
or as the coverage area in any market is increased. There can be no assurance
that the Company will be able to adequately address any such issues in any given
market or that such issues will be able to be addressed in a cost-effective
manner. Any failure by the Company to adequately address such issues or to
address them in a cost-effective manner could have a material adverse effect on
the Company.
DEPENDENCE ON THIRD PARTY PROVIDERS; ADAPTATION OF TECHNOLOGY FOR COMMERCIAL
APPLICATION
The Company's digital wireless telecommunications system is being developed
and commercialized by PowerSpectrum Technology, Ltd. ("PowerSpectrum"), a joint
venture between the Company and Rafael Armament Development Authority
("Rafael"), an agency of the Government of the State of Israel. Although the
Company owns a 56% interest in PowerSpectrum on a fully diluted basis and holds
the non-Israel worldwide rights to license, market, distribute and sell the
systems utilizing the technology developed by PowerSpectrum, the development of
the technology and systems is dependent in large part upon the efforts of Rafael
to adapt an advanced digital wireless technology known as Frequency Hopping
Multiple Access-TM- ("FHMA-TM-") from a military to a commercial application, to
integrate the FHMA-TM- technology with other digital technologies required for
optimal commercial deployment of GEONET-TM- and, as discussed below, for the
cost-effective manufacture of the base stations. In this regard, approximately
90 employees of Rafael are presently engaged on a full-time subcontract basis in
the development of FHMA-TM-. If Rafael reduces its commitment to PowerSpectrum
or if Rafael's continuing development efforts are not successful, the Company's
prospects could be materially adversely affected.
Neither the Company nor PowerSpectrum possess the expertise necessary to
manufacture the system architecture, hardware and mobile subscriber units
necessary for the commercial implementation of GEONET-TM-. Rafael has been
contracted by PowerSpectrum to manufacture the system hardware for GEONET-TM-.
Third parties, including Mitsubishi Consumer Electronics America, Inc. and
Hughes Network Systems, Inc., will manufacture subscriber units and certain
other components of the system hardware for GEONET-TM-. As a result, the
Company lacks direct control over the manufacturing process and the delivery of
equipment. There can be no assurance that such third parties will deliver such
equipment on a timely basis or that the Company will be able to successfully
integrate such components and hardware in a cost effective system on a timely
basis, if at all. The Company has only a single manufacturing source for
certain of the components of GEONET-TM- system hardware, including the base
stations and subscriber units. Although the Company believes that it can obtain
all components necessary to build GEONET-TM- from other sources, delays may be
encountered in the event of a component shortage because of the time it may take
to identify substitute sources and manufacture substitute components. A failure
by the Company to obtain hardware components on a timely basis or at
satisfactory prices could adversely affect the ability of the Company to roll-
out and market GEONET-TM-, which could have a material adverse effect on the
Company. See "-- Commercial Implementation of GEONET-TM-."
The Company has engaged International Business Machines Corporation ("IBM")
to manage the preparation and construction of each of its base stations and
remote sites. This arrangement is terminable
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at will by either party. A failure by IBM to manage the preparation and
construction of the Company's base stations and remote sites could have a
material adverse effect on the Company. See "-- Commercial Implementation of
GEONET-TM-."
COMPETITION
Although the Company believes that the quality, array and flexibility of
services to be offered by the Company through GEONET-TM- will meaningfully
differentiate such services from those offered by other wireless communications
providers in the Company's target markets, the Company will fact significant
competition from such other providers. The Company expects to experience
competition for each type of service it intends to offer from existing dispatch,
cellular telephony, paging and public data service providers. In addition, the
Company expects to experience competition from manufacturers of Private Mobile
Radio ("PMR") equipment, which target existing private network operators and
specialized mobile radio ("SMR") customers and urge them to build or upgrade
their own private networks rather than utilize SMR service providers. Many of
these providers and manufacturers are more established, have greater name
recognition, have larger sales staffs and/or have greater financial resources
than the Company.
NEXTEL Communications, Inc. ("NEXTEL") has announced plans to construct a
nationwide digital Enhanced Specialized Mobile Radio ("ESMR") network and is
offering services in several cities. NEXTEL has also secured a significant
number of 800 MHz SMR channels in twenty of the largest United States markets.
In addition, OneComm Corp. ("OneComm") has constructed an ESMR network in
several cities. Furthermore, several large SMR providers are positioning
themselves to compete for wireless voice and data traffic and have announced
plans to construct digital ESMR networks utilizing equipment manufactured
primarily by Motorola. These providers include Dial Page, Inc. ("Dial Page")
and Pittencrieff Communications, Inc. ("Pittencrieff"). Motorola has announced
agreements to transfer its 800 MHz SMR licenses to NEXTEL, OneComm and Dial Page
in consideration for equity positions in those companies. Motorola will remain
the largest SMR service provider in the 900 MHz band utilizing analog equipment,
and to the extent that Motorola is the largest provider of PMR equipment, such
company may be deemed to be an indirect competitor of the Company. In 1994,
NEXTEL announced plans to acquire OneComm and Dial Page.
The Company also may face competition from technologies and services
introduced in the future. In March 1995, the Federal Communications Commission
("FCC") completed auctions for Personal Communications Services ("PCS") licenses
in most telecommunications markets within the United States. PCS could compete
with services to be offered by the Company. The FCC also may license additional
spectrum for other wireless services. Although satellite technology currently
is prohibitively expensive for use in urban areas, it is possible that such
technology ultimately could be developed to permit urban use equal to or
superior to that available through SMR systems, which would result in increased
competition for the Company's services. The commercialization of any such
technologies could have a material adverse effect on the Company. See "-- Rapid
Technological Changes."
Many of the target customers for GEONET-TM- currently use other wireless
communications services. In order to be successful, the Company will need to
migrate a portion of its target customers from their existing services to those
provided by the Company over GEONET-TM-. The Company's ability to migrate its
target customers over to its services will be highly dependent on the perceived
utility of the Company's services to its target customers as compared to the
services currently utilized by such customers. Because there currently is no
integrated wireless communications network commercially available that is
comparable to that expected to be offered by the Company over GEONET-TM-, the
extent of the demand for the Company's wireless communications services cannot
be predicted with any degree of certainty. The demand for the Company's
integrated digital wireless communications services also could be affected by
other matters beyond
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its control, such as the future cost of subscriber equipment, marketing and
pricing strategies of competitors and general economic conditions.
The Company also experiences competition for each of its products and
services other than GEONET-TM- in the markets in which it sells such products
and services. Such competition is expected to remain strong for the foreseeable
future.
The Company also expects to experience competition for radio spectrum from
existing and future providers of wireless communications services. The Company
also expects to experience competition for communications tower space. See "--
Need for Spectrum; Need for Transmission Sites."
GOVERNMENT REGULATION
The licensing, construction, operation and acquisition of SMR systems in
the United States are regulated by the FCC under the Communications Act of 1934,
as amended (the "Communications Act"). During 1994, the FCC initiated several
regulatory proceedings with wide-ranging implications for the wireless
telecommunications industry. A primary intent of these recent amendments was to
encourage competition among mobile communications service providers by removing
regulatory distinctions between common carriers such as cellular telephone
companies and private carriers such as SMR service providers. Although the
Company will not be required to comply with most of these regulatory changes
prior to 1996, the regulations may materially impact the Company's operations in
the future. For example, the Company will be required to provide services on a
"nondiscriminatory basis" and on terms that are not "unjust and unreasonable,"
as such terms are defined by the Communications Act. In addition, the FCC may,
in the future, require that the Company provide equal access to its wireless
services to other wireless and wireline communications providers and
interconnection to wireline and wireless entities. The FCC may, in the future,
specify by rule other common carrier regulations that would apply to commercial
mobile service providers such as the Company. Moreover, the FCC did not delay
the effective date of the applicability of its rules concerning foreign
investment in and management and/or participation in any entity holding an FCC
license. However, the FCC did provide a mechanism for newly re-classified
providers to petition for a waiver of these limitations. The Company filed a
petition to retain its foreign directors and officers, including certain
executive officers of the Company the loss of the services of which could
adversely effect the conduct of the Company's business, which petition remains
pending before the FCC. If the waiver is not granted, this limitation could
restrict the Company's ability to retain foreign directors and officers. See "-
- - Dependence on Key Personnel." These limitations may also affect the Company's
ability to secure foreign financing through the sale of shares of Common Stock
or Common Stock equivalents and to issue Common Stock in the acquisition of
foreign subsidiaries. The FCC may specify by rule other common carrier
regulations that would apply to commercial mobile services providers such as the
Company. The Company cannot predict the effect of any of these regulations or
any future regulation adopted by the FCC on the Company's operations. Moreover,
there has been little experience in the interpretation and implementation of
these regulations. Future interpretations or practices with respect to such
regulations could have a material adverse effect on the Company.
The Company has been granted a waiver to construct and activate certain
systems it has acquired. In the event the Company fails to construct or
activate such systems in accordance with the dates set forth in the waiver, the
Company could lose the waiver and lose all of the frequencies covered by such
waiver which have not been constructed or activated. The Company's waiver is
currently subject to a pending challenge that was filed by a third party with
which the Company failed to negotiate a satisfactory management agreement. The
Company believes that this challenge is without merit and is vigorously opposing
it. A loss of the frequencies
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<PAGE>
covered by such waiver that have not been constructed or activated would have a
material adverse effect on the Company.
The Company intends to acquire additional SMR licenses. There can be no
assurance that the Company will be successful in its efforts to negotiate the
acquisition of all licenses it seeks to acquire or in its efforts to obtain
regulatory approval therefor. In addition, there can be no assurances that any
licenses currently owned or acquired in the future by the Company will be
renewed. The failure of the Company to renew existing or future SMR licenses
would have a material adverse effect on the Company.
All of the equipment utilizing the Company's technology, to the extent it
is used to send or receive signals, must meet FCC criteria. Although GEONET-TM-
base stations have received such approval and the mobile subscriber units have
been designed to meet FCC standards, there can be no assurance that the
subscriber units will meet such criteria. A failure of the Company's subscriber
units to meet FCC standards could have a material adverse effect on the Company.
Future changes in regulation or legislation affecting digital wireless
telecommunications services or the allocation by the FCC or Congress of
additional spectrum for services that compete with such service could adversely
affect the Company's business.
NEED FOR SPECTRUM; NEED FOR TRANSMISSION SITES
The Company will require additional spectrum to add capacity and
to service anticipated demand in certain of its target markets, including
in certain of its 1995 and 1996 markets. Moreover, a significant
portion of the Company's existing radio spectrum in Philadelphia, New York City,
Washington, Chicago, Dallas and Houston is subject to management agreements with
Motorola. The Company intends to enter into several of these markets in 1995.
The Company cannot utilize this radio spectrum until such management agreements
are terminated. In November 1994, Motorola and NEXTEL entered into a consent
decree with the federal government pursuant to which NEXTEL and Motorola agreed
that, upon effectiveness of the consent decree, they will take steps to reduce
their ownership and management of radio spectrum in certain U.S. markets
including each of the above-referenced markets, so that they collectively own
and/or manage no more than thirty 900 MHz channels in such markets. The consent
decree further provides that any Motorola management agreements will be
terminable at the sole option of the party owning the license upon 120 days
notice to Motorola. The consent decree allows Motorola to refuse to terminate
such management agreements when Motorola and NEXTEL together control (including
by management agreement) 30 or fewer 900 MHz channels in the licensee's market
(including the managed channel as to which the termination of the agreement is
being sought). The consent decree is subject to, and expected to become
effective upon, approval of the consent decree by the United States District
Court for the District of Columbia. There can be no assurance that the District
Court will approve the consent decree, or will approve it in its current form.
There also can be no assurances that Motorola will not retain its management
rights over some or all of the radio spectrum owned by the Company in these U.S.
markets. In the event the Company is unable to terminate any of the Motorola
management agreements or such ability is delayed, the Company's ability to enter
into such markets may be materially adversely affected.
As to the spectrum that the Company has entered into agreements to
acquire, certain of such agreements are subject to regulatory approval, which
the Company believes will be forthcoming prior to its expected roll-out in
each such market. There can be no assurance that such approvals will be
received on a timely basis or at all. The failure by the Company to obtain
any such approvals could have a material adverse effect on the Company.
-10-
<PAGE>
The Company intends to acquire sufficient spectrum in each of its target
markets in which it does not have sufficient spectrum to initiate service or
service anticipated demand. The Company expects the FCC to auction spectrum
during 1995 in each market in which the Company desires to acquire additional
spectrum. Although the Company intends to bid on such spectrum to the extent
such spectrum is needed, there can be no assurance that the Company will be the
successful bidder for any radio spectrum auctioned by the FCC. In addition, the
Company cannot predict the cost of obtaining licenses for additional spectrum
since such costs are determined by factors beyond the Company's control,
including, but not limited to, the availability of licenses and the number of
competitors seeking to acquire licenses in any particular market. Although the
Company believes that it will be able to acquire licenses in any particular
market. Although the Company believes that it will be able to acquire
sufficient spectrum in each of its U.S. markets, there can be no assurance that
the Company will be able to make such acquisitions on a timely basis, if at all,
or that such acquisitions will be able to be made on commercially acceptable
terms. A failure by the Company to obtain sufficient radio spectrum on
commercially acceptable terms and/or on a timely basis could have a material
adverse effect on the Company. See "-- Commercial Implementation of
GEONET-TM-."
There are only a limited number of existing communications towers capable
of providing the Company with optimal coverage area for its radio transmissions
and that are capable of supporting the Company's transmission equipment. In the
event the Company cannot obtain leases for existing towers, it may be required
to purchase sites, receive necessary permits and build such towers, a process
which the Company estimates could take up to a year to complete for each tower.
If the Company is required to build new towers, the roll-out of GEONET-TM- in
one or more target markets could be delayed, which could have a material adverse
effect on the Company.
RAPID TECHNOLOGICAL CHANGES
The telecommunications industry is subject to rapid and significant changes
in technology which could lead to new products and services that compete with
those offered by the Company or could lower the cost of current competing
products and services to the point where the Company's products and services
become non-competitive and the Company is required to reduce the prices of its
services. While the Company is not aware of any proposed changes that will
materially affect the attractiveness of its product and service offerings, the
effect of technological changes on the businesses of the Company cannot be
predicted. In the future, the Company expects to experience competition from
new technologies such as ESMR networks, PCS and possibly satellite technology,
as well as from advances with respect to existing technologies such as cellular,
paging and mobile data transmission. See "-- Competition."
RISKS OF INTERNATIONAL BUSINESS
The Company operates in and sells its products and services to clients in
various countries and certain of its products and components are manufactured
abroad. The Company's research and development activities are reliant upon
foreign providers. Accordingly, the Company is subject to the risks inherent in
conducting business across national boundaries, including, but not limited to,
currency exchange rate fluctuations, international incidents, military
outbreaks, economic downturns, government instability, nationalization of
foreign assets, government protectionism and changes in governmental policy, any
of which risks could have a material adverse impact on the Company.
-11-
<PAGE>
DEPENDENCE ON KEY PERSONNEL
The success of the Company will depend greatly upon the active
participation and the experience of its management. The loss of the services of
Yaron Eitan, the Company's Chief Executive Officer, could adversely affect the
conduct of the Company's business. In addition, the successful implementation
of the Company's business plan will depend, to a large extent, upon the ability
of the Company's and its subsidiaries' engineers and scientific personnel to
perfect and improve upon existing and proposed products. The loss of some or
all of such personnel, the inability of the Company to attract additional
personnel, or the inability of such persons to design such systems or to
continue product enhancement will directly inhibit the ability of the Company to
sell its products and services and to operate profitably.
INFLUENCE BY SIGNIFICANT STOCKHOLDERS; PREEMPTIVE RIGHTS
As of May 15, 1995, approximately 14.5 million shares, or 24.6% of the
total voting power of the Company's Common Stock (on a fully diluted basis but
without giving effect to the exercise of the options held by Vanguard Cellular
Systems, Inc. ("Vanguard")), were beneficially owned by the directors and
executive officers of the Company and their affiliates. Consequently,
the Company's directors and executive officers will be able to exert
significant influence with respect to all matters upon which stockholder
approval is required.
Of the amounts discussed above, 5,295,514 shares, or 9.3% of the Company's
Common Stock on a fully diluted basis, are beneficially owned by a group of
investors including George Soros (the "Soros Group"), whose affiliate, Purnendu
Chatterjee, is a director of the Company. In addition, as of May 15, 1995,
Vanguard owned 2.8 million shares or 5.4% of the Company's outstanding Common
Stock. However, assuming full exercise of the options held by Vanguard as of
such date, 12.8 million shares, or 20.8% of the Company's Common Stock on a
fully diluted basis, would be beneficially owned by Vanguard. With respect
to certain issuances of voting securities by the Company, Vanguard and the
Soros Group have the preemptive right to purchase voting securities of the
Company, at the same price and the same terms as the Company may offer to
third parties, in an amount sufficient to maintain Vanguard's or the Soros
Group's percentage interests, as applicable, in the voting securities of the
Company on a fully diluted basis.
Winston Churchill, the Chairman of the Board of the Company, Yaron Eitan,
the President and Chief Executive Officer of the Company, Evergreen Canada-
Israel Investment & Co., Ltd. ("Evergreen"), S-C Rig Investments-III, L.P., the
Soros Group's vehicle for investment in the Company ("S-C Rig"), and Vanguard
have agreed to vote their shares to elect a representative of each of Evergreen,
S-C Rig and Vanguard, respectively, to the Board of Directors of the Company
(although no representative of Evergreen currently is a member of the Board of
Directors). This obligation shall continue with respect to each of the parties
for so long as Vanguard, S-C Rig and Evergreen beneficially own at least
2,500,000, 2,500,000 and 1,000,000 shares of Common Stock, respectively. In the
event that the beneficial ownership of any such party drops below its designated
ownership level, then the agreement terminates with respect to such party only
and the agreement continues in full force and effect with respect to the
remaining parties thereto. Mr. Purnendu Chatterjee is the designated
representative of S-C Rig; and Mr. Haynes G. Griffin is the designated
representative of Vanguard. In addition, the Company has agreed, pursuant to an
agreement entered into in connection with the Company's acquisition of Metro Net
Systems, Inc. to use its best efforts to cause the election of Mr. Richard
Krants as a director of the Company through the 1996 fiscal year. The Company
has also agreed to use its best efforts to have Mr. Eitan elected as a member of
the Board of Directors during the term of his employment.
-12-
<PAGE>
PATENT ISSUES
The Company protects its proprietary information by way of confidentiality
and non-disclosure agreements with employees and third parties who may have
access to such information. The Company continually reviews its technology
developments in order to file patent applications and has filed patent
applications with respect to certain aspects of the FHMA-TM- technology and
GEONET-TM- in Israel and expects to file additional patent applications in
Israel and the United States. Generally, the Company intends to file all patent
applications in the United States and Israel and in such other countries as it
deems appropriate. There can be no assurance that such applications will be
granted. There can be no assurance that any patents issued will afford
meaningful protection against competitors with similar technology or that any
patents issued will not be challenged by third parties. There also can be no
assurance that others will not independently develop similar technologies,
duplicate the Company's technologies or design around the patented aspects of
any technologies developed by the Company. Many patents and patent applications
have been filed by third parties with respect to wireless communications
technology. The Company does not believe that its technology infringes on the
patent rights of third parties. However, there can be no assurance that certain
aspects of the Company's technology will not be challenged by the holders of
such patents or that the Company will not be required to license or otherwise
acquire from third parties the rights to use certain technology. The failure to
overcome such challenges or obtain such licenses could have a material adverse
effect on the Company's operations.
DIVIDENDS ON COMMON STOCK NOT LIKELY
The Company has not declared or paid any cash dividends on its Common Stock
since commencing operations and does not anticipate paying any dividends on its
Common Stock in the foreseeable future. At present, the Company is obligated to
pay, for a five-year period following the issuance of the Series H Preferred
Stock, cumulative dividends of $2,000,000 per year on the Series H Preferred
Stock, in cash, and, for a five-year period following the issuance of the Series
I Preferred Stock and Series K Preferred Stock, respectively, cumulative
dividends equaling $700,000 per year on the Series I Preferred Stock and
$700,000 per year on the Series K Preferred Stock, in cash or shares of Common
Stock of the Company, before any cash dividends may be paid on its Common Stock.
At present, the Company is current in payment of all required dividends on its
outstanding preferred stock. In addition, the terms of certain indebtedness
of the Company prohibit, during the term of such indebtedness, the declaration
or payment of any dividend on the Company's Common Stock (other than in shares
of such Common Stock).
SHARES OF COMMON STOCK RESERVED FOR ISSUANCE
As of May 15, 1995, the Company had an aggregate of approximately
51,400,000 issued and outstanding shares of Common Stock. In addition,
as of such date, the Company had reserved for issuance an aggregate of
approximately 29,000,000 shares of Common Stock issuable pursuant to (i)
outstanding vested and non-vested options, warrants and similar rights,
(ii) conversion of other outstanding equity securities of the Company
(including shares issuable upon conversion of the Company's preferred stock),
(iii) conversion of the Notes issued to the Selling Shareholders, and (iv)
contingent obligations to issue additional shares. Pursuant to the Company's
Restated Certificate of Incorporation, the Company currently has 86,000,000
authorized shares of Common Stock. The Company has included in its Proxy
Statement to be delivered to shareholders in connection with its 1995 annual
meeting of shareholders, a proposal that the shareholders of the Company
approve an amendment to the Restated Certificate of Incorporation which would
increase the authorized number of shares of Common Stock to 99,000,000, and
a proposal that the shareholders of the Company approve an increase in the
number of shares issuable under the Company's employee stock option plan
by 1,750,000 shares. Subject to certain limitations, the persons holding
such options, warrants and convertible securities may obtain the shares of
Common Stock underlying such options, warrants and convertible
-13-
<PAGE>
securities at any time. The issuance of a large number of shares of Common
Stock would dilute the percentage interest of other existing stockholders of the
Company.
SHARES OF COMMON STOCK ELIGIBLE FOR SALE
The Company has in the past registered for offer and sale under the
Securities Act certain of the issued and outstanding shares of Common Stock and
certain of the shares of Common Stock issuable upon the exercise or conversion,
as applicable, of outstanding options, warrants and convertible securities held
by the Company's stockholders, including certain officers, directors, employees
and "affiliates" of the Company (as such term is defined pursuant to the
Exchange Act). The sale of such shares would have been subject to substantial
limitations in the absence of such registration. A substantial number of such
shares may still be held by the registered holders thereof and available for
resale under currently effective registration statements. In addition, certain
stockholders of the Company hold the right (subject to certain conditions) to
require that the Company register for offer and sale issued and outstanding
shares of Common Stock and/or shares of Common Stock issuable upon the exercise
or conversion, as applicable, of options, warrants and convertible securities.
Sales of substantial amounts of such shares could adversely affect the market
value of the Common Stock and, in the case of convertible securities, may effect
a dilution of the book value per share of Common Stock, depending upon the
timing of any such sales.
TRANSACTIONS WITH AFFILIATES
During the period since its inception, the Company has undertaken a wide
variety of financing and merger/acquisition activity which has resulted in its
present corporate and financial structure. Included in such activity have been
transactions which have involved persons who now serve, or who did serve at the
time, as directors and officers of the Company or persons or entities related to
such persons. In every instance where such transactions have involved any such
persons or entities, the specific transaction has been approved unanimously by
directors of the Company, including all disinterested and outside directors,
with the affected parties abstaining. It is the Company's view that each such
transaction has been on terms no less favorable to the Company than other
similar transactions available to the Company with unaffiliated parties, if
available at all. In most of such instances, such transactions have been the
Company's only recourse to meet financing needs and/or business goals. Despite
the foregoing, prospective purchasers may wish to consider the circumstances in
which such transactions were made, the terms of such transactions and the
Company's possible alternative courses of action.
-14-
<PAGE>
SELLING SHAREHOLDERS
AND RELATED INFORMATION
On March 30, 1995, pursuant to a Note and Warrant Purchase Agreement dated
as of March 20, 1995, the Company consummated a private transaction pursuant to
which it issued and sold to the Selling Shareholders the Notes and five-year
warrants to purchase 700,000 shares of Common Stock at an exercise price of
$8.125 per share (the "New Warrants"). The aggregate gross proceeds to the
Company from the issuance and sale of the Notes and New Warrants was
$36,000,000, less $25,000,000, plus accrued and unpaid interest thereon, used by
the Company to retire certain senior secured notes, having an aggregate
principal amount of $25,000,000, that were issued and sold by the Company to the
Selling Shareholders in June 1994 (the "Old Notes'). In connection with the
issuance and sale of the Old Notes, the Company issued to the Selling
Shareholders five-year warrants to purchase 300,000 shares of Common Stock at an
exercise price of $7.875 per share (the "Old Warrants"). The shares of Common
Stock issuable by the Company upon the exercise of the New Warrants and Old
Warrants have been collectively defined herein as the "Warrant Shares."
The Notes bear interest at the rate of 14.75% per annum, payable quarterly
until maturity. During each four month period beginning September 30, 1995,
February 1, 1996 and June 1, 1996, up to $12,000,000 of the Notes (but no more
than $250,000 on any one day) may be converted, from time to time, by the
Selling Shareholders into shares of Common Stock at a conversion price equal to
87.5% of the weighted average of the sale prices of the Common Stock on the
trading day next preceding the date of conversion. The Company may prepay the
Notes at any time for an aggregate amount equal to the outstanding principal
amount thereof, plus (i) an amount equal to the total amount of interest payable
to maturity less the aggregate amount of interest theretofore paid with respect
to the Notes and (ii) such number of warrants as will allow the holder to
maintain its ability to acquire Note Shares as if the Notes remained
outstanding.
The Selling Shareholders are listed below. Included below concerning each
Selling Shareholder is the total amount and percentage of the Company's Common
Stock beneficially owned by such person, the amount subject to sale hereunder
and the resulting amount and percentage if all Shares offered hereby which are
owned by such person or entity are sold. Except as described herein, neither of
the Selling Shareholders has held any position or office, or had any other
material relationship with the Company during the past three years.
<TABLE>
<CAPTION>
PRE-OFFERING(1)(2) POST-OFFERING(3)
------------------ ----------------
TOTAL TOTAL
NUMBER NUMBER
OF SHARES OF SHARES
BENEFICIALLY PERCENTAGE SHARES BENEFICIALLY PERCENTAGE
SELLING SHAREHOLDERS OWNED OF CLASS (4) OFFERED OWNED OF CLASS(4)
- -------------------- ------------ ------------ ------- ------------ ------------
<S> <C> <C> <C> <C> <C>
The SC Fundamental 4,106,783 7.40% 4,106,783 0 0
Value Fund, L.P. (5)
SC Fundamental Value 2,201,973 4.11% 2,201,973 0 0
BVI, Ltd. (6)
<FN>
- ----------------
-15-
<PAGE>
(1) Beneficial ownership figures include all Common Stock represented by shares
of issued and outstanding Common Stock as well as shares of Common Stock
issuable upon exercise or conversion of outstanding warrants, options and
convertible securities, including shares of Common Stock issuable upon
exercise of the New Warrants and Old Warrants and upon conversion of the
Notes. Neither of the Selling Shareholders beneficially owns any Common
Stock other than the Note Shares and the Warrant Shares.
(2) Assumes the full conversation of the Notes in the aggregate principal
amount of $36,000,000 at a conversion price equal to 87.5% of the weighted
average of the sale prices of the Common Stock as reported on the NNM on
May 22, 1995 ($7.75 per share), or 5,308,756 shares of Common Stock.
(3) Assumes the sale of all Shares offered by this Prospectus by each Selling
Shareholder to third parties unaffiliated with the Selling Shareholders.
(4) These percentages are calculated in accordance with Section 13(d) of the
Securities Exchange Act of 1934, as amended, and the rules promulgated
thereunder, without giving effect to the 60 day limitation regarding
conversion or exercise of convertible securities and warrants.
(5) Represents 3,445,383 Note Shares and 661,400 Warrant Shares.
(6) Represents 1,863,373 Note Shares and 338,600 Warrant Shares.
</TABLE>
LEGAL MATTERS
The validity of the Shares of Common Stock offered hereby will be passed upon by
Klehr, Harrison, Harvey, Branzburg & Ellers, Philadelphia, Pennsylvania. Such
firm and certain partners of such firm beneficially own, in the aggregate,
135,363 shares of the Company's Common Stock.
