As filed with the Securities and Exchange Commission on July 24, 1996
Registration No. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
GEOTEK COMMUNICATIONS, INC.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of
incorporation or organization)
22-2358635
(I.R.S. Employer Identification Number)
20 Craig Road
Montvale, New Jersey 07645
(201) 930-9305
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
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Robert Vecsler, Esq.
General Counsel and Secretary
Geotek Communications, Inc.
20 Craig Road
Montvale, New Jersey 07645
(201) 930-9305
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
With a copy to:
Stephen T. Burdumy, Esq.
Klehr, Harrison, Harvey, Branzburg & Ellers
1401 Walnut Street
Philadelphia, PA 19102
(215) 568-6060
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the Registration Statement becomes effective.
------------------------------
If the only securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, check the following box: |_|
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
investment plans. Check the following box. |X|
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. |_| __________
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. |_| __________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. |_|
<PAGE>
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
==========================================================================================================================
Title of each class of securities to Amount to be Proposed Proposed Maximum Amount of
be registered registered Maximum Aggregate Offering Registration
Aggregate Price Price Fee
Per Unit
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value $ .01 per 20,545,371(1) $10.3125(2) $211,874,138.44 (2) $73,060.05
share
==========================================================================================================================
</TABLE>
(1) Includes additional shares of registrant's Common Stock which may be issued
to certain of the Selling Stockholders in satisfaction of dividends payable
on the Series N Preferred Stock. Pursuant to Rule 416 of the Securities
Act, this Registration Statement also registers such additional number of
shares of registrant's Common Stock issued as a result of stock splits,
stock dividends and anti-dilution provisions of the HNS Note, TDI Options,
Series L Preferred Stock, S-C Rig Warrants, Series N Preferred Stock,
Series N Warrants and Klehr Options (as such terms are defined in
the Prospectus).
(2) Based on the closing sale price of the registrant's Common Stock as
reported on the Nasdaq National Market on July 23, 1996. Estimated solely
for the purpose of calculating the registration fee in accordance with Rule
457(c) of the Securities Act of 1933, as amended.
The registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with section 8(a) of the
Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said section 8(a),
may determine.
<PAGE>
Subject to Completion, Dated July 24, 1996
GEOTEK COMMUNICATIONS, INC.
20,545,371 Shares of Common Stock
PROSPECTUS
This Prospectus concerns the offer and sale by Hughes Network Systems, Inc.
("HNS"), from time to time, of up to 3,888,889 shares of common stock, par value
$.01 per share (the "Common Stock") of Geotek Communications, Inc., a Delaware
corporation ("Geotek" or the "Company"). The 3,888,889 shares of Common Stock
offered hereby (the "HNS Offered Shares"), are issuable upon the conversion of a
convertible note, in the aggregate principal amount of up to $24,500,000 (the
"HNS Note"), issued by Geotek Financing Corporation ("GFC"), a wholly owned
subsidiary of the Company, to HNS pursuant to the Loan Agreement made as of
December 21, 1995 by and among GFC, the Company and HNS (the "HNS Loan
Agreement"). The HNS Note is guaranteed by the Company.
This Prospectus also concerns the offer and sale by Toronto Dominion
Investments, Inc. ("TDI"), from time to time, of an aggregate of 1,714,500
shares of Common Stock issuable by the Company to TDI upon the exercise of
options granted to TDI on May 25, 1995 (the "TDI Options"). The TDI Options
contain the following terms: (i) the Series A TDI Option entitles TDI to
purchase an aggregate of 1,000,000 shares of Common Stock and is exercisable, at
any time and from time to time, prior to September 1, 1996 (the "Series A
Expiration Date") at an exercise price of $15.00 per share, subject to certain
adjustments; (ii) the Series B TDI Option entitles TDI to purchase an aggregate
of 285,800 shares of Common Stock and is exercisable, at any time and from time
to time, prior to September 1, 1996 (the "Series B Expiration Date") at an
exercise price of $16.00 per share, subject to certain adjustments, provided,
however, that TDI in its sole discretion has the right, at any time prior to the
Series B Expiration Date, to extend such expiration date to March 1, 1997,
subject to an adjustment of the then applicable exercise price; and (iii) the
Series C TDI Option entitles TDI to purchase an aggregate of 428,700 shares of
Common Stock and is exercisable, at any time and from time to time, prior to the
first anniversary of the Series B Expiration Date as the same may have been
extended (the "Series C Expiration Date") at an exercise price of $17.00 per
share, subject to adjustment, provided, however, that TDI in its sole discretion
has the right, at any time prior to the Series C Expiration Date, to extend such
expiration date by six months, subject to an adjustment of the then applicable
exercise price. The TDI Options are exercisable, at the election of TDI, either
in full or from time to time in part, prior to the applicable expiration date;
provided, however, that (i) if the Series A TDI Option is not exercised in full
prior to the Series A Expiration Date, then the Series B TDI Option and Series C
TDI Option shall immediately terminate, and (ii) if the Series B TDI Option is
not exercised in full prior to the Series B Expiration Date (as the same may
have been extended), then the Series C TDI Option shall immediately terminate.
The shares of Common Stock issuable upon exercise of the TDI Options are
hereinafter referred to as the "TDI Option Shares."
(continued on next page)
This Prospectus incorporates documents by reference which are not presented
herein or delivered herewith. These documents are available upon request from
General Counsel, Geotek Communications, Inc., 20 Craig Road, Montvale, New
Jersey 07645, (201) 930-9305.
SEE "RISK FACTORS" FOR CERTAIN INFORMATION THAT SHOULD BE
CONSIDERED BY PROSPECTIVE INVESTORS.
-----------
THE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION (THE "COMMISSION") OR
ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE
The date of this Prospectus is July 24, 1996
<PAGE>
This Prospectus also concerns the offer and sale by TDI, from time to time,
of an aggregate of 531,463 shares of Common Stock issuable upon the conversion
of 531,463 shares of the Company's Series L Cumulative Convertible Preferred
Stock, par value $.01 per share (the "Series L Preferred Stock"). The Series L
Preferred Stock was issued by the Company to TDI on May 25, 1995. Each share of
Series L Preferred Stock is immediately convertible into that number of shares
of Common Stock as is determined by dividing (i) the sum of the $9.408 stated
value per share of the Series L Preferred Stock plus all unpaid dividends
accrued and deemed to have accrued, if any, with respect to such shares of
Series L Preferred Stock through the last dividend payment date by (ii) a
conversion price of $9.408 per share, subject to certain adjustments. Assuming
there are no accrued and unpaid dividends on the Series L Preferred Stock at the
time of conversion, the Series L Preferred Stock is convertible into an
aggregate of 531,463 shares of Common Stock. The shares of Common Stock issuable
upon conversion of the Series L Preferred Stock are hereinafter referred to as
the "Series L Shares."
This Prospectus also concerns the offer and sale by S-C Rig Investments -
III, L.P. ("S-C Rig"), from time to time, of an aggregate of 4,210,526 shares of
Common Stock issuable upon the exercise of certain warrants issued by the
Company to S-C Rig (the "S-C Rig Warrants") on April 4, 1996 in connection with
a capital-raising transaction undertaken by the Company. The S-C Rig Warrants
are exercisable at a per share price of $9.50 and may be exercised, either in
full or from time to time in part, at any time on or before April 4, 2001. The
shares of Common Stock issuable by the Company to S-C Rig upon exercise of the
S-C Rig Warrants are hereinafter referred to as the "S-C Rig Warrant Shares."
This Prospectus also concerns the offer and sale by certain selling
stockholders (the "Series N Investors"), from time to time, of (i) 6,650,000
shares of Common Stock issuable upon the conversion of 55,000 investment units,
each unit consisting of one share of the Company's Series N Cumulative
Convertible Preferred Stock, par value $.01 per share (the "Series N Preferred
Stock") and a warrant to purchase 30 shares of Common Stock (the "Series N
Warrants"), and (ii) up to 3,500,000 shares of Common Stock which may be issued
in satisfaction of dividends on the Series N Preferred Stock. The Series N
Preferred Stock and the Series N Warrants were issued by the Company to the
Series N Investors on June 20, 1996. The Series N Preferred Stock provides for a
dividend of 10% per annum of the stated value of the Series N Preferred Stock on
a cumulative basis. Dividends accrue from the date of issuance and are payable
quarterly. Dividends must be paid in shares of Common Stock valued as of the
respective dividend payment dates. Each share of Series N Preferred Stock is
convertible into the number of shares of Common Stock as is determined by
dividing (i) the sum of $1,000 stated value per share of the Series N Preferred
Stock plus all unpaid dividends accrued and deemed to have accrued, if any, with
respect to such shares of Series N Preferred Stock through the last dividend
payment date by (ii) a conversion price of $11.00 per share, subject to certain
adjustments. Assuming there are no accrued and unpaid dividends on the Series N
Preferred Stock at the time of conversion, the Series N Preferred Stock is
convertible into an aggregate of 5,000,000 shares of Common Stock. The Series N
Warrants are exercisable at a per share price of $11.00 and may be exercised,
from time to time, at any time during the period beginning on June 20, 1996 and
ending on June 20, 2001. The shares of Common Stock issuable by the Company to
the Series N Investors upon conversion of the Series N Preferred Stock, upon
exercise of the Series N Warrants and in satisfaction of dividends on the Series
N Preferred Stock are hereinafter referred to as the "Series N Conversion
Shares," the "Series N Warrant Shares," and the "Series N Dividend Shares,"
respectively.
This Prospectus also concerns the offer and sale by Leonard M. Klehr
("Klehr"), from time to time, of 50,000 shares of Common Stock issuable upon the
exercise of certain options issued by the Company to Klehr (the "Klehr Options")
on May 13, 1996 in connection with the application by Anam Industrial Co. Ltd.
(the Company's joint venture partner in Korea) for a license to operate a
nationwide trunked radio system in Korea. The Klehr Options are exercisable at a
per share price of $10.00 and may be exercised, either in full or from time to
time in part, at any time prior to May 13, 2001. The shares of Common Stock
issuable by the Company to Klehr upon exercise of the Klehr Options are
hereinafter referred to as the "Klehr Shares."
The HNS Note, TDI Options, Series L Preferred Stock, S-C Rig Warrants,
Series N Preferred Stock, Series N Preferred Warrants and Klehr Options are
collectively referred to as the "Securities." The HNS Offered Shares, the TDI
Option Shares, the Series L Shares, the S-C Rig Warrant Shares, the Series N
Conversion Shares, the Series N Warrant Shares, the Series N Dividend Shares and
the Klehr Shares are collectively referred to as the "Offered Shares." HNS, TDI,
S-C Rig, the Series N Investors and Klehr are collectively referred to as the
"Selling Stockholders."
-2-
<PAGE>
This Prospectus also concerns, pursuant to Rule 416 of the Securities Act,
the offer and sale by the Selling Stockholders of any and all shares of Common
Stock issued with respect to the Securities as a result of stock-splits, stock
dividends and anti-dilution provisions.
The Company's Common Stock is listed on the NASDAQ National Market ("NNM")
under the symbol "GOTK" and on the Pacific Stock Exchange ("PSE") under the
symbol "GEO." On July 23, 1996, the closing sale price for the Common Stock, as
quoted on the NNM, was $10.3125 per share.
Pursuant to this Prospectus, the Offered Shares may be sold by the Selling
Stockholders, from time to time while the Registration Statement to which this
Prospectus relates is effective, on the PSE, NNM or otherwise at prices and
terms prevailing at the time of sale, at prices and terms related to such
prevailing prices and terms, in negotiated transactions or at fixed prices.
Although none of the Selling Stockholders has advised the Company of the manner
in which it currently intends to sell the Offered Shares pursuant to this
Registration Statement, the Selling Stockholders may choose to sell all or a
portion of such Offered Shares from time to time in any manner described herein.
The methods by which the Offered Shares may be sold by the Selling Stockholders
include, without limitation: (i) ordinary brokerage transactions, which may
include long or short sales, (ii) transactions which involve crosses or block
trades or any other transactions permitted by the PSE or NNM, (iii) purchases by
a broker or dealer as principal and resale by such broker or dealer for its
account pursuant to this Prospectus, (iv) "at the market" to or through market
makers or into an existing market for the Common Stock, (v) in other ways not
involving market makers or established trading markets, including direct sales
to purchasers or sales effected through agents, (vi) through transactions in
options or swaps or other derivatives (whether exchange-listed or otherwise), or
(vii) any combination of any such methods of sale. In effecting sales, brokers
and dealers engaged by any of the Selling Stockholders may arrange for other
brokers or dealers to participate. Brokers or dealers may receive commissions or
discounts from the Selling Stockholders to sell a specified number of shares at
a stipulated price per share, and, to the extent such a broker or dealer is
unable to do so acting as agent for the Selling Stockholders, may purchase as
principal any unsold shares at the price required to fulfill such broker or
dealer commitment to the Selling Stockholders. Brokers or dealers who acquire
shares as principals may thereafter resell such shares from time to time in
transactions (which may involve crosses and block transactions and which may
involve sales to and through other brokers or dealers, including transactions of
the nature described above) in the over-the-counter market, in negotiated
transactions or otherwise, at market prices and terms prevailing at the time of
sale, at prices and terms related to such prevailing prices and terms, in
negotiated transactions or at fixed prices, and in connection with the methods
as described above. The Offered Shares held by the Selling Stockholders may also
be sold hereunder by brokers, dealers, banks or other persons or entities who
receive such Offered Shares as pledgees of the Selling Stockholders. The Selling
Stockholders and brokers and dealers through whom sales of Offered Shares may be
effected may be deemed to be "underwriters," as defined under the Securities Act
of 1933, as amended (the "Securities Act"), and any profits realized by them in
connection with the sale of the Offered Shares may be considered to be
underwriting compensation.
The agreements between the Company and the Selling Stockholders referenced
herein provide that the Company will indemnify any such person deemed an
underwriter and the Selling Stockholders against certain liabilities, including
civil liabilities under the Securities Act, or will contribute to payments such
underwriters or Selling Stockholders may be required to make in respect thereof.
Insofar as indemnification for liabilities arising under the Securities Act may
be permitted to directors, officers, or persons controlling the Company pursuant
to the foregoing provisions, its certificate of incorporation or by-laws, the
Company has been informed that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act and
is therefore unenforceable.
-3-
<PAGE>
<TABLE>
<CAPTION>
======================================================================================================================
Price Underwriting Discounts Proceeds to Proceeds to the
to Public and Commissions the Company Selling Stockholders
======================================================================================================================
<S> <C> <C> <C> <C>
Per Share........... $(1)(2) $(1)(2) $0(3) $(1)(4)
======================================================================================================================
Total................. $(1)(2) $(1)(2) $0(3) $(1)(4)
======================================================================================================================
</TABLE>
(1) It is anticipated that the Offered Shares registered for resale hereunder
will be sold by the Selling Stockholders in market or private transactions
at prevailing prices, from time to time.
(2) In connection with the sale of the Offered Shares by the Selling
Stockholders pursuant to this Prospectus, the Selling Stockholders may pay
underwriting or broker-dealer discounts or commissions. The amounts of such
discounts and commissions, if any, cannot be determined by the Company at
this time.
(3) The Company will not receive any proceeds from the resale of the Offered
Shares by the Selling Stockholders. Upon conversion of the HNS Note by HNS,
an aggregate of up to $24,500,000 principal amount of the Company's
indebtedness will be retired. Upon an exercise of the TDI Options by TDI,
exercise of the S-C Rig Warrants by S-C Rig, exercise of the Series N
Warrants by any of the Series N Investors or exercise of the Klehr Options
by Klehr, the Company will receive the exercise price of the TDI Options,
the S-C Rig Warrants, the Series N Warrants or the Klehr Options, as the
case may be. To the extent the TDI Options, S-C Rig Warrants, Series N
Warrants or Klehr Options are exercised, the Company will apply the
proceeds thereof to its general corporate purposes.
(4) The Company will pay all expenses of the offering of the Common Stock to
which this Prospectus relates, which are estimated to be $101,560.05. The
Selling Stockholders will pay any brokerage compensation in connection with
their sale of the Offered Shares.
-4-
<PAGE>
ADDITIONAL INFORMATION
The Company has filed a registration statement on Form S-3 (together with
any amendments thereto, the "Registration Statement") with the Commission under
the Securities Act with respect to the securities offered hereby. This
Prospectus, which constitutes a part of the Registration Statement, omits
certain information contained in the Registration Statement and reference is
made to the Registration Statement and the exhibits and schedules thereto for
further information with respect to the Company and the securities offered
hereby. Statements contained in this Prospectus as to the contents of certain
documents filed with, or incorporated by reference in, the Registration
Statement are not necessarily complete, and in each instance reference is made
to such document, each such statement being qualified in all respects by such
reference.
