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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of THE SECURITIES
EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) May 25, 1995
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GEOTEK COMMUNICATIONS, INC.
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(Exact name of registrant as specified in charter)
Delaware 0-17581 22-2358635
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
20 Craig Road, Montvale, New Jersey 07645
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(Address of principle executive offices) (Zip Code)
Registrant's telephone number, including area code 201-930-9305
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N/A
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(Former name or former address, if changed since last report.)
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Item 5. Other Events
On May 25, 1995, Geotek Communications, Inc. (the "Company") sold
531,463 shares of its Series L Cumulative Convertible Preferred Stock, $.01
par value per share ("Series L Stock"), to Toronto Dominion Investments, Inc.
("TDI") for an aggregate purchase price of $5.0 million. In connection with
this transaction, Vanguard Cellular Systems, Inc., a stockholder of the
Company ("Vanguard"), agreed to purchase an additional 531,463 shares of
Series L Stock on September 1, 1995 (the "Funding Date") for an aggregate
purchase price of $5.0 million.
In connection with Vanguard's purchase of the Series L Stock, the
parties agreed to modify the terms of certain options (the "Options") to
purchase shares of the Company's common stock, $.01 par value per share ("Common
Stock"), granted to Vanguard pursuant to that certain Stock Purchase Agreement
between the Company and Vanguard dated December 29, 1993. Pursuant to these
modifications, the total number of shares of Common Stock subject to the Options
was decreased from ten million shares to seven million shares. Of the remaining
Options, Options to purchase two million shares of Common Stock at $15.00 per
share and two million shares of Common Stock at $16.00 per share expire on the
first anniversary of the Funding Date and Options to purchase three million
shares of Common Stock at $17.00 per share expire on the second anniversary of
the Funding Date. After giving effect to these modifications, Vanguard and TDI
each hold one-half of the Options exercisable at $15.00 per share, Vanguard
holds six-sevenths of each of the Options exercisable at $16.00 and $17.00 per
share, respectively, and TDI holds one-seventh of each of the Options
exercisable at $16.00 and $17.00 per share, respectively. Each of Vanguard
and TDI may, upon written notice to the Company, extend the expiration date
of the Options exercisable at $16.00 and $17.00 per share, respectively, for a
period of six (6) months, subject to certain adjustments to the exercise price
thereof.
Each share of Series L Stock is convertible at any time, at the
holder's option, into one share of Common Stock, subject to adjustment in
certain circumstances. If the price of the Company's Common Stock equals or
exceeds $14.11 per share for a specified period, the Company may, at its option,
redeem all outstanding shares of Series L Stock for a per share redemption price
equal to the stated value of the Series L Stock plus all accrued but unpaid
dividends. In addition, in the event of certain circumstances constituting a
change of control of the Company, the Company is obligated to offer to redeem
all shares of Series L Stock. In either event, the redemption price payable with
respect to the Series L Stock may be paid in cash or shares of Common Stock at
the Company's option. Holders of Series L Stock are entitled to receive
cumulative annual dividends at the rate of 7.5% per annum based on the stated
value of $9.408 per share, payable in cash or additional shares of Series L
Stock at the Company's option. In addition to any voting rights provided by law,
the holders of Series L Stock are entitled to vote, on an as-converted basis, on
all matters voted on by holders of Common Stock, voting together as a single
class with the other shares entitled to vote, at all meetings of the
stockholders of the Company.
The Company has granted registration rights to TDI and Vanguard
with respect to shares of Common Stock held by them, including (i) the shares
of Common Stock issuable upon conversion of the Series L Stock; and (ii) any
shares of Common Stock issued in full or partial redemption of the Series L
Stock.
As of May 26, 1995, the Company sold 1,162.5 shares of its Series M
Cumulative Convertible Preferred Stock, $.01 par value per share ("Series M
Stock"), to a group of investors for an aggregate purchase price of
$11,625,000.