-16-
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
No person is authorized to give any information or to make any representation
not contained or incorporated by reference in this Prospectus, and if given or
made, such information or representation must not be relied upon as having been
authorized by the Company. Neither the delivery of this Prospectus nor any sale
made hereunder shall, under any circumstances, create any implication that there
has been no change in the facts set forth in this Prospectus or in the affairs
of the Company since the date hereof. This Prospectus does not constitute an
offer to sell or a solicitation of an offer to buy any securities other than
those to which it relates or an offer to sell or a solicitation of an offer to
buy any securities in any jurisdiction in which such offer or solicitation is
not authorized, or in which the person making such offer or solicitation is not
qualified to do so, or to any person to whom it is unlawful to make such an
offer or solicitation in such jurisdiction.
TABLE OF CONTENTS
PAGE
----
Additional Information . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Incorporation of Certain Information
by Reference . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Selling Shareholders and Related
Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Legal Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
GEOTEK COMMUNICATIONS, INC.
ISSUANCE AND SALE OF UP TO
$36,000,000 OF COMMON STOCK
AND
RESALE BY SELLING SHAREHOLDERS
OF UP TO $36,000,000 OF COMMON
STOCK AND 1,000,000 SHARES OF
COMMON STOCK
___________________________________
PROSPECTUS
MAY 26, 1995
___________________________________
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
Set forth below is an itemized statement of all expenses incurred or to be
incurred in connection with the issuance and distribution of the securities to
be registered:
<TABLE>
<S> <C>
Registration fee* . . . . . . . . . . . . . . . . . . . $15,086.20
Blue sky filing fees and expenses . . . . . . . . . . . 5,000.00
Transfer agent and registration fee . . . . . . . . . . 1,000.00
Printing and mailing expenses . . . . . . . . . . . . . 5,000.00
Legal fees and expenses . . . . . . . . . . . . . . . . 20,000.00
Accounting fees and expenses. . . . . . . . . . . . . . 7,500.00
Miscellaneous . . . . . . . . . . . . . . . . . . . . . 5,000.00
Total . . . . . . . . . . . . . . . . . . . . . . . $58,586.20
<FN>
____________________
*Exact; all other fees and expenses are estimates.
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
A. The Delaware Corporation Law provides that, to the extent that any
director, officer, employee or agent of the Company has been successful on the
merits or otherwise in defense of any action, suit or proceeding, whether civil,
criminal, administrative or investigative (including an action by or in the
right of the Company) which he was a party to by reason of the fact that he is
or was a director, officer, employee or agent of the Company or is or was
serving at the request of the Company as a director, officer, employee or agent
of another corporation, partnership, joint venture, trust or other enterprise,
the Company shall indemnify any such person against expenses (including
attorneys' fees) actually and reasonably incurred by him in connection
therewith.
B. In addition, the Company has the power to indemnify any of the persons
referred to above in connection with any such actions against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred in connection with any such actions, suit or
proceeding, if such person acted in good faith and in a manner he reasonably
believed to be or not opposed to the best interests of the Company, and, with
respect to any criminal action or proceeding, had no reasonable cause to believe
his conduct was unlawful.
Notwithstanding the foregoing, in connection with any action or suit by or
in the right of the Company to procure a judgment in its favor, the Company
shall not make any indemnification as described above in respect of any claim,
issue or matter as to which such person shall have been adjudged to be liable to
the Company unless or only to the extent that the Court of Chancery (in the
State of Delaware) or the court in which such action or suit was brought shall
determine, upon application, that, despite adjudication of liability but in view
of all the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which the Court of Chancery or such
other court shall deem proper.
C. The Company also has the power, under the Delaware Corporation Law, to
purchase and maintain insurance on behalf of any person who is or was a
director, officer, employee or agent of the Company, or is or was serving at the
request of the Company as a director, officer, employee or agent of another
corporation,
II-1
<PAGE>
partnership, joint venture, trust or other enterprise against any other
liability asserted against him and incurred by him in any such capacity, or
arising out of his status as such, whether or not the Company would have the
power to indemnify him against such liability under the provisions of this
Section.
D. The indemnification provided by or allowable pursuant to the Delaware
Corporation Law shall or may, as applicable, continue as to a person who has
ceased to be a director, officer, employee or agent of the Company and shall
inure to the benefit of the heirs, executors and administrators of such a
person.
ITEM 16. EXHIBITS
The following documents are filed as a part of this Registration Statement.
(Exhibit numbers correspond to the exhibits required by Item 601 of Regulation
S-K for a Registration Statement on Form S-3.)
(a) Exhibits
EXHIBIT NO.
2.1 Stock Purchase Agreement, dated as of November 1, 1993, by and between
the Company and S-C Rig Investments-III, L.P.(1)
2.2 Stock Purchase Agreement, dated as of December 29, 1993, by and
between the Company and Vanguard Cellular Systems, Inc. and its
affiliates ("Vanguard"), regarding the sale of up to an aggregate of
12.5 million shares of the Company's Common Stock.(2)
2.3 Notarial Deed and Share Purchase Agreement, dated May 26, 1994, by and
between Preussag Mobilfunk GmbH and Geotek Communications GmbH, a
wholly-owned subsidiary of the Company. (3)
2.4 Notarial Deed and Share Purchase Agreement, dated July 6, 1994, by and
between Quante A.G., on the one hand, and Geotek Communications GmbH
and Geotek Beteiligungs GmbH, wholly-owned subsidiaries of the
Company, on the other hand.(4)
*2.5 Stock Purchase Agreement, dated as of April 6, 1995, by and between
the Company and European Gateway Acquisition Corp., regarding the sale
of the Company's interest in Bogen Corporation and Speech Design GmbH,
as amended.
4.1 Restated Certificate of Incorporation of the Company, as amended.(5)
4.2 Certificate of Designation of Series H Participating Cumulative
Convertible Preferred Stock.(2)
4.3 Certificate of Designation of Series I Cumulative Convertible
Preferred Stock.(5)
*4.4 Certificate of Designation of Series K Cumulative Convertible
Preferred Stock.
II-2
<PAGE>
_____________________________
* Filed herewith.
II-3
<PAGE>
4.5 1989 Employee Stock Option Plan, as amended, of the Company.(6)
4.6 1994 Employee Stock Option Plan of the Company.(7)
4.7 Certificate of Amendment of the Restated Certificate of Incorporation
of the Company filed February 26, 1993.(8)
4.8 Certificate of Amendment of the Restated Certificate of Incorporation
of the Company filed February 16, 1994.(5)
4.9 Note and Warrant Purchase Agreement, dated as of June 15, 1994, by and
among Geotek Communications, Inc., The SC Fundamental Value Fund, L.P.
and SC Fundamental Value BVI, Ltd.(9)
4.10 Pledge Agreement, dated as of June 15, 1994, by and among Geotek
Communications, Inc., Geotek Acquisition Corp., Geotek Subsidiary
Industries, Inc., Bogen Corporation, U.S.I. Venture Corp. and SC
Fundamental Inc., as agent for The SC Fundamental Value Fund, L.P. and
SC Fundamental Value BVI, Ltd.(9)
4.11 Senior Secured Note, dated June 20, 1994, from the Company in
connection with the Note and Warrant Purchase Agreement referenced in
Exhibit 4.9 hereof.(9)
4.12 Senior Secured Note, dated June 20, 1994, from the Company in
connection with the Note and Warrant Purchase Agreement referenced in
Exhibit 4.9 hereof.(9)
4.13 Warrant Certificate issued in connection with the Note and Warrant
Purchase Agreement referenced in Exhibit 4.9 hereof dated June 20,
1994.(9)
4.14 Warrant Certificate issued in connection with the Note and Warrant
Purchase Agreement referenced in Exhibit 4.9 hereof dated June 20,
1994.(9)
4.15 Note and Warrant Purchase Agreement, dated as of March 20, 1995, by
and among the Company, The SC Fundamental Value Fund, L.P. and SC
Fundamental Value BVI, Ltd.(7)
4.16 Pledge Agreement, dated as of March 30, 1995, by and among the
Company, certain of its subsidiaries and SC Fundamental Inc., as agent
for and on behalf of The SC Fundamental Value Fund, L.P. and SC
Fundamental Value BVI, Ltd.(7)
4.17 Senior Secured Convertible Note, dated March 30, 1995, from the
Company in connection with the Note and Warrant Purchase Agreement
referenced in Exhibit 4.15 hereof.(7)
4.18 Senior Secured Convertible Note, dated March 30, 1995, from the
Company in connection with the Note and Warrant Purchase Agreement
referenced in Exhibit 4.15 hereof.(7)
4.19 Warrant Certificate issued in connection with Note and Warrant
Purchase Agreement referenced in Exhibit 4.15 hereof dated
March 30, 1995.(7)
II-4
<PAGE>
4.20 Warrant Certificate issued in connection with Note and Warrant
Purchase Agreement referenced in Exhibit 4.15 hereof dated
March 30, 1995.(7)
*5 Opinion of Klehr, Harrison, Harvey, Branzburg & Ellers.
10.1 Stockholders Voting Agreement, dated as of February 23, 1994, among
the Company, Vanguard Cellular Systems, Inc., S-C Rig Investments III,
L.P., Evergreen Canada-Israel Investment & Co., Ltd., Yaron Eitan and
Winston Churchill.(5)
10.2 Asset Exchange Agreement, dated as of March 24, 1995, by and between
the Company, Metro Net Systems, Inc., NEXTEL Communications, Inc. and
certain NEXTEL subsidiaries.(7)
10.3 FHMA-TM- Commercial Subscriber Unit Agreement, dated as of June 8,
1994, by and between the Company and Mitsubishi Consumer Electronics
America, Inc.(10)
10.4 FHMA-TM- Portable Subscriber Unit Agreement, dated as of May 19, 1995,
by and between the Company and Hughes Network Systems, Inc.(10)
*23.1 Consent of Coopers & Lybrand - Geotek Communications, Inc.
*23.2 Consent of Shachak & Co. -
PowerSpectrum Technology Ltd.
Consent of Shachak & Co. -
Oram Power Supplies (1990) Ltd.
Consent of Shachak & Co. -
Oram Electric Industries Ltd.
*23.3 Consent of Touche Ross & Co. -
National Band Three Limited and predecessor companies
*23.4 Consent of KPMG -
Band Three Radio Limited
*23.5 Consent of Coopers & Lybrand GmbH -
Preussag Bundelfunk GmbH
*23.6 Consent of Dusseldorfer Treuhand-Gesellschaft Altenburg & Tewes
AG -
DBF Bundelfunk GmbH & Co. Betriebs-KG
23.7 Consent of Klehr, Harrison, Harvey, Branzburg & Ellers (included in
Exhibit 5)
24 Power of Attorney regarding amendment of this Registration Statement
appears on the signature page to the originally filed Registration
Statement to which this Amendment No. 1 relates.
____________________________
* Filed herewith.
II-5
<PAGE>
(1) Incorporated by reference to the Exhibits to the Company's Current Report
on Form 8-K with respect to events whose earliest date was November 1,
1993.
(2) Incorporated by reference to the Exhibits to Amendment No. 1 to the
Company's Registration Statement on Form S-3 (Registration No. 33-72820)
filed with the Commission on January 25, 1994.
(3) Incorporated by reference to the Exhibits to the Company's Current Report
on Form 8-K dated July 5, 1994.
(4) Incorporated by reference to the Exhibits to the Company's Current Report
on Form 8-K dated August 2, 1994.
(5) Incorporated by reference to the Exhibits to the Company's Annual Report on
Form 10-K for the year ended December 31, 1993.
(6) Incorporated by reference to the Exhibits to the Company's Registration
Statement on Form S-3 (Registration No. 33-72820) filed with the Commission
on December 10, 1993.
(7) Incorporated by reference to the Exhibits to the Company's Annual Report on
Form 10-K for the year ended December 31, 1994.
(8) Incorporated by reference to the Exhibits to Post-Effective Amendment No. 2
to the Company's Registration Statement on Form S-1 (Registration No. 33-
42185) filed with the Commission on August 27, 1993.
(9) Incorporated by reference to the Exhibits to the Company's Current Report
on Form 8-K dated June 1, 1994.
(10) To be filed by amendment.
II-6
<PAGE>
ITEM 17. UNDERTAKINGS.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling-person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person of the registrant in the successful
defense of any action, suit or proceeding) is asserted by such director, officer
or controlling person of the registrant in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
A. The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement to include any
material information with respect to the plan of distribution not previously
disclosed in the registration statement or any material change to such
information in the registration statement;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
B. The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
II-7
<PAGE>
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 Form S-3 and has duly caused this
Amendment No. 1 to the Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Montvale, New Jersey, on the 19th of
May, 1995.
GEOTEK COMMUNICATIONS, INC.
By: /s/ Yaron I. Eitan
---------------------------------------
Yaron I. Eitan
President, Chief Executive Officer and Director
Pursuant to the requirements of the Securities Act of 1933, this
Amendment No. 1 to the Registration Statement has been duly signed below by the
following persons in the capacities and on the dates indicated.
SIGNATURES TITLE DATE
- --------- ----- ----
* Chairman of the May 19, 1995
- ----------------------------- Board; Director
Winston J. Churchill
/s/ Yaron I. Eitan President and Chief May 19, 1995
- ----------------------------- Executive Officer
Yaron I. Eitan (Principal Executive
Officer); Director
/s/ Yoram Bibring Executive Vice May 19, 1995
- ----------------------------- President, Chief
Yoram Bibring Financial Officer
and Chief Operating
Officer (Principal
Financial and
Accounting Officer)
* Director May 19, 1995
- -----------------------------
Walter E. Auch
* Director May 19, 1995
- -----------------------------
Jacob Burak
* Director May 19, 1995
- -----------------------------
George Calhoun
<PAGE>
SIGNATURES TITLE DATE
- --------- ----- ----
- ----------------------------- Director ________, 1995
Purnendu Chatterjee
* Director May 19, 1995
- -----------------------------
Haynes G. Griffin
* Director May 19, 1995
- -----------------------------
Richard Krants
- ----------------------------- Director ________, 1995
Haim Rosen
* Director May 19, 1995
- -----------------------------
Kevin W. Sharer
* Director May 19, 1995
- -----------------------------
William Spier
*An original Power of Attorney authorizing Yaron I. Eitan and Yoram Bibring, and
each of them, to sign any amendment to this Registration Statement on behalf of
certain officers and directors of the Registrant was included with the signature
pages to the originally filed Registration Statement to which this Amendment
No. 1 relates.
By: Yoram Bibring
-------------------------------
Yoram Bibring, Attorney-In-Fact
<PAGE>
EXHIBIT INDEX
PAGE NO. IN
SEQUENTIALLY
EXHIBIT NO. NUMBERED SYSTEM
- ---------- ---------------
2.5 Stock Purchase Agreement, dated as of April 6, 1995,
by and between the Company and European Gateway
Acquisition Corp., regarding the sale of the Company's
interest in Bogen Corporation and Speech Design GmbH,
as amended
4.4 Certificate of Designation of Series K Cumulative
Convertible Preferred Stock
5 Opinion of Klehr, Harrison, Harvey, Branzburg & Ellers
23.1 Consent of Coopers & Lybrand - Geotek Communications, Inc.
23.2 Consent of Shachak & Co. -
PowerSpectrum Technology Ltd.
Consent of Shachak & Co. -
Oram Power Supplies (1990) Ltd.
Consent of Shachak & Co. -
Oram Electric Industries Ltd.
23.3 Consent of Touche Ross & Co. -
National Band Three Limited and predecessor companies
23.4 Consent of KPMG -
Band Three Radio Limited
23.5 Consent of Coopers & Lybrand GmbH -
Preussag Bundelfunk GmbH
23.6 Consent of Dusseldorfer Treuhand-Gesellschaft Altenburg & Tewes
AG -
DBF Bundelfunk GmbH & Co. Betriebs-KG
<PAGE>
STOCK PURCHASE AGREEMENT
BY AND BETWEEN
GEOTEK COMMUNICATIONS, INC.
AND
EUROPEAN GATEWAY ACQUISITION CORP.
APRIL 6, 1995
<PAGE>
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (this "Agreement") dated April 6, 1995
by and between Geotek Communications, Inc., a Delaware corporation ("Seller"),
and European Gateway Acquisition Corp., a Delaware corporation ("Buyer").
Seller desires to sell to Buyer all of Seller's direct and indirect
ownership interest in the capital stock of each of Bogen Corporation, a Delaware
Corporation ("Bogen"), and Speech Design Gmbh, a German corporation ("Speech
Design"), and Buyer desires to purchase all of such interest upon the terms and
subject to the conditions set forth herein.
Accordingly, the parties hereto, intending to be legally bound hereby,
agree as follows:
Article 1. DEFINITIONS.
1.1 DEFINITIONS.
"Actual Knowledge" means those matters which are actually known by the
person to whom such phrase relates and those matters which such person
reasonably would have known or reasonably should have known if he had made due
inquiry with regard to such matters.
"Additional Base Payments" shall have the meaning set forth in Section
2.5 hereof.
"Adjusted Base Amount" shall mean the product of (i) the Adjusted
Value, and (ii) a fraction, (x) the numerator of which is the total number of
shares of Buyer Common Stock, other than shares owned by Seller, issued and
outstanding as of the date on which the determination is being made, and (y) the
denominator of which is the total number of shares of Buyer Common Stock issued
and outstanding as of such date (assuming, in each case, that all convertible
securities, options, warrants and similar rights outstanding as of such date
which are then convertible or exercisable into shares of Buyer Common Stock,
other than Buyer Warrants, have been so converted or exercised).
"Adjusted Value" shall mean the product of (i) the Adjustment Income,
and (ii) three; PROVIDED, HOWEVER, in no case shall the Adjusted Value be
greater than $60,000,000.
"Adjustment Income" shall mean a positive dollar amount, if any, equal
to the sum of the Pre-Tax Income of Bogen and the Pre-Tax Income of Speech
Design for the period from July 1, 1995 through June 30, 1997, as reflected on
the Adjustment Income Statements; PROVIDED, HOWEVER, in the event that the sum
of the Pre-Tax Income of Bogen and the Pre-Tax Income of Speech Design for the
period from July 1, 1996 through June 30, 1997 is ten percent (10%) or more
below the Pre-Tax Income of Bogen and the Pre-Tax Income of Speech Design for
the period from July 1, 1995 through June 30, 1996, the Adjustment Income shall
mean the positive dollar amount, if any, equal to the product of (i) the Pre-Tax
Income of Bogen and the Pre-Tax Income of Speech Design for the period from July
1, 1996 through June 30, 1997 and (ii) two. For purposes of the determination
of Adjustment Income, the Pre-Tax Income of Bogen and Speech Design shall be
multiplied by the Bogen Percentage Ownership and the Speech Design Percentage
Ownership, respectively. If the calculation of Adjustment Income does not yield
a positive dollar amount, Adjustment Income shall be deemed to be zero.
"Adjustment Income Statements" shall have the meaning set forth in
Section 2.4(a) hereof.
"Adjustment Payment Date" shall have the meaning set forth in Section
2.4(g) hereof.
"Bogen" shall mean Bogen Corporation, a Delaware corporation.
"Bogen Base Amount" shall mean the product of (i) the Initial Cash
Payment and (ii) a fraction (x) the numerator of which is the Bogen Book Value
and (y) the denominator of which is the sum of the Bogen Book Value and the
Speech Design Book Value.
"Bogen Book Value" shall mean a dollar amount equal to the product of
(i) the net book value of Bogen as reflected on the Closing Date Balance Sheets
and (ii) the Bogen Percentage Ownership.
"Bogen Common Stock" shall mean shares of the common stock, $.01 par
value per share, of Bogen.
"Bogen Debt" shall have the meaning set forth in Section 4.3 hereof.
<PAGE>
"Bogen Percentage Ownership" shall mean a fraction, expressed as a
percentage, (i) the numerator of which is the number of Bogen Shares and (ii)
the denominator of which is the total number of issued and outstanding shares of
Bogen Common Stock as of the Closing Date.
"Bogen Permitted Liens" shall have the meaning set forth in Section
3.2(c) hereof.
"Bogen Shares" shall mean all shares of Bogen Common Stock which
Seller beneficially owns, directly or indirectly, as of the date hereof and all
additional shares of Bogen Common Stock which Seller, directly or indirectly,
acquires pursuant to Section 4.10 or otherwise from and after the date hereof
and prior to the Closing Date, which shares shall constitute not less than 99%
of the issued and outstanding shares of Bogen Common Stock as of the Closing
Date.
"Buyer" shall mean European Gateway Acquisition Corp., a Delaware
corporation.
"Buyer Common Stock" shall mean shares of common stock, $.001 par
value per share, of Buyer.
"Buyer Obligation" shall have the meaning set forth in Section 2.4(c)
hereof.
"Buyer Private Placement" shall have the meaning set forth in Section
4.2(a) hereof.
"Buyer's Trust Fund" shall mean the trust account in which the
proceeds of Buyer's initial public offering are held, together with all interest
thereon, in accordance with Buyer's Certificate of Incorporation.
"Buyer Voting Stock" shall have the meaning set forth in Section
4.6(b) hereof.
"Buyer Warrants" shall have the meaning set forth in Section 2.5
hereof.
"Closings" shall mean, collectively, the First Closing and the Second
Closing.
"Closing Date" shall mean the date upon which the First Closing and
the Second Closing occur.
"Closing Date Balance Sheets" shall mean, collectively, the balance
sheets of each of Bogen and Speech Design dated as of the Closing Date, which
shall be prepared by each of Bogen and Speech Design and shall be subject to the
review and approval of all parties hereto.
"Closing Price" shall mean for any security, for each day, the last
reported sales price on that day or, if no such reported sale takes place on
such day, the reported closing bid price, in either case as reported in the
principal consolidated transaction reporting system for the United States
national securities exchange or the National Association of Securities Dealers,
Inc. Automated Quotation System ("NASDAQ") market on which such security is
admitted to trading or listed, or if not so admitted to trading or listed, the
last quoted bid price or, if not quoted, the average of the high bid and the low
asked prices in the over-the-counter market as reported by NASDAQ or such other
system then in use.
"Extraordinary Items" shall have the meaning ascribed to such term in
accordance with United States generally accepted accounting principles
including, without limitation, the provision thereof which limits Extraordinary
Items to items which possess a high degree of abnormality and would not be
reasonably expected to recur in the foreseeable future.
"First Closing" shall have the meaning set forth in Section 2.7
hereof.
"Initial Base Amount" shall mean the sum of the Speech Design Base
Amount and the Bogen Base Amount, which sum is equal to the Initial Cash
Payment.
"Initial Cash Payment" shall mean a dollar amount equal to (i) the sum
of (x) the amount of Buyer's Trust Fund as of the Closing Date and (y) the net
cash proceeds of the Buyer Private Placement, if any, less (ii) the expenses
incurred by Buyer in connection with the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby,
including, without limitation the Buyer Private Placement; PROVIDED, HOWEVER,
such amount shall not be greater than $10,000,000.
"Initial Stock Price" shall mean the least of (i) $5.50, (ii) the
Closing Price of shares of Buyer Common Stock on the Trading Day immediately
preceding the Closing Date; and (iii) such price per share of Buyer Common Stock
as will result in the satisfaction of the proviso set forth in Section 2.2.
"Liens" shall have the meaning set forth in Section 5.1(g) hereof.
-2-
<PAGE>
"Material Adverse Effect" shall mean a material adverse effect on the
operations, properties or financial condition of a party and its subsidiaries
taken as a whole.
"New Securities" shall have the meaning set forth in Section 4.6(c)
hereof.
"Option Agreement" shall mean that certain Option Agreement dated 16th
of February, 1993 by and among Seller and certain other persons.
"Option Compensation" shall mean a number of shares of Buyer Common
Stock equal to the quotient obtained by dividing (i) the product of (x) the
number of shares of Seller Common Stock issued or issuable in connection with
the exercise of the Option Agreement and (y) the average Closing Price of Seller
Common Stock for the 20 Trading Days immediately preceding the date such shares
of Seller Common Stock are issuable, by (ii) the average Closing Price of Buyer
Common Stock for the 20 Trading Days immediately preceding the date such shares
of Seller Common Stock are issuable; PROVIDED, HOWEVER, in the event that the
average Closing Price of Buyer Common Stock for such 20 Trading Days is less
than $1.00, Option Compensation shall mean a dollar amount equal to the product
of (i) the number of shares of Seller Common Stock issuable in connection with
the exercise of the Option Agreement and (ii) the average Closing Price of
Seller Common Stock for the 20 Trading Days immediately preceding the date such
shares of Seller Common Stock are issuable.
"Preemptive End Date" shall have the meaning set forth in Section
4.6(a) hereof.
"Pre-Tax Income" shall mean the sum of (i) income before income taxes,
Extraordinary Items and cumulative effects of accounting charges, (ii) an amount
equal to all amortization, charges and expenses reflected on the Adjustment
Income Statements which were incurred by Buyer in connection with the execution
and delivery of this Agreement or the consummation of the transactions
contemplated hereby, and (iii) an amount equal to the aggregate compensation
paid by Buyer to Yoav Stern and Joram D. Rosenfeld from July 1, 1995 through
June 30, 1997; all as calculated in accordance with generally accepted
accounting principles applied on a consistent basis.
"Registration Statement" shall have the meaning set forth in Section
4.11(b) hereof.
"Second Closing" shall have the meaning set forth in Section 2.7
hereof.
"Seller" shall mean Geotek Communications, Inc., a Delaware
corporation and its affiliates which own shares of Bogen Common Stock.
"Seller Common Stock" shall mean shares of the common stock, $.01 par
value per share of Seller.
"Seller Obligation" shall have the meaning set forth in Section 2.4(c)
hereof.
"Shares" shall mean, collectively, the Bogen Shares and the Speech
Design Shares.
"Speech Design" shall mean Speech Design Gmbh, a German corporation.
"Speech Design Base Amount" shall mean the product of (i) the Initial
Cash Payment and (ii) a fraction (x) the numerator of which is the Speech Design
Book Value and (y) the denominator of which is the sum of the Speech Design Book
Value and the Bogen Book Value.
"Speech Design Book Value" shall mean a dollar amount equal to the
product of (i) the net book value of Speech Design as reflected on the Closing
Date Balance Sheet, and (ii) the Speech Design Percentage Ownership.
"Speech Design Shares" shall mean shares of Speech Design Capital
Stock having an aggregate nominal value of DM 1,279,600 which Seller, directly
or indirectly, owns as of the date hereof.
"Speech Design Capital Stock" shall mean shares of the capital stock
of Speech Design, all of which such shares have an aggregate nominal value of DM
1,960,000.
"Speech Design Percentage Ownership" shall mean a fraction expressed
as a percentage, (i) the numerator of which is the number of Speech Design
Shares, and (ii) the denominator of which is the total number of issued and
outstanding shares of Speech Design Capital Stock as of the Closing Date.
"Tax" or "Taxes" shall have the meaning set forth in Section 4.16(g)
hereof.
-3-
<PAGE>
"Tax Returns" shall have the meaning set forth in Section 4.16(g)
hereof.
"Trading Day" shall mean, for any security, any day on which trades
are made or quotations posted on the principal securities exchange or
consolidated transaction reporting system for the NASDAQ market or quotation
system on which such security is admitted to trading, listed or quoted.
"Voting Agreement" shall have the meaning set forth in Section 4.7(e)
hereof.
Article 2. PURCHASE AND SALE.
2.1 PURCHASE AND SALE OF SHARES. (a) Upon the terms and
subject to the conditions set forth herein, at the First Closing Seller shall
sell and transfer to Buyer, and Buyer shall purchase from Seller, the Speech
Design Shares.
(b) Upon the terms and subject to the conditions set forth
herein, at the Second Closing Seller shall sell and transfer to Buyer, and Buyer
shall purchase from Seller, the Bogen Shares.
2.2 INITIAL CONSIDERATION. (a) The aggregate consideration
payable to the Seller at the First Closing for the Speech Design Shares shall be
(i) a dollar amount equal to the Speech Design Base Amount, and (ii) an amount
of newly issued shares of Buyer Common Stock equal to the quotient obtained by
dividing the Speech Design Book Value by the Initial Stock Price; and
(b) The aggregate consideration payable to Seller at the
Second Closing for the Bogen Shares shall be (i) a dollar amount equal to the
Bogen Base Amount, and (ii) an amount of newly issued shares of Buyer Common
Stock equal to the quotient obtained by dividing the Bogen Book Value by the
Initial Stock Price;
PROVIDED, HOWEVER, the shares of Buyer Common Stock issuable to
Seller pursuant to Sections 2.2(a)(ii) and 2.2(b)(ii) shall constitute not less
than fifty-one percent (51%) of the issued and outstanding shares of Buyer
Common Stock immediately following the Closing.