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Commission. Such reports, proxy statements and other information filed by the
Company can be inspected and copied at the public reference facilities
maintained by the Commission at Room 1024, 450 Fifth Street, N.W., Washington,
D.C. 20549, and at the Commission's Regional Offices located at 7 World Trade
Center, New York, NY 10048, and Northwestern Atrium Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661. Copies of such material can also be
obtained at prescribed rates from the Public Reference Section of the
Commission, Washington, D.C. 20549. The Common Stock is listed on both the NNM
and the PSE and such reports, proxy statements and other information filed with
the Commission should also be available for inspection at the offices of the
National Association of Securities Dealers, Inc., Report Section, 1735 K Street,
N.W., Washington, D.C. 20006, and at the PSE facilities located at 115 Sansome
Street, San Francisco, California.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The Company incorporates by reference into this Prospectus the documents
listed below:
(1) The Company's Annual Report on Form 10-K for the year ended
December 31, 1995;
(2) The Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1996;
(3) The Company's Current Reports on Form 8-K, dated June 18, 1993 (as
amended on Form 8-K/A filed on or about July 12, 1993), June 8, 1994 (as
amended on Form 8-K/A filed on or about June 27, 1995), July 5, 1994 (as
amended on Form 8-K/A filed on or about September 14, 1994), August 2, 1994
(as amended on Form 8-K/A filed on or about October 13, 1994 and Form 8-K/A
filed on or about May 25, 1995), March 4, 1996, and June 20, 1996; and
(4) The description of the Common Stock contained in the Company's
Registration Statement on Form 8-A, dated December 15, 1992.
All reports and other documents filed by the Company pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Exchange Act subsequent to the date of this
Prospectus, and prior to the filing of a post-effective amendment to the
Registration Statement which indicates that all securities offered hereby have
been sold or which deregisters all securities then remaining unsold, shall be
deemed to be incorporated by reference herein and to be a part hereof from the
date of the filing of such reports and documents. Any statement contained in a
document incorporated by reference herein shall be deemed to be modified or
superseded for all purposes to the extent that a statement contained herein or
in any other subsequently filed document which also is incorporated by reference
herein modifies or supersedes such statement. Any statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
The Company hereby undertakes to provide, without charge, to each person to
whom a copy of this Prospectus has been delivered, upon the written or oral
request of such person, a copy of all documents incorporated by reference in
this Prospectus, other than exhibits to such documents unless such exhibits are
specifically incorporated by reference herein. Requests for such copies should
be directed to Corporate Secretary, Geotek Communications, Inc., 20 Craig Road,
Montvale, New Jersey 07645; telephone number (201) 930-9305.
-5-
<PAGE>
The Company will furnish its stockholders with annual reports containing
audited financial statements and reports by independent accountants. In
addition, the Company will distribute unaudited quarterly reports to its
stockholders for the first three quarters of each fiscal year.
ADDRESS AND TELEPHONE NUMBER
The mailing address and telephone number of the Company's principal
executive offices are as follows:
Geotek Communications, Inc.
20 Craig Road
Montvale, New Jersey 07645
Telephone Number: (201) 930-9305
-6-
<PAGE>
RISK FACTORS
The securities described herein involve a substantial degree of risk. The
following factors, in addition to those discussed elsewhere in the Prospectus or
incorporated herein by reference, should be carefully considered in evaluating
the Company and its business prospects before purchasing the securities offered
by this Prospectus. This Prospectus contains and incorporates by reference
forward-looking statements within the "safe harbor" provisions of the Private
Securities Litigation Reform Act of 1995. Reference is made in particular to the
discussion under "Management's Discussion and Analysis of Financial Condition
and Results of Operations" in the Company's Annual Report on Form 10-K for the
year ended December 31, 1995 (the "Form 10-K") and the Quarterly Report on Form
10-Q for the quarter ended March 31, 1996, and under "Business" in the Form
10-K, incorporated in this Prospectus by reference. Such statements are based on
current expectations that involve a number of uncertainties including those set
forth in the Risk Factors below. Actual results could differ materially from
those projected in the forward-looking statements.
Commercial Implementation of GEONET(TM)
The Company's current business plan contemplates the commercial
implementation of its integrated digital voice and data wireless communications
network ("GEONET(TM)") in up to 12 U.S. target markets by the end of 1996 and in
36 U.S. target markets by the end of 1997. In each of these markets, the Company
expects gradually to add subscribers and increase its service offerings. The
Company expects to continue to generate negative cash flow in each of its target
markets until it achieves an adequate subscriber base in such market.
The successful and timely implementation of GEONET(TM) will depend upon a
number of factors, many of which are beyond the control of the Company,
including, but not limited to, the timely and cost-effective manufacture,
construction and integration of the system infrastructure and software, the
acquisition and control of additional radio spectrum, the procurement and
preparation of base station and remote sites, the receipt of all necessary
regulatory approvals and the need for substantial additional financing. See
"-Dependence on Third Party Providers," "- Need for Spectrum; Need for
Transmission Sites," "- Government Regulation" and "- Need for Additional
Financing." However, there can be no assurances in this regard and the failure
or delay with respect to any of the aforementioned items could adversely affect
the timing of the implementation of GEONET(TM) in one or more of the Company's
U.S. target markets, which could have a material adverse effect on the Company.
The Company will make continuing hardware and software modifications to
GEONET(TM) prior to, during and after the system's commercial roll-out. For
example, the Company must integrate the initial GEONET(TM) data applications,
which are expected to be completed in the third quarter of 1996 or soon
thereafter, with the initial GEONET(TM) voice applications. Subsequent
applications also will need to be integrated with existing GEONET(TM)
applications. There can be no assurance that the Company will be able
satisfactorily to complete such modifications and/or integration efforts, or
that such modifications and integration will be able to be completed in a manner
that enables the Company to offer its GEONET(TM) services on a profitable basis.
A failure by the Company to complete satisfactorily any such modifications or
integration efforts or to complete them on a cost-effective basis could have a
material adverse effect on the Company.
To date, no other wireless service provider has been successful at
providing the level of integrated voice and data services contemplated by the
Company. Accordingly, in implementing GEONET(TM) the Company may encounter
unforeseen technical issues. In addition, each of the Company's U.S. target
markets is expected to present unique technical issues due to differences in
geography and the level of local development. Technical difficulties in the
operation and/or performance of GEONET(TM) also may be experienced as
subscribers are added to the system in a given market or as the coverage area in
any market is increased. There can be no assurance that the Company will be able
adequately to address any such issues in any given market or that such issues
will be able to be addressed in a cost-effective manner. Any failure by the
Company adequately to address such issues or to address them in a cost-effective
manner could have a material adverse effect on the Company.
-7-
<PAGE>
Loading of Subscribers
The Company has generated a backlog of orders for the Company's services
from a number of customers, many of which have indicated their desire to utilize
the Company's advanced data services. The Company expects to offer these
advanced data services after integrating the Company's current services with
such advanced data services and the production by the Company of enhanced mobile
workstation units. The Company expects that these units and its initial data
services will be available during the third quarter of 1996 or soon thereafter.
In addition, the Company believes that it will need to accelerate the expansion
of its coverage area in certain of its target markets to meet its customer
demand. The Company is currently addressing this issue, the solution to which
may require modifications to the GEONET(TM) roll-out plan. There can be no
assurances that the Company will be able to adequately address these issues,
either individually or in the aggregate, or that the Company will be able to
address such issues in a timely manner. Any failure on the part of the Company
to address these issues in an adequate or timely manner could result in delays
in loading subscribers and the loss of current backlog subscribers which could
have a material adverse effect on the Company.
Limited Operating History; Management of Growth
The Company entered the wireless communications industry in 1992 and,
therefore, has limited experience in developing, establishing and operating
wireless communications systems. To date, most of the Company's wireless
communications services experience has been in foreign markets and has involved
technology different than that to be employed by the Company in its U.S. target
markets. In addition, the Company's only experience to date in the United States
with respect to its digital wireless communications services has been testing
GEONET(TM) in Philadelphia and providing wireless communication services to
customers in: Philadelphia (beginning in January 1996); Washington, Baltimore
and New York (beginning in March 1996); Boston (beginning in April 1996); and
Miami and Dallas (beginning in May 1996). Prospective investors, therefore, have
limited historical financial information about the Company on which to make a
determination as to the prospects for the Company's U.S. wireless communications
operations or financial condition and as to an investment in the securities
offered hereby.
Although the Company has added experienced senior management and has filled
a substantial number of technical, sales and field service positions during the
last year, the Company will need to increase rapidly and significantly the
number of technical personnel and sales personnel that it employs in its target
markets as the roll-out of GEONET(TM) progresses. The Company's success will
depend upon its ability to continue to attract, motivate, train and manage
additional employees. Management's ability to manage the Company's growth
effectively also will require it to expand significantly the Company's
operational, financial and management systems. The failure of the Company to
manage its growth effectively would have a material adverse effect on the
Company's future operations.
Need for Spectrum; Need for Transmission Sites
The Company requires additional spectrum to add capacity and to service
anticipated demand in certain of its target markets, including certain of its
1996 U.S. target markets. The Company also requires additional spectrum to
initiate services in certain of its 1997 target markets. Moreover, a significant
portion of the Company's existing radio spectrum in Philadelphia, New York City,
Washington, Chicago, Dallas, Miami and Houston is subject to management
agreements pursuant to which Motorola, Inc. ("Motorola") is licensed to use the
radio spectrum. The Company cannot utilize this radio spectrum for GEONET(TM)
services until such management agreements are terminated. In November 1994,
Motorola and NEXTEL Communications, Inc. ("NEXTEL") entered into a consent
decree with the federal government pursuant to which NEXTEL and Motorola agreed,
upon effectiveness of the consent decree, to take steps to reduce their
ownership and management of radio spectrum in certain U.S. markets, including
each of the above-referenced markets, so that they collectively own and/or
manage no more than thirty 900 MHZ channels in such markets. The consent decree
became effective on July 25, 1995. On January 12, 1996, the Company entered into
an agreement with Motorola pursuant to which Motorola, among other things,
vacated all of these channels on April 1, 1996.
Certain agreements pursuant to which the Company has the right to acquire
spectrum are subject to regulatory approval. Although the Company believes that
such approval will be forthcoming prior to its expected roll-out in each
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such market, there can be no assurance that such approvals will be received on a
timely basis or at all. The failure by the Company to obtain any such approvals
could have a material adverse effect on the Company.
In an effort to acquire sufficient spectrum in each of its target markets
in which it does not have sufficient spectrum to initiate service and to add
additional capacity in certain of its other U.S. target markets, the Company
participated in the Federal Communication Commission's (the "FCC") 900 MHz
spectrum auctions which ended on April 15, 1996. The Company was the successful
bidder on 181 10-channel blocks in 42 regional service areas known as Major
Trading Areas ("MTA") within the United States. Its successful bids for these
frequency blocks totaled $30,965,290. Upon award of these MTA licenses, the
Company can greatly expand its coverage area. As an MTA licensee in a service
area, the Company will be permitted to operate throughout the MTA on its
designated frequencies except where an incumbent licensee is already operating.
In many markets, the Company was the successful bidder on frequency blocks where
it is already the incumbent licensee. In certain MTAs, the frequency block on
which the Company was the successful bidder is encumbered by an existing
licensee. In such an event, the Company will seek to acquire access to the
encumbered spectrum through cooperative or management agreements or may seek to
acquire the incumbent license from its licensee, although there can be no
assurances it will be able to do so. In some markets, other entities secured an
MTA license surrounding an area where the Company is licensed on a site specific
basis. In these circumstances, the Company may either attempt to acquire the MTA
license from the winning bidder, remain as the incumbent, sell the license to
the MTA licensee or "swap" the license with another licensee. In the event that
Company acquires such license form another entity, it will be required to
construct the facilities in accordance with the Company's Rule Waiver (as
defined under "- Government Regulation"). Failure to construct facilities
pursuant to the Rule Waiver in these instances will result in cancellation of
the Company's license. In addition, there can be no assurance that any licenses
currently owned or acquired in the future by the Company will be renewed. The
failure of the Company to renew existing or future Specialized Mobile Radio
("SMR") licenses could have a material adverse effect on the Company. A failure
by the Company to obtain sufficient radio spectrum on commercially acceptable
terms could have a material adverse effect on the Company. See "- Commercial
Implementation of GEONET(TM)."
There are only a limited number of existing communications towers capable
of providing the Company with optimal coverage area for its radio transmissions
and that are capable of supporting the Company's transmission equipment.
Although the FCC recently initiated a rule making proceeding designed to make
sites available on government owned property, in the event the Company cannot
obtain leases for existing towers, it may be required to purchase sites, obtain
necessary permits and build such towers, a process which the Company estimates
could take up to one year to complete for each tower. If the Company is required
to build new towers, the roll-out of GEONET(TM) in one or more target markets
could be delayed, which could have a material adverse effect on the Company.
Deficiency of Earnings; Net Losses; Substantial Indebtedness
On a consolidated basis, the Company experienced net losses from continuing
operations of $50.4 million, $42.4 million, $87.2 million and $26.4 million for
the years ended December 31, 1993, December 31, 1994 December 31, 1995, and the
three month period ended March 31, 1996, respectively. In addition, the Company
had a deficiency of earnings before interest, taxes, depreciation and
amortization ("EBITDA") of $15.2 million, $34.2 million, $63.3 million and $16.8
million for the years ended December 31, 1993, December 31, 1994 and December
31, 1995 and for the three month period ended March 31, 1996, respectively. The
Company anticipates that its net operating losses from operations and its EBITDA
deficiency will increase significantly during the roll-out of GEONET(TM). There
can be no assurance that the Company will ever operate at profitable levels or
have positive EBITDA. Until sufficient cash flow is generated from operations,
the Company will have to utilize its capital resources or external sources of
funding to satisfy its working capital needs. In the event the Company cannot
achieve profitability or have positive EBITDA, it may not be able to make
required payments on certain debt instruments to which it is a party.
The Company has significant indebtedness, a substantial portion of which is
represented by its 15% Senior Secured Discount Notes, due 2005 (the "Senior
Discount Notes"), which have an aggregate principal amount at maturity of $227.7
million, and by the Company's 12% Senior Subordinated Convertible Notes, due
2001 (the "Subordinated Notes"), in the aggregate principal amount of $75.0
million. The Subordinated Notes are convertible into shares of the Company's
Common Stock at a price equal to $9.50 per share. Although no payments of
interest or principal are due
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on the Senior Discount Notes and no principal payments are due on the
Subordinated Notes in the immediate future, the Company will have significant
debt service obligations beginning in July 2000.
In addition, on December 21, 1995, GFC, a newly incorporated wholly-owned
subsidiary of the Company, entered into the HNS Loan Agreement. Pursuant to the
HNS Loan Agreement, HNS has provided GFC with up to $24.5 million of financing,
in the form of the HNS Note bearing interest at a rate of 12% per annum, for use
in connection with the purchase of additional 900 MHz licenses to be utilized in
the commercial implementation of GEONET(TM) (the "HNS Licenses"). The HNS Note
matures two years from the date of the initial funding (the "Initial Funding
Date") by HNS pursuant to the HNS Loan Agreement (the "Maturity Date"). The HNS
Note is collateralized by a pledge of the stock of the subsidiary holding the
HNS Licenses and a guarantee by the Company. The HNS Note is convertible, at the
option of HNS, into shares of Common Stock during the eighteen month period
commencing 181 days after the Initial Funding Date at an exercise price equal to
the lesser of (i) ninety percent (90%) of the weighted average sales price per
share of Common Stock on the trading day next preceding the date of conversion
(or over the ten trading days immediately preceding the date of conversion to
the extent (and only to the extent) the conversion relates to in excess of
$300,000 of loans drawn down under the HNS Loan Agreement (to the extent of such
excess) on the trading day next preceding the Maturity Date) as reported by
Bloomberg Financial Services or similar reporting service and (ii) $9.75.
In addition, on April 4, 1996, the Company and S-C Rig entered into a
Senior Loan Agreement pursuant to which S-C Rig will make a $40.0 million
unsecured credit facility available to the Company (the "S-C Rig Credit
Facility"). All borrowings under the S-C Rig Credit Facility are required to be
made on or prior to April 5, 1998, accrue interest at a rate of 10% per annum
and mature four years from the date of the final borrowing thereunder. The
Company is obligated to pay S-C Rig a fee equal to 3% of each borrowing under
the S-C Rig Credit Facility at the time of such borrowing. Borrowings under the
S-C Rig Credit Facility will constitute senior indebtedness of the Company. In
connection with the establishment of the S-C Rig Credit Facility, the Company
issued to S-C Rig the S-C Rig Warrant to purchase the S-C Rig Warrant Shares, at
an exercise price of $9.50 per share, subject to adjustment in certain
circumstances. The S-C Rig Warrants are exercisable at any time and from time to
time after June 5, 1996.
The Company also anticipates seeking additional financing which may impose
additional and earlier debt service obligations on the Company. See "-- Need for
Additional Financing." The degree to which the Company is leveraged may impair
the ability of the Company to obtain additional financing in the future for
working capital, capital expenditures, acquisitions or other general corporate
purposes. In addition, the indenture governing the Senior Discount Notes and
certain documents executed in connection therewith (collectively, the "Senior
Notes Indenture"), together with the HNS Loan Agreement and S-C Rig Credit
Facility, impose significant operating and financial restrictions on the
Company, affecting, among other things, the ability of the Company to incur
indebtedness, make prepayments of certain indebtedness, pay common stock
dividends, make investments, engage in transactions with stockholders and
affiliates, issue capital stock of its subsidiaries, create liens, sell assets
and engage in mergers and acquisitions. Although these loan agreements contain
various exceptions that are generally designed to allow the Company to operate
its business without undue restraint, these restrictions, in combination with
the leveraged nature of the Company, could limit the ability of the Company to
effect future financings and respond to changing market conditions, and
otherwise may restrict corporate activities.