Each share of Series M Stock is convertible at any time, at the
holder's option, into such number of shares of Common Stock as is determined by
dividing (i) the sum of the $10,000 per share stated value plus all accrued but
unpaid dividends with respect to such share, by (ii) a conversion price of $9.50
per share, subject to adjustment in certain circumstances. If the price of the
Company's Common Stock equals or exceeds $14.25 per share for a specified period
after May 26, 1998, the Company may, at its option, redeem all outstanding
shares of Series M Stock for a per share redemption price equal to the stated
value of the Series M Stock plus all accrued but unpaid dividends. The
redemption price payable with respect to the Series M Stock may be paid in cash
or shares of Common Stock at the Company's option. Holders of Series M
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Stock are entitled to receive cumulative annual dividends at the rate of 8.5%
per annum based on the stated value of $10,000 per share, payable in cash or
shares of Common Stock at the Company's option. In addition to any voting rights
provided by law, the holders of Series M Stock are entitled to vote, on an
as-converted basis, on all matters voted on by holders of Common Stock, voting
together as a single class with the other shares entitled to vote, at all
meetings of the stockholders of the Company.
The Company has granted registration rights to the purchasers of
the Series M Stock with respect to (i) the shares of Common Stock issuable
upon conversion of the Series M Stock; (ii) any shares of Common Stock issued
in full or partial payment of dividends payable with respect to the Series M
Stock; and (iii) any shares of Common Stock issued in full or partial
redemption of the Series M Stock.
The summaries of the terms of the Series L Stock and Series M Stock
set forth above are qualified in their entirety by reference to the
Certificate of Designation of each such series of Preferred Stock, copies of
which are filed herewith as Exhibits to this Current Report on Form 8-K.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(c) Exhibits
4.1 Certificate of Designation of Series L Cumulative
Convertible Preferred Stock.
4.2 Certificate of Designation of Series M Cumulative
Convertible Preferred Stock.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
GEOTEK COMMUNICATIONS, INC.
Date: June 9, 1995 By: /s/ Yoram Bibring
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Name: Yoram Bibring
Title: Executive Vice President,
Chief Financial Officer and
Chief Operating Officer
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EXHIBIT INDEX
Exhibit No.
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4.1 Certificate of Designation of Series L Cumulative Convertible
Preferred Stock.
4.2 Certificate of Designation of Series M Cumulative Convertible
Preferred Stock.
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EXHIBIT 4.1
CERTIFICATE OF DESIGNATION
of
SERIES L 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 L Cumulative Convertible Preferred Stock:
I. Designation and Amount
The designation of this series, which consists of 1,500,000 shares
of Preferred Stock, is Series L Cumulative Convertible Preferred Stock (the
"Series L Preferred Stock") and the stated value shall be $9.408 per share
(the "Stated Value"). The number of shares of the Series L 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 L Preferred Stock to a number less than
the aggregate number of shares of the Series L 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 L Preferred Stock.
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II. Rank
All Series L Preferred Stock shall rank (i) prior to the Corporation's
Common Stock, par value $.01 per share (the "Common Stock"), and to the
Corporation's Series E Mandatory Redeemable Convertible Preferred Stock; (ii)
junior to the Corporation's Series H Cumulative Convertible Preferred Stock
(the "Series H Stock") and to the Corporation's Series I Cumulative
Convertible Preferred Stock (the "Series I Stock") (or Parity Stock, as
defined in Article VII.B of the Certificate of Designation of the Series I
Stock, provided that such Parity Stock is on substantially the same terms as
the Series I Stock) (the Series H Stock, the Series I Stock, and such Parity
Stock (including without limitation the Corporation's Series K Cumulative
Convertible Preferred Stock) are referred to collectively as the "Senior
Series"); and (iii) unless the holders of Series L Preferred Stock shall
otherwise consent pursuant to Article VII.B, prior to 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.
III. Dividends
A. The holders of shares of Series L Preferred Stock shall
be entitled to receive cash dividends at the rate (the "Dividend Rate") of
Seven and one-half Percent (7.5%) per annum, through and including the date
on which such Series L Preferred Stock is no longer issued and outstanding,
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 L Preferred Stock
shall be valued at the Stated Value. Such dividends shall begin to accrue on
outstanding shares of Series L 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 L 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.