2.3 PAYMENT AND DELIVERY OF INITIAL CONSIDERATION. (a) At the
First Closing, Buyer shall (i) deliver an amount equal to the Speech Design Base
Amount, by wire transfer of immediately available funds to an account specified
by Seller, and (ii) deliver to Seller a certificate representing the number of
shares of Buyer Common Stock issuable to Seller in accordance with Section
2.2(a)(ii) above.
(b) At the Second Closing, Buyer shall (i) deliver an
amount equal to the Bogen Base Amount, by wire transfer of immediately available
funds to an account specified by Seller, and (ii) deliver to Seller a
certificate representing the number of shares of Buyer Common Stock issuable to
Seller in accordance with Section 2.2(b)(ii) above.
2.4 ADJUSTMENT OF BASE AMOUNT.
(a) Buyer shall calculate and prepare in accordance with
generally accepted accounting principles applied in a manner consistent with the
application of those principles in Buyer's audited financial statements, income
statements for each of Bogen and Speech Design for the twelve month period July
1, 1995 through June 30, 1996 and for the twelve month period July 1, 1996
through June 30, 1997 (the "Adjustment Income Statements") which include line
items for the Pre-Tax Income for each of Bogen and Speech Design.
(b) Buyer shall engage, at its sole expense, a big six
accounting firm (which firm may be Buyer's regular auditors) to conduct a
limited review of the Adjustment Income Statements and Buyer shall deliver to
Seller, as soon as practicable after June 30, 1997 but not later than September
30, 1997, the Adjustment Income Statements (as modified in accordance with such
accounting firm's recommendations) together with such accounting firm's report
thereon stating that it is not aware of any material modification that should be
made to the Adjustment Income Statements for such statements to be in conformity
with generally accepted accounting principles applied in a manner consistent
with the application of those principles in the preparation of Buyer's audited
financial statements. The Adjustment Income Statements and the related
accountants' report as so delivered shall be final and binding on the parties.
(c) On October 15, 1997, or such later date as provided for
in Section 2.4(g) below, (i) Buyer shall deliver to Seller, by wire transfer of
immediately available funds to an account specified by Seller, or by delivery of
a number of shares of Buyer Common Stock calculated pursuant to Section 2.4(d),
or a combination thereof, the amount, if any, by which the Adjusted Base Amount
exceeds the sum of the Initial Base Amount and all Additional Base Payments
(such amount to be referred to herein as the "Buyer Obligation"), or (ii) Seller
shall deliver to Buyer, by wire
-4-
<PAGE>
transfer of immediately available funds to an account specified by Buyer (x) the
amount, if any, by which (A) the sum of the Initial Base Amount and all
Additional Base Payments minus (B) $7,500,000, exceeds the Adjusted Base Amount
(such amount to be referred to herein as the "Seller Obligation"), and (y) any
interest which shall be deemed to be accrued thereon pursuant to Section 2.4(f);
PROVIDED, HOWEVER, that in lieu of paying the Seller Obligation, plus any
interest accrued thereon, to Buyer as provided in this clause (ii), Seller may,
at its sole option, extend to Buyer on the date upon which the Seller Obligation
would otherwise be payable hereunder, a loan in a principal amount equal to 200%
of the amount of the Seller Obligation plus any accrued interest thereon, which
loan shall be evidenced by a promissory note that (i) is repayable on the tenth
anniversary of the extension thereof, (ii) bears interest (payable
semi-annually) at the rate of 4% per annum and (iii) is subordinate (upon terms
satisfactory to Buyer) to all of the indebtedness of Buyer which may be
outstanding at any time.
(d) Buyer may, at its sole option, in lieu of paying Seller
any or all of the Buyer Obligation in cash, elect to deliver to Seller a
certificate representing a number of shares of Buyer Common Stock, in order
that, immediately following such issuance, Seller shall own the percentage of
the total number of issued and outstanding shares of Buyer Common Stock as of
such date equal to the difference obtained from subtracting (i) a fraction,
expressed as a percentage, (A) the numerator of which is the sum of (1) the
Initial Base Amount, (2) all Additional Base Payments and (3) all amounts of
Buyer Obligation paid to Seller in cash, and (B) the denominator of which is the
Adjusted Value from (ii) 100%.
(e) In the event Buyer elects to issue equity to third
parties in order to finance the payment to Seller of all or part of the cash
portion, if any, of the Buyer Obligation, Buyer agrees that it shall issue to
Seller, for no additional consideration, such number of shares of Buyer Common
Stock as is necessary for Seller to maintain its percentage ownership of Buyer's
Common Stock. Buyer may not, without Seller's prior written consent, incur any
indebtedness (or issue any security having a preference as to dividends or
liquidation over the Buyer Common Stock) or modify the terms of any of Buyer's
convertible securities or warrants in order to, or for the purpose of enhancing
Buyer's ability to pay to, Seller any or all of the Buyer Obligation.
(f) In the event Seller is obligated to pay to Buyer the
Seller Obligation, each portion of the Seller Obligation, if any, which is in
excess of an amount equal to the Initial Base Amount less $7,500,000 shall be
deemed to accrue interest from the date each such amount was first paid to
Seller until October 15, 1997 at a per annum rate equal to the average of the
prime rates of Morgan Guaranty Trust Company in effect on October 15, 1995, 1996
and 1997.
(g) Either Seller, in the case of the Seller Obligation or
Buyer, in the case of the Buyer Obligation, may elect to postpone the payment of
any or all of such amounts to a date not later than April 15, 1998. In the
event that Seller elects to so postpone such payments, the amount so payable by
Seller (including the interest deemed to accrue on Additional Base Payments as
set forth in Section 2.4(f)), shall accrue interest at a per annum rate equal to
the highest rate of interest which Seller is paying any third party on
outstanding indebtedness on October 15, 1997 plus 3%. In the event Buyer elects
to so postpone such payment, the amount so payable by Buyer shall accrue
interest at a per annum rate equal to the highest rate of interest which Buyer
is paying any third party on outstanding indebtedness on October 15, 1997 plus
3%. The interest, if any, payable to Seller pursuant to the immediately
preceding sentence shall be payable, at Buyer's sole election, in cash or shares
of Buyer Common Stock. If Buyer elects to pay such interest in Buyer Common
Stock, such shares (i) shall be valued at a price per share equal to the average
Closing Price for the ten (10) Trading Days immediately preceding the date of
issuance and (ii) shall be issued in addition to the shares of Buyer Common
Stock otherwise issuable in satisfaction of the Buyer Obligation. The date upon
which Buyer or Seller, as the case may be, makes the payment required pursuant
to Section 2.4(c) shall be referred to herein as the "Adjustment Payment Date".
2.5 ADDITIONAL BASE PAYMENTS. In the event that from and after
the Closing Date until the Adjustment Payment Date any warrant, option or other
right to purchase shares of Buyer Common Stock which is issued and outstanding
as of the Closing Date (collectively, the "Buyer Warrants") is exercised, Buyer
agrees that it shall pay to Seller an amount equal to seventy percent (70%) of
the cash proceeds received by Buyer upon such exercise. The amount of such
payments shall be referred to herein as the "Additional Base Payments."
2.6 OPTION AGREEMENT. At the First Closing, Seller shall
transfer and assign to Buyer and Buyer shall acquire from Seller all of Seller's
rights under that certain Option Agreement. In consideration for such
assignment, in the event Seller becomes obligated to issue shares of its common
stock, $.01 par value per share ("Seller Common Stock") pursuant to the Option
Agreement, Buyer agrees that it shall, contemporaneous with the issuance of
shares of Seller Common Stock pursuant to the Option Agreement, deliver to
Seller the Option Compensation; PROVIDED, HOWEVER, in the event Buyer is
obligated to pay Seller a cash amount as Option Compensation, Buyer may, at its
sole option, in lieu of paying such cash amount, elect to have Seller retain any
shares of Speech Design Capital Stock purchased in connection with the exercise
of rights under the Option Agreement; and, PROVIDED, FURTHER, in the event Buyer
exercises the Call Option (as defined in the Option Agreement) it shall deliver
the purchase price therefor, out of its own funds, in Deutsche Marks, to the
appropriate persons in accordance with the terms of the Option Agreement.
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2.7 DATE OF CLOSINGS. The closings of the sale and purchase
pursuant to Section 2.1(a) (the "First Closing") and Section 2.1(b) (the "Second
Closing"), shall take place at the offices of Weil, Gotshal & Manges, 767 Fifth
Avenue, New York, New York as soon as practicable after all the conditions set
forth in Sections 5.1 and 5.2 have been satisfied (or waived by the party having
the right to waive such conditions), in the case of the First Closing, and
immediately after all conditions precedent set forth in Sections 5.1, 5.2 and
5.3 have been satisfied (or waived by the party having the right to waive such
conditions) in the case of the Second Closing (the First Closing and the Second
Closing are hereinafter collectively referred to as the "Closings", and the date
upon which the First Closing and Second Closing occur shall be referred to as
the "Closing Date"). At the Closings, the parties shall execute and deliver the
documents and items referred to in Section 6.
Article 3. REPRESENTATIONS AND WARRANTIES
3.1 REPRESENTATIONS AND WARRANTIES AS TO SELLER. Seller hereby
makes the following representations and warranties to Buyer (subject to the
schedules to this Section 3.1 which will be attached hereto and made a part
hereof in accordance with Section 3.5 below):
(a) ORGANIZATION AND QUALIFICATION. Seller is a
corporation duly organized and existing in good standing under the laws of the
state of Delaware. Seller has all requisite corporate power to own its
properties and to carry on its business as it is now being conducted.
(b) AUTHORIZATION; ENFORCEABILITY. (i) Seller has the
requisite corporate power and authority to enter into and perform this Agreement
in accordance with all terms hereof; (ii) the execution and delivery of this
Agreement by Seller and the consummation by it of the transactions contemplated
hereby have been duly authorized by Seller's Board of Directors and no further
consent or authorization of Seller by its Board of Directors or stockholders is
required; (iii) this Agreement has been duly executed and delivered by Seller;
and (iv) this Agreement constitutes a valid and binding obligation of Seller
enforceable against Seller in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally the enforcement of creditors' rights and remedies or by
other equitable principles of general application.
(c) CONSENTS. Other than as set forth on SCHEDULE 3.1(c),
no consent, approval, order or authorization of, or registration, qualification,
designation, declaration or filing with, any federal, state, local or provincial
governmental authority or third party is required on the part of Seller or any
of its subsidiaries in connection with the execution of this Agreement and the
consummation of the transactions contemplated hereby.
(d) NO CONFLICTS. The execution, delivery and performance
of this Agreement by Seller and the consummation by Seller of the transactions
contemplated hereby (i) do not result in a violation of Seller's Certificate of
Incorporation or By-laws or (ii) assuming Seller obtains the consents of third
parties listed on SCHEDULE 3.1(C), conflict with, or constitute a default (or an
event which with notice or lapse of time or both would become a default) under,
or give to others any rights of termination, amendment, acceleration or
cancellation of, any agreement, indenture or instrument to which Seller or any
of its subsidiaries is a party, or result in a violation of any law, rule,
regulation, order, judgment or decree (including Federal and State securities
laws and regulations) applicable to the Seller or by which any property or asset
of Seller is bound or affected (except for such conflicts, defaults,
terminations, amendments, accelerations, cancellations and violations as would
not, individually or in the aggregate, have a Material Adverse Effect on
Seller).
(e) INVESTMENT INTENT. Seller is acquiring shares of Buyer
Common Stock for investment for its own account and not with a view to, or for
sale in connection with, any distribution thereof.
(f) DESCRIPTIONS OF BOGEN AND SPEECH DESIGN. All
descriptions of, and references to, Bogen and Speech Design which are contained
in the Seller's Annual Report on Form 10-K for the year ended December 31, 1994
are complete and correct in all material respects.
(g) ACCURACY OF REPRESENTATIONS AND WARRANTIES. No
representation or warranty by Seller in this Agreement and no statement made or
contained in any certificate or instrument delivered or to be delivered to Buyer
pursuant to this Agreement contains or will contain any untrue statement of a
material fact or omits or will omit to state a material fact necessary to make
the statements contained herein or therein, in light of the circumstances under
which they are made, not misleading.
3.2 REPRESENTATIONS AND WARRANTIES AS TO BOGEN. Seller hereby
makes the following representations and warranties to Buyer (subject to the
schedules to this Section 3.2 which will be attached hereto and made a part
hereof in accordance with Section 3.5 below):
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(a) ORGANIZATION AND QUALIFICATION. Each of Bogen and its
subsidiaries is a corporation duly organized and existing in good standing under
the laws of the jurisdiction in which it is incorporated, and each has the
requisite corporate power to own its properties and to carry on its business as
it is now being conducted, except, in each case, as would not have a Material
Adverse Effect on Bogen. Each of Bogen and its subsidiaries is duly qualified
to do business as a foreign corporation and is in good standing in every
jurisdiction in which the nature of the business conducted or property owned by
it makes such qualification necessary and where the failure so to qualify would
have a Material Adverse Effect on Bogen.
(b) CAPITALIZATION. As of the date of this Agreement, the
authorized capital stock of Bogen consists of (i) 25,000,000 shares of common
stock, $.001 par value per share, of which approximately 21,620,000 shares are
issued and outstanding and (ii) 3,750 shares of preferred stock, par value
$100.00 per share, none of which is issued and outstanding. All of Bogen's
outstanding shares have been validly issued and are fully paid and non-
assessable. There are no preemptive or similar rights to purchase or otherwise
acquire shares of capital stock or other securities of Bogen pursuant to any
provision of law, Bogen's Certificate of Incorporation as in effect on the date
hereof (the "Bogen Certificate of Incorporation"), Bogen's By-laws as in effect
on the date hereof (the "Bogen By-laws"), or any agreement to which Bogen is a
party or otherwise. Other than pursuant to the 1994 Bogen Corporation Stock
Option Plan or as disclosed in SCHEDULE 3.2(b), as of the date of this
Agreement, there are no outstanding options, warrants, scrip, rights to
subscribe to, calls or commitments of any character whatsoever relating to, or
securities or rights convertible into, any shares of capital stock of Bogen or
any of its subsidiaries, or arrangements by which Bogen or any of its
subsidiaries is or may become bound to issue additional shares of capital stock
of Bogen or any of its subsidiaries or options, warrants, scrip, rights to
subscribe to, or commitments to purchase or acquire, any shares, or securities
or rights convertible into shares, of capital stock of Bogen or any of its
subsidiaries.
(c) BOGEN SHARES. Seller, directly or indirectly, is, and
at the Closing will be, the beneficial owner of the Bogen Shares, free and clear
of any claim, lien, security interest or other encumbrance, other than as
disclosed on SCHEDULE 3.2(c) hereof. At the Closing, Buyer will receive valid
title to all Bogen Shares, free and clear of any claim, lien, security interest
or other encumbrance, other than any claim, lien, security interest or other
encumbrance (i) made in connection with the guarantee of outstanding debt of
Bogen (the "Bogen Permitted Lien") or (ii) arising as a result of any action or
inaction on the part of Buyer.
(d) CONDUCT OF BUSINESS. The businesses of Bogen and its
subsidiaries are not being conducted, and shall not be conducted through the
Closing Date in violation of any law, ordinance or regulation of any
governmental entity, except for violations which do not or would not in the
aggregate have a Material Adverse Effect on Bogen.
(e) SEC DOCUMENTS, FINANCIAL STATEMENTS. During the
period from January 1, 1993 until January 31, 1994, Bogen filed all reports,
schedules, forms, statements and other documents required to be filed by it with
the Securities and Exchange Commission (the "SEC") pursuant to the reporting
requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act") (all of the foregoing, including all exhibits filed therewith and
financial statements and schedules thereto and documents (other than exhibits)
incorporated by reference therein, being hereinafter referred to herein as the
"Bogen SEC Documents"). Seller has delivered to Buyer true and complete copies
of the Bogen SEC Documents, except for exhibits, schedules and documents
incorporated therein which have not been specifically requested by Buyer. As of
their respective dates, the Bogen SEC Documents complied in all material
respects with the requirements of the Exchange Act and the rules and regulations
of the SEC promulgated thereunder applicable to such Bogen SEC Documents, and
none of the Bogen SEC Documents, at the time they were filed with the SEC,
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. As of their respective dates, the financial statements of Bogen
included in the SEC Documents complied as to form in all material respects with
applicable accounting requirements and the published rules and regulations of
the SEC with respect thereto. In addition to the Bogen SEC Documents, Seller
has provided Buyer with audited financial statements of Bogen as of and for the
year ended December 31, 1994 (such financial statements, together with the
financial statements included in the Bogen SEC Documents are referred to herein
as the "Bogen Financial Statements"). The Bogen Financial Statements have been
prepared in accordance with generally accepted accounting principles applied on
a consistent basis during the periods involved (except (i) as may be otherwise
indicated in such financial statements or the notes thereto or (ii) in the case
of unaudited interim statements to the extent they may not include footnotes or
may be condensed or summary statements) and fairly present in all material
respects the consolidated financial position of Bogen and its consolidated
subsidiaries as of the dates thereof and the consolidated results of their
operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments). Except as set
forth on SCHEDULE 3.2(e), and except as otherwise indicated in the Bogen
Financial Statements, since December 31, 1994, there has been no change in the
business, financial condition or affairs of Bogen or its properties or assets,
other than such changes which would not have a Material Adverse Effect on Bogen.
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3.3 REPRESENTATIONS AND WARRANTIES AS TO SPEECH DESIGN. Seller
hereby makes the following representations and warranties to Buyer (subject to
the schedules to this Section 3.3 which will be attached hereto and made a part
hereof in accordance with Section 3.5 below):
(a) ORGANIZATION AND QUALIFICATION. Each of Speech Design
and its subsidiaries, if any, is a corporation duly organized under the laws of
the jurisdiction in which it is incorporated, and each has the requisite
corporate power to own its properties and to carry on its business as it is now
being conducted, except, in each case, as would not have a Material Adverse
Effect on Speech Design. Each of Speech Design and its subsidiaries, is duly
qualified as a foreign corporation to do business in every jurisdiction in which
the nature of the business conducted or property owned by it makes such
qualification necessary and where the failure so to qualify would have a
Material Adverse Effect on Speech Design.
(b) CAPITALIZATION. As of the date of this Agreement, the
authorized capital stock of Speech Design consists of shares of capital stock,
having an aggregate of nominal value of DM 1,960,000 of which shares having an
aggregate nominal value of DM 1,919,390 are issued and outstanding. All of
Speech Design's outstanding shares have been validly issued and are fully paid
and non-assessable. There are no preemptive or similar rights to purchase or
otherwise acquire shares of capital stock or other securities of Speech Design
pursuant to any provision of law, Speech Design's organizational or governing
documentation as in effect on the date hereof (the "Speech Design Organizational
Documents"), or any agreement to which Speech Design is a party or otherwise.
Except for the Option Agreement or as disclosed in SCHEDULE 3.3(b), as of the
date of this Agreement, there are no outstanding options, warrants, scrip,
rights to subscribe to, calls or commitments of any character whatsoever
relating to, or securities or rights convertible into, any shares of capital
stock of Speech Design or any of its subsidiaries, or arrangements by which
Speech Design or any of its subsidiaries is or may become bound to issue
additional shares of capital stock of Speech Design or any of its subsidiaries
or options, warrants, scrip, rights to subscribe to, or commitments to purchase
or acquire, any shares, or securities or rights convertible into shares, of
capital stock of Speech Design or any of its subsidiaries.
(c) SPEECH DESIGN SHARES. Seller, directly or indirectly,
is, and at the Closing will be, the record and beneficial owner of the Speech
Design Shares, free and clear of any claim, lien, security interest or other
encumbrance, other than as disclosed on SCHEDULE 3.3(c) hereof. At the Closing,
Buyer will receive valid title to all Speech Design Shares, free and clear of
any claim, lien, security interest or other encumbrance other than those arising
as a result of any action or failure to act on the part of Buyer.
(d) CONDUCT OF BUSINESS. To Seller's Actual Knowledge, the
businesses of Speech Design and its subsidiaries are not being conducted in
violation of any law, ordinance or regulation of any governmental entity, except
for possible violations which do not or would not in the aggregate have a
Material Adverse Effect on Speech Design.
(e) FINANCIAL STATEMENTS. Seller will have provided Buyer
with the audited financial statements of Speech Design described on SCHEDULE
3.3(e) (collectively, the "Speech Design Financial Statements"). The Speech
Design Financial Statements have been prepared in accordance with generally
accepted accounting principles in the United States applied on a consistent
basis during the periods involved (except as may be otherwise indicated in such
financial statements or the notes thereto) and fairly present in all material
respects the consolidated financial position of Speech Design and its
consolidated subsidiaries as of the dates thereof and the consolidated results
of their operations and cash flows for the periods then ended, other than such
changes which would not have a Material Adverse Effect on Speech Design.
(f) ABSENCE OF UNDISCLOSED LIABILITIES; INTERCOMPANY
LIABILITIES. To Seller's Actual Knowledge, except to the extent reflected or
reserved for in the Speech Design Financial Statements, as of December 31, 1994,
Speech Design did not have any liabilities of any nature, whether accrued,
absolute, contingent or otherwise, except such liabilities which individually or
in the aggregate would not have a Material Adverse Effect on Speech Design. To
Seller's Actual Knowledge, as of December 31, 1994, there was no basis for the
assertion against Speech Design of any liability of any nature (and in any
amount) not fully reflected or reserved for in the Speech Design Financial
Statements. SCHEDULE 3.3(f) will set forth all of Speech Design's liabilities
to Seller and its affiliates (other than Bogen) as of the date of this Agreement
and all liabilities of Seller and its affiliates (other than Bogen) to Speech
Design as of the date of this Agreement.
(g) BOOKS OF ACCOUNT. All of Speech Design's books of
account have been exhibited or made available to Buyer, and to Seller's Actual
Knowledge, such books of account accurately record all of Speech Design's
transactions during the respective periods covered by them.
(h) AGREEMENTS, ETC. SCHEDULE 3.3(h) will contain a list
of (i) all agreements and other commitments for the purchase of any materials or
supplies that involve an expenditure by Speech Design of more than $25,000; (ii)
all notes and agreements relating to any indebtedness of Speech Design for
borrowed money; (iii) all leases or other rental
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agreements under which Speech Design is either lessor or lessee that call for
annual lease payments in excess of $25,000; (iv) all other agreements
(including, but not limited to, employment agreements), commitments and
understandings (written or oral) to which Speech Design is a party or by which
it is bound that require payment by Speech Design of more than $25,000 and that
cannot be terminated by Speech Design on fewer than 30 days' notice without
liability; and (v) all patents, trademarks (including service marks), trademark
registrations, and applications for registering patents or trademarks, owned by
Speech Design (none of which is subject to a licensing or other agreement with
any other person). True and complete copies of all written leases, agreements,
commitments and understandings (collectively, the "Speech Design Agreements")
referred to in SCHEDULE 3.3(h) will have been made available to Buyer. Each
Speech Design Agreement is, and at the Closing will be, in full force and
effect, other than such agreements which the failure of such to be in full force
and effect would not, individually or in the aggregate, have a Material Adverse
Effect on Speech Design. There is no existing default by Speech Design under any
Speech Design Agreement, and, to the actual knowledge of Seller, there is no
existing default under any Speech Design Agreement by any other party to any
Speech Design Agreement.
(i) TAXES. Speech Design has timely filed all Tax Returns
required to be filed with respect to or arising out of its operations and paid
all Taxes that are shown to be due and payable on the Tax Returns. There are no
claims pending against Speech Design, nor, to the Actual Knowledge of Seller,
are there any threatened claims, in each case, for past due Taxes. To Seller's
Actual Knowledge, there are no Tax assessments or notices outstanding or
threatened against Speech Design and Speech Design has not waived any statute of
limitations with respect thereto.
(j) ABSENCE OF CERTAIN CHANGES. Since December 31, 1994,
Speech Design has operated its business in the ordinary course and consistent
with past practices, and has not:
(i) entered into any transactions or incurred any
liabilities or obligations that were entered into or incurred other than in the
ordinary course of its business or were unusual in nature or amount;
(ii) had any change in its business, financial
condition or affairs, other than changes which would not, individually or in
the aggregate, have a Material Adverse Effect on Speech Design;
(iii) paid any dividends, made any other
distributions on, or acquired any shares of, its capital stock or, directly or
indirectly, made any other payments or loans of any kind to Seller, or to any
employee or affiliate of Seller;
(iv) incurred any bank or other indebtedness for
borrowed money, other than in the ordinary course of business or as set forth in
SCHEDULE 3.3(j);
(v) granted or agreed to grant any general increase
in any rate or rates of salaries or compensation to its employees or any
specific increase in annual salary or compensation to any agent or employee, or
paid or agreed to pay any bonus to any employee, except as set forth in SCHEDULE
3.3(j);
(vi) waived any of its rights or claims having value,
except rights or claims not material in amount waived in the ordinary course of
business; or
(vii) violated any laws, ordinances, orders,
injunctions or decrees applicable to it or to the conduct of its business.
(k) OWNERSHIP OF PROPERTIES. Except as set forth in
SCHEDULE 3.3(k), Speech Design owns outright, free and clear of any security
interest, claim or encumbrance, all material property used in its business,
including the property reflected on Speech Design's audited balance sheet as of
December 31, 1994.
(l) EMPLOYEES. Except as set forth in SCHEDULE 3.3(l), or
pursuant to applicable law, Speech Design is not a party to or bound by any
collective bargaining or other labor agreement, or any pension, retirement,
stock purchase, savings, profit sharing, deferred compensation, retainer,
consultant, bonus, group insurance or other incentive or benefit contract, plan
or arrangement. There has been no strike, slowdown, work stoppage or any other
similar labor trouble by Speech Design's employees during the preceding five
years and, to Seller's Actual Knowledge, none is threatened.
(m) LITIGATION. Except as set forth in SCHEDULE 3.3(m), to
Seller's Actual Knowledge, there is no litigation, proceeding or governmental
investigation pending or threatened, or any order, injunction or decree
outstanding, against or relating to Speech Design or its property or business
which could reasonably be expected to have a Material Adverse Effect on Speech
Design, nor does Seller Actually Know of any basis for any litigation,
proceeding, governmental investigation, order, injunction or decree.
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(n) PROPRIETARY RIGHTS. To Seller's Actual Knowledge,
Speech Design owns or possesses adequate licenses or other rights to use all
computer software, software programs, patents, patent applications, trademarks,
trademark applications, trade secrets, service marks, trade names, copyrights,
inventions, drawings, designs, customer lists, proprietary know-how or
information or other rights which are material to its business, and those
licenses or rights are sufficient to conduct its business as they have been and
are now being conducted. To Seller's Actual Knowledge, Speech Design's
operations do not conflict with or infringe, and no one has asserted that those
operations conflict with or infringe, any rights of any third party.
3.4 REPRESENTATIONS AND WARRANTIES AS TO BUYER. Buyer hereby
makes the following representations and warranties to Seller (subject to the
schedules to this Section 3.4 which will be attached hereto and made a part
hereof in accordance with Section 3.5 below):
(a) ORGANIZATION AND QUALIFICATION. Buyer is a corporation
duly organized and existing in good standing under the laws of the jurisdiction
in which it is incorporated, and has the requisite corporate power to own its
properties and to carry on its business as it is now being conducted, except, in
each case, as would not have a Material Adverse Effect on Buyer. Buyer is duly
qualified as a foreign corporation to do business and is in good standing in
every jurisdiction in which the nature of the business conducted or property
owned by it makes such qualification necessary and where the failure so to
qualify would have a Material Adverse Effect on Buyer.
(b) AUTHORIZATION; ENFORCEABILITY. (i) Assuming the
receipt of approval of Buyer's shareholders of the transactions contemplated
hereby, Buyer has the requisite corporate power and authority to enter into and
perform this Agreement in accordance with the terms hereof; (ii) the execution
and delivery of this Agreement by Buyer and the consummation by it of the
transactions contemplated hereby have been duly authorized by Buyer's Board of
Directors and further consent or authorization of Buyer by its Board of
Directors is not required; (iii) this Agreement has been duly executed and
delivered by Buyer; and (iv) this Agreement constitutes a valid and binding
obligation of Buyer enforceable against Buyer in accordance with its terms,
except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, liquidation or similar laws relating to,
or affecting generally the enforcement of creditors' rights and remedies or by
other equitable principles of general application.