The Company's business plan assumes the roll-out of GEONET(TM) in each of
its U.S. target markets and substantial growth in the Company's subscriber base.
There can be no assurance that the Company will be able to achieve the growth
contemplated by its business plan. If such growth is not achieved, the Company
may not be able to make required payments on its debt instruments and may have
to refinance such instruments in order to repay these obligations. No assurance
can be given that the Company would be able to refinance such instruments.
Need for Additional Financing
The Company's existing cash on hand and expected cash flow from operations
will not be sufficient to fund the Company's full roll-out of GEONET(TM). The
Company estimates that it will need additional financing in an aggregate amount
of approximately $150.0 million for the full roll-out of GEONET(TM) in all of
its 36 target markets through 1997. Such amount may increase should the Company
determine to increase the scope of its roll-out, including a possible increase
in the number of its target markets to include some or all of the 42 markets in
which the Company
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acquired spectrum pursuant to the recently concluded FCC 900 MHz auction. See
"- Need for Spectrum; Need for Transmission Sites." Additionally, the Company
may need to raise additional funds to meet the needs of its anticipated
increased international and equipment sales activities. In the event the Company
is unable to raise such financing on a timely basis, it may be required to
adjust its roll-out schedule and may experience delays in initiating or
expanding its service in certain markets. The Company believes that the
macrocellular architecture of GEONET(TM) will allow the Company to adjust its
aggregate cash expenditures by focusing its activities in certain markets while
reducing its planned investments in other markets.
The Company's need for additional financing will increase if the Company
experiences delays in the commercial implementation of GEONET(TM), cost overruns
or unanticipated cash needs. In this regard, the Company has experienced certain
delays in its roll-out schedule in the past. See "-Commercial Implementation of
GEONET(TM)." Moreover, additional financing may be necessary to satisfy the
terms of certain financing transactions, including, but not limited to, possible
redemption obligations of the Company in connection with the Company's preferred
stock. Additional financing also may be required to fund acquisitions of
additional spectrum and businesses. The amount of additional funding required
will depend upon the timing of such expenditures, the availability of cash flow
from operations and, to the extent applicable, the availability of lease and
vendor financing. It is presently anticipated that additional financing, if
obtained, would be obtained from one or more sources, including, but not limited
to, equity or debt financing (whether through public or private offerings),
strategic partners, joint ventures, vendor financing, leasing arrangements or a
combination thereof. The Senior Notes Indenture, the indenture governing the
Subordinated Notes, the HNS Loan Agreement and the S-C Rig Credit Facility limit
the ability of the Company to incur additional indebtedness and engage in
certain other financing transactions. There can be no assurance that additional
financing will be available to the Company on terms desirable to the Company or
at all.
Competition
Although the Company believes that the quality, array and flexibility of
services to be offered through GEONET(TM) will meaningfully differentiate such
services from those offered by other wireless communications providers in the
Company's target markets, the Company will face significant competition from
such other providers. The Company expects to experience competition for each
type of service it intends to offer from existing dispatch, cellular telephony,
paging and public data service providers. In addition, the Company expects to
experience competition from manufacturers of Private Mobile Radio ("PMR")
equipment, which target existing private network operators and SMR customers and
urge them to build or upgrade their own private networks rather than utilize SMR
service providers. Many of these providers and manufacturers are larger, more
established, have more experience in the telecommunications industry, have
greater name recognition, have larger sales staffs and/or have greater financial
resources than the Company.
NEXTEL has announced plans to construct a nationwide digital Enhanced
Specialized Mobile Radio ("ESMR") network and is offering services in several
cities. NEXTEL has also secured a significant number of 800 MHz SMR channels in
most U.S. markets. In addition, to the extent that Motorola is the largest
provider of PMR equipment, Motorola may be deemed to be an indirect competitor
of the Company. Moreover, recent regulatory changes may permit the Bell
Operating Company's ("BOCs") to enter the Commercial Mobile Radio Service
("CMRS") marketplace. See " - Governmental Regulation."
The Company also may face competition from technologies and services
introduced in the future. In March 1995, the FCC completed auctions for wideband
Personal Communications Services ("PCS") licenses on a MTA basis. The wideband
PCS auction winners have already begun to provide service. In December 1995, the
FCC commenced its auction of 493 broadband basic trading area ("BTA") PCS
licenses. In addition, the FCC has also licensed national and regional
narrowband PCS licenses. Additional narrowband PCS licenses on an MTA basis will
be issued under government regulation in the future. Narrowband PCS service will
be similar to paging services already offered and may compete with the Company's
SMR proposed service. The FCC also intends to license additional spectrum for
other wireless services. It is also possible that satellite technology
ultimately could be developed to permit urban use equal to or superior to that
available through SMR systems, which would result in increased competition for
the Company's services. The commercialization or further development of any such
technologies could have a material adverse effect on the Company. See "- Rapid
Technological Changes."
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Many of the target customers for GEONET(TM) currently use other wireless
communications services. In order to be successful, the Company will need to
migrate a portion of its target customers from their existing services to those
provided by the Company over GEONET(TM). The Company's ability to migrate its
target customers over to its services will be highly dependent on the perceived
utility of the Company's services to its target customers as compared to the
services currently utilized by such customers. Because there currently is no
integrated wireless communications network commercially available that is
comparable to that expected to be offered by the Company over GEONET(TM), the
extent of the demand for the Company's wireless communication services cannot be
predicted with any degree of certainty. The demand for the Company's digital
wireless communications services also could be affected by other matters beyond
the Company's control, such as the future cost of subscriber equipment,
marketing and pricing strategies of competitors and general economic conditions.
The Company also expects to experience competition for radio spectrum from
existing and future providers of wireless communications services and for
communications tower space. See "- Need for Spectrum; Need for Transmission
Sites."
The Company experiences competition for each of its products and services
other than GEONET(TM) in the markets in which it sells such products and
services. Such competition is expected to remain strong for the foreseeable
future.
Government Regulation
The licensing, construction, operation and acquisition of SMR systems in
the United States is regulated by the FCC under the Communications Act of 1934,
as amended (the "Communications Act"). During 1994, the FCC initiated several
regulatory proceedings with wide-ranging implications for the wireless
telecommunications industry. A primary intent of these amendments was to
encourage competition among mobile communications service providers by removing
regulatory distinctions between common carriers, such as cellular telephone
companies, and private carriers, such as SMR service providers. These
regulations may materially impact the Company's operations in the future. For
example, the Company will be required to provide services on a
"nondiscriminatory basis" and on terms that are not "unjust and unreasonable,"
as such terms are defined by the Communications Act. In addition, the Company
will be prohibited from unreasonably restricting the resale of its services to
any requesting entity. The Company will also be required to comply with certain
technical capability and compatibility standards for emergency "911" calls,
including automatic caller identification and location identification. In the
near future, the Company will be required to ensure that it can find and deliver
calls to telephone numbers anywhere in the country through roaming capabilities.
The FCC has recently determined that CMRS providers will be permitted to offer
"fixed" services in addition to mobile services. As a result, the Company will
be permitted to offer an array of communications capabilities to it customers,
including wireless links between home, office, and car. The FCC may in the
future specify by rule other common carrier regulations that would apply to
commercial mobile services providers such as the Company. Moreover, the FCC did
not delay the effective date of the applicability of its rules concerning the
25% limitation on foreign investment in any entity holding an FCC license. These
limitations may affect the Company's ability to secure foreign financing through
the sale of shares of Common Stock or Common Stock equivalents and to issue
Common Stock in the acquisition of foreign subsidiaries. In a recent decision,
the FCC revised standards for regulating entry of foreign carriers and their
affiliates into the U.S. market for international telecommunications services.
The FCC will apply these standards in the application process for foreign entry,
principally by taking into consideration whether "effective competitive
opportunities" exist for U.S. carriers in the destination markets of foreign
carriers seeking to enter the U.S. international services market. In addition,
and of specific impact for the Company, the FCC determined that it will examine
reciprocal foreign market competitive opportunities in considering requests by
CMRS providers seeking foreign investment in excess of the existing 25%
benchmark. The Company cannot predict the effect of any of these regulations or
any future regulation adopted by the FCC on the Company's operations. Moreover,
there has been little experience in the interpretation and implementation of
these regulations. Future interpretations or practices with respect to such
regulations could have a material adverse effect on the Company.
The FCC granted the Company a waiver (the "Rule Waiver") which permitted
the Company to construct and activate certain systems it acquired for licenses
issued on a site specific basis on a longer schedule than would otherwise be
permitted under applicable FCC regulations. In the event the Company fails to
construct or activate such systems in
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accordance with the dates set forth in the Rule Waiver, the FCC could revoke the
Rule Waiver and the Company would consequently lose all of the licenses covered
by such waiver which have not been constructed or activated. The Rule Waiver is
currently subject to a pending challenge that was filed by a third party with
whom the Company failed to negotiate a satisfactory management agreement. The
Company believes that this challenge is without merit and is vigorously opposing
it. A loss of the licenses covered by the Rule Waiver that have not been
constructed or activated would have a material adverse effect on the Company.
The Rule Waiver will not be necessary for the additional MTA spectrum which
the Company acquired through the FCC's 900 MHz spectrum auctions. See "-Need for
Spectrum; Need for Transmission Sites." In addition, in many markets where the
Company is licensed on a site specific basis where surrounding MTA spectrum was
acquired through the FCC's 900 MHz spectrum auctions, the Rule Waiver has been
superseded and the construction schedule extended. An MTA licensee must provide
coverage to one-third of the MTA population within three years after initial
licensing, and coverage to two-thirds of the MTA population within five years
after initial licensing. The Rule Waiver will continue to be necessary in
certain circumstances for existing site specific licenses where the Company was
not the successful bidder for surrounding MTA spectrum pursuant to such
auctions. This relief from the Rule Waiver with respect to the MTA sites will
provide the Company with a greater degree of flexibility with respect to the
timing of the GEONET(TM) roll-out in such markets. For a description of the
terms, conditions and restrictions of the MTA licenses, see "-Need for Spectrum;
Need for Transmission Sites."
All of the equipment utilizing the Company's technology, to the extent it
is used to send or receive signals, must meet FCC criteria. Although GEONET(TM)
base stations and current subscriber units have received such approval, there
can be no assurance that the future generations of subscriber units will meet
such criteria. A failure of such subscriber units or any of the Company's other
equipment to meet FCC standards could have a material adverse effect on the
Company.
Early this year, the President of the United States signed into law the
Telecommunications Act of 1996 (the "Telecommunications Act") which imposes
sweeping reforms to telecommunications policy. Although the majority of the
Telecommunications Act's measures will directly impact large common carriers,
cable and broadcast operators, and internet service providers, many of the
Telecommunications Act's provisions will have an effect upon the CMRS
marketplace, and upon the Company. In particular, the Telecommunications Act may
require the Company to contribute to a Universal Service Fund and may require
the Company to ensure that its equipment is accessible to persons with
disabilities. In addition, the FCC recently initiated a rule making proceeding
as a response to a mandate of the Telecommunications Act, to determine whether
more extensive regulation with respect to reciprocal compensation arrangements
between CMRS and local telephone companies is necessary. All of these provisions
of the Telecommunications Act which may have an effect upon the Company will be
the subject of FCC rule making proceedings through the end of 1997. The FCC has
been granted authority to forbear some of these requirements where appropriate.
Accordingly, it is currently difficult to predict if and how the provisions of
the Telecommunications Act will impact upon the Company, although such impact
could be materially adverse to the Company.
Future changes in regulation or legislation affecting digital wireless
telecommunications service or the allocation by the FCC or Congress of
additional spectrum for services that compete with such service could adversely
affect the Company's business. See "- Competition."
Dependence on Third Party Providers
The Company's digital wireless telecommunications system is being enhanced
and commercialized by its subsidiary, PowerSpectrum, Ltd. ("PST"). However, the
development by PST of the technology and systems is dependent in large part upon
the efforts of Rafael Armament Development Authority ("Rafael"), a PST
contractor, to adapt frequency hopping from a military to a commercial
application, to integrate the frequency hopping technology with other digital
technologies required for optimal commercial deployment of GEONET(TM), and, as
discussed below, for the cost-effective manufacture of the base station
hardware. In this regard, approximately 90 employees of Rafael are presently
engaged on a full-time subcontract basis in the further development of the
Company's proprietary FHMA(TM) technology. Rafael's employees are represented by
a labor union, and, from time to time, there have been labor disputes between
Rafael and its employees which have resulted in slow-downs. To date, these
slow-downs have not had
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a material effect upon the Company's business. There can be no assurance,
however, that any future disputes will not have a material adverse effect on the
development or introduction of GEONET(TM) services by the Company in its U.S.
target markets. In addition, if Rafael reduces its commitment to PST or if
continuing development efforts are not successful, the Company's prospects could
be materially adversely affected.
Neither the Company nor PST manufacture the system architecture, hardware
and mobile subscriber units necessary for the commercial implementation of
GEONET(TM). Rafael entered into contracts with PST pursuant to which Rafael will
manufacture the system hardware for GEONET(TM) on a schedule which is intended
to enable the Company to meet its projected roll-out. Third parties, including
Mitsubishi Consumer Electronics America ("Mitsubishi"), HNS, a unit of GM Hughes
Electronics, and Kenwood Corporation of Japan ("Kenwood"), will manufacture
subscriber units and certain other components of the system hardware for
GEONET(TM) on a schedule based upon the Company's projected roll-out. There can
be no assurance that such third parties will deliver such equipment on a timely
basis or that the Company will be able to integrate such components and hardware
in a cost effective system on a timely basis, if at all. The Company has only a
single manufacturing source for certain of the components of the GEONET(TM)
system hardware, including the base stations and subscriber units. Although the
Company believes that it can obtain all components necessary to build GEONET(TM)
from other sources, delays may be encountered in the event of a component
shortage because of the time it may take to identify substitute sources and
manufacture substitute components. A failure by the Company to obtain hardware
components on a timely basis or at satisfactory prices could adversely affect
the ability of the Company to roll-out and market GEONET(TM), which could have a
material adverse effect on the Company. See "- Commercial Implementation of
GEONET(TM)."
The Company has entered into an agreement with IBM Corporation ("IBM") to
manage the construction of the GEONET(TM) stations and the installation of
FHMA(TM) equipment in the Company's U.S. target markets. The Company has also
engaged, and intends to engage, other third party contractors to manage all or
certain aspects of such construction or installation in certain of its U.S.
target markets. A failure by IBM or such other contractors to manage properly
the preparation and construction of the Company's base stations and remote sites
could have a material adverse effect on the Company. See "- Commercial
Implementation of GEONET(TM)".
The Company anticipates that, in order to meet the needs of its expanding
international and equipment sales activities, it will be required to establish
and maintain additional manufacturing, distribution and licensing arrangements
with other third party providers. The Company is currently exploring various
alternatives to meet these needs. However, there can be no assurances that the
Company will be able to identify or maintain relationships with such providers.
Any failure to do so could have a material adverse effect on the Company.
Rapid Technological Changes
The telecommunications industry is subject to rapid and significant changes
in technology which could lead to new products and services that compete with
those offered by the Company or could lower the cost of current competing
products and services to the point where the Company's products and services
could become non-competitive and the Company could be required to reduce the
prices of its services. While the Company is not aware of any proposed changes
that will materially affect the attractiveness of its product and service
offerings, the effect of technological changes on the businesses of the Company
cannot be determined. In the future, the Company expects to experience
competition from new technologies such as ESMR networks, PCS and, possibly,
satellite technology, as well as from advances with respect to existing
technologies such as cellular, paging and mobile data transmission. See "-
Competition."
Dependence on Key Personnel
The success of the Company will depend greatly upon the active
participation and the experience of its management. The loss of the services of
Yaron Eitan, the Company's President and Chief Executive Officer, could
adversely affect the conduct of the Company's business. In addition, the
successful implementation of the Company's business plan will depend, to a large
extent, upon the ability of the Company's and its subsidiaries' engineers and
scientific personnel to perfect and improve upon existing and proposed products.
The loss of some or all of such personnel, the inability of the Company to
attract additional personnel, or the inability of such persons to design such
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systems or to continue product enhancement will inhibit the ability of the
Company to sell its products and services and to operate profitably.
Risks of International Business
The Company operates in and sells products and services to clients in
various countries and certain of its products and components are manufactured
abroad. The Company's research and development activities are dependent upon
foreign providers. The Company is also pursuing a strategy of expansion into
international markets, including, but not limited to, Germany, Korea, Canada and
the United Kingdom. Such efforts may be conducted by the Company alone or in
conjunction with strategic partners. Accordingly, the Company is subject to the
risks inherent in conducting business across national boundaries, including, but
not limited to, currency exchange rate fluctuations, international incidents,
military outbreaks, economic downturns, government instability, nationalization
of foreign assets, government protectionism, and changes in governmental policy,
any of which risks could have a material adverse impact on the Company. In
addition, the licensing and other operational risks attendant upon commencing
and maintaining wireless telecommunications systems in foreign countries are
similar to those which prevail in the United States, including, but not limited
to, availability of spectrum capacity and transmission sites, competition, and
government regulation. Development of the business in international markets may
stretch the Company's financial, managerial, and personnel resources. There can
be no assurance that the Company will be successful in developing its business
in these markets or that any such expansion of the Company's business will be
profitable.