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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 Series L Preferred Stock rather than cash. The
Corporation shall pay such dividend by issuing to such holder shares of
Series L Preferred Stock that have an aggregate Stated Value equal to the
amount of the cash dividends otherwise payable to such holder on the
applicable Dividend Payment Date.
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 L
Preferred Stock or (ii) ranks pari passu with the Series L 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 L Preferred Stock
as a percentage of accrued and unpaid dividends per share on the Series L
Preferred Stock), unless and until all accrued and unpaid dividends on the
Series L 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.
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 L Preferred Stock shall
not be entitled to receive any dividends or other distributions with respect
to such shares except as provided herein.
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
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series of Preferred Stock that, in accordance with Article II hereof, ranks
senior to the Series L Preferred Stock) upon liquidation, dissolution or
winding up unless prior thereto, the holders of shares of Series L 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 L Preferred Stock and holders of
capital stock ranking on a pari passu basis with the Series L 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 L 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 L 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 L 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 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 cash
or shares of Common Stock or shares of common equity of the successor entity,
provided that any Common Stock issued by the Corporation or common equity
securities issued by such successor entity upon such Change of Control
Redemption shall have been registered at the time of issuance for resale by
the Electing Holders pursuant to an effective registration statement under
the Securities Act of 1933, as amended (the "Act"), and with such state
securities authorities as may be reasonably requested by the Electing
Holders, all at the expense of the Corporation or such successor entity and
on terms substantially identical to those that would be provided by the
Corporation in connection with a registration pursuant to the Registration
Rights Agreement dated as of May 23, 1995 by and between the Corporation and
Toronto Dominion Investments, Inc., including, without limitation, the
indemnification provisions thereof) 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 L Preferred Stock (the "Redemption Price") equal
to (A) in the case of a Mandatory Redemption (as defined in Article V.E.) or
a redemption effected pursuant to Article VII.D., 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 L Preferred Stock to the
Redemption Date or the date of actual payment of the Redemption Price,
whichever is later, or (B) in the case of a Change of Control Redemption (as
defined in Article V.F.), the greater of (i) the amount calculated under
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clause (A) above and (ii) the Market Value (as defined below) of the shares
of capital stock of the Corporation into which such shares of Series L
Preferred Stock are convertible at the Change of Control 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 L
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 after receipt by
such holder of such notice of Change of 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
(or the Extended Redemption Date in the event of a redemption pursuant to
Article VII.D), 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 of Control Redemption,
common equity of the successor entity) sufficient in amount to pay the
Redemption Price in full on all outstanding shares of Series L Preferred
Stock held by Electing Holders (or all holders of Series L 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 L 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; provided that if the
Corporation shall have deposited securities with the transfer agent, such
rights will not cease or terminate until such securities are registered in
accordance with Article V.A. In case holders of any shares of Series L
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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 L 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.
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 L 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 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 L Preferred Stock in respect of each share of Series L
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 45 Trading Days within any period of 60 consecutive Trading
Days is at least equal to $14.11 per share (as adjusted for any stock splits,
stock dividends or reclassifications). The notice of Mandatory Redemption
shall set the date for Mandatory Redemption (the "Mandatory Redemption Date")
at least 45 Trading Days following the date of such notice or such earlier
date as the shares of Common Stock issuable upon redemption of Series L
Preferred Stock are registered for resale under the Act, but in no event less
than 15 Trading Days following the date of such notice, subject to the
holders' earlier right of conversion, and, to the extent applicable, shall be
in accordance with Article V.B.
F. (a) In the event of a Change of Control (as defined
below), the Corporation shall redeem (the "Change of Control Redemption") the
shares of Series L 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 of 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.
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"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 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 L 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.
<PAGE> 13
"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 L 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 L Preferred Stock into Common Stock as follows. Each share
of Series L 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 $9.408 per 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 L 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 L 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.
<PAGE> 14
(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.
(c) The Conversion Price of shares of Series L 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
<PAGE> 15
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 L 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 L Preferred Stock. If the conversion of a share or shares
of Series L 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 L 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 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 L 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 L 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.
<PAGE> 16
E. A number of shares of the authorized but unissued Common
Stock sufficient to provide for the conversion of the Series L 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 L
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 L 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 L Preferred Stock then outstanding shall have the right thereafter to
convert each such share of Series L 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 L
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 L 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 L
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 L 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 L 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 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.