(c) CAPITALIZATION. As of the date of this Agreement, the
authorized capital stock of Buyer consists of (1) 50,000,000 shares of common
stock, $.001 par value per share, of which 1,925,000 shares are issued and
outstanding and (ii) 1,000,000 shares of preferred stock, $.001 par value per
share, none of which are issued and outstanding. All of Buyer's outstanding
shares have been validly issued and are fully paid and nonassessable. There are
no preemptive or similar rights to purchase or otherwise acquire shares of
capital stock or other securities of Buyer pursuant to any provision of law,
Buyer's Certificate of Incorporation as in effect on the date hereof (the "Buyer
Certificate of Incorporation"), Buyer's By-laws as in effect on the date hereof
(the "Buyer By-laws"), or any agreement to which Buyer is a party or otherwise.
Other than the Buyer Warrants, as of the date of this Agreement, there are no
outstanding options, warrants, scrip, rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities or rights
convertible into, any shares of capital stock of Buyer or any of its
subsidiaries, or arrangements by which Buyer or any of its subsidiaries is or
may become bound to issue additional shares of capital stock of Buyer or any of
its subsidiaries or options, warrants, scrip, rights to subscribe to, or
commitments to purchase or acquire, any shares, or securities or rights
convertible into shares, of capital stock of Buyer or any of its subsidiaries.
(d) CONSENTS. Other than as set forth on SCHEDULE 3.4(d),
no consent, approval, order or authorization of, or registration, qualification,
designation, declaration or filing with, any federal, state, local or provincial
governmental authority or third party is required on the part of Buyer in
connection with the execution of this Agreement and the consummation of the
transactions contemplated hereby.
(e) BUYER SHARES. The shares of Buyer Common Stock to be
issued, sold and delivered to Seller in accordance with the terms hereof, when
so issued, sold and delivered, will be duly and validly issued, fully paid and
nonassessable. All Buyer Shares will be issued free of any preemptive or
similar right and free and clear of any claim, lien, security interest or other
encumbrance, other than any claim, lien, security interest or other encumbrance
arising as a result of any action or inaction on the part of Seller. Assuming
the accuracy of Seller's representations and warranties hereunder, the issuance
to Seller of Buyer Common Stock pursuant to this Agreement is exempt from the
registration requirements of the Securities Act of 1933, as amended (the
"Securities Act") pursuant to Section 4(2) of the Securities Act and will be
issued in compliance with all applicable securities laws of each state whose
securities laws may be applicable thereto.
(f) NO CONFLICTS. The execution, delivery and performance
of this Agreement by Buyer and the consummation by Buyer of the transactions
contemplated hereby (i) assuming receipt of approval of Buyer's shareholders of
the transactions contemplated hereby, do not result in a violation of the Buyer
Certificate of Incorporation or
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the Buyer By-laws or (ii) conflict with, or constitute a default (or an event
which with notice or lapse of time or both would become a default) under, or
give to others any rights of termination, amendment, acceleration or
cancellation of, any agreement, indenture or instrument to which Buyer or any of
its subsidiaries is a party, or result in a violation of any law, rule,
regulation, order, judgment or decree (including Federal and State securities
laws and regulations) applicable to Buyer, any of its subsidiaries or by which
any property or asset of Buyer or any of its subsidiaries is bound or affected
(except for such conflicts, defaults, terminations, amendments, accelerations,
cancellations and violations as would not, individually or in the aggregate,
have a Material Adverse Effect on Buyer).
(g) CONDUCT OF BUSINESS. The businesses of Buyer and its
subsidiaries are not being conducted, and shall not be conducted through the
Closing Date in violation of any law, ordinance or regulation of any
governmental entity, except for possible violations which either singly or in
the aggregate do not have a Material Adverse Effect on Buyer. Other than as
contemplated by Buyer's prospectus dated October 7, 1993 (the "Prospectus"),
Buyer has not conducted any business or operations. As of the date hereof, the
market value of the Buyer's Trust Fund is approximately $7,800,000.
(h) SEC DOCUMENTS, FINANCIAL STATEMENTS. Buyer has filed
all reports, schedules, forms, statements and other documents required to be
filed by it since its formation with the SEC pursuant to the reporting
requirements of the Exchange Act (all of the foregoing, including all exhibits
filed therewith and financial statements and schedules thereto and documents
(other than exhibits) incorporated by reference therein, being hereinafter
referred to herein as the "Buyer SEC Documents"). Buyer has delivered to
Seller true and complete copies of the Buyer SEC Documents, except for such
exhibits, schedules and documents incorporated therein which Seller has not
specifically requested. As of their respective dates, the Buyer SEC Documents
complied in all material respects with the requirements of the Exchange Act and
the rules and regulations of the SEC promulgated thereunder applicable to such
Buyer SEC Documents, and none of the Buyer SEC Documents, at the time they were
filed with the SEC, contained any untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading. As of their respective dates, the financial statements of
Buyer included in the SEC Documents complied as to form in all material respects
with applicable accounting requirements and the published rules and regulations
of the SEC with respect thereto. In addition to the Buyer SEC Documents, Buyer
has provided Seller with audited financial statements of Buyer as of and for the
year ended December 31, 1994 (such financial statements, together with the
financial statements contained in the Buyer SEC Documents are referred to herein
as the "Buyer Financial Statements"). The Buyer Financial Statements have been
prepared in accordance with generally accepted accounting principles applied on
a consistent basis during the periods involved (except (i) as may be otherwise
indicated in such financial statements or the notes thereto or (ii) in the case
of unaudited interim statements to the extent they may not include footnotes or
may be condensed or summary statements) and fairly present in all material
respects the consolidated financial position of Buyer and its consolidated
subsidiaries as of the dates thereof and the consolidated results of their
operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments). Except as set
forth on SCHEDULE 3.4(h), since December 31, 1994, there has been no material
adverse change in the business, prospects, financial condition or affairs of
Buyer or its properties or assets. The Prospectus did not, as of the date
thereof, contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
(i) INVESTMENT COMPANY. Buyer is not an "investment
company" or a company controlled by an "investment company" within the meaning
of such term in the Investment Company Act of 1940, as amended.
(j) ACCURACY OF REPRESENTATIONS AND WARRANTIES. No
representation or warranty made by Buyer in this Agreement and no statement made
or contained in any certificate or instrument delivered or to be delivered to
Seller pursuant to this Agreement contains or will contain any untrue statement
of a material fact or omits or will omit to state a material fact necessary to
make the statements contained herein or therein not misleading.
3.5 DELIVERY OF SCHEDULES. The parties hereto agree that all
schedules hereto shall be delivered to the other party as soon as practicable
after the date hereof, but in no event later than April 30, 1995. In the event
that information contained in the schedules materially and adversely differs, in
the aggregate, from the information previously disclosed to, or known to, a
party, such party shall have three (3) business days from the date it receives
such schedules to notify the other party hereto that it elects (i) to terminate
this Agreement, and upon receipt of such notice, this Agreement shall terminate
or (ii) to proceed to Closing, in which event the representations and warranties
shall be deemed modified by such schedules. If the scheduled information does
not materially and adversely affect the information previously disclosed or
known, the parties must proceed to Closing.
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Article 4. COVENANTS OF THE PARTIES.
4.1 ACCESS TO INFORMATION. (a) Prior to the Closings, Seller
shall cause each of Bogen and Speech Design to permit Buyer and its
representatives to make such reasonable investigation of the properties and
business of each of Bogen and Speech Design as Buyer may wish and shall give
Buyer and its counsel, accountants and other representatives full access during
normal business hours throughout the period prior to the Closings to all the
property, books, agreements, records, files and personnel of each of Bogen and
Speech Design and Seller shall cause each of Bogen and Speech Design to furnish
Buyer during that period with all documents and copies of documents (certified
as true and complete, if requested) and information concerning the business and
affairs of each of Bogen and Speech Design as Buyer may reasonably request.
Buyer shall hold, and shall cause its representatives to hold confidential, all
such information and documents, other than information that (i) is in the public
domain at the time of its disclosure to Buyer, (ii) becomes part of the public
domain after disclosure through no fault of Buyer, (iii) is known to Buyer or
any of its officers or directors prior to disclosure, or (iv) is disclosed in
accordance with the written consent of Seller. In the event this Agreement is
terminated prior to the Closings, Buyer shall, upon the written request of
Seller, promptly forward all copies of all documentation and information
provided by Seller to Buyer in connection herewith.
(b) Prior to the Closings, Buyer shall permit Seller and
its representatives to make such reasonable investigation of the properties and
business of Buyer as Seller may wish and shall give Seller and its counsel,
accountants and other representatives full access during normal business hours
throughout the period prior to the Closings to all the property, books,
agreements, records, files and personnel of Buyer and Buyer shall furnish Seller
during that period with all documents and copies of documents (certified as true
and complete, if requested) and information concerning the business and affairs
of Buyer as Seller may reasonably request. Seller shall hold, and shall cause
its representatives to hold confidential, all such information and documents,
other than information that (i) is in the public domain at the time of its
disclosure to Seller, (ii) becomes part of the public domain after disclosure
through no fault of Seller, (iii) is known to Seller or any of its officers or
directors prior to disclosure, or (iv) is disclosed in accordance with the
written consent of Buyer. In the event this Agreement is terminated prior to
the Closings, Seller shall, upon the written request of Buyer, promptly forward
all copies of all documentation and information provided by Buyer to Seller in
connection herewith.
4.2 CONDUCT OF BUSINESS PENDING THE CLOSINGS. Prior to the
Closings, other than as contemplated hereby, Buyer shall comply with and Seller
shall cause each of Bogen and Speech Design to comply with the provisions set
forth below:
(a) Other than the sale by Buyer of equity or debt
securities, the net proceeds of which shall be included in the Initial Cash
Payment (subject only to the definition of Initial Cash Payment contained in
Section 1.1 hereof) or the consummation of bridge debt financing, the terms and
conditions of each of which transactions shall be approved by Seller in writing
(the "Buyer Private Placement"), no securities or material assets or rights of
Bogen, Speech Design or Buyer shall be sold, transferred or otherwise disposed
of (nor may any such transaction be authorized) without the prior written
approval of Seller or Buyer, as the case may be;
(b) Each of Bogen, Speech Design and Buyer shall operate
its business in the ordinary course and consistent with its past practices,
shall pay its accounts payable and collect its accounts receivable in a manner
consistent with past practices, and shall not incur any obligation or liability
that is unusual in nature or amount other than in the ordinary course of
business and in an amount or amounts consistent with past practice;
(c) Seller or Buyer, as the case may be, shall promptly
notify the other party in writing of, and furnish to the other party any
information such party may request with respect to, the occurrence of any event
or the existence of any state of facts that would result in any of its
representations and warranties not being true if they were made at any time
prior to or as of the date of the Closings;
(d) None of Bogen, Speech Design or Buyer shall grant or
agree to grant any bonuses to any employee, any general increase in the rates of
salaries or compensation of its employees or any specific increase to any
employee or provide for any new pension, retirement or other employment benefits
to any of its employees or any increase in any existing benefits other than
consistent with past practice;
(e) None of Bogen, Speech Design or Buyer shall declare,
set aside or pay any dividends or other distributions in respect of its capital
stock; redeem, purchase or otherwise acquire any of its capital stock; or make
any direct or indirect payment or loan to any shareholder or to any employee or
affiliate of any shareholder;
(f) None of Bogen, Speech Design or Buyer shall amend its
certificate of incorporation or by-laws or other organizational documents or
enter into any merger or consolidation agreement except, in the case of Bogen,
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a merger pursuant to which Seller, directly or indirectly, acquires all of the
shares of Bogen Common Stock not currently owned by it;
(g) None of Bogen, Speech Design or Buyer shall waive any
of its rights or claims having value, except rights or claims not material in
amount waived in the ordinary course of business;
(h) Each of Bogen and Speech Design shall use its best
efforts to maintain and preserve its business organization intact, to retain its
present employees so that they will be available after the Closings and to
maintain its relationships with customers, suppliers of programming and others
so that those relationships will be preserved after the Closings;
(i) Each of Bogen, Speech Design and Buyer shall maintain
in full force and effect all insurance in effect on the date of this Agreement;
and
(j) Each of Bogen, Speech Design and Buyer shall duly
comply with all laws, ordinances, orders, injunctions and decrees applicable to
it and to the conduct of its business.
4.3 DISCHARGE OF CERTAIN LIABILITIES; SUBSTITUTE GUARANTEE.
(a) Immediately prior to or simultaneously with the Closings, each of Seller
and Bogen shall cause the amount of all outstanding principal and interest
owed by Bogen to Seller and any of its subsidiaries and affiliates (the "Bogen
Debt") to be converted into shares of Bogen Common Stock. The issuance of
Bogen Common Stock as a result of such conversion, if any, shall be based
upon the Bogen Book Value per share. Such shares of Bogen Common Stock
shall be included in the Bogen Shares.
(b) Buyer and Seller agree that they shall use all
reasonable efforts to (i) have Seller assign to Buyer as of the Closing Date or
as soon thereafter as practicable, all of its obligations under a currently
existing guarantee by Seller of the Bogen Debt and (ii) cause such currently
existing guarantee be released; PROVIDED, HOWEVER, Seller agrees that it shall
continue to guaranty Bogen indebtedness to CIT Group/Credit Finance, Inc. upon
terms and conditions which are no less favorable to Seller than the current
guaranty, until such time as Seller no longer controls the ability to elect a
majority of the members of the Board of Directors of Buyer (whether by
termination of the Voting Agreement or by the fact that Seller no longer owns a
majority of the issued outstanding shares of Buyer Voting Stock).
4.4 RULE 144. Buyer hereby covenants that, following the
Closings (i) it shall comply with the current public information requirements of
Rule 144(c)(1) promulgated under the Securities Act and (ii) at all times Rule
144 is available to Seller for sales of Buyer Common Stock issued to Seller
pursuant to this Agreement, Buyer will furnish Seller, upon Seller's request,
all information within Buyer's possession required for the preparation and
filing of Form 144.
4.5 SALES OF BUYER COMMON STOCK BY SELLER; PLEDGE OF BUYER
COMMON STOCK. (a) Seller agrees that it shall not, prior to October 15,
1997, without the prior written consent of Buyer, sell any shares of Buyer
Common Stock issued to Seller in connection with this Agreement, either (i) in a
public offering, or (ii) in the open market. Seller agrees that prior to
selling any shares of Buyer Common Stock which were issued to Seller in
connection with this Agreement, other than sales through a public offering or in
the open market pursuant to Rule 144 promulgated under the Securities Act, it
shall notify Buyer in writing of the terms upon which Seller is prepared to sell
such shares and offer to Buyer the opportunity to purchase such shares upon such
terms. Buyer shall promptly, but in any event within fifteen (15) days of its
receipt of Seller's notice, notify Seller of whether it intends to accept such
offer. If Buyer elects to accept Seller's offer, Buyer shall have thirty (30)
days from the date of its receipt of Seller's offer to enter into an agreement
with Seller and shall have an additional one hundred twenty (120) days from the
date of such agreement to close the sale of the securities. In the event Buyer
shall not accept such offer or not enter into an agreement with Seller, Seller
shall thereafter have the right until the later of sixty (60) days from the date
Seller receives such notice or the date negotiations with respect to such
agreement are terminated, to enter into an agreement to sell such securities
upon terms which shall be no less favorable to Seller then the terms contained
in Seller's offer to Buyer; PROVIDED, HOWEVER, that any sale pursuant to such
agreement shall be consummated within one hundred twenty (120) days of the date
of any such agreement. In the event Buyer and Seller enter into such an
agreement but the transactions contemplated thereby do not close within the time
period set forth above other than as a result of Seller's failure to satisfy the
terms and conditions thereof, Seller shall have the unlimited right to sell such
securities on terms and conditions which it may determine in its sole
discretion.
(b) Notwithstanding anything to the contrary contained in
this Agreement, Buyer and Seller acknowledge and agree that (i) Seller may
pledge, as collateral security for indebtedness, any or all of the shares of
Buyer Common Stock issued to Seller pursuant to this Agreement, and (ii) at any
time after the pledgee of such shares becomes the record owner of such shares,
such pledgee may, subject to the terms and conditions of any documentation
governing such pledge and applicable law, (x) exercise the registration rights
contained in Section 7 hereof, and/or (y) sell such shares
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(notwithstanding that such registration rights would not otherwise be
exercisable prior to October 15, 1997 and that the sale of such shares would
otherwise be subject to restrictions under this Agreement).
4.6 ISSUANCE AND SALE OF BUYER COMMON STOCK BY BUYER. (a)
Following the Closing, until that date which is fifteen (15) days after the
Adjustment Payment Date (or the next succeeding business day) (the "Preemptive
End Date"), in the event Buyer intends to sell or issue New Securities (whether
for cash or upon exercise of warrants, options or otherwise) and, after giving
effect to such sale or issuance, Seller would own less than a majority of the
issued and outstanding shares of Buyer Common Stock (assuming for such purposes
all New Securities which are convertible or exercisable into shares of Buyer
Common Stock have been so converted or exercised), Buyer shall grant to Seller
the right to purchase, at Market Price (as defined below), a pro rata share of
all or any part of such New Securities. A pro rata share, for purposes of this
Section 4.6, is the ratio that (i) the sum of (x) the number of shares of Buyer
Common Stock held by Seller at the time of determination and (y) the number of
shares of Buyer Common Stock issuable upon conversion or exercise of securities
convertible or exercisable into shares of Buyer Common Stock held by Seller at
such time, bears to (ii) the sum of the (x) the total number of shares of Buyer
Common Stock then issued and outstanding and (y) the total number of shares of
Buyer Common Stock issuable upon conversion or exercise of securities
convertible or exercisable into shares of Buyer Common Stock then issued and
outstanding; PROVIDED, HOWEVER, in no event shall the pro rata share exceed such
number of shares as is necessary to cause Seller to own a majority of the issued
and outstanding shares of Buyer Common Stock immediately following such issuance
(assuming for such purposes all securities which are convertible or exercisable
into shares of Buyer Common Stock have been so converted or exercised).
(b) "New Securities" shall mean (i) any shares of Buyer
Common Stock, whether now authorized or not, (ii) any rights, options or
warrants to purchase shares of Buyer Common Stock, (iii) securities of any type
whatsoever that are, or may become, convertible or exercisable into shares of
Buyer Common Stock or (iv) securities of Buyer which entitle the holder thereof
to vote in the election of directors of Buyer ("Buyer Voting Stock").
(c) In the event Buyer proposes to undertake an issuance of
New Securities, it shall give Seller written notice of its intention, describing
the type of New Securities, and the price and general terms upon which Buyer
proposes to issue the same. Seller shall have twenty-five (25) days from the
date of receipt of any such notice to agree to purchase up to its pro rata
shares of such New Securities by giving written notice to Buyer stating therein
the quantity of New Securities to be purchased. In the event Seller exercises
such right, the purchase price for such securities shall equal the product of
(i) the average Closing Price of Buyer Common Stock for the twenty (20) Trading
Days immediately preceding the date Seller receives such notice (the "Market
Price") (adjusted, as appropriate, in the event the New Securities are
securities which are exercisable for or convertible into Buyer Common Stock),
and (ii) the number of shares of Buyer Common Stock or other securities to be
purchased by Seller (treating securities which are exercisable for or
convertible into Buyer Common Stock on an as converted basis).
(d) In the event Seller fails to exercise the purchase
right contained in Section 4.6(a) within such twenty-five (25) day period, Buyer
shall have ninety (90) days (or, in the event the New Securities are to be sold
in an underwritten public offering, one hundred fifty (150) days) thereafter to
sell or enter into an agreement (pursuant to which the sale of New Securities
covered thereby shall be closed, if at all, within sixty (60) days from the date
of such agreement) to sell such New Securities at the price and upon general
terms no more favorable to the purchaser of such securities as the terms
specified in Buyer's notice to Seller. In the event Buyer has not sold the New
Securities or entered into an agreement to sell the New Securities within said
ninety (90) day period (or sold and issued New Securities in accordance with the
foregoing within sixty (60) days from the date of said agreement), Buyer shall
not thereafter issue or sell any New Securities, without first offering such
securities to Seller in the manner provided above.
(e) Notwithstanding anything to the contrary contained in
Sections 4.6(a)-(d), Seller shall not have a right to purchase any New
Securities which are convertible or exercisable into shares of Buyer Common
Stock until such time as such New Securities have been so converted or
exercised, unless prior to being so converted or exercised such new securities
constitute Buyer Voting Stock.
(f) In the event that at any time on or prior to the
Preemptive End Date, Seller shall own less than a majority of the issued and
outstanding shares of Buyer Voting Stock (assuming for such purposes all
securities owned by Seller or any third party which are convertible or
exercisable into shares of Buyer Voting Stock outstanding at such time have been
converted or exercised), Seller shall have the right to purchase such number of
additional shares of Buyer Common Stock in order that immediately following such
issuance it shall own a majority of the issued and outstanding shares of Buyer
Voting Stock. The purchase price per share of Buyer Common Stock purchased by
Seller pursuant to the immediately preceding sentence, shall equal the average
Closing Price of Buyer Common Stock for the twenty (20) Trading Day period
immediately preceding the date of such purchase.
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4.7 GOVERNANCE OF BUYER. (a) Buyer agrees that as of the
Closings the following actions shall have been taken: (i) the Buyer By-laws
shall have been amended to provide for a Board of Directors consisting of eight
members, (ii) Yoav Stern, Joram D. Rosenfeld, David Jan Mitchell and four
individuals designated by Seller shall have been nominated as directors of
Buyer, and (iii) Eitan Nahum shall have been elected as Chief Executive Officer
of Buyer and appointed to the Board of Directors. Seller agrees that with
respect to voting on any and all issues regarding (i) intercompany transactions
between Buyer and Seller, and (ii) the decision on whether to pay the Buyer
Obligation, if any, in cash or shares of Buyer Common Stock, or a combination
thereof, Seller shall cause all but one, or, in the event Seller has five
designees, all but two of its designees to be excused from the meeting at which
such vote is taken, and shall cause the remaining designee or designees to
abstain from voting on such issue. The Buyer By-laws shall also be amended to
provide that Seller's designees on the Board of Directors shall have the
authority at any time to increase the size of the Board to nine members and to
fill the vacancy created thereby with an additional designee.
(b) As of the Closings, the Buyer By-laws shall have been
amended to provide that the Board of Directors of Buyer shall form (i) an
executive committee which, subject to the general authority of the Board of
Directors, will have the authority to act on all matters regarding the
compensation of employees and directors of Buyer, the finance of Buyer and such
other matters as the Board of Directors shall designate and (ii) an audit
committee. The executive committee and audit committee shall each consist of
five directors, two of whom shall be Seller's nominee, one of whom shall be the
Chief Executive Officer of Buyer and two of whom shall be Messrs. Joram
Rosenfeld and Yoav Stern, or their designees. All matters to be determined by
the executive committee and audit committee must be approved by the affirmative
vote of a majority of its members, including the affirmative vote of both
committee members designated by Seller. All executive committee members who are
not employees of Buyer or Seller shall receive an annual fee of $50,000 (payable
in arrears monthly) for four years or such lesser period during which they serve
on the executive committee; PROVIDED, HOWEVER, if either of Yoav Stern or Joram
Rosenfeld are employees of Buyer each, as the case may be, shall be entitled to
receive such fee regardless of the fact that they may receive additional
compensation from Buyer as an employee of Buyer. At the request of the
executive committee, the two executive committee members who are not either
Seller's designee or the Chief Executive Officer, shall assist Buyer in its
investor relations and merger and acquisition activities.
(c) The following matters will require the unanimous vote
of the Board of Directors, excluding the Chief Executive Officer, in order to be
acted upon:
(i) the dismissal, appointment or changing of duties
of the Chief Executive Officer, legal counsel or independent auditors of Buyer;
(ii) the issuance of any shares of capital stock of
Buyer or any securities convertible or exercisable into shares of capital stock
of Buyer (other than to Seller in accordance with this Agreement); or
(iii) the sale, conveyance or other disposal of a
majority of Buyer's property or business, or the merger with or into or
consolidation with any other corporation (other than a wholly-owned subsidiary
corporation), or the effectuation of any transaction or series of related
transactions in which more than fifty percent (50%) of the voting power of Buyer
is disposed of.
(d) Seller agrees that if substantially all of the shares
of the Buyer Common Stock issued to Seller pursuant to this Agreement are
foreclosed upon by a creditor to whom Seller has granted a security interest
therein pursuant to Section 4.5(b), upon consummation of such foreclosure,
Seller shall use its best efforts to effect the resignations, as directors of
Buyer, of the directors designated by Seller.
(e) Seller and Buyer agree that Seller, Buyer, Yoav Stern,
Joram Rosenfeld and David Jan Mitchell shall at the Closing execute and deliver
a voting agreement in form and substance reasonably satisfactory to the parties
(the "Voting Agreement"), pursuant to which, until the Preemptive End Date, each
of Messrs. Stern, Rosenfeld and Mitchell shall agree to vote all shares of Buyer
Common Stock or other Buyer Voting Stock which they have the right to vote in
the election of Buyer's directors in accordance with Seller's instructions.
4.8 CONVERSION OF BOGEN OPTIONS. At the Second Closing, each
issued and outstanding option to purchase shares of Bogen Common Stock issued
pursuant to the 1994 Bogen Corporation Stock Option Plan (the "Bogen Option
Plan"), shall be converted (whether by the adoption of a new plan or otherwise)
into options (the "New Options") to purchase such number of shares of Buyer
Common Stock as is determined by the product of (i) a fraction, the numerator of
which is the Bogen Book Value and the denominator of which is the sum of the
Bogen Book Value and the Speech Design Book Value, (ii) a fraction, the
numerator of which is the number of shares of Bogen Common Stock issuable upon
exercise of such option and the denominator of which is the total number of
issued and outstanding shares of Bogen Common Stock as of the Closing Date, and
(iii) the number of shares of Buyer Common Stock issued and outstanding
immediately following the Closing Date. Each New Option shall have
substantially similar terms and conditions, including, without limitation, the
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vesting period, as the corresponding option which is currently outstanding under
the Bogen Option Plan. Promptly after the Second Closing, Buyer shall prepare
and file with the SEC a registration statement on Form S-8 registering the
shares of Buyer Common Stock issuable upon exercise of the New Options, and will
thereafter use its best efforts to cause such registration statement to be
declared effective as soon as possible.
4.9 FINANCIAL STATEMENTS. Seller agrees that it shall cause
each of Bogen and Speech Design to prepare and deliver, at its own expense, all
financial statements necessary to be included in the proxy statement to be
distributed in connection with the meeting of Buyer's stockholders to vote upon
the transactions contemplated hereby (the "Proxy Statement"); PROVIDED, HOWEVER,
in the event the Closing occurs, Buyer shall reimburse Seller for all expenses
incurred in connection with the preparation and delivery of such financial
statements.
4.10 PURCHASE BY SELLER OF BOGEN COMMON STOCK PRIOR TO THE
CLOSING. Seller agrees that, prior to the Closing, it shall use its reasonable
efforts to acquire or cause one or more of its subsidiaries to acquire, pursuant
to a transaction which complies with Section 253 of the Delaware General
Corporation Law or otherwise, all issued and outstanding shares of Bogen Common
Stock which it, directly or indirectly, does not own as of the date hereof.
4.11 PROXY STATEMENT/PROSPECTUS; REGISTRATION. (a) Buyer shall
prepare and file with the SEC as soon as reasonably practicable after the date
hereof the Proxy Statement and shall use all reasonable efforts to mail the
Proxy Statement on the earliest practicable date. Seller shall promptly furnish
to Buyer all information, and take such other actions, as may reasonably be
requested in connection with any action to be taken by Buyer in connection with
the immediately preceding sentence. Buyer shall have the right to review and
provide comments to the Proxy Statement prior to the filing of the Proxy
Statement with the SEC. The information provided and to be provided by Buyer
and Seller, respectively, for use in the Proxy Statement shall be true and
correct in all material respects without omission of any material fact which is
required to make such information not false or misleading.