Influence by Significant Stockholders; Preemptive Rights
As of March 31, 1996, approximately 25% of the total voting power of the
Common Stock (on a fully diluted basis, but without giving effect to the
exercise of the options held by Vanguard Cellular Systems, Inc. ("Vanguard") and
the exercise of the warrants held by S-C Rig) was beneficially owned by the
directors and executive officers of the Company and their affiliates. (Vanguard
holds options to purchase approximately 5.3 million shares of Common Stock and
S-C Rig holds warrants to purchase approximately 4.8 million shares of Common
Stock.) Consequently, the Company's directors and executive officers will be
able to exert significant influence with respect to all matters upon which
stockholder approval is required.
Pursuant to certain agreements among them, certain of the principal
stockholders of the Company have the right to require the other stockholders to
cause (to the extent permitted by law and to the extent within such other
stockholders' control) the directors of the Company to vote, or refrain from
voting, in accordance with such stockholders' direction with respect to the
election of directors. In addition, S-C Rig and Vanguard have preemptive rights
with respect to certain issuances of voting securities by the Company which
permit them to purchase voting securities of the Company, at the same price and
on the same terms as the Company may offer to third parties, in an amount
sufficient to maintain their respective percentage interests in the voting
securities of the Company on a fully-diluted basis. The Company also has granted
to S-C Rig, Vanguard and certain other holders of the Company's preferred stock
the right to elect additional directors to the Board of Directors of the Company
upon the occurrence of certain events of default under certain series of the
Company's outstanding preferred stock. The operation of such provisions could
result in such stockholders exerting significant influence over the Board of
Directors of the Company.
Transactions with Affiliates
During the period since its inception, the Company has undertaken a wide
variety of financing and merger/acquisition activity which has resulted in its
present corporate and financial structure. Included in such activity have been
transactions which have involved persons who now serve, or who did serve at the
time, as directors and officers of the Company or persons or entities related to
such persons. In every instance where such transactions have involved any such
persons or entities, the specific transaction has been approved unanimously by
directors of the Company, including all disinterested and outside directors,
with the affected parties abstaining. It is the Company's view that each such
transactions have been on terms no less favorable to the Company than other
similar transactions available to the Company with unaffiliated parties, if
available at all. Despite the foregoing, prospective purchasers may wish to
consider the circumstances in which such transactions were made, the terms of
such transactions and the
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Company's possible alternative courses of action. The Company may enter into
transactions in the future with affiliates in order to meet its financing needs
and/or business goals.
Proprietary Information and Patent Issues
The Company protects its proprietary information by way of confidentiality
and non-disclosure agreements with employees and third parties who may have
access to such information. The Company continually reviews its technology
developments in order to file patent applications and has filed patent
applications with respect to certain aspects of its FHMA(TM) technology and
GEONET(TM) in Israel and the United States and expects to file additional patent
applications in Israel and the United States. Generally, the Company intends to
file all patent applications in the United States, Israel and in such other
countries as it deems appropriate. There can be no assurance that any such
applications will be granted. There can be no assurance that any patents issued
will afford meaningful protection against competitors with similar technology or
that any patents issued will not be challenged by third parties. There also can
be no assurance that others will not independently develop similar technologies,
duplicate the Company's technologies, or design around the patented aspects of
any technologies developed by the Company. Many patents and patent applications
have been filed by third parties with respect to wireless communications
technology. The Company does not believe that its technology infringes on the
patent rights of third parties. However, there can be no assurance that certain
aspects of the Company's technology will not be challenged by the holders of
such patents or that the Company will not be required to license or otherwise
acquire from third parties the right to use certain technology. The failure to
overcome such challenges or obtain such licenses or rights could have a material
adverse effect on the Company's operations.
Dividends on Common Stock Not Likely
The Company has not declared or paid any cash dividends on Common Stock
since commencing operations and does not anticipate paying any dividends on
Common Stock in the foreseeable future. At present, the Company is obligated to
pay cumulative dividends of $2,000,000 per year, in cash, for a five-year period
following the issuance of the Company's Series H Cumulative Convertible
Preferred Stock, $.01 par value (the "Series H Preferred Stock"), cumulative
dividends of $700,000 per year, in cash of shares of Common Stock, for a
five-year period following the issuance of the Company's Series I Cumulative
Convertible Preferred Stock $.01 par value (the "Series I Preferred Stock"), and
cumulative dividends of $700,000 per year, in cash or shares of Common Stock,
for a five-year period following the issuance of the Company's Series K
Cumulative Convertible Preferred Stock, $.01 par value (the "Series K Preferred
Stock"), all before any cash dividends may be paid on Common Stock. In addition,
the Company is presently obligated to pay cumulative annual dividends of
$750,000 per year on the Series L Preferred Stock, and cumulative annual
dividends of $988,125 per year on the Company's Series M Cumulative Convertible
Preferred Stock, $.01 par value, in cash or shares of Common Stock, before any
cash dividends may be paid on Common Stock. The Series N Preferred Stock
prohibits the declaration or payment of any dividend on Common Stock (other than
in shares of Common Stock) without the consent of the holders thereof, provided
such holders hold $25,000,000 of the stated value of the Series N Preferred
Stock. At present, the Company is current in payment of all required dividends
on its outstanding preferred stock. In addition, the terms of certain
indebtedness of the Company prohibit, during the term of such indebtedness, the
declaration or payment of any dividend on Common Stock (other than in shares of
Common Stock).
Shares of Common Stock Eligible for Sale; Dilution.
The Company has in the past registered for offer and sale under the
Securities Act certain of the issued and outstanding shares of Common Stock and
certain of the shares of Common Stock issuable upon the exercise or conversion,
as applicable, of outstanding options, warrants and convertible securities held
by the Company's stockholders, including certain officers, directors, employees
and "affiliates" of the Company (as such term is defined pursuant to the
Exchange Act). The sale of such shares would have been subject to substantial
limitations in the absence of such registration. A substantial number of such
shares may still be held by the registered holders thereof and available for
resale under currently effective registration statements. In addition, certain
stockholders of the Company hold the right (subject to certain conditions) to
require that the Company register for offer and sale issued and outstanding
shares of Common Stock and/or shares of Common Stock issuable upon the exercise
or conversion, as applicable, of options, warrants and convertible securities.
Sales of substantial amounts of such shares could adversely
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affect the market value of the Common Stock and, in the case of convertible
securities, may effect a dilution of the book value per share of Common Stock,
depending upon the timing of any such sales.
BUSINESS
The Company is a provider of wireless communications services for mobile
business users. Since 1992, the Company has devoted substantial financial and
management resources to the development of GEONET(TM), its low cost, high
quality integrated digital voice and data wireless communications network. The
Company started providing commercial services in: Philadelphia in January 1996;
Washington, Baltimore and New York in March 1996; Boston in April 1996; and
Miami in May 1996. The Company intends to offer GEONET(TM) in a number of other
cities in the United States, including Miami and Dallas, by the Summer of 1996,
and in a total of 36 markets by the end of 1997. Each market will consist of a
major United States city and its surrounding area. In certain markets, the
Company may also offer its services regionally.
The Company, through operating subsidiaries, also provides analog wireless
mobile communications services to approximately 70,000 business subscribers in
the United Kingdom and Germany. The Company is also engaged in the manufacture
and sale of (i) telephone and facsimile peripherals and sound and communications
equipment through Bogen Communications International, Inc., and (ii) equipment
for the mobile data market through GMSI, Inc. These operations currently
generate substantially all of the Company's operating revenues.
RECENT DEVELOPMENTS
Korea
In early June 1996, the Korean Ministry of Information and Communications
awarded a consortium, in which the Company holds a 21% interest, a license to
operate a nationwide trunked radio system in Korea. The consortium, also
includes approximately 53 Korean companies, among them Anam Industrial Co. Ltd.
(the Company's joint venture partner in Korea), Hyundai Electronics, Korean
Mobile Telecom, Ssangyong Corporation and Korea Express. The license covers a
geographic area with a population of approximately 45 million people and is
based on the implementation of the Company's FHMA(TM) system on an 800 MHz
frequency. The Company's FHMA(TM) system currently operates in the 900 MHz
frequency band. Although the Company believes that it will successfully adapt
its FHMA(TM) system to the 800 MHz frequency, such adaptation is subject to a
number of contingencies and the manufacture of certain equipment required in
connection therewith. There can be no assurance that the Company will be able to
successfully adapt its FHMA(TM) system to the 800 MHz frequency on a timely
basis. Any failure on the part of the Company to successfully adapt its FHMA(TM)
technology pursuant to the terms of the Korean license could have a material
adverse effect on the Company's prospects in Korea. In addition, the Company
will provide FHMA(TM) related infrastructure equipment and broad business and
engineering support for the design, implementation and operation of the network
in Korea. Finally, the development of a FHMA(TM) based digital system in Korea
will be subject to the same risks attendent to the development of the Company's
GEONET(TM) system in the United States.
United Kingdom
In late June 1996, the United Kingdom Department of Trade and Industry
awarded the Company's United Kingdom operating subsidiary a license to operate a
digital Public Access Mobile Radio ("PAMR") network in the United Kingdom. Under
the terms of the new digital license, the operating subsidiary will receive up
to two megahertz of spectrum in the 410-430 MHz band for the construction of a
network based on the new Trans European Trunked Radio ("TETRA") standard.
Currently, there are no TETRA systems available for commercial application.
While some potential vendors have indicated an interest in supplying a
TETRA-based system to National Band Three Limited, the Company's United Kingdom
subsidiary ("NB3"), management of the company and NB3 cannot accurately estimate
the availability, quality and costs associated with the implementation of a
TETRA-based network. Management is continuing to work with potential vendors and
regulatory authorities in the United Kingdom regarding implementation of such
system. However, there can be no assurance that NB3 will be able to implement
such a system or, if implemented, when NB3 will be in a position to roll-out a
TETRA-based system. Finally, the development of a TETRA-based system in the
United Kingdom will be subject to the same risks attendent to the development of
the Company's GEONET(TM) system in the United States.
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The Company expects that the digital network to be implemented by the
Company in the United Kingdom will offer a full range of mobile voice and data
services, including telephony, digital dispatch, automatic vehicle location and
packet data The Company hopes to commence commercial operations of such a
digital network in 1998. The Company's United Kingdom operating subsidiary
already provides PAMR services to over 60,000 business subscribers throughout
the United Kingdom.
Canada
In April 1996, Industry Canada, the Canadian agency responsible for
spectrum allocation, approved in principle an award of certain 900 MHz
frequencies in Ontario, Quebec, British Columbia and Alberta to a joint venture
consisting of the Company, Cogeco Cable, Inc. ("Cogeco") and Techcom, Inc., a
Canadian SMR operator. These entities had entered into a letter of intent to
form such joint venture in Canada to launch mobile wireless communications
services based on the Company's proprietary FHMA(TM) technology. In July 1996,
the Company announced that it had been unable to reach a final agreement with
Cogeco and that the Company is actively negotiating with other potential
Canadian partners to replace Cogeco, so as to comply with Canadian foreign
ownership and regulatory requirements. There can be no assurance that the
Company will be able to identify such a partner or, if such a partner is
identified, that an agreement can be reached on terms favorable to the Company.
Any failure on the part of the Company to enter into such an arrangement could
have a material adverse effect on the Company's prospects in Canada.
USE OF PROCEEDS
The Company will not receive any proceeds from the resale of the Offered
Shares by the Selling Stockholders. Upon conversion of the HNS Note by HNS, an
aggregate of up to $24,500,000 principal amount of the Company's indebtedness
will be retired. Upon an exercise of the TDI Options by TDI, exercise of the S-C
Rig Warrants by S-C Rig, exercise of the Series N Warrants by any of the Series
N Investors or exercise of the Klehr Options by Klehr, the Company will receive
the exercise price of the TDI Options, the S-C Rig Warrants, the Series N
Warrants or the Klehr Options, as the case may be. To the extent the TDI
Options, S-C Rig Warrants and Series N Warrants are exercised, the Company will
apply the proceeds thereof to its general corporate purposes. There can be no
assurance that the TDI Options, S-C Rig Warrants, Series N Warrants or Klehr
Options will be exercised.
SELLING STOCKHOLDERS
On December 21, 1995, the Company, GFC and HNS entered into the HNS Loan
Agreement, pursuant to which HNS agreed to provide GFC with up to $24.5 million
of financing, in the form of a convertible note bearing interest at a rate of
12% per annum, for use in connection with the purchase by GFC of additional 900
MHZ licenses to be utilized in the commercial implementation of GEONET(TM). The
HNS Note is convertible, at the option of HNS,
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<PAGE>
into shares of Common Stock during the eighteen month period commencing 181 days
after the Initial Funding Date at a conversion price equal to the lesser of (i)
ninety percent (90%) of the weighted average sales price per share of Common
Stock on the trading day next preceding the date of conversion (or over the ten
trading days immediately preceding the date of conversion to the extent (and
only to the extent) the conversion relates to in excess of $300,000 of loans
drawn down under the HNS Loan Agreement (to the extent of such excess) on the
trading day next preceding the Maturity Date) as reported by Bloomberg Financial
Services or similar reporting service and (ii) $9.75 per share.
On May 25, 1995, the Company completed a private transaction pursuant to
which it issued and sold to TDI 531,463 shares of Series L Preferred Stock. The
aggregate gross proceeds to the Company for the issuance and sale of the Series
L Preferred Stock was approximately $5,000,000. The shares of Series L Preferred
Stock issued and sold to TDI are immediately convertible into the number of
shares of Common Stock as is determined by dividing (i) the sum of the $9.408
stated value per share of the Series L Preferred Stock plus all unpaid dividends
accrued and deemed to have accrued, if any, with respect to such shares of
Series L Preferred Stock through the last dividend payment date by (ii) a
conversion price of $9.408 per share, subject to certain adjustments. Also in
connection with such transaction, the Company granted TDI the TDI Options to
acquire an aggregate of 1,714,500 shares of Common Stock. The TDI Options carry
the following terms: (i) the Series A TDI Option entitles TDI to purchase an
aggregate of 1,000,000 shares of Common Stock and is exercisable, at any time
and from time to time, prior to September 1, 1996 at an exercise price of $15.00
per share, subject to certain adjustments; (ii) the Series B TDI Option entitles
TDI to purchase an aggregate of 285,800 shares of Common Stock and is
exercisable, at any time and from time to time, prior to September 1, 1996 at an
exercise price of $16.00 per share, subject to certain adjustments, provided,
however, that TDI in its sole discretion has the right, at any time prior to the
Series B Expiration Date, to extend such expiration date to March 1, 1997,
subject to an adjustment of the then applicable exercise price; and (iii) the
Series C TDI Option entitles TDI to purchase an aggregate of 428,700 shares of
Common Stock and is exercisable at any time and from time to time, prior to the
first anniversary of the Series B Expiration Date as the same may have been
extended, at an exercise price of $17.00 per share, subject to adjustment,
provided, however, that TDI in its sole discretion has the right, at any time
prior to the Series C Expiration Date, to extend such expiration date by six
months, subject to an increase in the then applicable exercise price. The TDI
Options are exercisable, at the election of TDI, either in full or from time to
time in part prior to the applicable expiration date; provided, however, that
(i) if the Series A TDI Option is not exercised in full prior to the Series A
Expiration Date, then the Series B TDI Option and Series C TDI Option shall
immediately terminate and (ii) if the Series B TDI Option is not exercised in
full prior to the Series B Expiration Date (as the same may have been extended),
then the Series C TDI Option shall immediately terminate.
On April 4, 1996, the Company completed a private transaction pursuant to
which it issued and sold, among other things, the S-C Rig Warrants. The S-C Rig
Warrants were issued by the Company in connection with the S-C Rig Credit
Facility more fully described under "Risk Factors - Deficiency of Earnings; Net
Losses; Substantial Indebtedness." The S-C Rig Warrants are exercisable at a per
share price of $9.50 and may be exercised, from time to time, at any time during
the period which began on June 5, 1996 and ends on April 4, 2001.
On June 20, 1996, the Company completed a private transaction pursuant to
which it issued and sold to the Series N Investors 55,000 investment units, each
unit consisting of one share of Series N Preferred Stock and 30 Series N
Warrants. Each share of Series N Preferred Stock is convertible into the number
of shares of Common Stock as is determined by dividing (i) the sum of $1,000
stated value per share of the Series N Preferred Stock plus all unpaid dividends
accrued and deemed to have accrued, if any, with respect to such shares of
Series N Preferred Stock through the last dividend payment date by (ii) a
conversion price of $11.00 per share, subject to certain adjustments. Assuming
there are no accrued and unpaid dividends on the Series N Preferred Stock at the
time of conversion, the Series N Preferred Stock is convertible into an
aggregate of 5,000,000 shares of Common Stock. From and after June 20, 1998, the
Company may, in its sole discretion, require the conversion of all, but not less
than all, of the then outstanding Series N Preferred Stock following a mandatory
conversion calculation period. The Series N Preferred Stock provides for a
dividend of 10% per annum of the stated value of the Series N Preferred Stock on
a cumulative basis. Dividends accrue from the date of issuance and are payable
quarterly. Dividends must be paid in shares of Common Stock valued as of the
respective dividend payment dates. The beneficial ownership figures set forth
below for holders of shares of Series N Preferred Stock do not include Series N
Dividend Shares to be issued to such holders because the number of such
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shares that will be issued is indeterminable. However, the Series N Dividend
Shares are being offered by the Series N Investors pursuant to this Prospectus.