<PAGE> 17
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 L
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 L 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 L Preferred Stock.
VII. Voting Rights
In addition to any voting rights provided by law, the holders of shares
of Series L Preferred Stock shall have the following rights:
A. So long as the Series L Preferred Stock is outstanding, each
share of Series L 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 L 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 L 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 L Preferred Stock is convertible on the record date for
such vote.
B. The affirmative vote of the holders of at least two-thirds of
the voting power represented by the outstanding shares of Series L Preferred
Stock, voting separately as a single class, shall be necessary to (i)
increase the authorized number of shares of, or issue beyond the 1,500,000
shares initially authorized hereby (including on conversion or exchange of
any convertible or exchangeable securities or by reclassification) any shares
of, Series L 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 L Preferred Stock or alter or change the powers, preferences or
special rights of the shares of Series L Preferred Stock so as to affect such
shares of Series L Preferred Stock materially and adversely, (iii) allow the
Corporation to purchase any shares of Series L Preferred Stock when dividends
on the Series L Preferred Stock are in arrears or there exists a redemption
default under Article V, (iv) issue any capital stock of the Corporation
subsequent to April 24, 1995 (other than Parity Stock (as defined in
Article VII.B of the Certificate of Designation for the Series I Stock)
having a Stated Value of up to an aggregate amount of $30 million) senior or
equal to the Series L Preferred Stock (either as to dividends or upon
liquidation) or (v) amend, alter or repeal any provision hereof, or of the
Corporation's Restated Certificate of Incorporation or Bylaws, which alters
or changes the powers, preferences, or special rights of the shares of the
Series L Preferred Stock, so as to affect them adversely. The affirmative
vote of holders of at least a majority of the voting power represented by the
outstanding shares of Series L Preferred Stock, voting separately as a class,
shall be necessary to issue any shares of Series L Preferred Stock other than
pursuant to Article III, provided, however, that no shareholder approval
shall be required for issuances of Series L Preferred Stock made pursuant to
preemptive rights in existence on the date upon which this Certificate of
Designation is filed with the Secretary of State for the State of Delaware.
<PAGE> 18
C. If on any date (i) the Corporation shall have breached any of
its obligations under the Stock Purchase Agreement dated as of May 23, 1995,
among the Corporation, Vanguard Cellular Systems, Inc. and Toronto Dominion
Investments, Inc. and any subsequent stock purchase agreement pursuant to
which Series L 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 L Preferred Stock exercise their rights under this
Article VII.C, (ii) dividends or distributions payable on the Series L
Preferred Stock, whether or not declared, 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 L 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 L 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 L 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 L 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 L Preferred Stock shall terminate subject to revesting
in the event of each and every subsequent event of the character indicated
above.
D. After any Event of Default, as hereinafter defined, the
holders of Series L 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 (a "Default Declaration") by majority vote that all
of the then outstanding shares of Series L Preferred Stock shall be redeemed
at the Redemption Price thereof as hereinafter provided. For purposes of
this Article VII.D, an Event of Default shall be deemed to occur on such date
as dividends or distributions payable on Series L Preferred Stock, whether or
not declared, shall have been in arrears and not paid in full with respect to
four consecutive Dividend Payment Dates. On the date the Corporation
receives written notice of a Default Declaration signed by the holders of a
majority of the then outstanding shares of Series L Preferred Stock (the
"Acceleration Date"), the then outstanding shares of Series L Preferred Stock
shall be redeemed in accordance with the provisions of Article V.A through
V.D, 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 last day of such 180-day period
(the "Extended Redemption Date").
E. (i) The foregoing rights of holders of shares of Series L
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 L 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 L Preferred Stock
required to take such action.
<PAGE> 19
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 L 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 L 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 L 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 L Preferred Stock shall not prevent the election of directors
other than those to be elected by the holders of shares of Series L
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 L
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 L 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 L 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 L 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 L 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 L
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 L 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 L Preferred Stock shall cease
to serve as directors before their terms shall expire, the holders of
Series L 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.