(b) As soon as practicable after the Closing Date but in no
event later than thirty (30) days thereafter, Buyer shall have caused to become
effective a shelf registration statement on Form S-3 complying with Rule 415 of
the Securities Act (the "Registration Statement") registering for resale by
Seller (or a pledgee of the shares of Buyer Common Stock which Seller owns) all
shares of Buyer Common Stock issued to Seller at the Closing. Contemporaneous
with or prior to the issuance by Buyer to Seller of any shares of Buyer Common
Stock after the Closing Date pursuant to this Agreement, Buyer shall amend the
Registration Statement to include within the Registration Statement all
additional shares of Buyer Common Stock so issued to Seller, and shall use its
best effort to cause the Registration Statement, as amended, to remain or be
declared effective as soon thereafter as practicable. Buyer shall use its best
efforts to keep the Registration Statement effective until such times as all
shares of Buyer Common Stock registered thereunder have been sold. The
provisions of Sections 7.5, 7.6, 7.7 and 7.9 (other than those relating to an
underwritten offering) shall apply to the Registration Statement.
Notwithstanding anything to the contrary set forth in this Agreement or in the
Registration Statement, (i) prior to selling, transferring or otherwise
disposing of any of the securities registered by way of the Registration
Statement, Seller (or a pledgee of the shares of the Buyer Common Stock owned by
Seller) shall notify Buyer of Seller's (or the pledgee's) intent to make such
sale, transfer or other disposition and (ii) in the event that Buyer shall have
advised Seller (or the pledgee) not later than the next business day following
receipt of such notice that there then exists certain material information with
respect to Buyer which has not been disclosed publicly and which, but for the
effectiveness of such Registered Statement, Buyer would not legally be required
to disclose publicly (and which, for a proper business purpose, Buyer has
determined not to disclose publicly), Seller (or the pledgee) shall refrain from
selling, transferring or otherwise disposing of such securities until Buyer
shall have informed it that such information has ceased to be material or has
been disclosed publicly; PROVIDED, HOWEVER, that Seller (or the pledgee) shall
in no event be required to refrain from selling pursuant to the Registration
Statement for more than sixty (60) consecutive days or for more than ninety (90)
days in any one hundred eighty (180) day period and, in that regard, to the
extent such information continues to be material, Buyer will promptly disclose
such information in the manner required by law.
(c) In the event that the Registration Statement is not
effective on that date which is thirty one (31) days after the Closing Date,
Seller may, at its sole option, elect to have the transactions contemplated
hereby unwound by providing Buyer with notice thereof within thirty six (36)
days after the Closing Date. In the event Seller has provided such notice to
Buyer, the parties agree that they shall take all steps necessary to unwind the
transactions contemplated hereby.
4.12 STOCKHOLDERS' APPROVAL. Buyer shall promptly submit this
Agreement and the transactions contemplated hereby for the approval of its
stockholders at a meeting of stockholders and, subject to the fiduciary duties
of the Board of Directors of Buyer under applicable law, shall use its best
efforts to obtain stockholder approval and adoption of this Agreement and the
transactions contemplated hereby. Such meeting shall be held as soon as
practicable following the date upon which the Proxy Statement is mailed.
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4.13 OTHER ACTION. Seller and Buyer shall use their best efforts
to cause the conditions to the obligations of the parties set forth in Section 5
which are within their control (other than the conditions contained in Section
5.2(h) which Seller shall have no obligation to satisfy, except on terms which
are acceptable to it in its sole discretion) to be satisfied as promptly as
practicable, to cause the purchase to be consummated at the earliest practicable
date, and to prevent the taking of any action that would result in their
respective representations and warranties not being true as of the Closings.
4.14 FURTHER ACTION. Seller and Buyer shall take all such
further action, and execute and deliver such further documents, as may be
necessary to carry out the transactions contemplated by this Agreement.
4.15 EXPENSES. Except as otherwise expressly provided herein,
each party to this Agreement shall bear its own respective expenses incurred in
connection with the negotiation and preparation of this Agreement, the
consummation of the transactions contemplated hereby and in connection with all
duties and obligations required to be performed by each of them under this
Agreement. Buyer will pay all costs and expenses related to the preparation and
mailing of the Proxy Statement.
4.16 CERTAIN TAX MATTERS.
(a) RETURNS. Seller shall have the exclusive obligation
and authority to file or cause to be filed all federal, state, local, and
foreign Tax Returns that are required to be filed by or with respect to the
income, assets, and operations of each of Speech Design and Bogen for all
taxable years or other taxable periods ending on or prior to the Closing Date
(the "Pre-Closing Periods"). Except as provided in the preceding sentence,
Buyer shall have the exclusive obligation and authority to file or cause to be
filed all Tax Returns that are required to be filed by or with respect to the
income, assets, and operations of each of Speech Design and Bogen or any
successor thereto after the Closing Date (without regard to extensions). Prior
to the filing of any Tax Return with respect to any taxable year or other
taxable period beginning before the Closing Date and ending after the Closing
Date (the "Overlap Period") and no later than thirty (30) days prior to the due
date for filing of such Tax Return, Buyer shall provide Seller and its
representative with notice, which notice shall (i) set forth Buyer's
calculations regarding the amount of such Taxes which Buyer determines has given
rise to a right of indemnification pursuant to Section 4.16(c) in sufficient
detail and particularity to enable Seller to verify the amount of the required
indemnification; (ii) include a draft of such Tax Return; and (iii) provide
Seller access to all records of each of Speech Design and Bogen reasonably
necessary to enable Seller and its representatives to evaluate the draft Tax
Returns provided with such notice. No later than fifteen (15) days prior to the
due date for filing of such Tax Returns, Seller shall notify Buyer of any
reasonable objections Seller may have to Buyer's calculations regarding the
amount of such Taxes and to any items set forth in such draft return. Buyer and
Seller agree to consult and resolve in good faith any such objection, it being
understood and agreed that in the absence of any such resolution, any and all
such objections shall be resolved in a manner consistent with the past practices
with respect to such items.
(b) CONTESTS. Seller and its duly appointed
representatives shall have the exclusive authority to control any audit or
examination by any taxing authority, initiate any claim for refund, amend any
Tax Return, and contest, resolve and defend against any assessment for
additional Taxes, notice of Tax deficiency or other adjustment of taxes of or
relating to any liability of Speech Design or Bogen for Taxes for any Pre-
Closing Period, and Seller shall be entitled to any Tax refund relating to any
Pre-Closing Period; PROVIDED, HOWEVER, that neither Seller nor any of its
representatives shall, without the prior written consent of Buyer, which consent
shall not be unreasonably withheld, enter into any settlement of any contest or
otherwise compromise any issue that materially affects or may materially affect
the Tax liability of Buyer or any of its affiliates for any taxable year or
other taxable period ending after the Closing Date (the "Post-Closing Periods").
Buyer shall have the exclusive authority to control any audit or examination by
any taxing authority, initiate any claim for refund, amend any Tax Return, and
contest, resolve and defend against any assessment for additional Taxes, notice
of Tax deficiency or other adjustment of Taxes of or relating to any liability
of Speech Design or Bogen for Taxes for all Post-Closing Periods; PROVIDED,
HOWEVER, that (i) neither Buyer nor any of its representatives shall, without
the prior written consent of Seller, which consent shall not be unreasonably
withheld, enter into any settlement of any contest or otherwise compromise any
issue that affects or may materially affect the Tax liability of Seller or any
of its affiliates for any Pre-Closing Period or the portion of the Overlap
Period ending immediately prior to the Closing Date and (ii) neither Buyer nor
any of its representatives shall, without the prior consent of Seller, which
consent shall not be unreasonably withheld, enter into any settlement of any
contest or otherwise compromise any issue that would require payment by Seller
of any amount under Section 4.16(c) unless Buyer shall have waived or caused to
be waived for itself and Speech Design or Bogen any right to indemnification for
any such amounts from Seller.
(c) INDEMNIFICATION. Except to the extent Taxes are
reserved for on the Closing Date Balance Sheets of Speech Design or Bogen, and
except as otherwise provided in this Section 4.16(c), Seller agrees to indemnify
and hold harmless Buyer and its affiliates from and against all Taxes for which
Speech Design or Bogen shall be liable (i) for all Pre-Closing Periods, (ii)
arising out of the inclusion of Bogen in any consolidated, combined, or unitary
group of which Bogen is or was a member on or prior to the Closing Date, and
(iii) with respect to the Overlap Period, for the portion of such
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taxable year or taxable period up to and including the Closing Date determined
on the basis of an interim closing of the books as of the Closing Date. Except
as otherwise provided in this Section 4.16(c), Buyer agrees to indemnify and
hold harmless Seller from and against all Taxes imposed on or with respect to
the post-closing income, assets and operations of Speech Design or Bogen for any
taxable period after the Closing Date. Notwithstanding anything to the contrary
contained herein, Seller's indemnification obligation to Buyer and its
affiliates with respect to Taxes of Speech Design shall be limited to the
product of (i) the Speech Design Percentage Ownership, and (ii) the amount of
Taxes for which Speech Design is liable and which gives rise to Seller's
indemnification obligation pursuant to this Section 4.16(c).
(d) TAX BENEFITS. Any payment hereunder shall be net of
any Tax benefits for (i) Buyer, Speech Design, Bogen or their affiliates or (ii)
Seller or its affiliates, as the case may be.
(e) NOTICES. Buyer shall promptly forward to Seller all
written notifications and other communications from any taxing authority
received by Buyer relating to any pending or threatened Tax audit or other
proceeding relating to the Tax liability of Speech Design or Bogen which, if
successful, would result in a payment under Section 4.16(c). The failure of
Buyer to give Seller such written notice, to the extent Seller is actually
prejudiced thereby, if at all, shall excuse Seller from its obligations under
Section 4.16(c) with respect to any increased Tax liability directly or
indirectly attributable to any such written notification or other communication.
(f) COOPERATION; RECORDS. Seller and Buyer shall cause
each of Speech Design or Bogen to provide the requesting party with such
assistance as may be reasonably requested by such party in connection with the
preparation of any Tax Return, any audit, or any judicial or administrative
proceeding or determination relating to liability for Taxes of Speech Design or
Bogen, including but not limited to, access to the books and records of Speech
Design or Bogen and the affiliates of Speech Design or Bogen. Buyer and Seller
acknowledge that any and all information obtained in connection with the
preparation of any Tax Return, any audit, or any judicial or administrative
proceeding or determination pursuant to Section 4.16(f) is of a confidential
nature and that all such information shall be used only for the purposes set
forth in the immediately preceding sentence. Each party hereto shall hold and
shall cause its consultants, advisors, employees, and affiliates to hold such
information received from the other party in strict confidence, unless such
information has been published, is a matter of public knowledge or is required
to be disclosed by legal process.
Seller shall, and Buyer shall cause each of Speech Design and
Bogen to, retain all Tax Returns, schedules, work papers and all material
records or other documents relating to Tax matters of each of Speech Design and
Bogen for the first taxable year or other taxable period ending after the
Closing Date and for all prior taxable years or other taxable periods until the
expiration of all applicable statutes of limitation, and provide the other party
with any record or information (including making employees available to such
other party for reasonable periods of time) which may be relevant to such Tax
Return, audit, proceeding or determination. None of Buyer, Speech Design or
Bogen (or any of their affiliates) shall destroy or dispose of or allow the
destruction or disposition of any books, records or files relating to the
business, properties, assets or operations of Speech Design or Bogen to the
extent they pertain to the operations of Speech Design or Bogen on or prior to
the Closing Date, without first having offered in writing to deliver such books,
records and files to Seller. Buyer, Speech Design and Bogen (and their
affiliates) shall be entitled to dispose of the books, records and files
described in such notice if Seller shall fail to request copies of such books,
records and files within 90 days after receipt of the notice described in the
preceding sentence.
(g) For purposes of this Agreement (i) "Tax" or "Taxes"
shall mean all taxes of any kind whatsoever, including, without limitation, any
interest, penalties and additions to tax and (ii) "Tax Return" shall mean all
returns, reports and forms required to be filed in respect of Taxes.
Article 5. CONDITIONS TO CLOSING.
5.1 CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER AT BOTH THE
FIRST CLOSING AND THE SECOND CLOSING. The obligations of Buyer to consummate
the transactions contemplated at each of the First Closing and the Second
Closing are subject to the fulfillment, prior to or at the First Closing and the
Second Closing, as the case may be, of each of the following conditions (any or
all of which may be waived by Buyer):
(a) all representations and warranties of Seller to Buyer
(as modified by the schedules provided pursuant to Section 3.5) shall be true
and correct in all material respects at and as of the time of each of the First
Closing and the Second Closing with the same effect as though those
representations and warranties had been made again at and as of that time;
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(b) Seller shall have performed and complied with all
obligations and covenants required by this Agreement to be performed or complied
with by it prior to or at each of the First Closing and the Second Closing
including, without limitation, the deliveries required by Sections 6.2 and 6.4
hereof;
(c) Buyer shall have been furnished with a certificate
(dated the date of the Closings and in form and substance satisfactory to
Buyer), executed by an executive officer of Seller, certifying to the
fulfillment of the conditions specified in Sections 5.1(a) and 5.1(b);
(d) Buyer shall have been furnished with an opinion of
Klehr, Harrison, Harvey, Branzburg & Ellers, counsel to Seller, which opinion
shall be customary for transactions of this type and shall be acceptable to
Buyer;
(e) there shall be no litigation or any proceeding by or
before any governmental agency or instrumentality pending or threatened against
any party hereto that seeks to restrain or enjoin or otherwise questions the
legality or validity of the transactions contemplated by this Agreement or which
seeks substantial damages in respect thereof;
(f) Buyer and Seller shall have obtained all consents,
authorizations or approvals from all applicable third parties and all foreign
and domestic governmental agencies and self-regulatory organizations required,
necessary or desirable for completion of the transactions contemplated by this
Agreement (including, without limitation, the approval of Buyer's stockholders)
in each case in form and substance reasonably satisfactory to Buyer, and no such
consent, authorization or approval shall have been revoked. Any applicable
waiting periods under the HSR Act, applicable to the transactions contemplated
hereby shall have expired or been terminated; and
(g) All claims, liens, security interests and other
encumbrances set forth on SCHEDULES 3.2(c) or 3.3(c) (the "Liens") shall have
been released, other than the Bogen Permitted Lien.
5.2 CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER AT BOTH THE
FIRST CLOSING AND THE SECOND CLOSING. The obligations of Seller to consummate
the transactions contemplated at each of the First Closing and the Second
Closing are subject to the fulfillment, prior to or at the First Closing and the
Second Closing, as the case may be, of each of the following conditions (any or
all of which may be waived by Seller):
(a) all representations and warranties of Buyer to Seller
(as modified by the schedules provided pursuant to Section 3.5) shall be true
and correct in all material respects at and as of the time of each of the First
Closing and the Second Closing with the same effect as though such
representations and warranties had been made again at and as of that time;
(b) Buyer shall have performed and complied with all
obligations and covenants required by this Agreement to be performed or complied
with by it prior to or at each of the First Closing and the Second Closing
including, without limitation, the deliveries required by Sections 6.1 and 6.3
hereof and the covenant set forth in Section 4.11(b);
(c) Seller shall have been furnished with a certificate
(dated the date of the Closings and in form and substance satisfactory to
Seller) executed by an executive officer of Buyer certifying to the fulfillment
of the conditions specified in Sections 4.2(a) and 5.2(b);
(d) Seller shall have been furnished with an opinion of
Weil, Gotshal & Manges, counsel to Buyer, which opinion shall be customary for
transactions of this type and shall be acceptable to Seller;
(e) there shall be no litigation or any proceeding by or
before any governmental agency or instrumentality pending or threatened against
any party hereto that seeks to restrain or enjoin or otherwise questions the
legality or validity of the transactions contemplated by this Agreement or which
seeks substantial damages in respect thereof;
(f) Buyer and Seller shall have obtained all consents,
authorizations or approvals from all applicable third parties, and foreign and
domestic governmental agencies and self-regulatory organizations required,
necessary or desirable for completion of the transactions contemplated by this
Agreement (including, without limitation, the approval of Buyer's stockholders)
in each case in form and substance reasonably satisfactory to Seller, and no
such consent, authorization or approval shall have been revoked. Any applicable
waiting periods under the HSR Act, applicable to the transactions contemplated
hereby shall have expired or been terminated;
(g) All Liens shall have been released on terms acceptable
to Seller in its sole discretion, other than the Bogen Permitted Lien; PROVIDED,
HOWEVER, that any Lien for the benefit of S.C. Fundamental Value
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Fund, L.P., SC Fundamental Value BVI, Ltd., or any of their affiliates shall
have been released regardless of whether the terms of such release are
acceptable to Seller;
(h) The Buyer shall have consummated a private placement
for minimum gross proceeds of $3,000,000 and shall have received a bridge loan,
on terms reasonably acceptable to Seller, of at least $100,000;
(i) GKN Securities Corp. shall have waived its right to
require its consent in connection with a call for redemption by Buyer of any or
all Buyer Warrants; and
(j) The Voting Agreement shall have been executed and
delivered by the other parties thereto.
5.3 CONDITIONS PRECEDENT TO OBLIGATIONS OF ALL PARTIES AT THE
SECOND CLOSING; RECISION. In addition to the conditions set forth in Sections
5.1 and 5.2 hereof, the obligations of each of Buyer and Seller to consummate
the transactions contemplated at the Second Closing shall be subject to the
consummation of the transactions contemplated at the First Closing. It is
contemplated that the Closings will occur on the same date; PROVIDED, HOWEVER,
in the event that the Second Closing is not consummated within one (1) business
day after consummation of the First Closing, upon the written request of either
Buyer or Seller to the other, the parties agree that they shall take all actions
necessary to unwind the transactions consummated at the First Closing.
Article 6. DELIVERIES AT THE CLOSINGS.
6.1 DELIVERIES BY SELLER AT THE FIRST CLOSING. At the First
Closing, Seller shall deliver, or cause to be delivered, to Buyer the following
(which deliveries shall be deemed to be held in escrow pending the consummation
of the Second Closing):
(a) a stock certificate or certificates representing the
Speech Design Shares or such other documents satisfactory to Buyer and its
counsel evidencing the transfer of the Speech Design Shares, which such shares
shall be free and clear of any security interest, claim or encumbrance, duly
endorsed in blank or accompanied by stock transfer powers and with all requisite
stock transfer tax stamps attached;
(b) a copy of resolutions of the board of directors of
Seller authorizing the execution, delivery and performance of this Agreement by
Seller, and a certificate of Seller's secretary or assistant secretary, dated
the date of the First Closing, to the effect that those resolutions were duly
adopted and are in full force and effect;
(c) the certificate referred to in Section 5.1(c);
(d) the opinion referred to in Section 5.1(d); and
(e) the Voting Agreement, unless waived by Seller as a
condition to the Closing.
6.2 DELIVERIES BY BUYER AT THE FIRST CLOSING. At the First
Closing, Buyer shall deliver, or cause to be delivered, to Seller the following
(which deliveries shall be deemed to be held in escrow pending the consummation
of the Second Closing):
(a) a stock certificate or certificates for the aggregate
number of shares of Buyer Common Stock issuable to Seller as calculated in
accordance with Section 2.2(a)(ii), registered in Seller's name, free and clear
of all restrictive legends and any security interest, claim or encumbrance;
(b) evidence of the wire transfer required by Section
2.3(a);
(c) a copy of resolutions of the board of directors of
Buyer authorizing the execution, delivery and performance of this Agreement by
Buyer, and a certificate of its secretary or assistant secretary, dated the date
of the First Closing, to the effect that those resolutions were duly adopted and
are in full force and effect;
(d) the certificate referred to in Section 5.2(c);
(e) the opinion referred to in Section 5.2(d); and
(f) a dollar amount in immediately available funds equal to
the amount specified in Section 4.9; and
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(g) the Voting Agreement.
6.3 DELIVERIES BY SELLER AT THE SECOND CLOSING. At the Second
Closing, Seller shall deliver, or cause to be delivered, to Buyer the following:
(a) a stock certificate or certificates representing the
Bogen Shares, free and clear of any security interest, claim or encumbrance
(other than the Bogen Permitted Lien), duly endorsed in blank or accompanied by
stock transfer powers and with all requisite stock transfer tax stamps attached;
(b) a copy of resolutions of the board of directors of
Seller authorizing the execution, delivery and performance of this Agreement by
Seller, and a certificate of Seller's secretary or assistant secretary, dated
the date of the Second Closing, to the effect that those resolutions were duly
adopted and are in full force and effect;
(c) the certificate referred to in Section 5.1(c); and
(d) the opinion referred to in Section 5.1(d).
6.4 DELIVERIES BY BUYER AT THE SECOND CLOSING. At the Second
Closing, Buyer shall deliver, or cause to be delivered, to Seller the following:
(a) a stock certificate or certificates for the aggregate
number of shares of Buyer Common Stock issuable to Seller as calculated in
accordance with Section 2.2(b)(ii), registered in Seller's name, free and clear
of all restrictive legends and any security interest, claim or encumbrance;
(b) evidence of the wire transfer required by Section
2.3(b);
(c) a copy of resolutions of the board of directors of
Buyer authorizing the execution, delivery and performance of this Agreement by
Buyer, and a certificate of its secretary or assistant secretary, dated the date
of the Second Closing, to the effect that those resolutions were duly adopted
and are in full force and effect;
(d) the certificate referred to in Section 5.2(c); and
(e) the opinion referred to in Section 5.2(d).
Article 7. REGISTRATION RIGHTS. Buyer covenants and agrees as
follows:
7.1 DEFINITIONS. For purposes of this Section 7:
(a) The term "register", "registered", and "registration"
refer to a registration effected by preparing and filing a registration
statement or similar document in compliance with the Securities Act, and the
declaration or ordering of effectiveness of such registration statement or
document;
(b) The term "Registrable Securities" means (i) the shares
of Buyer Common Stock issuable or issued to Seller in connection with this
Agreement, (ii) the shares of Buyer Common Stock issuable upon conversion or
exercise of all securities issuable or issued pursuant to this Agreement, and
(iii) the shares of Buyer Common Stock issuable or issued as (or issuable upon
the conversion or exercise of any warrant, right or other security which is
issued as) a dividend or other distribution with respect to, or in exchange for
or in replacement of securities issued to Seller pursuant to this Agreement,
other than such shares of Buyer Common Stock which at the time of determination
may be sold pursuant to and are included in an effective registration statement.
(c) The number of shares of "Registrable Securities then
outstanding" shall be determined by the number of shares of Buyer Common Stock
outstanding which are, and the number of shares of Buyer Common Stock issuable
pursuant to then exercisable or convertible securities which are, Registrable
Securities; and
(d) The term "Holder" means any person owning or having the
right to acquire Registrable Securities.
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7.2 REQUEST FOR REGISTRATION.
(a) If, at any time on or after October 15, 1997 (or such
earlier date as provided in Section 4.5(b) hereof), Buyer shall receive a
written request from Holders of Registrable Securities that Buyer file a
registration statement under the Securities Act covering the registration of at
least twenty five percent (25%) of such Registrable Securities then outstanding,
then Buyer shall use its best efforts to effect as soon as practicable, after
the receipt of such request, the registration under the Securities Act of such
Registrable Securities which the Holders request to be registered. Without the
prior written consent of the Holders requesting a registration, neither Buyer
nor any other person other than the Holders shall be entitled to include shares
in the registrations made under this Section 7.2.
(b) Buyer is obligated to effect only three such
registrations pursuant to this Section 7.2.
(c) Notwithstanding the foregoing, if Buyer shall furnish
to Holders requesting a registration statement pursuant to this Section 7.2 a
certificate signed by the Chief Executive Officer of Buyer stating that in the
good faith judgment of the board of directors of Buyer it would be seriously
detrimental to Buyer and its stockholders for such registration statement to be
filed and it is therefore essential to defer the filing of such registration
statement, Buyer shall have the right to defer such filing for a period of not
more than 60 days after receipt of the request of the Holders; PROVIDED,
HOWEVER, that Buyer may not utilize this right more than once in any twelve
month period.
7.3 COMPANY REGISTRATION. If (but without any obligation to do
so) Buyer proposes at any time on or after October 15, 1997 (or such earlier
date as provided in Section 4.5(b) hereof) to register (including for this
purpose a registration effected by Buyer for shareholders other than the
Holders) any shares of its capital stock or other securities under the
Securities Act (other than a registration relating solely to the sale of
securities to participants in a Buyer stock plan, or a registration on any form
which does not include substantially the same information, other than
information related to the selling shareholders or their plan of distribution,
as would be required to be included in a registration statement covering the
sale of the Registrable Securities), Buyer shall, at such time, promptly give
each Holder written notice of such registration. Upon the written request of
each Holder given within twenty (20) days after mailing of such notice by Buyer,
Buyer shall, subject to the provisions of Section 7.8, cause to be registered
under the Securities Act all of the Registrable Securities that each such Holder
has requested to be so registered.
7.4 REGISTRATION S-3. If Buyer shall receive at any time on or
after October 15, 1997 (or such earlier date as provided in Section 4.5(b)
hereof) a written request from any Holder that Buyer effect a registration on
Form S-3 and any related qualification or compliance, with respect to all or a
part of such Registrable Securities owned by such Holder, Buyer will, as soon as
practicable, effect such registration and all such qualifications and
compliances as may be so requested as would permit or facilitate the sale and
distribution of all or such portion of such Holder's Registrable Securities as
is specified in such request; PROVIDED, HOWEVER, that Buyer shall not be
obligated to effect any such registration, qualification or compliance pursuant
to this Section 7.4: (i) if Form S-3 is not then available for such offering by
the Holders; (ii) if the Holders, together with the holders of any other
securities of Buyer entitled to inclusion in such registration, propose to sell
Registrable Securities and such other securities (if any) at an aggregate price
to the public (net of any underwriters, discounts or commissions) of less than
$500,000; (iii) if Buyer shall furnish to the Holders a certificate signed by
the Chief Executive Officer of Buyer stating that in the good faith judgment of
the Board of Directors of Buyer, it would be seriously detrimental to Buyer and
its stockholders for such Form S-3 registration to be effected at such time, in
which event Buyer shall have the right to defer the filing of the Form S-3
registration statement for a period of not more than sixty (60) days after the
first receipt of the request of the Holder or Holders under this Section 7.4;
PROVIDED, HOWEVER, that Buyer shall not utilize such right of deferral more than
once in any twelve month period; (iv) if Buyer has, within the six (6) month
period preceding the date of such request, already effected one registration on
Form S-3 for the Holders pursuant to this Section 7.4; or (v) in any particular
jurisdiction in which Buyer would be required to qualify to do business or to
execute a general consent to service of process in effecting such registration,
qualification or compliance. Without the prior written consent of the Holders
requesting a registration, neither Buyer nor any other person other than Holders
shall be entitled to include shares in an underwritten registration made under
this Section 7.4.
7.5 OBLIGATIONS OF BUYER. Whenever required under this Section
7 to effect the registration of any Registrable Securities, Buyer shall, as
expeditiously as reasonably possible:
(a) Prepare and file with the SEC a registration statement
with respect to such Registrable Securities and use its best efforts to cause
such registration statement to become effective, and, upon the request of the
Holders of a majority of the Registrable Securities registered thereunder, keep
such registration statement effective for up to one hundred eighty (180) days
or, in the case of any registration statement on Form S-3, until such time as
the shares covered by such registration statement are sold in accordance with
the plan of distribution set forth therein.
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(b) Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement.
(c) Furnish to the Holders such numbers of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents as they may
reasonably request in order to facilitate the disposition of Registrable
Securities owned by them.
(d) Use its best efforts to register and qualify the
securities covered by such registration statement under such other securities or
Blue Sky laws of such jurisdictions as shall be reasonably requested by the
Holders, provided that Buyer shall not be required to qualify to do business or
to file a general consent to service of process in any such states or
jurisdictions.
(e) In the event of any underwritten public offering, enter
into and perform its obligations under an underwriting agreement, in usual and
customary form, with the managing underwriter of such offering. Each Holder
participating in such underwriting shall also enter into and perform its
obligations under such an agreement.
(f) Notify each Holder of Registrable Securities covered by
such registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing.
(g) In the case of an underwritten public offering,
furnish, at the request of any Holder requesting registration of Registrable
Securities pursuant to this Section 6, on the date that such Registrable
Securities are delivered to the underwriters for sale in connection with a
registration pursuant to this Section 7 (i) an opinion, dated such date, of the
counsel representing Buyer for the purposes of such registration, in such form
and substance as is customarily given to underwriters in an underwritten public
offering, addressed to the underwriters and (ii) a letter dated such date, from
the independent certified public accountants of Buyer, in such form and
substance as is customarily given by independent certified public accountants to
underwriters in an underwritten public offering, addressed to the underwriters.