Therefore, the amount of shares of Common Stock actually offered by the Selling
Stockholders which are holders of shares of Series N Preferred Stock will be
greater than the numbers set forth below to the extent Series N Dividend Shares
are issued to them in the future. The Series N Warrants are exercisable at a per
share price of $11.00 and may be exercised, from time to time, at any time
during the period beginning on June 20, 1996 and ending on June 20, 2001.
On May 13, 1996, in connection with the application by a joint venture
partner of the Company for a license to operate a nationwide trunked radio
system in Korea, the Company issued to Klehr the Klehr Options. The Klehr
Options are exercisable at a per share price of $10.00 and may be exercised,
either in full or from time to time in part, at any time prior to May 13, 2001.
This Prospectus also concerns, pursuant to Rule 416 of the Securities Act,
the offer and sale by the Selling Stockholders of any and all shares of Common
Stock issued with respect to the Securities as a result of stock-splits, stock
dividends and anti-dilution provisions.
The agreements between the Company and the Selling Stockholders referenced
herein provide that the Company will indemnify any person deemed an underwriter
and the Selling Stockholders against certain liabilities, including civil
liabilities under the Securities Act, or will contribute to payments such
underwriters or Selling Stockholders may be required to make in respect thereof.
Insofar as indemnification for liabilities arising under the Securities Act may
be permitted to directors, officers, or persons controlling the Company pursuant
to the foregoing provisions, its certificate of incorporation or by-laws, the
Company has been informed that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act and
is therefore unenforceable.
Included below concerning each Selling Stockholder beneficially owning
Offered Shares, as applicable, is a table showing the total amount of the
Offered Shares beneficially owned by such person, the amount subject to sale
hereunder, and the resulting amount and percentage of the outstanding Common
Stock if all Offered Shares which are beneficially owned by such person are
sold.
None of the Selling Stockholders has, or within the past three years has
had, any position, office or other material relationship with the Company or any
of its predecessors or affiliates, except as noted in the discussion above or in
the footnotes to this table. The Selling Stockholders identified below may have
sold, transferred or otherwise disposed of all or a portion of their Securities
since the date of this Prospectus in transactions exempt from the registration
requirements of the Securities Act.
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<PAGE>
<TABLE>
<CAPTION>
Pre-Offering Post Offering(1)
- ------------------------------------------------------------ -------------------------------------------------------------
Selling Amount of Shares Amount of Amount of Shares Percentage
Stockholder Beneficially Owned Shares Being Sold Beneficially Owned of Class (2)
----------- ------------------ ----------------- ------------------ ------------
<S> <C> <C> <C> <C>
Hughes Network Systems, Inc. 2,512,821 (3) 2,512,821 0 *
Toronto Dominion Investments, Inc. 2,245,963 (4) 2,245,963 0 *
S-C Rig Investments - III, L.P. 10,580,445 (5) 4,663,935 5,916,510 9.41%
Renaissance Fund LDC 1,209,090 (6) 1,209,090 0 *
Todd Investments Limited 1,191,196 (7) 1,191,196 0 *
Stockton Partners, L.P. 17,894 (8) 17,894 0 *
Charles Bronfman Family Trust 1,088,181 (9) 1,088,181 0 *
The Kolber Trust 362,727(10) 362,727 0 *
Continental Casualty Company 527,042(11) 527,042 0 *
Goldman, Sachs & Co. 548,595(12) 527,042 21,553 *
S. Daniel Abraham 263,460(13) 263,460 0 *
Arnhold and S. Bleichroeder, Inc. 575,047(14) 474,447 100,600 *
BEA Associates 2,596,317(15) 263,460 2,332,857 3.99%
PEC Israel Economic Corporation 3,029,437(16) 120,909 2,908,528 4.99%
Winston Partners II LDC 100,838(17) 100,838 0 *
Winston Partners II LLC 50,298(18) 50,298 0 *
Leonard M. Klehr 176,000(19) 50,000 126,000 *
</TABLE>
- ----------
* Less than 1%.
(1) Assumes the sale of Common Stock offered by this Prospectus by the
Selling Stockholders to third parties unaffiliated with such Selling
Stockholder.
(2) This percentage is calculated in accordance with Section 13(d) of the
Securities Act and the rules promulgated thereunder, without giving
effect to the sixty (60) day limitation regarding conversion of
convertible securities. Based upon 58,213,880 shares of Common Stock
issued and outstanding as of June 30, 1996.
(3) The number of Offered Shares set forth in this table assumes that the
HNS Note has been converted into Common Stock at a conversion price of
$9.75 per share. As noted above, the HNS Note is convertible, at the
option of HNS, into shares of Common Stock during the eighteen month
period commencing 181 days after the Initial Funding Date at a
conversion price equal to the lesser of (i) ninety percent (90%) of
the weighted average sales price per share of Common Stock on the
trading day next preceding the date of conversion (or over the ten
trading days immediately preceding the date of conversion to the
extent (and only to the extent) the conversion relates to in excess of
$300,000 of loans drawn down under the HNS Loan Agreement (to the
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extent of such excess) on the trading day next preceding the Maturity
Date) as reported by Bloomberg Financial Services or similar reporting
service and (ii) $9.75 per share. The actual number of Offered Shares
offered hereunder by HNS will be higher than that set forth in this
table to the extent the market price of the Common Stock declines. To
account for this contingency, the Company is registering 3,888,889
shares of Common Stock pursuant to this Registration Statement, based
on a conversion price of $6.30 per share.
(4) Consists of 1,714,500 shares of Common Stock issuable upon exercise of
the TDI Options and 531,463 shares of Common Stock issuable upon
conversion of the Series L Preferred Stock.
(5) Consists of 4,210,526 shares of Common Stock issuable upon exercise of
the S-C Rig Warrants, 340,909 shares of Common Stock issuable upon
conversion of the Series N Preferred Stock and 112,500 shares of
Common Stock issuable upon exercise of the Series N Warrants. To the
extent shares of Common Stock are issued in satisfaction of dividends
payable with respect to the Series N Preferred Stock, the number of
shares offered may be higher. S-C Rig also holds 444,445 shares of
Series H Preferred Stock, which it purchased from the Company in a
private placement in December 1993 for $40,000,000. The Series H
Preferred Stock is, under certain circumstances, convertible into
Common Stock by dividing (i) the sum of the $90.00 per share stated
value and any dividend arrearage by (ii) $9.00 per share (as adjusted
from time to time for certain events of dilution). Assuming there are
no accrued and unpaid dividends on the Series H Preferred Stock at the
time of conversion, the Series H Preferred Stock is convertible into
an aggregate of 4,444,450 shares of Common Stock. S-C Rig also holds
20 shares of Series I Preferred Stock, which it purchased from the
Company in a private placement in December 1994 for $10,000,000. The
Series I Preferred Stock is, under certain circumstances, convertible
into Common Stock by dividing (x) the sum of $500,000 per share stated
value and any dividend arrearage by (y) $11.75 per share (as adjusted
from time to time for certain events of dilution). Assuming there are
no accrued and unpaid dividends on the Series I Preferred Stock at the
time of conversion, the Series I Preferred Stock is convertible into
an aggregate of 851,060 shares of Common Stock. In addition, S-C Rig
holds a warrant to purchase 621,000 shares of Common Stock. See "Risk
Factors - Deficiency of Earnings; Net Losses; Substantial Indebtedness
- Influence of Significant Stockholders; Preemptive Rights - Dividends
on Common Stock Not Likely." Purnendu Chatterjee, an affiliate of S-C
Rig, is a director of the Company. Dr. Chatterjee holds options which
are currently accessible to purchase 20,000 shares of Common Stock.
Dr. Chatterjee is also deemed to beneficially own options to purchase
400,000 shares of Common Stock held by one of his affiliates, XTec
International, Inc. In addition, Winston Partners II LDC and Winston
Partners II LLC are affiliates of S-C Rig.
(6) Consists of 909,090 shares of Common Stock issuable upon conversion of
the Series N Preferred Stock and 300,000 shares of Common Stock
issuable upon exercise of the Series N Warrants. To the extent shares
of Common Stock are issued in satisfaction of dividends payable with
respect to the Series N Preferred Stock, the number of shares offered
may be higher.
(7) Consists of 895,636 shares of Common Stock issuable upon conversion of
the Series N Preferred Stock and 295,560 shares of Common Stock
issuable upon exercise of the Series N Warrants. To the extent shares
of Common Stock are issued in satisfaction of dividends payable with
respect to the Series N Preferred Stock, the number of shares offered
may be higher.
(8) Consists of 13,454 shares of Common Stock issuable upon conversion of
the Series N Preferred Stock and 4,440 shares of Common Stock issuable
upon exercise of the Series N Warrants. To the extent shares of Common
Stock are issued in satisfaction of dividends payable with respect to
the Series N Preferred Stock, the number of shares offered may be
higher.
(9) Consists of 818,181 shares of Common Stock issuable upon conversion of
the Series N Preferred Stock and 270,000 shares of Common Stock
issuable upon exercise of the Series N Warrants. To the extent shares
of Common Stock are issued in satisfaction of dividends payable with
respect to the Series N Preferred Stock, the number of shares offered
may be higher.
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<PAGE>
(10) Consists of 272,727 shares of Common Stock issuable upon conversion of
the Series N Preferred Stock and 90,000 shares of Common Stock
issuable upon exercise of the Series N Warrants. To the extent shares
of Common Stock are issued in satisfaction of dividends payable with
respect to the Series N Preferred Stock, the number of shares offered
may be higher.
(11) Consists of 396,272 shares of Common Stock issuable upon conversion
of the Series N Preferred Stock and 130,770 shares of Common Stock
issuable upon exercise of the Series N Warrants. To the extent shares
of Common Stock are issued in satisfaction of dividends payable with
respect to the Series N Preferred Stock, the number of shares offered
may be higher.
(12) Includes 396,272 shares of Common Stock issuable upon conversion of
the Series N Preferred Stock and 130,770 shares of Common Stock
issuable upon exercise of the Series N Warrants. To the extent shares
of Common Stock are issued in satisfaction of dividends payable with
respect to the Series N Preferred Stock, the number of shares offered
may be higher. Includes 21,553 shares of Common Stock held in
customers' accounts with respect to which Goldman, Sachs & Co. has
investment discretion which may be deemed to be beneficially owned by
Goldman, Sachs & Co.; Goldman, Sachs & Co. disclaims beneficial
ownership of such shares.
(13) Consists of 198,090 shares of Common Stock issuable upon conversion of
the Series N Preferred Stock and 65,370 shares of Common Stock
issuable upon exercise of the Series N Warrants. To the extent shares
of Common Stock are issued in satisfaction of dividends payable with
respect to the Series N Preferred Stock, the number of shares offered
may be higher.
(14) Includes 356,727 shares of Common Stock issuable upon conversion of
the Series N Preferred Stock and 117,720 shares of Common Stock
issuable upon exercise of the Series N Warrants. To the extent shares
of Common Stock are issued in satisfaction of dividends payable with
respect to the Series N Preferred Stock, the number of shares offered
may be higher. The Series N Preferred Stock and Series N Warrants held
by Arnold and S. Bleichroeder, Inc. ("Bleichroeder") were issued to it
as a placement fee in connection with its services as placement agent
for the offering to the other Series N Investors. Bleichroeder
provides investment banking services to the Company from time to time.
(15) Includes 198,090 shares of Common Stock issuable upon conversion of
the Series N Preferred Stock and 63,370 shares of Common Stock
issuable upon exercise of the Series N Warrants. To the extent shares
of Common Stock are issued in satisfaction of dividends payable with
respect to the Series N Preferred Stock, the number of shares offered
may be higher. BEA Associates, an investment advisor, is the
beneficial owner of such securities, which it holds for the following
entities: The Common Fund, Connecticut Mutual Dimension Fund, BEA
Income Fund, Inc. (formerly CSFB Income Fund), General Retirement
System of the City of Detroit, Omaha Public School Employee Retirement
System, BEA High Yield Portfolio, RJR Nabisco Domestic High Yield, SEI
Institutional Managed Trust, The Emerging Markets Intrastructure Fund
Inc., The First Israel Fund Inc., and VAIL. The information set forth
in the table with respect to BEA Associates and the information set
forth in this footnote was provided by BEA Associates.
(16) Includes 90,909 shares of Common Stock issuable upon conversion of the
Series N Preferred Stock and 30,000 shares of Common Stock issuable
upon exercise of the Series N Warrants. To the extent shares of Common
Stock are issued in satisfaction of dividends payable with respect to
the Series N Preferred Stock, the number of shares offered may be
higher.
(17) Consists of 75,818 shares of Common Stock issuable upon conversion of
the Series N Preferred Stock and 25,020 shares of Common Stock
issuable upon exercise of the Series N Warrants. To the extent shares
of Common Stock are issued in satisfaction of dividends payable with
respect to the Series N Preferred Stock, the number of shares offered
may be higher. Winston Partners II LLC and S-C Rig are affiliates of
Winston Partners II LDC.
-23-
<PAGE>
(18) Consists of 37,818 shares of Common Stock issuable upon conversion of
the Series N Preferred Stock and 12,480 shares of Common Stock
issuable upon exercise of the Series N Warrants. To the extent shares
of Common Stock are issued in satisfaction of dividends payable with
respect to the Series N Preferred Stock, the number of shares offered
may be higher. Winston Partners II LDC and S-C Rig are affiliates of
Winston Partners II LLC.
(19) Includes 50,000 shares of Common Stock issuable upon exercise of the
Klehr Options. Klehr is a partner in the law firm of Klehr, Harrison,
Harvey, Branzburg and Ellers, Philadelphia, Pennsylvania. Such law
firm acts as the Company's principal outside legal counsel.
-24-
<PAGE>
PLAN OF DISTRIBUTION
Pursuant to this Prospectus, the Offered Shares may be sold by the Selling
Stockholders from time to time while the Registration Statement to which this
Prospectus relates is effective, on the PSE, NNM or otherwise at prices and
terms prevailing at the time of sale, at prices and terms related to such
prevailing prices and terms, in negotiated transactions or at fixed prices.
Although none of the Selling Stockholders has advised the Company of the manner
in which it currently intends to sell the Offered Shares pursuant to this
Registration Statement, the Selling Stockholders may choose to sell all or a
portion of such Offered Shares from time to time in any manner described herein.
The methods by which the Offered Shares may be sold by the Selling Stockholders
include, without limitation: (i) ordinary brokerage transactions, which may
include long or short sales, (ii) transactions which involve crosses or block
trades or any other transactions permitted by the PSE or NNM, (iii) purchases by
a broker or dealer as principal and resale by such broker or dealer for its
account pursuant to this Prospectus, (iv) "at the market" to or through market
makers or into an existing market for the Common Stock, (v) in other ways not
involving market makers or established trading markets, including direct sales
to purchasers or sales effected through agents, (vi) through transactions in
options or swaps or other derivatives (whether exchange-listed or otherwise), or
(vii) any combinations of any such methods of sale. In addition, the Selling
Stockholders may enter into hedging transactions with broker-dealers. In
connection with such transactions, broker-dealers may engage in short sales of
Common Stock in the course of hedging the positions they assume with Selling
Stockholders. The Selling Stockholders may also sell Common Stock short and
redeliver the shares of Common Stock to close out such short positions. The
Selling Stockholders may also enter into option or other transactions with
broker-dealers which require the delivery to such broker-dealers of the Common
Stock offered hereby, which Common Stock such broker-dealers may resell pursuant
to this Prospectus.
In effecting sales, brokers and dealers engaged by any of the Selling
Stockholders may arrange for other brokers or dealers to participate. Brokers or
dealers may receive commissions or discounts from the Selling Stockholders to
sell a specified number of shares at a stipulated price per share, and, to the
extent such a broker or dealer is unable to do so acting as agent for the
Selling Stockholders, may purchase as principal any unsold shares at the price
required to fulfill such broker or dealer commitment to the Selling
Stockholders. Brokers or dealers who acquire shares as principals may thereafter
resell such shares from time to time in transactions (which may involve crosses
and block transactions and which may involve sales to and through other brokers
or dealers, including transactions, of the nature described above) in the
over-the-counter market, in negotiated transactions or otherwise, at market
prices and terms prevailing at the time of sale, at prices and terms related to
such prevailing prices and terms, in negotiated transactions or at fixed prices,
and in connection with the methods as described above. The Offered Shares held
by the Selling Stockholders may also be sold hereunder by brokers, dealers,
banks or other persons or entities who receive such Offered Shares as a pledgee
of the Selling Stockholders. The Selling Stockholders and brokers and dealers
through whom sales of Offered Shares may be effected may be deemed to be
"underwriters", as defined under the Securities Act, and any profits realized by
them in connection with the sale of the Offered Shares may be considered to be
underwriting compensation.
LEGAL MATTERS
The validity of the Offered Shares will be passed upon by Robert Vecsler,
Esquire, General Counsel of the Company.
EXPERTS
The consolidated balance sheets of the Company as of December 31, 1995 and
1994 and the consolidated statements of operations, stockholders' equity, and
cash flows for the years ended December 31, 1995, 1994 and 1993, incorporated by
reference in this Prospectus, have been incorporated by reference herein in
reliance on the report of Coopers & Lybrand L.L.P., independent accountants,
given on the authority of that firm as experts in accounting and
-25-
<PAGE>
auditing. In such report, Coopers & Lybrand L.L.P. states that, with respect to
certain affiliated companies, its opinions are based upon the reports of other
independent accountants.