<PAGE> 20
Any director elected by the holders of shares of Series L 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 L Preferred Stock. A special meeting of the holders of shares of
Series L Preferred Stock may be called in accordance with the procedures set
forth in subparagraph (i) of this Article VII.E to effect such removal.
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 L 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 L 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 L Preferred Stock at a time required by
Article V or Article VII.D, thereafter and until all redemption obligations
of the Corporation 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 L 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 L 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 L 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 L 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 L Preferred Stock; (ii) redeem or purchase or otherwise acquire
for consideration any shares of Series L Preferred Stock; provided, however,
that the Corporation (A) may accept shares of Series L Preferred Stock
surrendered for conversion into shares of capital stock of the Corporation
pursuant to Article VI and (B) may redeem shares of Series L Preferred Stock
as to which any holder of Series L 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 L 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 L 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.
<PAGE> 21
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 L 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 23rd day of May, 1995.
GEOTEK COMMUNICATIONS, INC.
By: /s/ Yaron Eitan
-------------------------------
Yaron Eitan, President
<PAGE> 22
EXHIBIT 4.2
CERTIFICATE OF DESIGNATION
of
SERIES M 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 M Cumulative Convertible Preferred Stock:
I. Designation and Amount
The designation of this series, which consists of 2,000 shares of
Preferred Stock, is Series M Cumulative Convertible Preferred Stock (the
"Series M Preferred Stock") and the stated value shall be $10,000 per share
(the "Stated Value"). The number of shares of the Series M 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 M Preferred Stock to a number less than
the aggregate number of shares of the Series M 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 M Preferred Stock.
<PAGE> 23
II. Rank
All Series M Preferred Stock shall rank (i) prior to the Corporation's
Common Stock, par value $.01 per share (the "Common Stock"), and to the
Corporation's Series E Mandatory Redeemable Convertible Preferred Stock; (ii)
junior to the Corporation's Series H Cumulative Convertible Preferred Stock
(the "Series H Stock"), the Corporation's Series I Cumulative Convertible
Preferred Stock (the "Series I Stock") (or Parity Stock, as defined in
Article VII.B of the Certificate of Designation of the Series I Stock,
provided that such Parity Stock is on substantially the same terms as the
Series I Stock) and the Corporation's Series L Cumulative Convertible
Preferred Stock (the "Series L Stock") (the Series H Stock, the Series I
Stock, the Series L Stock and such Parity Stock (including without limitation
the Corporation's Series K Cumulative Convertible Preferred Stock) are
referred to collectively as the "Senior Series"); and (iii) unless the
holders of Series M Preferred Stock shall otherwise consent pursuant to
Article VII.B, prior to 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.
III. Dividends
A. The holders of shares of Series M Preferred Stock shall
be entitled to receive cash dividends at the rate (the "Dividend Rate") of
Eight and one-half Percent (8.5%) per annum, through and including the date
on which such Series M Preferred Stock is no longer issued and outstanding,
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 M Preferred Stock
shall be valued at the Stated Value. Such dividends shall begin to accrue on
outstanding shares of Series M 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 M 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.
<PAGE> 24
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 such number of shares of Common
Stock as is determined by dividing the amount of the cash dividends otherwise
payable to such holder on the applicable Dividend Payment Date by the average
Closing Price (as defined below) of the shares of Common Stock during the
period of twenty (20) consecutive Trading Days (as defined below) ending on
the Trading Day immediately prior to the applicable Dividend Payment Date.
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 M
Preferred Stock or (ii) ranks pari passu with the Series M 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 M Preferred Stock
as a percentage of accrued and unpaid dividends per share on the Series M
Preferred Stock), unless and until all accrued and unpaid dividends on the
Series M 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.
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 M Preferred Stock shall
not be entitled to receive any dividends or other distributions with respect
to such shares except as provided herein.