7.6 FURNISH INFORMATION. It shall be a condition precedent to
the obligations of Buyer to take any action pursuant to this Section 7 with
respect to the Registrable Securities of any selling Holder that such Holder
shall have furnished to Buyer such information regarding itself, the Registrable
Securities held by it, and the intended method of disposition of such securities
as shall be required to effect the registration of such Holder's Registrable
Securities.
7.7 EXPENSES OF REGISTRATION. All expenses other than
underwriting discounts and commissions incurred in connection with
registrations, filings or qualifications pursuant to this Section 7, including
without limitation all registration, filing and qualification fees, printers and
accounting fees and fees and disbursements of counsel for Buyer shall be borne
by Buyer; PROVIDED, HOWEVER, in the event Buyer includes in any registration
statement shares for sale for its own account, it shall pay the pro rata portion
of any underwriting discounts and commission attributable to such securities for
its own account. Notwithstanding the immediately preceding sentence, Buyer
shall not be required to pay for any expenses of any registration proceeding
begun pursuant to Section 7.2 if the registration request is subsequently
withdrawn at the request of the Holders of a majority of the Registrable
Securities to be registered (in which case all Holders participating in such
withdrawn registration shall bear such expenses pro rata), unless the Holders of
a majority of the Registrable Securities agree to forfeit their right to one
demand registration pursuant to Section 7.2; PROVIDED, HOWEVER, that if at the
time of such withdrawal the Holders have learned of a material adverse change in
the condition, business, or prospects of Buyer from that known to the Holders at
the time of their request, then the Holders shall not be required to pay any of
such expenses and shall retain their rights pursuant to Section 7.2
7.8 UNDERWRITING REQUIREMENTS; CUTBACK. In connection with any
offering involving an underwriting of shares being issued by Buyer, Buyer shall
not be required under Section 7.3 to include any of the Holders' securities in
such underwriting unless they accept the customary and reasonable terms of the
underwriting as agreed upon between Buyer and the underwriters selected by it,
and then only in such quantity as will not, in the opinion of the underwriters,
jeopardize the success of the offering by Buyer. If the total amount of
securities, including Registrable Securities, requested to be included in such
offering exceeds the amount of securities that the underwriters reasonably
believe compatible with the success of the offering, then Holders may include in
the offering only that number of such Registrable Securities which the
underwriters believe will not jeopardize the success of the offering (the
securities so included to be apportioned pro rata among the Holders according to
the total amount of securities entitled to be included therein owned by each
Holder or in such other proportions as shall mutually be agreed to by such
Holders); PROVIDED, HOWEVER, Registrable
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Securities shall be excluded from such offering only to the extent that no
securities other than those sold for the account of Buyer and other Registrable
Securities are included in such offering.
7.9 INDEMNIFICATION AND CONTRIBUTION. In the event any
Registrable Securities are included pursuant to a registration statement under
this Section 7:
(a) To the extent permitted by law, Buyer will indemnify
and hold harmless each Holder, any underwriter (as defined in the Securities
Act) and each person if any, who controls such Holder or underwriter within the
meaning of the Securities Act or the Exchange Act against any losses, claims,
damages or liabilities (joint or several) to which they or any of them may
become subject under the Securities Act, the Exchange Act or any other federal
or state law, insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of or are based upon any of the following
statements, omissions or violations (collectively a "Violation"): (i) any
untrue statement or alleged untrue statement of a material fact contained in
such registration statement, including any preliminary prospectus (but only if
such is not corrected in the final prospectus) contained therein or any
amendments or supplements thereto, (ii) the omission or alleged omission to
state therein a material fact required to be stated therein, or necessary to
make the statements therein not misleading (but only if such is not corrected in
the final prospectus), or (iii) any violation or alleged violation by Buyer in
connection with the registration of Registrable Securities under the Securities
Act, the Exchange Act, any state securities law or any rule or regulation
promulgated under the Securities Act, the Exchange Act or any state securities
law; and Buyer will pay to each such Holder, underwriter or controlling person,
as incurred, any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim, damage,
liability or action; PROVIDED, HOWEVER, that the indemnity agreement contained
in this Section 7.9(a) shall not apply to amounts paid in settlement of any such
loss, claim, damage, liability or action if such settlement is effected without
the consent of Buyer (which consent shall not be unreasonably withheld), nor
shall Buyer be liable in any such case for any such loss, claim, damage,
liability or action to the extent that it arises out of or is based upon a
violation which occurs in reliance upon and in conformity with written
information furnished expressly for use in connection with such registration by
any such Holder, underwriter or controlling person.
(b) To the extent permitted by law, each selling Holder
will indemnify and hold harmless Buyer, each of its directors, each of its
officers who has signed the registration statement, each person, if any, who
controls Buyer within the meaning of the Securities Act, any underwriter, any
other Holder selling securities in such registration statement and any
controlling person of any such underwriter or other Holder, against any losses,
claims, damages or liabilities (joint or several) to which any of the foregoing
persons may become subject, under the Securities Act, the Exchange Act or other
federal or state law, insofar as such losses, claims, damages or liabilities (or
actions in respect thereto) arise out of or are based upon any Violation, in
each case to the extent (and only to the extent) that such Violation occurs in
reliance upon and in conformity with written information furnished by such
Holder expressly for use in connection with such registration; and each such
Holder will pay, as incurred, any legal or other expenses reasonably incurred by
any person intended to be indemnified pursuant to this Section 7.9(b), in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the indemnity agreement contained
in this Section 7.9(b) shall not apply to amounts paid in settlement of any such
loss, claim, damage, liability or action if such settlement is effected without
the consent of the Holder, which consent shall not be unreasonably withheld;
provided that in no event shall any indemnity under this Section 7.9(b) exceed
the net proceeds from the offering received by such Holder.
(c) Promptly after receipt by an indemnified party under
this Section 7.9 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this Section 7.9, deliver to
the indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party shall
have the right to retain its own counsel, with the fees and expenses to be paid
by the indemnifying party, if representation of such indemnified party by the
counsel retained by the indemnifying party would be inappropriate due to actual
or potential differing interests between such indemnified party and any other
party represented by such counsel in such proceeding. The failure to deliver
written notice to the indemnifying party within a reasonable time of the
commencement of any such action, if prejudicial to its ability to defend such
action, shall relieve such indemnifying party of any liability to the
indemnified party under this Section 7.9, but the omission so to deliver written
notice to the indemnifying party will not relieve it of any liability that it
may have to any indemnified party otherwise than under this Section 7.9.
(d) In order to provide for just and equitable contribution
in circumstances in which the indemnification provided for in Section 7.9(a) is
applicable but for any reason is held to be unavailable from Buyer with respect
to all Holders or any Holder, Buyer and the Holder or Holders, as the case may
be, shall contribute to the aggregate losses, claims, damages and liabilities
(including any investigation, legal and other expenses incurred in connection
with, and any amount paid in settlement of, any action, suit or proceeding or
any claims asserted) to which Buyer and one or more of the Holders may be
subject in such proportion as is appropriate to reflect the relative fault of
Buyer on the one hand, and the
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Holder or Holders on the other, in connection with statements or omissions which
resulted in such losses, claims, damages or liabilities. Notwithstanding the
foregoing, no Holder shall be required to contribute any amount in excess of the
net proceeds received by such Holder from the Registrable Securities as the case
may be, sold by such Holder pursuant to the registration statement. 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. Each person, if any, who
controls a Holder within the meaning of the Securities Act shall have the same
rights to contribution as such Holder.
(e) The obligations of Buyer and Holders under this Section
7.9 shall survive the completion of any offering of Registrable Securities in a
registration statement under this Section 7 or otherwise.
7.10 AMENDMENT OF REGISTRATION RIGHTS. Any provision of this
Section 7 may be amended or the observance thereof may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of Buyer and the Holders of a
majority of the Registrable Securities then outstanding. An amendment or waiver
effected in accordance with this Section shall be binding upon each Holder of
any securities purchased under this Agreement at the time outstanding (including
securities into which such securities are convertible), each future Holder of
all such securities, and Buyer.
Article 8. SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION.
8.1 SURVIVAL. All statements contained in any certificate or
other instrument delivered by or on behalf of Seller pursuant to this Agreement
or in connection with the transactions contemplated by this Agreement shall be
considered representations and warranties by Seller to Buyer with the same force
and effect as if contained in this Agreement. All representations, warranties
and agreements made by Seller shall survive the Closings for a period of one (1)
year, notwithstanding any investigation at any time made by or on behalf of
Buyer. All statements contained in any certificate or other instrument
delivered by or on behalf of Buyer pursuant to this Agreement or in connection
with the transactions contemplated by this Agreement shall be considered
representations and warranties by Buyer to Seller with the same force and effect
as if contained in this Agreement. All representations, warranties and
agreements made by Buyer shall survive the Closings for a period of one (1)
year, notwithstanding any investigation at any time made by or on behalf of
Seller.
8.2 INDEMNIFICATION. Except as otherwise provided in Section
4.16: (a) Seller shall indemnify and hold harmless Buyer against any loss,
liability, damage or expense (including reasonable counsel fees) that Buyer may
suffer, sustain or become subject to as a result of any breach of any
representation, warranty or agreement, or any misrepresentation, made by Seller;
PROVIDED, HOWEVER, the parties acknowledge and agree that Seller's liability for
any such breach which affects or has the result of overstating the financial or
other condition of Speech Design shall be limited to the product of (i) the
Speech Design Percentage Ownership and (ii) the amount of such overstatement.
Buyer shall indemnify and hold harmless Seller against any loss, liability,
damage or expense (including reasonable counsel fees) that Seller may suffer,
sustain or become subject to as a result of any breach of any representation,
warranty or agreement, or any misrepresentation, made by Buyer. Buyer, on the
one hand, or Seller, on the other hand, shall have no liability (for
indemnification or otherwise) with respect to any representation or warranty (i)
unless, on or prior to that date which is one (1) year after the Closing Date,
Buyer or Seller, as the case may be, has received written notice of the
inaccuracy or breach giving rise to a right of indemnity, or (ii) to the extent
any inaccuracy or breach was disclosed to the other party prior to the Closings.
(b) Notwithstanding anything to the contrary contained in
Section 8.2(a), in no event shall the aggregate liability of Seller with respect
to the indemnity provided herein exceed a dollar amount equal to the sum of (i)
the Initial Cash Payment less the amount of Bogen Debt, and (ii) the quotient
obtained by dividing (x) the total number of shares of Buyer Common Stock issued
to Seller pursuant to Sections 2.3(a) and 2.3(b) by (y) the Initial Stock Price.
8.3 CONDITIONS OF INDEMNIFICATION. Except as otherwise
provided in Section 4.16, the respective obligations and liabilities of a party
from whom indemnification is sought (an "Indemnifying Party") to a party seeking
indemnification (an "Indemnified Party") under Section 8.2 shall be subject to
the following terms and conditions:
(a) Within fifteen (15) days after receipt of notice of
commencement of any action or the assertion of any claim by a third party (but
in any event at least ten days preceding the date on which an answer or other
pleading must be served in order to prevent a judgment by default in favor of
the party asserting the claim), the Indemnified Party shall give the
Indemnifying Party written notice thereof together with a copy of such claim,
process or other legal pleading, and the Indemnifying Party shall have the right
to undertake the defense thereof by representatives of its own choosing that are
reasonably satisfactory to the Indemnified Party.
(b) If the Indemnifying Party, by the fifteenth day after
receipt of notice of any such claim (or, if earlier, by the fifth day preceding
the day on which an answer or other pleading must be served in order to
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prevent judgment by default in favor of the person asserting such claim), does
not elect to defend against such claim, the Indemnified Party will (upon further
notice to the Indemnifying Party) have the right to undertake the defense,
compromise or settlement of such claim on behalf of and for the account and risk
of the Indemnifying Party; PROVIDED, HOWEVER, that the Indemnified Party shall
not settle or compromise such claim without the Indemnifying Party's consent,
which consent shall not be unreasonably withheld; and PROVIDED FURTHER that the
Indemnifying Party shall have the right to assume the defense of such claim with
counsel of its own choosing at any time prior to settlement, compromise or final
determination thereof.
(c) Notwithstanding anything to the contrary in this
Section 8.3, if there is a reasonable probability that a claim may materially
adversely affect the Indemnifying Party other than as a result of money damages
or other money payments, the Indemnifying Party shall have the right, at its own
cost and expense, to compromise or settle such claim, but the Indemnifying Party
shall not, without the prior written consent of the Indemnified Party, settle or
compromise any claim or consent to the entry of any judgment which does not
include as an unconditional term thereof the giving by the claimant or the
plaintiff to the Indemnified Party a release from all liability in respect of
such claim.
(d) In connection with any such indemnification, the
Indemnified Party will cooperate in all reasonable requests of the Indemnifying
Party.
8.4 PARTICIPATION IN DEFENSE OF CLAIM. If any claim is made
against Buyer that, if sustained, would give rise to a liability of Seller under
Section 8.2, Buyer shall promptly cause notice of the claim to be delivered to
Seller and shall afford Seller and its counsel, at its own expense, the
opportunity to join in defending or compromising the claim. If any claim is
made against Seller that, if sustained, would give rise to a liability of Buyer
under Section 8.2, Seller shall promptly cause notice of the claim to be
delivered to Buyer and shall afford Buyer and its counsel, at Buyer's own
expense, the opportunity to join in defending or compromising the claim.
Article 9. TERMINATION.
This Agreement may be terminated by Buyer or Seller by notice to
the other if (a) at any time prior to the date of the Closings any event shall
have occurred or any state of facts shall exist that renders any of the
conditions to its or their obligations to consummate the transactions
contemplated by this Agreement incapable of fulfillment or (b) on October 7,
1995 if the Closings have not occurred. Following termination of this Agreement
no party shall have liability to another party relating to such termination,
other than any liability resulting from the breach of this Agreement by a party
prior to the date of termination.
Article 10. MISCELLANEOUS.
10.1 FINDERS. The parties to this Agreement respectively
represent and warrant to each other that they have not employed or utilized the
services of any broker or finder in connection with this Agreement or the
transactions contemplated by it.
10.2 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the law of the State of Delaware applicable to
agreements made and to be performed in Delaware.
10.3 NOTICES. All notices, requests, demands and other
communications under this Agreement shall be in writing and shall be deemed
given when delivered personally or mailed by registered mail, return receipt
requested, to the parties at the following addresses (or to such other address
as a party may have specified by notice to the other parties pursuant to this
provision):
(a) if to Seller, to:
Geotek Communications, Inc.
20 Craig Road
Montvale, New Jersey 07645
Attention: Andrew Siegel, General Counsel
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<PAGE>
with a copy to:
Leonard M. Klehr
Klehr, Harrison, Harvey, Branzburg & Ellers
1401 Walnut Street
Philadelphia, Pennsylvania 19102
(b) if to Buyer, to:
c/o Joram Rosenfeld
101 E. 52nd Street, 11th Floor
New York, New York 10022
with a copy to:
David P. Stone
Weil, Gotshal & Manges
767 Fifth Avenue
New York, New York 10153-0119
10.4 SEPARABILITY. If any provision of this Agreement is invalid
or unenforceable, the balance of this Agreement shall remain in effect.
10.5 WAIVER. Buyer may waive compliance by Seller, and Seller may
waive compliance by Buyer, with any provision of this Agreement. Any waiver
must be in writing.
10.6 PUBLICITY. Unless required by law, neither Buyer nor Seller
shall issue any press release or public announcement of any kind concerning the
transactions contemplated by this Agreement without the prior written consent of
the other parties.
10.7 SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
successors and assigns. Notwithstanding the immediately preceding sentence,
other than as contemplated in Section 4.5 hereof, neither this Agreement nor any
right hereunder may be assigned by a party without the prior written consent of
the other parties hereto, except (i) that a party may assign any or all of its
rights hereunder to a wholly owned subsidiary of such party so long as such
party remains liable for all of its obligations to be performed hereunder, and
(ii) Seller may assign its rights pursuant to Article 7 hereof to any purchaser
of five percent (5%) or more of the Registrable Securities outstanding at such
time.
10.8 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which shall together constitute one and the same
instrument.
10.9 AMENDMENT. This Agreement may be amended only by written
instrument executed by each of the parties hereto.
10.10 ENTIRE AGREEMENT. This Agreement (with its schedules
and exhibits) contains, and is intended as, a complete statement of all the
terms of the arrangements among the parties with respect to the matters provided
for, supersedes any previous agreements and understandings among the parties
with respect to those matters.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date first written above.
GEOTEK COMMUNICATIONS, INC.
BY: /S/ YORAM BIBRING
--------------------------------
YORAM BIBRING
EUROPEAN GATEWAY ACQUISITION CORP.
BY: /S/ JORAM D. ROSENFELD
--------------------------------
JORAM D. ROSENFELD
<PAGE>
EUROPEAN GATEWAY ACQUISITION CORP.
C/O JORAM ROSENFELD
101 EAST 52ND STREET, 11TH FLOOR
NEW YORK, NEW YORK 10022
May 10, 1995
Geotek Communications, Inc.
20 Craig Road
Montvale, New Jersey 07645
Attention: Andrew Siegel, General Counsel
Dear Sirs:
Reference is made to the Stock Purchase Agreement, dated April 6, 1995 (the
"Agreement"), between Geotek Communications, Inc. and European Gateway
Acquisition Corp. All of the terms utilized hereinbelow which are defined in
the Agreement shall, when so utilized, have the respective meanings ascribed
thereto in the Agreement.
Notwithstanding anything to the contrary set forth in the Agreement, Seller
and Buyer hereby agree as follows:
a. The term "Initial Cash Payment", as defined in Section 1.1 of the
Agreement, shall be, and hereby is, amended to read in its entirety as follows:
"Initial Cash Payment" shall mean the amount (whether or not paid in cash)
equal to (i) the sum of (x) the amount of Buyer's Trust Fund as of the
Closing Date and (y) $3,000,000, less (ii) the expenses incurred by Buyer
in connection with the issuance and delivery of this Agreement and the
consummation of the transactions contemplated hereby; PROVIDED, HOWEVER,
that such amount shall not be greater than $10,000,000.
b. Up to $3,000,000 of the combined dollar amount of cash payable by Buyer
to Seller at the First Closing and the Second Closing pursuant to Sections
2.2(a)(i), 2.2(b)(i), 2.3(a)(i) and 2.3(b)(i) of the Agreement may be paid to
Seller by the execution and delivery by Buyer on the Closing Date of two
promissory notes (one with respect to the First Closing and the other with
respect to the Second Closing) payable to Seller (the "Buyer Notes") in the form
annexed hereto as EXHIBIT A. The following terms, when utilized in the Buyer
Notes, shall have the respective meanings set forth below:
i) "Borrowing Rate" shall mean the rate of interest payable from time
to time on the indebtedness to CIT Group/Credit Finance, Inc. referred to
in Section 4.3(b) of the Agreement or on any indebtedness incurred to
refinance such indebtedness.
ii) The "Market Price" of shares of Buyer Common Stock, as of any
date, shall mean the average of the Closing Prices of such shares during
the 20 Trading Days next preceding such date.
c. For all purposes of the Agreement (including, without limitation for
purposes of determining the amount of Adjustment Income and, therefore, the
amount of Adjusted Value and for purposes of preparing the Adjustment Income
Statements), in addition to any other applicable adjustments, the sum of the
Pre-Tax Income of Bogen and the Pre-Tax Income of Speech Design shall be
increased by an amount equal to the aggregate amount of all interest expenses
included in the financial statements of Buyer and relating to the Buyer Notes
for the period in respect of which such income is determined.
d. The date by which all schedules to the Agreement must be delivered, as
set forth in Section 3.5 of the Agreement, shall be May 30, 1995, in lieu of
April 30, 1995.
<PAGE>
e. The Buyer Private Placement referred to in Section 4.2(a) of the
Agreement shall not be undertaken or consummated by Buyer. However, subsequent
to the Closing Date, Buyer will seek to raise approximately $3 million through
the sale of equity securities of Buyer. Seller agrees that both Seller and the
Seller's designees to the Board of Directors of Buyer will support such
transaction provided that the sale price of any equity securities issued by
Buyer in connection therewith shall equal not less than 90% of the market value
of such securities at the time of the authorization of their issuance by Buyer.
f. All shares of Buyer Common Stock issued upon conversion, in whole or in
part, of the Buyer Note shall be deemed Registrable Securities within the
meaning of Section 7.1(b) of the Agreement.
g. Buyer represents that the total amount of funds in the Buyer Trust Fund
as of the date hereof is at least $7,986,849 and that such amount plus interest
accrued thereon from the date hereof to the Closing Date, less expenses incurred
in connection with the transactions contemplated hereby, will be available for
delivery to Seller at the Closings.
Please acknowledge your agreement to the foregoing in the space provided
for that purpose hereinbelow.
EUROPEAN GATEWAY ACQUISITION CORP.
By: /s/ Authorized Officer
---------------------------
Agreement acknowledged as of
the date first written above.
GEOTEK COMMUNICATIONS, INC.
By: /s/ Authorized Officer
- ---------------------------
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<PAGE>
EXHIBIT A
FORM OF PROMISSORY NOTE
$_________ [Closing Date]
FOR VALUE RECEIVED, the undersigned EUROPEAN GATEWAY ACQUISITION CORP.
("Buyer") hereby promises to pay to GEOTEK COMMUNICATIONS, INC. ("Seller"), on
[the date which is eighteen months following the Closing Date], the principal
amount of _____ _______ DOLLARS ($_________) and to pay interest on the
principal amount hereof outstanding from time to time, quarterly in arrears (on
the __ day of _______, _______, _______ and _______) and upon repayment in full,
at a rate per annum equal to the Borrowing Rate (as defined in the Letter
Agreement referred to below) plus 2%; PROVIDED, HOWEVER, that, following and
during the continuation of any default by Buyer in respect of any of its
obligations hereunder, the rate of interest payable hereunder per annum shall be
such Borrowing Rate plus 5%, provided that no interest hereunder shall accrue at
a rate in excess of the maximum amount of interest then permitted by law.
So long as any portion of the principal amount hereof shall be
outstanding, Seller shall have the right, exercisable at its sole option at any
time and from time to time by written notice to Buyer, to convert all or any
portion of such outstanding principal amount into fully-paid and non-assessable
shares of Buyer Common Stock at the following conversion price (the "Conversion
Price") per share of Common Stock:
The Conversion Price per share
shall be the following
If notice of conversion percentage of the Market Price
is delivered to Buyer at (as defined in the Letter
any time Agreement):
------------------------ -------------------------------
From the date hereof through
(6 months thereafter) . . . . . . . . . 100%
From [the 6 month-date]
through [9 months after the
date hereof] . . . . . . . . . . . . . 85%
From [the 9 month-date]
through 12 months after the
date hereof] . . . . . . . . . . . . . 82.5%
From [the 12-month date]
through 15 months after
the date hereof] . . . . . . . . . . . 80%
From [the 15 month date
through 18 months after
the date hereof] . . . . . . . . . . . 75%
After any time subsequent to
[the 18-month date] . . . . . . . . . . 65%
The number of shares of Buyer Common Stock issuable upon the conversion of any
portion of the outstanding principal amount hereof shall be the number obtained
by dividing (a) the outstanding principal amount then converted by (b) the
Conversion Price then in effect. Simultaneously with the issuance of such
shares to Seller upon
<PAGE>
such conversion, Buyer shall pay to Seller an amount equal to the total of all
interest which shall have accrued hereunder, but shall not have theretofore been
paid to Seller, through the date of such conversion on the portion of the
principal amount then converted.
Buyer shall have the right, exercisable at its sole option at any time
and from time to time upon not less than 10 days prior written notice to Seller,
to prepay all or any portion of the outstanding principal amount hereof. Any
such prepayment shall be accompanied by payment in full of all accrued but
unpaid interest on the portion of such principal amount then prepaid.
This Promissory Note is one of the two "Buyer Notes" referred to in
the letter agreement, dated May __, 1995, between Buyer and Seller (the "Letter
Agreement") and is being issued as partial payment for the amounts owed by Buyer
to Seller at the [First/Second] Closing. All notices hereunder shall be given
in the manner and shall be deemed given as provided in Section 10.3 of the
Agreement (as defined in the Letter Agreement).
Each of the following shall be an "Event of Default" hereunder:
(1) the non-payment of any amount payable under any Buyer Note, and the failure
by Buyer to cure such non-payment within thirty (30) days of receipt of written
notice of any such non-payment; (2) the non-payment by Buyer of the Buyer
Obligation (as defined in the Agreement), and the failure by Buyer to cure such
non-payment within thirty (30) days of receipt of written notice of any such
non-payment; and (3) if Buyer becomes insolvent or makes an assignment for the
benefit of creditors, or if any petition is filed by or against Buyer under any
provision of any state or federal law or statute alleging that Buyer is
insolvent or unable to pay debts as they mature or under any provision of the
Federal Bankruptcy Act as amended.
Upon the occurrence of any Event of Default, Seller may accelerate the
maturity of this Promissory Note and demand immediate payment of all outstanding
principal and accrued interest thereon. Upon the occurrence of any Event of
Default or an event which, but for the passage of time, would constitute an
Event of Default, Seller may set off any amounts due and payable hereunder
against amounts which Seller would otherwise be obligated to pay Buyer pursuant
to the Agreement.
In the event that Seller engages an attorney to represent it in
connection with (1) any alleged default by Buyer under this Promissory Note,
(2) the enforcement of any of Seller's rights and remedies hereof, (3) any
bankruptcy or other insolvency proceedings commenced by or against Buyer and/or
(4) any litigation arising out of or related to any of the foregoing, then Buyer
shall be liable to and shall reimburse Seller for all reasonable attorneys'
fees, costs and expenses incurred by Seller. Buyer shall also be liable and
shall also reimburse Seller for all other reasonable costs and expenses incurred
by Seller in connection with the enforcement of any of Buyer's obligations under
this Promissory Note.
This Promissory Note shall be governed and construed in accordance
with the laws of the State of New York and the United States of America, from
time to time in effect, and all amounts payable hereunder shall be payable in
lawful money of the United States of America.
The Buyer hereby waives resentment for payment, demand, notice of
dishonor and protest of this Promissory Note and further agrees that this
Promissory Note shall be deemed to have been made under the laws of the State of
New York in all respects, including construction, validity and performance, and
that none of its terms or provisions may be waived, altered, modified or amended
except as Seller may consent thereto in writing duly signed for and on its
behalf.
The rights and privileges of Seller under this Promissory Note shall
inure to the benefit of its successors and assigns. All representations,
warranties and agreements of Buyer made in connection with this Promissory Note
shall bind Buyer's successors and assigns. If any provision of this Promissory
Note shall for any reason be held to be invalid or unenforceable, such
invalidity or unenforceability shall not affect any other provision hereof, but
this Promissory Note shall be construed as if such invalid or unenforceable
provision had never been
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<PAGE>
contained herein. The waiver of any Event of Default or the failure of Seller to
exercise any right or remedy to which it may be entitled shall not be deemed a
waiver of any subsequent Event of Default or of Seller's right to exercise that
or any other right or remedy to which Seller is entitled.
IN WITNESS WHEREOF, Buyer has hereunto set its hand on the date first
set forth above.
EUROPEAN GATEWAY ACQUISITION CORP.
By:
--------------------------
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<PAGE>
EUROPEAN GATEWAY ACQUISITION CORP.
C/O JORAM ROSENFELD
101 EAST 52ND STREET, 11TH FLOOR
NEW YORK, NEW YORK 10022
May 10, 1995
Geotek Communications, Inc.
20 Craig Road
Montvale, New Jersey 07645
Attention: Andrew Siegel, General Counsel
Dear Sirs:
Reference is made to the Stock Purchase Agreement, dated April 6, 1995
and as amended by a letter agreement, dated May 10, 1995 (the "Agreement"),
between Geotek Communications, Inc. and European Gateway Acquisition Corp. All
of the terms used herein which are defined in the Agreement shall, when so used,
have the respective meanings ascribed thereto in the Agreement.
As additional consideration for the consummation of the transactions
set forth in the Agreement, Buyer hereby agrees to issue to Seller at the
Closings 200,000 warrants to purchase shares of Buyer Common Stock which
warrants shall have the same terms and conditions as the Buyer Warrants.