-26-
<PAGE>
================================================================================
No person is authorized to give any information or to make any
representations not contained or incorporated by reference in this Prospectus,
and, if given or made, such information or representation must not be relied
upon as having been authorized by the Company. This Prospectus does not
constitute an offer to sell or a solicitation of an offer to buy any securities
other than the securities to which it relates or an offer to sell or a
solicitation of an offer to buy such securities in any circumstances or in any
jurisdiction in which such offer or solicitation is unlawful. Neither the
delivery of this Prospectus nor any sale made hereunder shall, under any
circumstances, create an implication that there has not been any change in the
affairs of the Company since the date hereof or that the information contained
herein is correct as of any time subsequent to its date.
--------
TABLE OF CONTENTS
Page
----
Additional Information...................... 5
Incorporation of Certain Information
by Reference.............................. 5
Address and Telephone Number................ 6
Risk Factors................................ 7
Business.................................... 17
Recent Developments......................... 17
Use of Proceeds............................. 18
Selling Stockholders........................ 18
Plan of Distribution........................ 25
Legal Matters............................... 25
Experts..................................... 25
================================================================================
================================================================================
GEOTEK
COMMUNICATIONS, INC.
20,545,371 Shares of Common Stock
----------
PROSPECTUS
Dated: July 24, 1996
----------
================================================================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following is an itemized statement of the estimated amounts of all
expenses payable by the registrant in connection with the registration of the
Offered Shares, other than underwriting discounts and commissions:
Registration Fee--Securities and Exchange Commission ....... $ 73,060.05
*Blue Sky fees and expenses ................................. $ 1,000.00
*Accountants' fees and expenses ............................. $ 10,000.00
*Legal fees and expenses .................................... $ 10,000.00
*Printing and engraving expenses ............................ $ 5,000.00
*Miscellaneous .............................................. $ 2,500.00
-----------
Total .......................................... $101,560.05
===========
_______________________
* Estimate
Item 15. Indemnification of Directors and Officers.
A. The Delaware Corporation Law provides that, to the extent that any
director, officer, employee or agent of the Company has been successful on the
merits or otherwise in defense of any action, suit or proceeding, whether civil,
criminal, administrative or investigative (including an action by or in the
right of the Company) to which such person was a party by reason of the fact
that such person is or was a director, officer, employee or agent of the Company
or is or was serving at the request of the Company as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, the Company shall indemnify any such person against expenses
(including attorneys' fees) actually and reasonably incurred in connection
therewith.
B. In addition, the Company has the power to indemnify any of the persons
referred to above against expenses (including attorneys' fees), judgments, fines
and amounts paid in settlement actually and reasonably incurred in connection
with any such actions, suit or proceeding, if such person acted in good faith
and in a manner such person reasonably believed to be or not opposed to the best
interests of the Company, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe such person's conduct was
unlawful.
Notwithstanding the foregoing, in connection with any action or suit by or
in the right of the Company to procure a judgment in its favor, the Company
shall not make any indemnification as described above in respect of any claim,
issue or matter as to which such person shall have been adjudged to be liable to
the Company unless, and only to the extent that, the Court of Chancery (in the
State of Delaware) or the court in which such action or suit was brought shall
determine, upon application, that despite adjudication of liability, but in view
of all the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which the Court of Chancery or such
other court shall deem proper.
C. The Company also has the power, under the Delaware Corporation Law, to
purchase and maintain insurance on behalf of any person who is or was a
director, officer, employee or agent of the Company, or is or was serving at the
request of the Company as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against any
other liability asserted against such person and incurred by such person in any
such capacity, or arising out of such person's status as such, whether or not
the Company would have the power to indemnify such person against such liability
under the foregoing provisions.
II-1
<PAGE>
D. The indemnification provided by or allowable pursuant to the Delaware
Corporation Law shall or may, as applicable, continue as to a person who has
ceased to be a director, officer, employee or agent of the Company and shall
inure to the benefit of the heirs, executors and administrators of such person.
Item 16. Exhibits and Financial Statement Schedules.
(a) Schedule of Exhibits.
Exhibit
Number Exhibit
------ -------
4.1 Warrant to purchase Common Stock issued to S-C Rig
Investments-III, L.P.
*4.2 Form of Warrant issued in connection with Series N
Cumulative Convertible Preferred Stock.
*4.3 Certificate of Designation of Series N Cumulative
Convertible Preferred Stock.
**5 Opinion and Consent of Robert Vecsler, Esquire.
23.1 Consent of Coopers & Lybrand L.L.P. - Geotek Communications,
Inc.
23.2 Consent of Shachak Peer Reznick & Co. - PowerSpectrum
Technology Ltd.
23.3 Consent of Coopers & Lybrand - National Band Three Limited.
23.4 Consent of Coopers & Lybrand L.L.P. - Bogen Communications
International, Inc.
23.5 Consent of KPMG - Band Three Radio Limited.
23.6 Consent of Coopers & Lybrand GmbH - Preussag Bundelfunk
GmbH.
23.7 Consent of Dusseldorfer Treuhand-Gesellschaft Altenburg &
Tewes AG - DBF Bundelfunk GmbH & Co. Betriebs-KG.
23.8 Consent of Deloitte & Touche - National Band Three Limited.
24 The powers of attorney contained on the signature pages of
this Registration Statement are hereby incorporated by
reference.
- -------------
* Incorporated by reference in the Company's Current Report on
Form 8-K dated June 20, 1996.
** To be filed supplementally.
Item 17. Undertakings.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
II-2
<PAGE>
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act;
(ii) To reflect in the Prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
Registration Statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high and of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee" table in
the effective Registration Statement.
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or any
material change to such information in the Registration Statement.
Provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the registrant pursuant to
Section 13 or Section 15(d) of the Exchange Act that are incorporated by
reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the Securities
Act, each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the registrant of expenses incurred or
paid by a director, officer or controlling person of the regis trant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
For purposes of determining any liability under the Securities Act, each
filing of the registrant's annual report pursuant to Section 13(a) or 15(d) of
the Exchange Act that is incorporated by reference in this registration
statement shall be deemed to be a new Registration Statement relating to the
securities offered herein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in Montvale, New Jersey, on July 24, 1996.
GEOTEK COMMUNICATIONS, INC.
By: /s/ Yaron I. Eitan
-----------------------------------------------
Yaron I. Eitan
President, Chief Executive Officer and Director
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below hereby constitutes and appoints Yaron Eitan, President and Michael McCoy,
Chief Financial Officer, and each of them, his true and lawful attorney-in-fact
and agent, with full power of substitution and resubstitution, for him and in
his name, place and stead, in any and all capacities, to sign any or all
amendments, including any post-effective amendments, to this Registration
Statement, and to file the same, with all exhibits thereto, and other documents
in connection therewith, with the Securities and Exchange Commission, granting
unto said attorneys-in-fact and agents, and each of them, full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the above premises, as fully to all intents and purposes
as he might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or either of them or his substitute or substitutes,
may lawfully do or cause to be done by virtue hereof.
This Power of Attorney may be executed in multiple counterparts, each of
which shall be deemed an original, but which taken together shall constitute one
instrument.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been duly signed below by the following persons in
the capacities indicated on July 24, 1996.
Signatures Title
- ---------- -----
/s/ Winston J. Churchill Chairman of the Board; Director
- ------------------------
Winston J. Churchill
/s/ Yaron I. Eitan President and Chief Executive Officer
- ------------------------ (Principal Executive Officer); Director
Yaron I. Eitan
/s/ Walter E. Auch Director
- ------------------------
Walter E. Auch
/s/ George Calhoun Director
- ------------------------
George Calhoun
<PAGE>
Signatures Title
- ---------- -----
/s/ Purnendu Chatterjee Director
- ------------------------
Purnendu Chatterjee
/s/ Haynes G. Griffin Director
- ------------------------
Haynes G. Griffin
/s/ Richard Krants Director
- ------------------------
Richard Krants
/s/ Richard T. Liebhaber Director
- ------------------------
Richard T. Liebhaber
/s/ Jonathan C. Crane Director
- ------------------------
Jonathan C. Crane
/s/ Kevin W. Sharer Director
- ------------------------
Kevin W. Sharer
/s/ William Spier Director
- ------------------------
William Spier
/s/ Michael McCoy Chief Financial Officer
- ------------------------ (Principal Financial Officer)
Michael McCoy
/s/ Michael Carus Chief Accounting Officer
- ------------------------ (Principal Accounting Officer)
Michael Carus
<PAGE>
EXHIBIT INDEX
Exhibit
Number Exhibit
------ -------
4.1 Warrant to Purchase Common Stock issued to S-C Rig
Investments-III, L.P.
23.1 Consent of Coopers & Lybrand L.L.P. - Geotek Communications,
Inc.
23.2 Consent of Shachak Peer Reznick & Co. - PowerSpectrum
Technology Ltd.
23.3 Consent of Coopers & Lybrand - National Band Three Limited.
23.4 Consent of Coopers & Lybrand L.L.P. - Bogen Communications
International, Inc.
23.5 Consent of KPMG - Band Three Radio Limited.
23.6 Consent of Coopers & Lybrand GmbH - Preussag Bundelfunk
GmbH.
23.7 Consent of Dusseldorfer Treuhand-Gesellschaft Altenburg &
Tewes AG - DBF Bundelfunk GmbH & Co. Betriebs-KG.
23.8 Consent of Deloitte & Touche - National Band Three Limited
24 The powers of attorney contained on the signature pages of
this Registration Statement are hereby incorporated by
reference.
Exhibit 4.1
NEITHER THIS WARRANT NOR THE SECURITIES ISSUABLE UPON EXERCISE HEREOF NOR ANY
INTEREST OR PARTICIPATION HEREIN OR THEREIN MAY BE OFFERED, SOLD, ASSIGNED,
PLEDGED, HYPOTHECATED, ENCUMBERED OR IN ANY OTHER MANNER TRANSFERRED OR DISPOSED
OF IN THE UNITED STATES EXCEPT IN COMPLIANCE WITH THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), ANY APPLICABLE STATE SECURITIES LAWS AND THE
TERMS AND CONDITIONS HEREOF. THE HOLDER OF THIS WARRANT AND THE SECURITIES
ISSUABLE UPON EXERCISE HEREOF ARE SUBJECT TO THE RESTRICTIONS HEREIN SET FORTH.
VOID AFTER 5:00 P.M., NEW YORK, NEW YORK TIME, APRIL 4, 2001
***************************************
WARRANT
to
PURCHASE COMMON STOCK
of
GEOTEK COMMUNICATIONS, INC.
***************************************
This certifies that, for good and valuable consideration, Geotek
Communications, Inc., a Delaware corporation (the "Company"), grants to S-C Rig
Investments - III, L.P., a Delaware limited partnership, or permitted registered
assigns (the "Warrantholder" or "Warrantholders"), the right to subscribe for
and purchase from the Company, at a purchase price of $9.50 per share (the
"Exercise Price"), at any time and from time to time after such date (the
"Initial Exercise Date") that the Company amends its articles of incorporation
to increase the number of authorized shares of the Company's Common Stock, par
value $.01 per share (the "Common Stock"), to allow for the reservation of the
full number of Warrant Shares (as defined below) initially issuable upon
exercise of this Warrant, and to and including 5:00 P.M. New York City time on
April 4, 2001 (the "Expiration Date"), Four Million Two Hundred Ten Thousand
Five Hundred and Twenty-six (4,210,526) shares, as such number of shares may be
adjusted from time to time (the "Warrant Shares"), of the Common Stock, subject
to the provisions and upon the terms and conditions herein set forth.
Notwithstanding anything herein to the contrary, in the event the Initial
Exercise Date does not occur on or prior to July 31, 1996, this Warrant shall
automatically be terminated and Warrantholder shall have no rights hereunder.
The Exercise
<PAGE>
Price and the number of Warrant Shares are subject to adjustment from time to
time as provided in Section 6.
SECTION 1. Exercise of Warrant; Limitation on Exercise; Payment of Taxes.
1.1 Exercise of Warrant.
(a) Subject to Section 1.2 hereof, the Warrantholder may exercise this
Warrant, in whole or in part at any time and from time to time after the Initial
Exercise Date, by presentation and surrender of this Warrant to the Company at
its principal executive offices or at the office of its stock transfer agent, if
any, with the Subscription Form annexed hereto duly executed and accompanied by
cash payment of the full Exercise Price for each Warrant Share to be purchased.
(b) Upon receipt of this Warrant, with the Subscription Form duly executed
and accompanied by payment of the aggregate Exercise Price for the Warrant
Shares for which this Warrant is then being exercised, the Company shall cause
to be issued certificates for the total number of whole shares of Common Stock
for which this Warrant is being exercised (adjusted to reflect the effect of the
antidilution provisions contained in Section 6 hereof, if any, and as provided
in Sections 5 and 7.8 hereof) in such denominations as are requested for
delivery to the Warrantholder, and the Company shall thereupon deliver such
certificates to the Warrantholder. The stock certificates so delivered shall be
in such denominations as may be specified by the Warrantholder and shall be
issued in the name of the Warrantholder or, if permitted by Section 5 and in
accordance with the provisions thereof, such other name as shall be designated
in the Subscription Form. The Warrantholder shall be deemed to be the holder of
record of the shares of Common Stock issuable upon such exercise,
notwithstanding that the stock transfer books of the Company shall then be
closed or that certificates representing such shares of Common Stock shall not
then be actually delivered to the Warrantholder. If at the time this Warrant is
exercised, a registration statement is not in effect to register under the
Securities Act the Warrant Shares issuable upon exercise of this Warrant, the
Company may require the Warrantholder to make such customary representations and
deliver such customary opinions of counsel, and may place such customary legends
on certificates representing the Warrant Shares, as may be reasonably required
in the opinion of counsel to the Company to permit the Warrant Shares to be
issued without such registration.
(c) If this Warrant shall have been exercised only in part, the Company
shall, at the time of delivery of the certificates for the Warrant Shares,
deliver to the Warrantholder a new Warrant evidencing the rights to purchase the
remaining Warrant Shares, which new Warrant shall in all other respects be
identical with this Warrant. No adjustments or payments shall be made on or in
respect of Warrant Shares issuable on the exercise of this Warrant for any
regular cash dividends paid or payable to holders of record of Common Stock
prior to the date as of which the Warrantholder shall be deemed to be the record
holder of such Warrant Shares.
2
<PAGE>
1.2 Limitation on Exercise. If this Warrant is not exercised prior to 5:00
P.M. on the Expiration Date (or the next succeeding Business Day, if the
Expiration Date is a Saturday, Sunday or a day on which the New York Stock
Exchange is authorized to close or on which the Company is otherwise closed for
business (a "Nonbusiness Day"), this Warrant, or any new Warrant issued pursuant
to Section 1.1, shall cease to be exercisable and shall become void and all
rights of the Warrantholder hereunder shall cease. This Warrant shall not be
exercisable and no Warrant Shares shall be issued hereunder prior to 9:00 a.m.
New York City time on the Initial Exercise Date. In addition, this Warrant shall
not be exercisable at any time that the lender under that certain Senior Loan
Agreement dated as of the date hereof by and between the Company and the initial
holder of this Warrant (the "Loan Agreement") shall be in material breach of its
obligations thereunder or at any time after a permissible termination of the
Loan Agreement resulting directly from a material breach by such lender
thereunder.
1.3 Payment of Exercise Price. Payment of the Exercise Price pursuant to
Section 1.1(a) shall be made to the Company in cash; by certified or official
bank check payable in United States dollars to the order of the Company; or by
any combination of the foregoing.
1.4 Payment of Taxes. The issuance of certificates for Warrant Shares shall
be made without charge to the Warrantholder for any stock transfer or other
issuance tax in respect thereto; provided, however, that the Warrantholder shall
be required to pay any and all taxes which may be payable in respect to any
transfer involved in the issuance and delivery of any certificates for Warrant
Shares in a name other than that of the then Warrantholder as reflected upon the
books of the Company.
SECTION 2. Reservation and Listing of Shares, Etc.
All Warrant Shares which are issued upon the exercise of the rights
represented by this Warrant shall, upon issuance and payment of the Exercise
Price, be validly issued, fully paid and nonassessable without any preemptive
rights, and free from all taxes, liens, security interests, charges and other
encumbrances with respect to the issue thereof other than taxes in respect of
any transfer occurring contemporaneously with such issue. During the period
within which this Warrant may be exercised, the Company shall at all times have
authorized and reserved, and keep available and free from preemptive rights, and
free from all taxes, liens, security interests, charges and other encumbrances
with respect to the issue thereof, a sufficient number of shares of Common Stock
to provide for the exercise of this Warrant, and if at any time the number of
authorized but unissued shares of Common Stock shall not be sufficient to effect
the exercise of this Warrant, in addition to such other remedies as shall be
available to a Warrantholder, the Company will take such corporate action as
may, in the opinion of its counsel, be necessary to increase its authorized but
unissued shares of Common Stock to such number of shares as shall be sufficient
for such purposes. In addition, prior to the issuance of any Warrant Shares, the
Company shall at its expense procure the listing of the Warrant Shares (or any
other issues of capital stock issuable upon the exercise of this Warrant if such
other class of capital stock is then so listed) which shall be issued upon
exercise of this Warrant (subject to official notice of issuance) as then may be
required on all stock exchanges or interdealer quotation systems on
3
<PAGE>
which the Common Stock is then listed and shall maintain such listing if and so
long as any shares of the same class shall be listed on such stock exchanges or
interdealer quotation systems. The Company shall, from time to time, take all
such action as may be required to assure that the par value per share of the
Warrant Shares is at all times equal to or less than the then effective Exercise
Price.