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
<PAGE> 25
series of Preferred Stock that, in accordance with Article II hereof, ranks
senior to the Series M Preferred Stock) upon liquidation, dissolution or
winding up unless prior thereto, the holders of shares of Series M 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 M Preferred Stock and holders of
capital stock ranking on a pari passu basis with the Series M 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 M 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 M 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,
the Corporation may, at its option, elect to redeem all or any portion of the
shares of Series M Preferred Stock then outstanding if, after that date which
is three (3) years from the date of the initial issuance of shares of the
Series M Preferred Stock, the Closing Price of the Common Stock on each of 20
consecutive Trading Days (as defined in Article VI.B below) is equal to or
greater than $14.25 per share (as adjusted for any stock splits, stock
dividends or reclassifications). The Redemption Price (as defined below)
payable upon a Redemption (as defined below) shall be paid in cash or shares
of Common Stock, or a combination thereof, at the sole discretion of the
Corporation; provided, however, that in the event that the Company elects to
pay the Redemption Price in shares of Common Stock, the holders of shares of
Series M Preferred Stock to be redeemed, may delay the Redemption until that
date on which a registration statement covering the resale of the shares of
Common Stock issuable upon such Redemption is declared effective. The
"Redemption Price" shall equal 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 M Preferred Stock to the Redemption Date or
the date of actual payment of the Redemption Price, whichever is later. The
term "Redemption" means a redemption effected pursuant to this Article VII.A.
B. The Corporation shall send notice, by first class mail,
postage prepaid, to the holders of record of the shares of Series M 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 that the Corporation elects 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 date for Redemption (the
"Redemption Date") shall be determined by the Corporation, but shall in no
event be less than 15 Trading Days following the date of such notice, subject
to the holders' earlier right of conversion and the holders' right to delay
the redemption as set forth in Article V.A.
<PAGE> 26
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
sufficient in amount to pay the Redemption Price in full on all outstanding
shares of Series M Preferred Stock to be redeemed 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 M 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; provided that if the Corporation shall
have deposited securities with the transfer agent, such rights will not cease
or terminate until such securities are registered in accordance with
Article V.A. In case holders of any shares of Series M 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 M
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.
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 M Preferred
Stock shall be determined by dividing the Redemption Price by the average of
the Closing Prices of the shares of Common Stock during the period of 20
consecutive Trading Days ending on the Trading Day immediately prior to the
Redemption Date.
VI. Conversion at the Option of the Holder
A. Each holder of shares of Series M 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 M Preferred
Stock into Common Stock as follows. Each share of Series M 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 $9.50 per 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.
<PAGE> 27
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 M 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 M 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
<PAGE> 28
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.
(c) The Conversion Price of shares of Series M 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 M 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.
<PAGE> 29
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 M Preferred Stock. If the conversion of a share or shares
of Series M 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 M 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 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 M 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 M 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 M Preferred
Stock outstanding at the then current Conversion Price shall at all times be
reserved by the Corporation, free from preemptive rights, 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 M 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,
for conversion of the outstanding Series M 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 M Preferred Stock then outstanding shall have the right thereafter to
convert each such share of Series M 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 M
Preferred Stock might have been converted immediately prior to such
reclassification, consolidation, merger, sale, transfer or share exchange.
<PAGE> 30
To the extent that as a result of any such reclassification, consolidation,
merger, sale, transfer or share exchange the Series M 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 M
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 M 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 M 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 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 M
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 M 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 M Preferred Stock.
VII. Voting Rights
A. So long as the Series M Preferred Stock is outstanding,
each share of Series M 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 M 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 M 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 M Preferred Stock is convertible
on the record date for such vote.
B. At each meeting of stockholders at which the holders of
shares of Series M Preferred Stock shall have the right, voting separately as
a single class, to take any action, the presence in person or by proxy of the
holders of record of a majority of the voting power represented by the total
number of shares of Series M 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, in the absence of a quorum of the holders of shares of
Series M 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 M Preferred Stock from time to time and place to place without
notice other than announcement at the meeting until a quorum shall be
present.
<PAGE> 31
C. Except as otherwise required by law, the holders of
shares of Series M Preferred Stock shall have no voting rights except as set
forth in this Article VII.
IN WITNESS WHEREOF, this Certificate of Designation is executed on
behalf of the Corporation this 26th day of May, 1995.
GEOTEK COMMUNICATIONS, INC.
By: /s/ Yoram Bibring
----------------------------------------
Yoram Bibring, Executive Vice President