Please acknowledge your agreement to the foregoing in the space
provided for that purpose below.
EUROPEAN GATEWAY ACQUISITION CORP.
By: /s/ Authorized Officer
---------------------------
Agreement acknowledged as of
the date first written above.
GEOTEK COMMUNICATIONS, INC.
By: /s/ Authorized Officer
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CERTIFICATE OF DESIGNATION
OF
SERIES K CUMULATIVE CONVERTIBLE PREFERRED STOCK
OF
GEOTEK COMMUNICATIONS, INC.
(PURSUANT TO SECTION 151 OF THE
DELAWARE GENERAL CORPORATION LAW)
Geotek Communications, Inc., a corporation organized and existing
under the General Corporation Law of the State of Delaware (the "Corporation"),
hereby certifies that the following resolutions were adopted by the Board of
Directors of the Corporation pursuant to authority of the Board of Directors as
required by Section 151 of the Delaware General Corporation Law:
RESOLVED, that pursuant to the authority granted to and vested in the
Board of Directors of this Corporation (the "Board of Directors" or the "Board")
in accordance with the provisions of its Restated Certificate of Incorporation,
the Board of Directors hereby creates a series of the Corporation's previously
authorized Preferred Stock, par value $.01 per share (the "Preferred Stock"),
and hereby states the designation and number of shares, and fixes the relative
rights, preferences, privileges, powers and restrictions thereof as follows:
Series K Cumulative Convertible Preferred Stock:
I. DESIGNATION AND AMOUNT
The designation of this series, which consists of 20 shares of Preferred
Stock, is Series K Cumulative Convertible Preferred Stock (the "Series K
Preferred Stock") and the stated value shall be $500,000 per share (the "Stated
Value"). The number of shares of the Series K Preferred Stock may be decreased
from time to time by a resolution or resolutions of the Board of Directors;
PROVIDED, HOWEVER, that no such amendment shall reduce the number of shares of
the Series K Preferred Stock to a number less than the aggregate number of
shares of the Series K Preferred Stock then outstanding. Notwithstanding any
other provision in this Certificate of Designation, the Corporation shall not be
required to issue fractional shares of Series K Preferred Stock.
II. RANK
All Series K Preferred Stock shall rank (i) prior to the Corporation's
Common Stock, par value $.01 per share (the "Common Stock"), to the
Corporation's Series E Mandatory Redeemable Convertible Preferred Stock and,
unless the holders of Series K Preferred Stock shall otherwise consent pursuant
to Article VII.B., to any Excess Preferred Stock (as defined in Article VII.B);
(ii) junior to the Corporation's Series H Cumulative Convertible Preferred
Stock; (iii) PARI PASSU with the Corporation's Series I Cumulative Convertible
Preferred Stock; and (iv) unless the holders of Series K Preferred Stock shall
otherwise consent pursuant to Article VII.B, at least PARI PASSU with any other
class or series of the Corporation's capital stock, both as to payment of
dividends and as to distribution of assets upon liquidation, dissolution or
winding up of the Corporation, whether voluntary or involuntary.
<PAGE>
III. DIVIDENDS
A. The holders of shares of Series K Preferred Stock shall be entitled
to receive cash dividends at the rate (the "Dividend Rate") of Seven Percent
(7.0%) per annum, through and including the date that is five (5) years from the
date of issuance of such shares, which dividends shall be payable in equal
quarterly installments on March 31, June 30, September 30 and December 31 each
year (each such date, regardless of whether any dividends have been paid or
declared and set aside for payment on such date, being a "Dividend Payment
Date") to holders of record as they appear on the stock books on such record
dates as are fixed by the Board of Directors, but only when, as and if declared
by the Board of Directors out of funds at the time legally available for the
payment of dividends. For purposes of calculation of such cash dividends, the
Series K Preferred Stock shall be valued at the Stated Value. Such dividends
shall begin to accrue on outstanding shares of Series K Preferred Stock from the
date of issuance and shall be deemed to accrue from day to day whether or not
earned or declared until paid; PROVIDED, HOWEVER, that dividends accrued or
deemed to have accrued for any period shorter than the full three-month period
between Dividend Payment Dates shall be computed based on the actual number of
days elapsed in the three-month period for which such dividends are payable.
Dividends on the Series K Preferred Stock shall be cumulative, and from and
after any Dividend Payment Date on which any dividend that has accrued or been
deemed to have accrued through such date has not been paid in full, the amount
of such unpaid dividends (the "Dividend Arrearage"), valued at the full such
amount, shall accrue dividends at an annual rate equal to the Dividend Rate.
Such dividends in respect of any Dividend Arrearage shall be deemed to accrue
from day to day whether or not earned or declared until the Dividend Arrearage
is paid, shall be calculated as of each successive Dividend Payment Date and
shall constitute an additional Dividend Arrearage from and after any Dividend
Payment Date to the extent not paid on such Dividend Payment Date. References
in any Article herein to dividends that have accrued or that have been deemed to
accrue shall include the amount, if any, of any Dividend Arrearage together with
any dividends accrued or deemed to have accrued on such Dividend Arrearage
pursuant to the immediately preceding two sentences. Dividends on account of
any Dividend Arrearage may be declared and paid at any time, in whole or in
part, without reference to any regular Dividend Payment Date, to holders of
record on such date as may be fixed by the Board of Directors of the
Corporation.
B. Notwithstanding Clause A above, the Corporation may, in its sole
discretion, but is not obligated to, pay any or all dividends, including without
limitation any or all dividends payable as a result of a Dividend Arrearage, in
Common Stock rather than cash. The Corporation shall pay such dividend by
issuing to such holder shares of Common Stock that have an aggregate Market
Value (as defined below) equal to the amount of the cash dividends otherwise
payable to such holder on the applicable Dividend Payment Date. For purposes of
this paragraph, the aggregate "Market Value" of the Common Stock with respect to
any Dividend Payment Date shall mean the average of the Closing Prices (as
defined in subparagraph (b) of Article VI.B) of the shares of Common Stock for
the 20 consecutive Trading Days (as defined in subparagraph (b) of Article VI.B)
preceding the date that is five Trading Days prior to the Dividend Payment Date,
multiplied by the number of shares to be issued to such holder.
C. No dividends or other distributions, other than dividends or other
distributions payable solely in shares of capital stock of the Corporation and
liquidating distributions which are subject to the provisions of Article IV,
shall be paid or set aside for payment on, and no purchase, redemption or other
acquisition shall be made of, any shares of capital stock of the Corporation
(other than any class or series of Preferred Stock that, in accordance with
Article II hereof, (i) ranks senior to the Series K Preferred Stock or (ii)
ranks PARI PASSU with the Series K Preferred Stock as to dividends ("Pari Passu
Dividend Stock"), so long as any dividend payments per share on Pari Passu
Dividend Stock as a percentage of accrued and unpaid dividends per share on Pari
Passu Dividend Stock do not exceed contemporaneous dividend payments per share
on the Series K Preferred Stock as a percentage of accrued and unpaid dividends
per share on the Series K Preferred Stock), unless and until all accrued and
unpaid dividends on the Series K Preferred Stock, including the full dividend
for the then current quarterly dividend period and all outstanding Dividend
Arrearages and accrued and unpaid dividends thereon, shall have been declared
and paid or a sum sufficient for the payment thereof set aside for such
purposes.
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<PAGE>
D. Any reference to "distribution" contained in this Article III shall
not be deemed to include any stock dividend or distributions made in connection
with any liquidation, dissolution or winding up of the Corporation, whether
voluntary or involuntary.
E. The holders of shares of Series K Preferred Stock shall not be
entitled to receive any dividends or other distributions except as provided
herein and shall have no right to receive dividends with respect to any period
after the date that is five years from the date of issuance of such shares,
PROVIDED that any accrued and unpaid Dividend Arrearages and dividends thereon
shall continue to accrue dividends at the Dividend Rate as provided in Article
III.A.
IV. LIQUIDATION PREFERENCE
A. If the Corporation shall commence a voluntary case under the
Federal bankruptcy laws or any other applicable Federal or State bankruptcy,
insolvency or similar law, or consent to the entry of an order for relief in an
involuntary case under any law or to the appointment of a receiver, liquidator,
assignee, custodian, trustee, sequestrator (or other similar official) of the
Corporation or of any substantial part of its property, or make an assignment
for the benefit of its creditors, or admit in writing its inability to pay its
debts generally as they become due, or if a decree or order for relief in
respect of the Corporation shall be entered by a court having jurisdiction in
the premises in an involuntary case under the Federal bankruptcy laws or any
other applicable Federal or State bankruptcy, insolvency or similar law
resulting in the appointment of a receiver, liquidator, assignee, custodian,
trustee, sequestrator (or other similar official) of the Corporation or of any
substantial part of its property, or ordering the winding up or liquidation of
its affairs, and any such decree or order shall be unstayed and in effect for a
period of 60 consecutive days and, on account of any such event (a "LIQUIDATION
EVENT"), the Corporation shall liquidate, dissolve or wind up, or if the
Corporation shall otherwise liquidate, dissolve or wind up, no distribution
shall be made to the holders of any shares of capital stock of the Corporation
(other than any class or series of Preferred Stock that, in accordance with
Article II hereof, ranks senior to the Series K Preferred Stock) upon
liquidation, dissolution or winding up unless prior thereto, the holders of
shares of Series K Preferred Stock, subject to Article VI, shall have received
the Liquidation Preference (as defined in Article IV.C) with respect to each
share. If upon the occurrence of a Liquidation Event, the assets and funds
available for distribution among the holders of the Series K Preferred Stock and
holders of capital stock ranking on a PARI PASSU basis with the Series K
Preferred Stock with respect to liquidation ("PARI PASSU LIQUIDATION STOCK")
shall be insufficient to permit the payment to such holders of the preferential
amounts payable thereon, then the entire assets and funds of the Corporation
legally available for distribution to the Series K Preferred Stock and the Pari
Passu Liquidation Stock shall be distributed ratably among such shares in
proportion to the ratio that the liquidation preference payable on each such
share bears to the aggregate liquidation preference payable on all such shares.
B. Neither the consolidation, merger or other business combination of
the Corporation with or into any other Person (as defined below) or Persons nor
the sale of all or substantially all the assets of the Corporation shall be
deemed to be a liquidation, dissolution or winding up of the Corporation for
purposes of this Article IV. "Person" shall mean any individual, corporation,
limited liability company, partnership, association, trust or other entity or
organization.
C. For purposes hereof, the "Liquidation Preference" with respect to a
share of the Series K Preferred Stock shall mean an amount equal to the
dividends accrued or deemed to have accrued thereon to the date of final
distribution to the holder thereof, whether or not declared, plus an amount
equal to the Stated Value.
V. REDEMPTION
A. Subject to the limitations set forth in this Article V, on each
Redemption Date (as defined in this Article V.A.), the Corporation shall redeem
the shares of Series K Preferred Stock then outstanding held by (i) Electing
Holders (as defined in Article V.B), in the case of a Change of Control
Redemption (as defined in Article V.F.), or (ii) all holders, in the case of a
Mandatory Redemption (as defined in Article V.E.) or a
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<PAGE>
redemption effected pursuant to Article VII.D. The redemption price payable upon
a Redemption (as defined in this Article V.A.) shall be paid in cash or shares
of Common Stock (or, in the case of a Change of Control Redemption, in the
common equity of the successor entity) or a combination thereof, at the
Corporation's option, in accordance with Article V.D and shall be in an amount
per share of Series K Preferred Stock (the "Redemption Price") equal to the sum
of (i) the Stated Value and (ii) an amount equal to all unpaid dividends accrued
or deemed to have accrued with respect to such share of Series K Preferred Stock
to the Redemption Date or the date of actual payment of the Redemption Price,
whichever is later. If the Redemption Price is not paid in full within 30 days
after the Redemption Date (unless such delay results from the need for approval
or other action by governmental bodies or other Persons which approval or other
action is sought by the Corporation with reasonable diligence) any unpaid
Redemption Price shall accrue interest at the greater of (x) 15% per annum or
(y) the interest rate per annum at which deposits in United States dollars are
offered by the principal office of Citibank in London, England, to prime banks
in the London interbank market at 11:00 a.m. (London time) during the period
covered plus 6% per annum from the Redemption Date until the date of payment,
and such interest shall be compounded daily and the Redemption Price shall be
deemed to include all such accrued and unpaid interest. The term Redemption Date
means the Change of Control Redemption Date (as defined in Article V.F), the
Mandatory Redemption Date (as defined in Article V.E) and the Acceleration Date
(as defined in Article VII.D). The term "Redemption" means a Change of Control
Redemption, a Mandatory Redemption and a redemption effected pursuant to Article
VII.D.
B. Not more than 60 nor fewer than 15 Trading Days prior to the Change
of Control Redemption Date, notice by first class mail, postage prepaid, shall
be sent to the holders of record of the shares of Series K Preferred Stock
eligible to be redeemed, addressed to such stockholders at their last addresses
as shown by the records of the Corporation. Such notice shall (i) notify such
holders of their right to elect redemption, subject to the applicable provisions
of this Article V; (ii) state the amount and form or forms of consideration to
be paid; and (iii) provide a summary of other relevant details of the
transaction. The right of each holder to elect redemption shall terminate
unless notice of such election from such holder is received by the Corporation
not later than 10 Trading Days prior to the Change in Control Redemption Date.
Holders who elect redemption in accordance with the foregoing are referred to
herein as the "Electing Holders."
C. The Corporation shall, on or prior to the Redemption Date, but not
earlier than 45 days prior to the Redemption Date, deposit with its transfer
agent or other redemption agent in the United States selected by the Board of
Directors, as a trust fund, cash and/or shares of Common Stock (or, in the case
of a Change in Control Redemption, common equity of the successor entity)
sufficient in amount to pay the Redemption Price in full on all outstanding
shares of Series K Preferred Stock held by Electing Holders (or all holders of
Series K Preferred Stock in the case of a Mandatory Redemption or a redemption
effected pursuant to Article VII.D) with irrevocable instructions and authority
to such transfer agent or other redemption agent to give or complete the notice
of redemption thereof and to pay to the applicable holders (as evidenced by a
list of such holders certified by an officer of the Corporation) the Redemption
Price upon surrender of their respective share certificates. Such deposit shall
be deemed to constitute full payment for such shares to their holders, and from
and after the date of such deposit all rights of the holders of the shares of
Series K Preferred Stock that are to be redeemed, as stockholders of the
Corporation with respect to such shares, except the right to receive the
Redemption Price without interest, upon the surrender of their respective
certificates, and except any right as provided in Article VI to convert their
shares into Common Stock or other property or securities prior to the date fixed
for redemption, shall cease and terminate. In case holders of any shares of
Series K Preferred Stock called for redemption shall not, within one year after
such deposit, claim the cash deposited for redemption thereof, such transfer
agent or other redemption agent shall, upon demand, pay over to the Corporation
the balance so deposited. Thereupon, such transfer agent or other redemption
agent shall be relieved of all responsibility to the holders thereof and the
sole right of such holders, with respect to shares to be redeemed, shall be as
general creditors of the Corporation. To the extent that shares of Series K
Preferred Stock called for redemption are converted into Common Stock (or other
property or securities pursuant to Article VI hereof) prior to the date fixed
for redemption, the amount deposited by the Corporation for the redemption of
such shares shall immediately be returned to the Corporation. Any interest
accrued on any funds so deposited shall belong to the Corporation, and shall be
paid to it from time to time on demand.
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D. In the event that the Corporation exercises its option to pay the
Redemption Price in whole or in part in shares of Common Stock, the number of
shares of Common Stock to be issued per share of Series K Preferred Stock shall
be determined by dividing the Redemption Price by the Market Value (as defined
below) of a share of Common Stock. For purposes of this subparagraph, the
"Market Value" of a share of Common Stock shall mean the average of the 20
highest Closing Prices of the shares of Common Stock during the period of 30
consecutive Trading Days ending on the Trading Day immediately prior to the
Redemption Date. To the extent the Redemption Price in a Change of Control
Redemption is paid in common equity of a successor entity, the amount of such
common equity shall be determined by the Board of Directors applying the
principles of this Article V.D. to the extent practicable.
E. The Corporation may, at its option, issue to each holder of the
Series K Preferred Stock in respect of each share of Series K Preferred Stock
then outstanding a notice of mandatory redemption (a "Mandatory Redemption") at
any time after the Closing Price of the Common Stock on each of 20 Trading Days
within any period of 30 consecutive Trading Days is at least equal to $17.63 per
share (as adjusted for any stock splits, stock dividends or reclassifications
occurring after November 1, 1994). The notice of Mandatory Redemption shall set
the date for Mandatory Redemption (the "Mandatory Redemption Date") no less than
15 Trading Days following the date of such notice and, to the extent applicable,
shall be in accordance with Article V.B.
F. (a) In the event of a Change in Control (as defined below), the
Corporation shall redeem (the "Change of Control Redemption") the shares of
Series K Preferred Stock held by Electing Holders that are outstanding as of the
date of the Change of Control. The Change of Control Redemption shall be made
as of a date (the "Change of Control Redemption Date") specified by the
Corporation not later than the later of (i) the date of the Change of Control;
or (ii) 60 days after the Corporation first received written notice of the
Change in Control.
(b) Solely for purposes of this Article V.F, the following terms
shall have the following meanings:
"Capital Stock" means any and all shares, interests, rights to purchase,
warrants, options, participations or other equivalents of or interests in
(however designated) corporate stock and any and all equity, beneficial or
ownership interests in, or participations or other equivalents in, any
partnership, association, joint venture or other business entity.
"Change of Control" means an event or series of events by which (i) (A)
any "person" or "group" (as such terms are defined in Sections 13(d) and 14(d)
of the Securities Exchange Act of 1934 (the "Exchange Act")), is or becomes the
"beneficial owner" (as defined in Rule 13d-3 and Rule 13d-5 under the Exchange
Act), directly or indirectly, of more than 50% of the total voting power of the
then outstanding Voting Stock of the Corporation or (B) the Corporation
consolidates with, or merges with or into, another Person or sells, assigns,
conveys, transfers, leases or otherwise disposes of all or substantially all of
its assets to any Person, or any Person consolidates with, or merges with or
into, the Corporation, if, immediately thereafter, the Persons who, immediately
prior to such transaction, beneficially owned the Voting Stock of the
Corporation, own, in the aggregate, less than 50% of the total voting power of
the Voting Stock of the surviving or transferee Person; PROVIDED, HOWEVER, that
no Change of Control will be deemed to occur pursuant to this clause (i) (x) if
the Person is a corporation with outstanding debt securities having a maturity
at original issuance of at least one year and if such debt securities are rated
Investment Grade by S&P or Moody's for a period of at least 90 consecutive days,
beginning on the date of such event (which period will be extended up to 90
additional days for as long as the rating of such debt securities is under
publicly announced consideration for possible downgrading by the applicable
rating agency), or (y) if the Person is a corporation (1) that is not, and does
not have any outstanding debt securities that are, rated by S&P, Moody's or any
other rating agency of national standing at any time during a period of 90
consecutive days beginning on the date of such event (which period will be
extended up to an additional 90 days for as long as any such rating agency has
publicly announced that such corporation or debt thereof will be rated), unless
after such
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date but during such period debt securities of such corporation having a
maturity at original issuance of at least one year are rated Investment Grade by
S&P or Moody's and remain so rated for the remainder of the period referred to
in clause (x) above and (2) that, when determined as of the Trading Day
immediately before the Trading Day immediately after the date of such event, has
Total Common Equity of at least $10 billion (provided that, solely for the
purpose of calculating Total Common Equity as of such later Trading Day, the
average Closing Price of Common Stock of the such Person will be deemed to equal
the Closing Price of such Common Stock on such later Trading Day, subject to the
last sentence of the definition of "Total Common Equity"); or (ii) during any
consecutive two-year period, individuals who at the beginning of such period
constituted the Board of Directors of the Corporation (together with any
directors who are members of the Board of Directors on the date of the initial
issuance of shares of Series K Preferred Stock and any new directors whose
election by such Board of Directors or whose nomination for election by the
stockholders of the Corporation was approved by a vote of 66 2/3% of the
directors then still in office who were either directors at the beginning of
such period or whose election or nomination for election was previously so
approved) cease for any reason to constitute a majority of the Board of
Directors of the Corporation then in office.
"Closing Price" shall have the meaning set forth in subparagraph (b) of
Article VI.B.
"Common Stock" of any Person means Capital Stock of such Person that
does not rank prior, as to the payment of dividends or as to the distribution of
assets upon any voluntary or involuntary liquidation, dissolution or winding up
of such Person, to shares of Capital Stock of any other class of such Person.
"Investment Grade" means a rating of at least BBB-, in the case of S&P,
or Baa3, in the case of Moody's.
"Moody's" means Moody's Investors Service, Inc. and its successors.
"S&P" means Standard & Poor's Corporation and its successors.
"Trading Day" shall have the meaning set forth in subparagraph (b) of
Article VI.B.
"Total Common Equity" of any Person means, as of any day of
determination (and as modified for purposes of the definition of "Change of
Control"), the product of (i) the aggregate number of outstanding primary shares
of Common Stock of such Person on such day (which shall not include any options
or warrants on, or securities convertible or exchangeable into, shares of Common
Stock of such Person) and (ii) the average Closing Price of such Common Stock
over the 20 consecutive Trading Days immediately preceding such day. If no such
Closing Price exists with respect to shares of any such class, the value of such
shares for purposes of clause (ii) of the preceding sentence shall be determined
by the Board of Directors of the Corporation in good faith and evidenced by a
written opinion as to such value issued by an investment banking firm of
recognized national standing.
"Voting Stock" of any Person means Capital Stock of such Person which
ordinarily has voting power for the election of directors (or persons performing
similar functions) of such Person.
VI. CONVERSION AT THE OPTION OF THE HOLDER
A. Subject to all applicable state, federal and foreign laws, rules
and regulations ("Applicable Law"), each holder of shares of Series K Preferred
Stock may, at its option at any time and from time to time, upon surrender of
the certificates therefor, convert any or all of its shares of Series K
Preferred Stock into Common Stock as follows. Each share of Series K Preferred
Stock shall be convertible into such number of fully paid and nonassessable
shares of Common Stock as is determined by dividing (i) the sum of the Stated
Value and the Dividend Arrearage, if any, with respect to such share through the
last Dividend Payment Date, but no later, by (ii) the then effective Conversion
Price (as defined below). The "Conversion Price" initially shall be $11.75 per
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share of Common Stock and shall be subject to adjustment from time to time as
provided in connection with the antidilution adjustments set forth in Article
VI.B.
B. The Conversion Price shall be subject to adjustment from time to
time as follows:
(a) In case the Corporation shall (i) declare a dividend or make
a distribution on the outstanding shares of its Common Stock in shares of its
Common Stock, (ii) subdivide its outstanding shares of Common Stock into a
greater number of shares, or (iii) combine its outstanding shares of Common
Stock into a smaller number of shares, the Conversion Price in effect at the
time of the record date for such dividend or distribution or the effective date
of such subdivision or combination shall be proportionately adjusted so that the
holder of any shares of Series K Preferred Stock surrendered for conversion
after such time shall be entitled to receive the aggregate number of shares of
Common Stock which the holder would have owned or been entitled to receive had
such shares of Series K Preferred Stock been converted immediately prior to such
record date or effective date and the resulting Common Stock had been subject to
such dividend, distribution, subdivision or combination. Any shares of Common
Stock issuable in payment of a dividend shall be deemed to have been issued
immediately prior to the time of the record date for such dividend for purposes
of calculating the number of outstanding shares of Common Stock under
subparagraphs (b) and (c) below. Such adjustment shall be made successively
whenever any event specified above shall occur.
(b) In case the Corporation shall fix a record date for the
issuance of rights, options or warrants to all holders of shares of Common Stock
entitling them (for a period expiring within 45 calendar days after such record
date) to subscribe for or purchase shares of Common Stock (or securities
convertible into shares of Common Stock) at a price per share (or having a
Conversion Price per share) less than the average of the Closing Prices (as
defined below) of the Common Stock for the 20 consecutive Trading Days (as
defined below) ending five Trading Days prior to the record date (the
"Conversion Average Closing Price"), the Conversion Price shall be adjusted
immediately thereafter so that it shall equal the price determined by
multiplying the Conversion Price in effect immediately prior thereto by a
fraction, the numerator of which shall be the number of shares of Common Stock
outstanding on such record date plus the number of shares of Common Stock that
the aggregate offering price of the total number of shares of such Common Stock
so offered (or the aggregate initial conversion price of the convertible
securities so offered) would purchase on such record date at the Conversion
Average Closing Price, and the denominator of which shall be the number of
shares of Common Stock outstanding on such record date plus the number of
additional shares of Common Stock offered for subscription or purchase (or into
which the convertible securities so offered are initially convertible). Shares
of Common Stock owned by or held for the account of the Corporation shall not be
deemed outstanding for the purpose of any such computation. Such adjustment
shall be made successively whenever such a record date is fixed. In the event
that such rights, options, warrants or convertible securities are not so issued,
the Conversion Price then in effect shall be readjusted to the Conversion Price
which would then be in effect if such record date had not been fixed. The
"Closing Price" for each day shall be the last reported sales price regular way
on that day or, in case no such reported sale takes place on such day, the
reported closing bid price regular way, in either case as reported in the
principal consolidated transaction reporting system for the principal United
States national securities exchange or the National Association of Securities
Dealers, Inc. Automated Quotation System ("NASDAQ") National Market on which the
Common Stock is admitted to trading or listed, or if not so listed or admitted
to trading, the last quoted bid price or, if not quoted, the average of the high
bid and the low asked prices in the over-the-counter market as reported by
NASDAQ or such other system then in use. If the Common Stock is not publicly
held or so listed or traded, the "Closing Price" shall mean the fair value per
share as determined in good faith by the Board of Directors, whose determination
shall be conclusive, and described in a resolution of the Board of Directors
certified by the Secretary or an Assistant Secretary of the Corporation. A
"Trading Day" shall be any day on which the principal national securities
exchange (or NASDAQ) on which the Common Stock is admitted to trading or listed
is open or, if the Common Stock is not so admitted to trading or so listed, any
day except Saturday, Sunday, a legal holiday or any day on which banking
institutions in the City of New York are obligated or authorized to close.
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(c) The Conversion Price of shares of Series K Preferred Stock
shall be adjusted in the event that the Corporation shall fix a record date for
the making of a distribution to all holders of shares of Common Stock of (i)
shares of any class of capital stock other than Common Stock, (ii) evidences of
its indebtedness, (iii) assets (excluding regular cash dividends at rates in
effect from time to time, and excluding dividends or distributions referred to
in subparagraph (a) above) or (iv) rights, options or warrants (excluding those
referred to in subparagraph (b) above). In such case, the Conversion Price in
effect immediately thereafter shall be determined by multiplying the Conversion
Price in effect immediately prior thereto by a fraction, the numerator of which
shall be the total number of shares of Common Stock outstanding on such record
date multiplied by the average of the Closing Prices of the Common Stock for the
20 consecutive Trading Days ending five Trading Days prior to such record date,
less the fair market value (as determined in good faith by the Board of
Directors, whose determination shall be conclusive, and described in a
resolution of the Board of Directors certified by the Secretary or an Assistant
Secretary of the Corporation) of said shares or evidences of indebtedness or
assets or rights, options or warrants so distributed, and the denominator of
which shall be the total number of shares of Common Stock outstanding on such
record date multiplied by the average of the Closing Prices of the Common Stock
for the 20 consecutive Trading Days ending five Trading Days prior to such
record date. Such adjustment shall be made successively whenever such a record
date is fixed. In the event that such distribution is not so made, the
Conversion Price then in effect shall be readjusted to the Conversion Price
which would then be in effect if such record date had not been fixed.
(d) In any case in which this Article VI.B shall require that an
adjustment become effective immediately after a record date for an event, the
Corporation may defer until the occurrence of such event by (i) issuing to the
holder of any shares of Series K Preferred Stock converted after such record
date and before the occurrence of such event the additional shares of Common
Stock issuable upon such conversion by reason of the adjustment required by such
event over and above the shares of Common Stock issuable upon such conversion
before giving effect to such adjustment and (ii) paying to such holder any
amount in cash in lieu of a fractional share pursuant to Article VI.C; PROVIDED,
HOWEVER, that the Corporation shall deliver to such holder a due bill or other
appropriate instrument evidencing such holder's rights to receive such
additional shares of Common Stock and such cash, upon the occurrence of the
event requiring such adjustment.