SECTION 3. Exchange, Loss or Destruction of Warrant.
If permitted by Section 5 and in accordance with the provisions thereof,
upon surrender of this Warrant to the Company with a duly executed instrument of
assignment and funds sufficient to pay any transfer tax, the Company shall,
without charge, execute and deliver a new Warrant of like tenor in the name of
the assignee named in such instrument of assignment and this Warrant shall
promptly be canceled. Upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this
Warrant, and, in the case of loss, theft or destruction, of such bond or
indemnification as the Company may reasonably require, and, in the case of such
mutilation, upon surrender and cancellation of this Warrant, the Company will
execute and deliver a new Warrant of like tenor. The term "Warrant" as used
herein includes any Warrants issued in substitution or exchange of this Warrant.
SECTION 4. Ownership of Warrant; Certain Rights of Warrantholders.
(a) The Company may deem and treat the person in whose name this Warrant is
registered as the holder and owner hereof (notwithstanding any notations of
ownership or writing hereon made by anyone other than the Company) for all
purposes and shall not be affected by any notice to the contrary, until
presentation of this Warrant for registration of transfer as provided in
subsection 1.1, Section 3 or Section 5.
(b) Nothing contained in this Warrant shall be construed as conferring upon
the Warrantholder or its transferees the right to vote or to receive dividends
or to consent or to receive notice as a stockholder in respect of any meeting of
stockholders for the election of directors of the Company or of any other
matter, or any rights whatsoever as stockholders of the Company. The Company
shall give notice to the Warrantholder by registered mail if at any time prior
to the expiration or exercise in full of the Warrants, any of the following
events shall occur:
(i) the Company shall authorize the payment of any dividend payable in
any securities upon shares of Common Stock or authorize the making of any
distribution (other than a regular cash dividend paid out of net profits
legally available therefor) to all holders of Common Stock;
(ii) the Company shall authorize the issuance to all holders of Common
Stock of any additional shares of Common Stock or securities that are
convertible into or exercisable for shares of Common Stock ("Common Stock
Equivalents") or of rights, options or warrants to subscribe for or
purchase Common Stock or Common Stock Equivalents or of any other
subscription rights, options or warrants;
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<PAGE>
(iii) a dissolution, liquidation or winding up of the Company; or
(iv) a capital reorganization or reclassification of the Common Stock
(other than a subdivision or combination of the outstanding Common Stock
and other than a change in the par value of the Common Stock) or any
consolidation or merger of the Company with or into another corporation
(other than a consolidation or merger in which the Company is the
continuing corporation and that does not result in any reclassification or
change of Common Stock outstanding) or in the case of any sale or
conveyance to another corporation of the property of the Company as an
entirety or substantially as an entirety or a tender offer or exchange
offer for shares of Common Stock.
Such giving of notice shall be initiated at least 20 days prior to the date
fixed as a record date or effective date or the date of closing of the Company's
stock transfer books for the determination of the stockholders entitled to such
dividend, distribution, issuance or subscription rights, or for the
determination of the stockholders entitled to vote on such proposed merger,
consolidation, sale, conveyance, dissolution, liquidation or winding up or to
participate in such tender or exchange offer. Such notice shall specify (A) the
date as of which the holders of record of shares of Common Stock to be entitled
to receive any such rights, options, warrants or distribution are to be
determined, or (B) the initial expiration date set forth in any tender offer or
exchange offer for shares of Common Stock or any securities convertible into or
exchangeable for Common Stock, or (C) the date on which any such reorganization,
reclassification, consolidation, merger, sale, conveyance, dissolution,
liquidation or winding up is expected to become effective or consummated, and
the date as of which it is expected that holders of record of shares for
securities or other property, if any, deliverable upon such reorganization,
reclassification, consolidation, merger, sale, conveyance, dissolution,
liquidation or winding up. Failure to provide such notice shall not affect the
validity of any action taken in connection with such dividend, distribution,
issuance or subscription rights, or proposed merger, consolidation, sale,
conveyance, tender offer, exchange offer, dissolution, liquidation or winding
up.
SECTION 5. Split-Up, Combination, Exchange and Transfer of Warrants.
(a) Subject to the provisions of Section 5(b), this Warrant may be split
up, combined or exchanged for another Warrant or Warrants containing the same
terms to purchase a like aggregate number of Warrant Shares. If the
Warrantholder desires to split up, combine or exchange this Warrant, he, she or
it shall make such request in writing delivered to the Company and shall
surrender to the Company this Warrant and any other Warrants to be so split up,
combined or exchanged. Upon any such surrender for a split up, combination or
exchange, the Company shall execute and deliver to the person entitled thereto a
Warrant or Warrants, as the case may be, as so requested. The Company shall not
be required to effect any split up, combination or exchange which will result in
the issuance of a warrant entitling the Warrantholder to purchase upon exercise
a fraction of a share of Common Stock or a fractional Warrant. The Company may
require such Warrantholder to pay a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any split up,
combination or exchange of Warrants.
5
<PAGE>
(b) Neither this Warrant not the Warrant Shares may be transferred,
disposed of or encumbered (any such action, a "Transfer") except in accordance
with and subject to the provisions of the Securities Act, any applicable state
securities laws and the rules and regulations promulgated thereunder. If at the
time of a Transfer, a registration statement is not in effect to register this
Warrant or the Warrant Shares, the Company may require the Warrantholder to make
such customary representations and deliver such customary opinions of counsel,
and may place such customary legends on certificates representing this Warrant,
as may be reasonably required in the opinion of counsel to the Company to permit
a Transfer without such registration.
SECTION 6. Adjustments of Exercise Price and Number of Warrant Shares
Issuable. The Exercise Price and the number of Warrant Shares issuable upon the
exercise of this Warrant are subject to adjustment from time to time upon the
occurrence of the events enumerated in this Section 6. For purposes of this
Section 6, "Common Stock" means the Common Stock and any other capital stock of
the Company, however designated, for which the Warrants may be exercisable.
(a) Adjustment for Change in Capital Stock.
If the Company:
(i) pays a dividend or makes a distribution on its Common Stock in
shares of its Common Stock;
(ii) subdivides its outstanding shares of Common Stock into a greater
number of shares;
(iii) combines its outstanding shares of Common Stock into a smaller
number of shares;
(iv) makes a distribution on its Common Stock in shares of its capital
stock other than Common Stock; or
(v) issues by reclassification of its Common Stock any shares of its
capital stock,
then the Exercise Price and the number and kind of shares of capital stock of
the Company issuable upon the exercise of this Warrant (as in effect immediately
prior to such action) shall be proportionately adjusted so that the
Warrantholder may receive, upon exercise of this Warrant, the aggregate number
and kind of shares of capital stock of the Company which he would have owned
immediately following such action if this Warrant had been exercised immediately
prior to such action.
The adjustment shall become effective immediately after the record date,
subject to subsection (n) of this Section 6, in the case of a dividend or
distribution and immediately after the effective date in the case of a
subdivision, combination or reclassification.
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If after an adjustment, a Warrantholder shall be entitled to receive shares
of two or more classes or series of capital stock of the Company upon exercise
of this Warrant, the Company shall determine the allocation of the adjusted
Exercise Price between the classes or series of capital stock. After such
allocation, the exercise privilege and the Exercise Price of each class or
series of capital stock shall thereafter be subject to adjustment on terms
comparable to those applicable to Common Stock in this Section 6.
Such adjustment shall be made successively whenever any event listed above
shall occur.
(b) Adjustment for Rights Issue. If the Company distributes any rights,
options or warrants to all holders of its Common Stock entitling them for a
period expiring within 60 days after the record date mentioned below to purchase
shares of Common Stock or securities convertible into or exercisable or
exchangeable for shares of Common Stock at a price per share less than the
current market price per share (including, in the case of securities convertible
into or exercisable or exchangeable for shares of Common Stock, the
consideration payable for such convertible, exercisable or exchangeable security
and the minimum consideration per share payable upon the conversion, exercise or
exchange of such security into or for Common Stock) on that record date, the
Exercise Price shall be adjusted in accordance with the following formula:
O + N x P
-------
E' = E x M
-----------
O + N
where:
E' = the adjusted Exercise Price.
E = the current Exercise Price.
O = the number of shares of Common Stock outstanding on the record date.
N = the number of additional shares of Common Stock offered.
P = the offering price per share of the additional shares.
M = the current market price per share of Common Stock on the record date.
The adjustment shall be made successively whenever any such rights, options
or warrants are issued and shall become effective immediately after the record
date for the determination of stockholders entitled to receive the rights,
options or warrants. If at the end of the period during which such rights,
options or warrants are exercisable, not all rights, options or warrants shall
have been exercised, the Exercise Price shall be immediately readjusted to what
it would have been if "N" in the above formula had been the number of shares
actually issued.
7
<PAGE>
(c) Adjustment for Other Distributions. If the Company distributes to all
holders of its Common Stock any of its assets or debt securities or any rights
or warrants to purchase debt securities, assets or other securities of the
Company, the Exercise Price shall be adjusted in accordance with the following
formula:
E' = E x M - F
-----
M
where:
E' = the adjusted Exercise Price.
E = the current Exercise Price.
M = the current market price per share of Common Stock
on the record date mentioned in the immediately
succeeding paragraph.
F = the fair market value on the record date of the
assets, securities, rights or warrants applicable to
one share of Common Stock. The Board of Directors
shall determine the fair market value.
The adjustment shall be made successively whenever any such distribution is
made and shall become effective immediately after the record date for the
determination of stockholders entitled to receive the distribution.
This subsection (c) does not apply to:
(i) rights, options or warrants referred to in subsection (b) of this
Section 6, or
(ii) cash dividends or cash distributions paid out of consolidated
current or retained earnings as shown on the books of the Company prepared
in accordance with generally accepted accounting principles other than any
Extraordinary Cash Dividend (as defined below). An "Extraordinary Cash
Dividend" shall be that portion, if any, of the aggregate amount of all
cash dividends paid in any fiscal year which exceeds $25 million. In all
cases, the Company shall give the Warrant holders at least 30 days notice
of a record date for any dividend payment on its Common Stock.
(d) Adjustment for Common Stock Issue. If the Company issues shares of
Common Stock for a consideration per share less than the current market price
per share on the date the Company fixes the offering price of such additional
shares, the Exercise Price shall be adjusted in accordance with the formula:
8
<PAGE>
P
-
E' = E x O + M
-----
A
where:
E' = the adjusted Exercise Price.
E = the then current Exercise Price.
O = the number of shares outstanding immediately prior
to the issuance of such additional shares.
P = the aggregate consideration received for the
issuance of such additional shares.
M = the current market price per share on the date the
Company fixes the offering price of such additional
shares.
A = the number of shares outstanding immediately after
the issuance of such additional shares.
The adjustment shall be made successively whenever any such issuance is
made, and shall become effective immediately after such issuance.
This subsection (d) does not apply to:
(i) any of the transactions described in subsections (a), (b)and (c)
of this Section 6,
(ii) the conversion, exercise or exchange of securities convertible or
exchangeable for Common Stock,
(iii) Common Stock issuable upon the exercise of rights or warrants
issued to the holders of Common Stock,
(iv) Common Stock issued to shareholders of any person which merges
into the Company in proportion to their stock holdings of such person
immediately prior to such merger, upon such merger,
(v) Common Stock issued in a bona fide public offering pursuant to a
firm commitment underwriting, or
(vi) Common Stock issued in a bona fide private placement through a
placement agent which is a member firm of the National Association of
Securities Dealers, Inc.
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<PAGE>
(except to the extent that any discount from the current market price
attributable to restrictions on transferability of the Common Stock, as
determined in good faith by the Board of Directors and described in a Board
resolution which shall be filed with the Warrant Agent, shall exceed 20%).
(e) Adjustment for Convertible Securities Issue. If the Company issues any
securities convertible into or exercisable or exchangeable for Common Stock
(other than securities issued in transactions described in subsections (a), (b)
and (c) of this Section 6) for a consideration per share (including the minimum
consideration per share payable upon conversion, exercise or exchange of any
securities convertible into or exercisable or exchangeable for Common Stock) of
Common Stock initially deliverable upon conversion, exercise or exchange of such
securities less than the current market price per share on the date the Company
fixes the offering price of such securities, the Exercise Price shall be
adjusted in accordance with this formula:
P
-
E' = E x O + M
-----
O + D
where:
E' = the adjusted Exercise Price.
E = the then current Exercise Price.
O = the number of shares outstanding immediately prior
to the issuance of such securities.
P = the aggregate consideration received for the issuance of
such securities.
M = the current market price per share on the date the
Company fixes the offering price of such securities.
D = the maximum number of shares deliverable upon
conversion or exercise of or in exchange for such
securities at the initial conversion, exercise or
exchange rate.
The adjustment shall be made successively whenever any such issuance is
made, and shall become effective immediately after such issuance.
If all of the Common Stock deliverable upon conversion, exercise or
exchange of such securities has not been issued when such securities are no
longer outstanding, then the Exercise Price shall promptly be readjusted to the
Exercise Price which would then be in effect had the adjustment upon the
issuance of such securities been made on the basis of the actual
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<PAGE>
number of shares of Common Stock issued upon conversion, exercise or exchange of
such securities.
This subsection (e) does not apply to:
(i) convertible, exercisable or exchangeable securities issued to
shareholders of any person which merges into the Company, or with a
subsidiary of the Company, in proportion to their stock holdings of such
person immediately prior to such merger, upon such merger,
(ii) convertible, exercisable or exchangeable securities issued in a
bona fide public offering pursuant to a firm commitment underwriting or
pursuant to agreements in effect on the date of issuance of this Warrant,
(iii) convertible, exercisable or exchangeable securities issued in a
bona fide private placement through a placement agent which is a member
firm of the National Association of Securities Dealers, Inc. (except to the
extent that any discount from the current market price attributable to
restrictions on transferability of Common Stock issuable upon conversion,
as determined in good faith by the Board of Directors and described in a
Board resolution which shall be filed with the Trustee, shall exceed 20% of
the then current market price) or
(iv) stock options issued to the Company's directors, officers or
employees.
(f) Adjustment for Tender or Exchange Offer. If the Company or any
Subsidiary of the Company consummates a tender or exchange offer for all or any
portion of the Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock, to the extent that the cash and value of any
other consideration included in such payment per share of Common Stock
(determined on an as-converted basis in the case of any such convertible,
exercisable or exchangeable securities so tendered or exchanged) exceeds the
average of the Quoted Prices (as defined in subsection (g) of this Section 6) of
the Common Stock for the five consecutive trading days (the "Adjustment Period")
commencing on the first trading day (such trading day, the "First Trading Day")
immediately following the last time tenders or exchanges may be made pursuant to
such tender or exchange offer (the "Expiration Time"), the Exercise Price shall
be adjusted in accordance with this formula:
E' = E x O x M
-----------
P + (A x M)
E' = the adjusted Exercise Price.
E = the current Exercise Price.
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<PAGE>
O = the number of shares of Common Stock outstanding immediately prior
to the Expiration Time, including, in the case of any tender or
exchange offer in respect of securities convertible into or
exercisable or exchangeable for Common Stock, any shares of Common
Stock issuable upon the conversion, exercise or exchange of such
securities.
M = the average of the Quoted Prices (as defined in subsection (g) of
this Section 6) of the Common Stock for the Adjustment Period.
P = the aggregate cash consideration and the fair market value of any
non-cash consideration payable to stockholders based on the number of
shares of Common Stock (or securities convertible into or exercisable
or exchangeable for Common Stock) tendered or exchanged (and not
withdrawn) in connection with the tender or exchange offer and
accepted by the Company. The Board of Directors shall determine the
fair market value of any non-cash consideration.
A = the number of shares of Common Stock outstanding at the time of
acceptance by the Company of any shares of Common Stock (or securities
convertible into or exercisable or exchangeable for Common Stock) so
tendered or exchanged and accepted by the Company, including, in the
case of any tender or exchange offer in respect of securities
convertible into or exercisable or exchangeable for Common Stock, any
shares of Common Stock issuable upon the conversion, exercise or
exchange of such securities.
The adjustment shall be made successively whenever any such tender or
exchange offer is made. To the extent a Warrant holder exercises such holder's
Warrant(s) prior to the conclusion of the Adjustment Period, any adjustment in
the number of Warrant Shares issuable upon exercise of such Warrant(s) shall be
for the benefit of the holder of record of such Warrant(s) at the close of
trading on the First Trading Day.
This subsection (f) does not apply to redemptions of securities pursuant to
redemption provisions contained in the certificate of designation pertaining to
such securities in effect at the time such securities were issued, whether such
redemptions are optional or mandatory.
(g) Current Market Price. In subsections (b), (c), (d) and (e) of this
Section 6, the current market price per share of Common Stock on any date is the
average of the Quoted Prices of the Common Stock for 30 consecutive trading days
commencing 45 trading days before the date in question. The "Quoted Price" of
the Common Stock is the last reported sales price of the Common Stock on any
national securities exchange on which the Common Stock is listed which shall be
for consolidated trading if applicable to such exchange, or if not so listed,
the last reported bid price of the Common Stock. In the absence of one or more
such quotations, the
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<PAGE>
Board of Directors of the Company shall determine the current market price on
such basis as it in good faith considers appropriate.