(e) All calculations under this Article VI.B shall be made to
the nearest cent or to the nearest one one-hundredth of a share of Common Stock
as the case may be.
(f) Anything in this Article VI.B to the contrary
notwithstanding, the Corporation shall be entitled to make such reductions in
the Conversion Price in addition to those adjustments expressly required by this
Article VI.B, as and to the extent that it in its sole discretion shall
determine to be advisable in order that any consolidation or subdivision of the
Common Stock and any distribution or dividend on Common Stock referred to in
subparagraph (a) of this Article VI.B payable in Common Stock or issuance of
rights, options or warrants referred to in subparagraph (b) of this Article VI.B
or any distribution referred to in subparagraph (c) of this Article VI.B,
hereafter made by the Corporation to holders of shares of Common Stock not be
taxable to such stockholders.
C. No fractional shares of Common Stock or other securities, if any,
or scrip representing fractional shares of Common Stock or other securities, if
any, shall be issued upon the conversion of any share or shares of Series K
Preferred Stock. If the conversion of a share or shares of Series K Preferred
Stock results in a fraction of Common Stock or other securities, an amount equal
to such fraction multiplied by the Closing Price of the Common Stock or other
securities, if any, on the Trading Day prior to the conversion shall be paid to
such holder in cash by the Corporation. The "Closing Price" for other
securities shall be determined in the same manner and with the same effect as
the "Closing Price" for the Common Stock as defined in Article VI.B.(b).
D. The right of the holders of shares of Series K Preferred Stock to
convert their shares shall be exercised by surrendering for such purpose to the
Corporation or its agent, as provided above, certificates representing shares to
be converted, duly endorsed in blank or accompanied by proper instruments of
transfer. The Corporation shall not, however, be required to pay any tax which
may be payable in respect of any transfer involved
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in the issue and delivery upon conversion of shares of Common Stock or other
securities or property in a name other than that of the registered holder of the
shares of the Series K Preferred Stock being converted, and the Corporation
shall not be required to issue or deliver any such shares of Common Stock or
other securities or property in a name other than that of the registered holder
of such Series K Preferred Stock unless and until the person or persons
requesting the issuance thereof shall have paid to the Corporation the amount of
any such tax or shall have established to the satisfaction of the Corporation
that such tax has been paid or that no such tax is due.
E. A number of shares of the authorized but unissued Common Stock
sufficient to provide for the conversion of the Series K Preferred Stock
outstanding at the then current Conversion Price shall at all times be reserved
by the Corporation, free from preemptive rights, except for preemptive rights
disclosed in the Purchase Agreement (as defined in Article VII.C.) or any
schedule thereto, for such conversion, subject to the provisions of the next
succeeding paragraph. If the Corporation shall issue any securities or make any
change in its capital structure which would change the number of shares of
Common Stock into which each share of the Series K Preferred Stock shall be
convertible at the then current Conversion Price, the Corporation shall at the
same time also make proper provision so that thereafter there shall be a
sufficient number of shares of Common Stock authorized and reserved, free from
preemptive rights, except for preemptive rights disclosed in the Purchase
Agreement (as defined in Article VII.C.) or any schedule thereto, for conversion
of the outstanding Series K Preferred Stock on the new basis.
F. In case of (i) any reclassification or change of the outstanding
shares of Common Stock (other than a change in par value, or from par value to
no par value, or from no par value to par value, or as a result of a subdivision
or combination), (ii) any consolidation or merger of the Corporation with any
other corporation (other than a merger in which the Corporation is the surviving
or continuing corporation and its capital stock is unchanged), (iii) any sale or
transfer of all or substantially all of the assets of the Corporation or (iv)
any share exchange pursuant to which all of the outstanding shares of Common
Stock are converted into other securities or property, the Corporation shall in
each such case make appropriate provision or cause appropriate provision to be
made so that the holders of shares of Series K Preferred Stock then outstanding
shall have the right thereafter to convert each such share of Series K Preferred
Stock into the kind and amount of other securities and property receivable upon
such reclassification, consolidation, merger, sale, transfer or share exchange
by a holder of the number of shares of Common Stock into which each such share
of Series K Preferred Stock might have been converted immediately prior to such
reclassification, consolidation, merger, sale, transfer or share exchange. To
the extent that as a result of any such reclassification, consolidation, merger,
sale, transfer or share exchange the Series K Preferred Stock becomes
convertible into a new common stock of the Corporation or the common stock of
any other corporation involved in a merger with the Corporation, the Corporation
shall make appropriate provision or cause appropriate provision to be made so
that the Conversion Price with respect to such new common stock shall be subject
to further adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to Common Stock
contained in this Article VI. If in connection with any such reclassification,
consolidation, merger, sale, transfer or share exchange, each holder of shares
of Common Stock is entitled to elect to receive alternative forms of
consideration upon completion of such transaction, the Corporation shall provide
or cause to be provided to each holder of Series K Preferred Stock upon
conversion thereof the shares of capital stock or other securities or property
receivable by a holder of Common Stock who failed to make an election with
respect to the form of consideration receivable in such transaction. The
Corporation shall not effect any such transaction unless the provisions of this
paragraph have been complied with. The above provisions shall similarly apply
to successive reclassifications, consolidations, mergers, sales, transfers or
share exchanges.
G. Upon the surrender of certificates representing shares of Series K
Preferred Stock in accordance with the terms hereof, the person converting shall
be deemed to be the holder of record at such time of the shares of Common Stock
and other securities or property issuable on such conversion and all rights with
respect to the shares of Series K Preferred Stock surrendered shall forthwith
terminate except the right to receive the shares of Common Stock or other
securities or property issuable on such conversion. Except as otherwise
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provided in Article VI.B, no adjustment in the Conversion Price shall be made at
the time of conversion in respect of distributions or dividends theretofore
declared and paid or payable on the Common Stock.
H. Upon the occurrence of each adjustment or readjustment of the
Conversion Price pursuant to this Article VI, the Corporation, at its expense,
shall promptly compute such adjustment or readjustment in accordance with the
terms hereof and prepare and furnish to each holder of Series K Preferred Stock
a certificate setting forth such adjustment or readjustment and showing in
detail the facts upon which such adjustment or readjustment is based. The
Corporation shall, upon the written request at any time of any holder of Series
K Preferred Stock, furnish or cause to be furnished to such holder a like
certificate setting forth (i) such adjustment or readjustment, (ii) the
Conversion Price at the time in effect and (iii) the number of shares of Common
Stock and the amount, if any, of other securities or property which at the time
would be received upon conversion of a share of Series K Preferred Stock.
VII. VOTING RIGHTS
In addition to any voting rights provided by law, the holders of shares
of Series K Preferred Stock shall have the following rights:
A. So long as the Series K Preferred Stock is outstanding, each share
of Series K Preferred Stock shall entitle the holder thereof to vote on all
matters voted on by holders of the capital stock of the Corporation into which
such share of Series K Preferred Stock is convertible, voting together as a
single class with the other shares entitled to vote, at all meetings of the
stockholders of the Corporation. With respect to any such vote, each share of
Series K Preferred Stock shall entitle the holder thereof to cast the number of
votes equal to the number of votes which could be cast in such vote by a holder
of the shares of capital stock of the Corporation into which such share of
Series K Preferred Stock is convertible on the record date for such vote.
B. The affirmative vote of the holders of at least 66 2/3% of the
voting power represented by the outstanding shares of Series K Preferred Stock,
voting separately as a single class, shall be necessary to (i) increase the
authorized number of shares of, or issue beyond the 20 shares initially
authorized hereby (including on conversion or exchange of any convertible or
exchangeable securities or by reclassification) any shares of, Series K
Preferred Stock, (ii) authorize, adopt or approve an amendment to the Restated
Certificate of Incorporation of the Corporation that would increase or decrease
the aggregate number (or par value) of authorized shares of Series K Preferred
Stock or alter or change the powers, preferences or special rights of the shares
of Series K Preferred Stock so as to affect such shares of Series K Preferred
Stock materially and adversely, or (iii) allow the Corporation to purchase any
shares of Series K Preferred Stock when dividends on the Series K Preferred
Stock are in arrears or there exists a redemption default under Article V, (iv)
issue any capital stock of the Corporation senior to the Series K Preferred
Stock (either as to dividends or upon liquidation) or (v) issue any capital
stock of the Corporation equal (either as to dividends or upon liquidation) to
the Series K Preferred Stock ("Parity Stock") after the Corporation shall have
issued Parity Stock on or after the initial filing of this Certificate of
Designation for aggregate gross proceeds of $30 million, less any gross proceeds
from issuances of Series K Preferred Stock other than proceeds from the issuance
of the first 20 shares of Series K Preferred Stock ("Excess Preferred Stock").
No approval of the holders of the outstanding shares of Series K Preferred Stock
shall be necessary (i) to authorize or increase the authorized amount of any
Parity Stock or (ii) to issue any Parity Stock, other than Excess Preferred
Stock.
C. If on any date (i) the Corporation shall have breached any of its
obligations under the Stock Purchase Agreement dated as of October 3, 1994,
between the Corporation and Anam Industrial Co., Ltd. ("Anam"), as assigned and
amended pursuant to an Assignment and Amendment dated as of April 20, 1995 among
the Corporation, Anam and Amkor Electronics, Inc., and any subsequent stock
purchase agreement pursuant to which Series K Preferred Stock is issued
(collectively, the "Purchase Agreement") and such breach shall have continued
for 30 days after notice thereof has been given to the Corporation and shall be
continuing at the time the holders of Series K Preferred Stock exercise their
rights under this Article VII.C, (ii) dividends or distributions
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payable on the Series K Preferred Stock shall have been in arrears and not paid
in full with respect to two Dividend Payment Dates, or (iii) the Corporation
shall have failed to satisfy its obligation to redeem shares of Series K
Preferred Stock pursuant to Article V, then the number of directors constituting
the Board of Directors shall, without further action, be increased by two and
the holders of shares of Series K Preferred Stock shall have, in addition to the
other voting rights as set forth herein, the exclusive right, voting separately
as a single class, to elect the directors of the Corporation to fill such newly
created directorships, the remaining directors of the Corporation to be elected
by the other classes of stock entitled to vote therefor (including the Series K
Preferred Stock in accordance with Article VII.A), at each meeting of
stockholders held for the purpose of electing directors. Such additional
directors shall continue as directors and such additional voting rights shall
continue until such time as (A) all or any such breaches are no longer
continuing, (B) all dividends payable on the Series K Preferred Stock shall have
been paid in full and (C) any mandatory redemption obligation provided in
Article VII.D which has become due shall have been satisfied or all necessary
funds shall have been set aside for payment, as the case may be, at which time
such additional directors shall cease to be directors and such additional voting
rights of the holders of Series K Preferred Stock shall terminate subject to
revesting in the event of each and every subsequent event of the character
indicated above.
D. After any date that dividends or distributions payable on Series K
Preferred Stock shall have been in arrears and not paid in full with respect to
four consecutive Dividend Payment Dates, the holders of Series K Preferred Stock
shall have, in addition to the other voting rights set forth herein, the
exclusive right, voting separately as a single class, to declare by majority
vote that all of the then outstanding shares of Series K Preferred Stock,
together with all accrued and unpaid dividends thereon, shall become immediately
due and payable in full. On the date the Corporation receives written notice of
such vote (the "Acceleration Date"), the then outstanding shares of Series K
Preferred Stock, together with all accrued and unpaid dividends thereon, shall
become immediately due and payable, PROVIDED that the Corporation shall have the
right to pay the Redemption Price on such outstanding shares (including interest
on the unpaid portion thereof) in such amount or amounts as it shall determine
during the 180 days following the Acceleration Date, PROVIDED FURTHER that the
Corporation shall have paid the entire Redemption Price (including interest at
the same rate as is provided in Article V.A for periods following a Redemption
Date) on all such outstanding shares no later than the end of such 180-day
period.
E. (i) The foregoing rights of holders of shares of Series K Preferred
Stock to take any actions as provided in Paragraphs B, C and D of this Article
VII may be exercised at any annual meeting of stockholders or any special
meeting of stockholders or holders of Series K Preferred Stock held for such
purposes as hereinafter provided or at any adjournment thereof, or by the
written consent, delivered to the Secretary of the Corporation, of the holders
of the minimum number of shares of Series K Preferred Stock required to take
such action.
So long as such right to vote continues (and unless such right has been
exercised by written consent of the minimum number of shares required to take
such action), the Chairman of the Board of the Corporation may call, and upon
the written request addressed to the Secretary of the Corporation at the
principal office of the Corporation of holders of record of 20% of the voting
power represented by the outstanding shares of Series K Preferred Stock, shall
call a special meeting of the holders of shares entitled to vote as provided
herein. Such meeting shall be held within 30 days after delivery of such
request to the Secretary, at the place and upon the notice provided by law and
in the Bylaws of the Corporation for the holding of meetings of stockholders.
(ii) At each meeting of stockholders at which the holders of
shares of Series K Preferred Stock shall have the right, voting separately as a
single class, to elect directors of the Corporation as provided in this Article
VII or to take any action, the presence in person or by proxy of the holders of
record of one-third of the voting power represented by the total number of
shares of Series K Preferred Stock voting separately as a single class then
outstanding and entitled to vote on the matter shall be necessary and sufficient
to constitute a quorum. At any such meeting or at any adjournment thereof:
(A) the absence of a quorum of the holders of shares of
Series K Preferred Stock shall not prevent the election of directors
other than those to be elected by the holders of shares
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of Series K Preferred Stock, and the absence of a quorum of the holders
of shares of any other class or series of capital stock shall not prevent
the election of directors to be elected by the holders of shares of
Series K Preferred Stock or the taking of any action as provided in this
Article VII; and
(B) in the absence of a quorum of the holders of shares of
Series K Preferred Stock, the holders of a majority of the voting power
represented by such shares present in person or by proxy shall have the
power to adjourn the meeting as to the actions to be taken by the
holders of shares of Series K Preferred Stock from time to time and
place to place without notice other than announcement at the meeting
until a quorum shall be present.
For the taking of any action as provided in Paragraphs B, C and D of
this Section VII by the holders of shares of Series K Preferred Stock, each such
holder shall have the right to cast such number of votes as may be cast by the
holder of the number of shares of Common Stock into which such Series K
Preferred Stock is convertible as of any record date fixed for such purpose or,
if no such date is fixed, at the close of business on the Trading Day next
preceding the day on which notice is given, or if notice is waived, at the close
of business on the Trading Day next preceding the day on which the meeting is
held.
Each director elected by the holders of shares of Series K Preferred
Stock, as provided in Paragraph C of this Article VII shall, unless his term
shall expire earlier or be terminated in accordance with such Article VII.C,
hold office until the annual meeting of stockholders next succeeding his
election or until his successor, if any, is elected and qualified.
In case any vacancy shall occur among the directors elected by the
holders of shares of Series K Preferred Stock, as provided in Article VII.C,
such vacancy may be filled for the unexpired portion of the term by vote of the
remaining director theretofore elected by such holders (if there is a remaining
director), or such director's successor in office. If any such vacancy is not
so filled within 20 days after the creation thereof or if both directors so
elected by the holders of Series K Preferred Stock shall cease to serve as
directors before their terms shall expire, the holders of Series K Preferred
Stock then outstanding and entitled to vote for such directors may, by written
consent as herein provided, or at a special meeting of such holders called as
provided herein, elect successors to hold office for the unexpired terms of the
directors whose places shall be vacant.
Any director elected by the holders of shares of Series K Preferred
Stock voting separately as a single class may be removed from office with or
without cause by the vote or written consent of the holders of at least a
majority of the voting power represented by the outstanding shares of Series K
Preferred Stock. A special meeting of the holders of shares of Series K
Preferred Stock may be called in accordance with the procedures set forth in
subparagraph (i) of this Article VII.E.
VIII. CERTAIN RESTRICTIONS.
A. Whenever the Corporation breaches any of its obligations under the
Purchase Agreement, thereafter and until such breach has been cured, or whenever
dividends or distributions payable on shares of Series K Preferred Stock as
provided in Article III are not paid in full, thereafter and until all unpaid
dividends or distributions payable, whether or not declared, on the outstanding
shares of Series K Preferred Stock shall have been paid in full or declared and
set apart for payment, or whenever the Corporation shall not have redeemed
shares of Series K Preferred Stock at a time required by Article V or Article
VII.D, thereafter and until all mandatory redemption obligations provided in
Article V or Article VII.D which have come due shall have been satisfied or all
necessary funds have been set apart for payment, the Corporation shall not
declare or pay dividends, or make any other distributions, on any shares of
stock ranking junior (both as to dividends and upon liquidation, dissolution or
winding up ("Junior Stock")) to the Series K Preferred Stock.
B. Whenever the Corporation breaches any of its obligations under the
Purchase Agreement, thereafter and until such breach has been cured, or whenever
dividends or distributions payable on shares of Series
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K Preferred Stock as provided in Article III are not paid in full, thereafter
and until all dividends or distributions payable, whether or not declared, on
the outstanding shares of Series K Preferred Stock shall have been paid in full
or declared and set apart for payment, or whenever the Corporation shall not
have redeemed shares of Series K Preferred Stock at a time required by Article V
or Article VII.D which have come due, thereafter and until all payments in
respect thereof shall have been satisfied or all necessary funds have been set
apart for payment, the Corporation shall not: (i) redeem, purchase or otherwise
acquire for consideration any shares of Junior Stock pursuant to any mandatory
redemption, put, sinking fund or other similar obligation; PROVIDED, HOWEVER,
that the Corporation may at any time redeem, purchase or otherwise acquire
shares of Junior Stock in exchange for any shares of Common Stock or for other
capital stock of the Corporation ranking junior (both as to dividends and upon
liquidation, dissolution or winding up) to the Series K Preferred Stock; (ii)
redeem or purchase or otherwise acquire for consideration any shares of Series K
Preferred Stock; PROVIDED, however, that the Corporation (A) may accept shares
of Series K Preferred Stock surrendered for conversion into shares of capital
stock of the Corporation pursuant to Article VI and (B) may redeem shares of
Series K Preferred Stock as to which any holder of Series K Preferred Stock has
exercised the right to cause such redemption pursuant to Article V or Article
VII.D, PROVIDED that if not all shares of Series K Preferred Stock the holders
of which have elected to cause the redemption thereof are to be redeemed by the
Corporation pursuant to Article V or Article VII.D, as the case may be, then the
Corporation shall redeem shares pursuant to this clause (B) pro rata in relation
to the total number of shares of Series K Preferred Stock the holders of which
had elected to cause the redemption thereof pursuant to Article V or Article
VII.D, as the case may be; or (iii) make or extend any loan or advance to any
stockholder of the Corporation or any affiliate of such stockholder other than
wholly-owned subsidiaries of the Corporation.
C. The Corporation shall not permit any subsidiary of the Corporation
to purchase or otherwise acquire for consideration any shares of capital stock
of the Corporation or to make or extend any loan or advance specified in clause
(iii) of Article VIII.B unless the Corporation could, pursuant to Article
VIII.B, purchase such shares at such time and in such manner or make or extend
such loan or advance at such time, as the case may be.
D. Except as otherwise required by law, the holders of shares of
Series K Preferred Stock shall have no voting rights except as set forth in
Article VII.
IN WITNESS WHEREOF, this Certificate of Designation is executed on
behalf of the Corporation by its President this 20th of April, 1995.
GEOTEK COMMUNICATIONS, INC.
BY /S/ YARON EITAN
----------------------
YARON EITAN, PRESIDENT
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<PAGE>
[LETTERHEAD OF KLEHR, HARRISON, HARVEY, BRANZBURG & ELLERS]
May 19, 1995
Geotek Communications, Inc.
20 Craig Road
Montvale, NJ 07645
RE: Registration Statement on Form S-3 (Reg. No. 33-85296)
------------------------------------------------------
Gentlemen:
We have acted as counsel to Geotek Communications, Inc., a Delaware
corporation (the "Company"), in connection with the preparation of the above-
referenced Registration Statement, as amended (the Registration Statement),
filed with the Securities and Exchange Commission under the Securities Act of
1933, as amended (the "Act").
The Registration Statement relates to the issuance and sale to holders
of the Company's Notes (as defined below), from time to time, of up to an
aggregate of $36,000,000 of the Company's common stock, par value $.01 per share
(the "Common Stock"), upon the conversion of senior secured convertible notes,
due March 1998, in the aggregate principal amount of $36,000,000 (the "Notes").
All shares of Common Stock issuable upon conversion of the Notes are hereinafter
referred to as the "Note Shares" and the holders of the Company's Notes are
hereinafter referred to as the "Selling Shareholders." The Registration
Statement also relates to the offer and sale by the Selling Shareholders, from
time to time, of the Note Shares and up to an aggregate of 1,000,000 shares of
Common Stock issuable upon the exercise of warrants (the "Warrants") issued to
the Selling Shareholders in connection with the issuance of the Notes (the
"Warrant Shares").
In connection herewith, we have examined and relied upon the original or
copies of (i) the Certificate of Incorporation, as amended and restated through
the date hereof, and the By-laws of the Company; (ii) minutes and records of the
corporate proceedings with respect to the issuance of the shares of Common Stock
described above; and (iii) such other documents as we have deemed necessary as a
basis for the opinion hereinafter set forth.
<PAGE>
Geotek Communications, Inc.
May 19, 1995
Page 2
In our examination of the foregoing documents, we have assumed (i) the
due execution, by all relevant parties, and authorization of all agreements to
which the Company or any of its subsidiaries is a party; (ii) the genuineness of
all signatures; and (iii) the authenticity of all documents submitted to us as
originals as well as the conformity to the originals of all documents submitted
to us as photostatic copies.
As to various questions of fact material to this opinion, we have
relied, to the extent we deemed reasonably appropriate, upon representations or
certificates of officers or directors of the Company, without independent
verification of their accuracy.
Based upon the foregoing and subject to the qualifications hereinafter
set forth, we are of the opinion that:
Upon the conversion of the Notes in accordance with the terms thereof
and upon the exercise of the Warrants in accordance with the terms thereof, the
Note Shares and Warrant Shares will be legally issued, fully paid and non-
assessable.
We are members of the Bar of the Commonwealth of Pennsylvania and do not
express any opinion as to matters governed by laws other than the laws of the
Commonwealth of Pennsylvania and the federal laws of the United States of
America.
We hereby consent to the filing of this opinion as an Exhibit to the
Registration Statement and to the reference to our firm under the caption "Legal
Matters" contained therein. In giving such consent, we do not thereby admit
that we come within the category of persons whose consent is required under
Section 7 of the Act, or the Rules and Regulations of the Securities and
Exchange Commission promulgated thereunder.
Very truly yours,
KLEHR, HARRISON, HARVEY, BRANZBURG & ELLERS
<PAGE>
[LETTERHEAD OF COOPERS & LYBRAND]
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this Amendment No. 1 to the
Registration Statement of Geotek Communications, Inc. (formerly Geotek
Industries, Inc.) on Form S-3 (Reg. No. 33-85296) of our report dated
March 30, 1995, on our audits of the consolidated financial statements of
Geotek Communications, Inc. as of December 31, 1994 and 1993,
and for the years ended December 31, 1994, 1993 and 1992, which report is
included in the Company's Annual Report on Form 10-K/A. Our report contains an
emphasis of a matter paragraph related to significant transactions with
related parties in 1992.
COOPERS & LYBRAND
New York, New York
May 26, 1995
<PAGE>
[LETTERHEAD OF SHACHAK & CO.]
CONSENT OF INDEPENDENT ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this Amendment No. 1 to the Registration Statement of Geotek
Communications, Inc. (the "Company") on Form S-3 (Reg. No. 33-85296) of our
report, dated February 14, 1995, with respect to the financial statements of
PowerSpectrum Technology Ltd. ("PST") as of December 31, 1994 and 1993, and for
the year ended December 31, 1994 and the fifteen month period ended December 31,
1993, and of our report, dated January 17, 1993, with respect to the financial
statements of PST as of September 30, 1992, and for the three month period then
ended, which reports are included in the annual report of the Company on Form
10-K for the fiscal year ended December 31, 1994.
Shachak & Co.
Certified Public Accountants (Isr.)
May 17, 1995
Tel Aviv, Israel
<PAGE>
[LETTERHEAD OF SHACHAK & CO.]
CONSENT OF INDEPENDENT ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this Amendment No. 1 to the Registration Statement of Geotek
Communications, Inc. (the "Company") on Form S-3 (Reg. No. 33-85296) of our
report, dated February 24, 1993, with respect to the financial statements of
Oram Power Supplies (1990) Ltd. as of December 31, 1992 and for the year then
ended, included in the annual report of the Company on Form 10-K for the fiscal
year ended December 31, 1994.
Shachak & Co.
Certified Public Accountants (Isr.)
May 17, 1995
Tel Aviv, Israel
<PAGE>
[LETTERHEAD OF SHACHAK & CO.]
CONSENT OF INDEPENDENT ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this Amendment No. 1 to the Registration Statement of Geotek
Communications, Inc. (the "Company") on Form S-3 (Reg. No. 33-85296) of our
report, dated February 24, 1993, with respect to the financial statements of
Oram Electric Industries Ltd. as of December 31, 1992 and for the year then
ended, included in the annual report of the Company on Form 10-K for the fiscal
year ended December 31, 1994.
Shachak & Co.
Certified Public Accountants (Isr.)
May 17, 1995
Tel Aviv, Israel
<PAGE>
[LETTERHEAD OF TOUCHE ROSS & CO.]
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Amendment No. 1 to the
Registration Statement on Form S-3 (Reg. No. 33-85296) of Geotek Communications,
Inc. (formerly Geotek Industries, Inc.) of (i) our report dated June 10, 1993
with respect to the financial statements of National Band Three Limited, (ii)
our report dated November 24, 1992 with respect to the financial statements of
GEC -Marconi Communications Networks Limited and (iii) our report dated January
27, 1993 with respect to the financial statements of Vodanet Limited, each
appearing in the Current Report on Form 8-K/A of Geotek Communications, Inc.,
dated June 18, 1993.
TOUCHE ROSS & CO.
London, England
May 26, 1995
<PAGE>
[LETTERHEAD OF KPMG]
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors and Stockholders
Band Three Radio Limited
We consent to the incorporation by reference in this Amendment No. 1 to the
Registration Statement on Form S-3 (Reg. No. 33-85296) of Geotek Communications,
Inc. of our report dated 15 July 1991, relating to the Band Three Radio Limited
statements of the net loss and cash flows for the year ended 31 March 1991,
which report was included in the Current Report on Form 8-K/A of Geotek
Communications, Inc., dated June 18, 1993.
Reading, England
19 May 1995
<PAGE>
[LETTERHEAD OF COOPERS & LYBRAND GMBH]
CONSENT OF INDEPENDENT AUDITORS RELATING TO
PREUSSAG BUNDELFUNK GMBH, SALZGITTER/GERMANY
--------------------------------------------
As independent auditors, we hereby consent to the incorporation by reference in
this Amendment No. 1 to the Registration Statement of Geotek Communications,
Inc. (the "Company") on Form S-3 (Reg. No. 33-85296) of our report, dated
August30, 1994, relating to the balance sheet of Preussag Bundelfunk GmbH as of
September 30, 1993 and the related statement of operations, shareholders' equity
and cash flow for the year then ended, which report was included in the Current
Report on Form 8-K of the Company, dated July 5, 1994, as amended.
Hannover,
May 19, 1995
Coopers & Lybrand GmbH
Wirtschaftspr1ufungsgesellschaft
<PAGE>
[LETTERHEAD OF DUSSELDORFER TREUHAND-GESELLSCHAFT
ALTENBURG & TEWES AG]
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this Amendment No. 1 to the
Registration Statement on Form S-3 (Reg. No. 33-85296) of Geotek Communications,
Inc. (formerly Geotek Industries, Inc.) of our report dated September 6, 1994,
on our audit of the financial statements of DBF Bundelfunk GmbH & Co. Betriebs-
KG as of December 31, 1993, and for the year ended December 31, 1993, which
report appears in the Company's Current Report on Form 8-K dated August 2, 1994,
as amended.
Dusseldorf, May 19, 1995
DUSSELDORFER TREUHAND-GESELLSCHAFT
ALTENBURG & TEWES AG
WIRTSCHAFTSPRUFUNGSGESELLSCHAFT
STEUERBERATUNGSGESELLSCHAFT
Spielberg Gobels
Wirtschaftsprufer Wirtschaftsprufer