(h) Consideration Received. For purposes of any computation respecting
consideration received pursuant to subsections (d) and (e) of this Section 6,
the following shall apply:
(i) in the case of the issuance of shares of Common Stock for cash,
the consideration shall be the amount of such cash, provided that in no
case shall any deduction be made for any commissions, discounts or other
expenses incurred by the Company for any underwriting of the issue or
otherwise in connection therewith;
(ii) in the case of the issuance of shares of Common Stock for a
consideration in whole or in part other than cash, the consideration other
than cash shall be deemed to be the fair market value thereof as determined
in good faith by the Company's Board of Directors (irrespective of the
accounting treatment thereof), whose determination shall be conclusive and
described in a Board resolution; and
(iii) in the case of the issuance of securities convertible into or
exercisable or exchangeable for shares, the aggregate consideration
received therefor shall be deemed to be the consideration received by the
Company for the issuance of such securities plus the additional minimum
consideration, if any, to be received by the Company upon the conversion,
exercise or exchange thereof (the consideration in each case to be
determined in the same manner as provided in clauses (i) and (ii) of this
subsection).
(i) When De Minimis Adjustment May Be Deferred. No adjustment in the
Exercise Price need be made unless the adjustment would require an increase or
decrease of at least 1% in the Exercise Price. Any adjustments that are not made
shall be carried forward and taken into account in any subsequent adjustment.
All calculations under this Section 6 shall be made to the nearest cent or
to the nearest 1/100th of a share, as the case may be.
(j) When No Adjustment Required. No adjustment need be made for a
transaction referred to in subsections (a), (b),(c), (d), (e) or (f) of this
Section 6 if Warrant holders are to participate in the transaction on a basis
and with notice that the Board of Directors determines to be fair and
appropriate in light of the basis and notice on which holders of Common Stock
participate in the transaction.
No adjustment need be made for (i) a transaction referred to in subsections
(b), (d) or (e) of this Section 6 if the below market portion of such issuances,
taken together with the below market portions all other issuances and with the
above market portions of all tender or exchange offers described in clause (ii)
of this paragraph made on and after the date of this Agreement, is less than
2.0% of the Total Market Capitalization of the Company (determined by reference
to the sum of the percentages of Total Market Capitalization of the Company
attributable
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<PAGE>
to each such transaction on the date thereof) and (ii) a transaction referred to
in subsection (f) of this Section 6 if the above market portion of such tender
or exchange offers, taken together with the above market portions of all other
tender or exchange offers and with the below market portions of all issuances
described in clause (i) of this paragraph made on or after the date of this
Agreement, is less than 2.0% of the Total Market Capitalization of the Company
(determined by reference to the sum of the percentages of Total Market
Capitalization of the Company attributable to each such transaction on the date
thereof). For purposes of this Agreement, the Total Market Capitalization of the
Company shall mean as of any day of determination, the sum of (a) the
consolidated indebtedness of the Company and its subsidiaries on such day plus
(b) the product of (i) the Company's aggregate number of outstanding primary
shares of Common Stock on such day (which shall not include any options or
warrants on, or securities convertible or exchangeable into, shares of Common
Stock other than, any shares of preferred stock of the Company, that, as of the
day of determination, cannot, pursuant to the terms thereof as in effect on the
date of this Warrant, be required to be redeemed by the Company in cash), and
(ii) the average closing price of such Common Stock over the 20 consecutive
trading days immediately preceding such day, plus (c) the liquidation value of
any outstanding shares of preferred stock of the Company on such day. If no such
closing price exists with respect to shares of any such class, the value of such
shares for purposes of clause (b) for the preceding sentence shall be determined
by the Company's Board of Directors in good faith.
No adjustment need be made for a change in the par value, or from par value
to no par value, or from no par value to par value, of the Common Stock.
To the extent the Warrants become convertible into cash, no adjustment need
be made thereafter as to the cash. Interest will not accrue on the cash.
(k) Voluntary Reduction. The Company from time to time may, as the Board of
Directors deems appropriate, reduce the Exercise Price by any amount for any
period of time if the period is at least 20 days and if the reduction is
irrevocable during the period; provided that in no event may the Exercise Price
be less than the par value of a share of Common Stock.
Whenever the Exercise Price is reduced, the Company shall mail to Warrant-
holders a notice of the reduction. The Company shall mail the notice at least 15
days before the date the reduced Exercise Price takes effect. The notice shall
state the reduced Exercise Price and the period it will be in effect.
A voluntary reduction of the Exercise Price pursuant to this Section 6(k),
other than a reduction which the Company has irrevocably committed will be in
effect for so long as any Warrants are outstanding, does not change or adjust
the Exercise Price otherwise in effect for purposes of subsections (a), (b),
(c), (d), (e) and (f) of this Section 6.
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<PAGE>
(l) Reorganization of the Company.
(i) If the Company consolidates or merges with or into, or transfers or
leases all or substantially all its assets to, any person, upon consummation of
such transaction this Warrant shall automatically become exercisable for the
kind and amount of securities, cash or other assets which the holder of a
Warrant would have owned immediately after the consolidation, merger, transfer
or lease if the holder had exercised the Warrant immediately before the
effective date of the transaction. Concurrently with the consummation of such
transaction, the corporation formed by or surviving any such consolidation or
merger if other than the Company, or the person to which such sale or conveyance
shall have been made (any such person, the "Successor Entity"), shall enter into
a supplemental agreement so providing and further providing for adjustments
which shall be as nearly equivalent as may be practical to the adjustments
provided for in this Section 6. The Successor Entity shall mail to the Warrant
holder a notice describing the supplemental agreement. If the issuer of
securities deliverable upon exercise of this Warrant under the supplemental
agreement is an affiliate of the formed, surviving, transferee or lessee
corporation, that issuer shall join in the supplemental agreement.
(ii) If this subsection (l) applies, subsections (a), (b), (c), (d), (e)
and (f) of this Section 6 do not apply.
(m) Company Determination Final. Any determination that the Company or the
Board of Directors must make pursuant to subsection (a), (c), (d), (e), (f),
(g), (h) or (j) of this Section 6 may be challenged in good faith by
Warrantholders that hold Warrants entitling them to purchase at least 50% of the
Warrant Shares (the "Majority Warrantholders") by providing the Company written
notice of such challenge within ten (10) business days of the Company providing
Warrantholders notice of such determination. Any such challenge shall be
resolved by an investment banking firm selected by the Company and reasonably
acceptable to the Majority Warrantholders, which resolution shall be conclusive
and binding on the Company and the Warrantholders.
(n) When Issuance or Payment May Be Deferred. In any case in which this
Section 6 shall require that an adjustment in the Exercise Price be made
effective as of or immediately after a record date for a specified event, the
Company may elect to defer until the occurrence of such event (i) issuing to the
holder of any Warrant exercised after such record date the Warrant Shares and
other capital stock of the Company, if any, issuable upon such exercise over and
above the Warrant Shares and other capital stock of the Company, if any,
issuable upon such exercise on the basis of the Exercise Price prior to such
adjustment and (ii) paying to such holder any amount in cash in lieu of a
fractional share pursuant to Section 7.8 hereof; provided that the Company shall
deliver to such holder a due bill or other appropriate instrument evidencing
such holder's right to receive such additional Warrant Shares, other capital
stock and cash upon the occurrence of the event requiring such adjustment.
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<PAGE>
(o) Adjustment in Number of Shares. Upon each adjustment of the Exercise
Price pursuant to this Section 6, this Warrant shall thereafter evidence the
right to receive upon payment of the adjusted Exercise Price that number of
shares of Common Stock (calculated to the nearest hundredth) obtained from the
following formula:
N'= N x E
---
E'
where:
N' = the adjusted number of Warrant Shares issuable upon
exercise of a Warrant by payment of the adjusted
Exercise Price.
N = the number of Warrant Shares previously issuable
upon exercise of this Warrant by payment of the
Exercise Price prior to adjustment.
E' = the adjusted Exercise Price.
E = the Exercise Price prior to adjustment.
(p) Certificate as to Adjustments. Upon the occurrence of each adjustment
or readjustment of the Exercise Price or number of Warrant Shares issuable upon
exercise hereof pursuant to this Section 6, the Company, at its expense, shall
promptly compute such adjustment or readjustment in accordance with the terms
hereof and prepare and furnish to each Warrantholder a certificate prepared by
the Company (or by a firm of independent public accountants of recognized
standing selected by the Board of Directors of the Company (who may be the
regular auditors of the Company) if such accountants are required to deliver a
similar certificate pursuant to Section 18(a) of that certain Warrant Agreement
dated as of June 30, 1995 by and between the Company and IBJ Schroder Bank &
Trust Company, as Warrant Agent) setting forth such adjustment or readjustment
and showing in reasonable detail the method of calculation and the facts upon
which such adjustment or readjustment is based. The Company shall, upon the
written request at any time of any Warrantholder, furnish or cause to be
furnished to such holder a like certificate setting forth (i) such adjustment
and readjustment, (ii) the Exercise Price at the time in effect, and (iii) the
number of shares of Common Stock and the amount, if any, of other property which
at the time would be received upon the exercise of this Warrant.
SECTION 7. Miscellaneous.
7.1 Entire Agreement. This Warrant constitutes the entire agreement between
the Company and the Warrantholder with respect to this Warrant and Warrant
Shares.
7.2 Binding Effects; Benefits. This Warrant shall inure to the benefit of
and shall be binding upon the Company, the Warrantholder and holders of Warrant
Shares and their respective heirs, legal representatives, successors and
assigns. Nothing in this Warrant, expressed or
16
<PAGE>
implied, is intended to or shall confer on any person other than the Company,
the Warrantholder and holders of Warrant Shares, or their respective heirs,
legal representatives, successors or assigns, any rights, remedies, obligations
or liabilities under or by reason of this Warrant or the Warrant Shares.
7.3 Amendments and Waivers. This Warrant may not be modified or amended
except by an instrument in writing signed by the Company and the Majority
Warrantholders. The Company, any Warrantholder or holders of Warrant Shares may,
by an instrument in writing, waive compliance by the other party with any term
or provision of this Warrant on the part of such other party hereto to be
performed or complied with. The waiver by any such party of a breach of any term
or provision of this Warrant shall not be construed as a waiver of any
subsequent breach.
7.4 Section and Other Headings. The section and other headings contained in
this Warrant are for reference purposes only and shall not be deemed to be a
part of this Warrant or to affect the meaning or interpretation of this Warrant.
7.5 Further Assurances. Each of the Company, the Warrantholders and holders
of Warrant Shares shall do and perform all such further acts and things
(including, without limitation, any required filings under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended) and execute and deliver all such
other certificates, instruments and/or documents (including without limitation,
such proxies and/or powers of attorney as may be necessary or appropriate) as
any party hereto may, at any time and from time to time, reasonably request in
connection with the performance of any of the provisions of this Warrant.
7.6 Notices. All demands, requests, notices and other communications
required or permitted to be given under this Warrant shall be in writing and
shall be deemed to have been duly given if delivered personally or sent by
United States certified or registered first class mail, postage prepaid, to the
parties hereto at the following addresses or at such other address as any party
hereto shall hereafter specify by notice to the other party hereto:
(a) if to the Company, addressed to:
Geotek Communications, Inc.
20 Craig Road
Montvale, New Jersey 07645
Attention: President
(b) if to any Warrantholder or holder of Warrant Shares, addressed to
the address of such person appearing on the books of the Company.
Except as otherwise provided herein, all such demands, requests, notices
and other communications shall be deemed to have been received on the date of
personal delivery thereof or on the third business day after the mailing
thereof.
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<PAGE>
7.7 Separability. Any term or provision of this Warrant which is invalid or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such invalidity or unenforceability without rendering invalid
or unenforceable any other term or provision of this Warrant or affecting the
validity or enforceability of any of the terms or provisions of this Warrant in
any other jurisdiction.
7.8 Fractional Shares. No fractional shares or scrip representing
fractional shares shall be issued upon the exercise of this Warrant. With
respect to any fraction of a share called for upon any exercise hereof, the
Company shall pay to the Warrantholder an amount in cash equal to such fraction
multiplied by the current market price (as determined as of the date of
exercise, and with reference to the applicable trading market, in accordance
with Section 1.1(a)(ii)) of a share of such stock as of the date of such
exercise.
7.9 Rights of the Holder. The Warrantholder shall not, solely by virtue of
this Warrant, be entitled to any rights of a stockholder of the Company, either
at law or in equity.
7.10 Governing Law; Jurisdiction.
(a) This Warrant shall be governed by and construed in accordance with the
laws of the State of New York, without regard to such State's internal conflicts
of laws principles.
(b) Jurisdiction. With respect to any suit, action or preceding relating to
this Warrant, the Company irrevocably (i) submits to the non-exclusive
jurisdiction of the courts in the State of New York and the United States
District court located in the Borough of Manhattan in New York City; and (ii)
waives any objection which it may have at any time to the laying of venue of any
such suit, action or proceeding brought in any such court, waives any claim that
any such suit, action or proceeding has been brought in an inconvenient forum
and further waives the right to object with respect to any such suit, action or
proceeding that such court does not have any jurisdiction over it.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
18
<PAGE>
Nothing contained in this Section 7.10 shall limit or impair the right of a
Warrantholder to institute any suit, action, motion or proceeding in any other
court of competent jurisdiction, nor shall the taking of any suit, action or
proceeding in one or more jurisdictions preclude the taking of proceedings in
any other jurisdiction, whether concurrently or not.
(c) Service of Process. The Company irrevocably appoints the following
process agent to receive, for it and on its behalf, service of process in any
suit, action or proceeding relating to this Warrant: CT Corporation System, 1633
Broadway, New York, New York 10019. If for any reason the Company's process
agent is unable to act as such, the Company will promptly notify the
Warrantholders and within thirty (30) days appoint a substitute process agent
acceptable to the Majority Warrantholders. Nothing in this Agreement will affect
the right of a Warrantholder to serve process in any other manner permitted by
law.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by its
duly authorized officer.
GEOTEK COMMUNICATIONS, INC.
By:_______________________________________
Name:
Title:
Dated: April 4, 1996
19
<PAGE>
ASSIGNMENT
(To be executed only upon assignment of Warrant Certificate)
For value received, ____________________ hereby sells, assigns and
transfers unto _____________________ the within Warrant Certificate, together
with all right, title and interest therein, and does hereby irrevocably
constitute and appoint _________________ attorney, to transfer said Warrant
Certificate on the books of the within-named Company with respect to the number
of Warrants set forth below, with full power of substitution in the premises:
Name(s) of
Assignee(s) Address No. of Warrant Shares
----------- ------- ---------------------
And if said number of Warrants shall not be all the Warrants represented by the
Warrant Certificate, a new Warrant Certificate is to be issued in the name of
said undersigned for the balance remaining of the Warrants represented by said
Warrant Certificate.
Dated: ________________, 19___
--------------------------------------------------
Note: The above signature should correspond
exactly with the name on the face of this
Warrant Certificate.
20
<PAGE>
SUBSCRIPTION FORM
(To be executed upon exercise of Warrant
pursuant to Section 1.1(a))
The undersigned hereby irrevocably elects to exercise the right of purchase
represented by the within Warrant Certificate for, and to purchase thereunder,
shares of Common Stock, as provided for therein, and delivers payment in full of
the Exercise Price in the amount of $ __________ as follows:
Cash $___________
Certified or Official bank check $___________
Please issue a certificate or certificates for such Common Stock in the
name of, and pay any cash for any fractional share to:
Name: ______________________________________
Address: ______________________________________
______________________________________
Social Security No.: ______________________________________
(Please Print Name, Address and Social Security No.)
Signature: ________________________________________
NOTE: The above signature should
correspond exactly with
the name on the first
page of this Warrant
Certificate or with the
name of the assignee
appearing in the
assignment form delivered
herewith.
And if said number of shares shall not be all the shares purchasable under
the within Warrant Certificate, a new Warrant Certificate is to be issued in the
name of said undersigned for the balance remaining of the shares purchasable
thereunder rounded up to the next higher number of shares.
21
Exhibit 23.1
[LETTERHEAD OF COOPERS & LYBRAND L.L.P]
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this Registration Statement of
Geotek Communications, Inc. (the "Company") on Form S-3 of our report, which
includes a reference to the report of other auditors, dated March 26, 1996, on
our audits of the consolidated financial statements and consolidated financial
statement schedule of Geotek Communications, Inc. and Subsidiaries as of
December 31, 1995 and 1994, and for the years ended December 31, 1995, 1994 and
1993, which report is included in the Company's Annual Report on Form 10-K. We
also consent to the reference to our firm under the caption "Experts" in this
registration statement.
/s/ Coopers & Lybrand L.L.P.
- ----------------------------
COOPERS & LYBRAND L.L.P.
New York, New York
July 19, 1996
Exhibit 23.2
[LETTERHEAD OF SHACHAK PEER REZNICK & CO.]
CONSENT OF INDEPENDENT ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this Registration Statement of Geotek Communications, Inc. (the
"Company") on Form S-3 of our report, dated March 26, 1996, with respect to the
financial statements of PowerSpectrum Technology Ltd. ("PST") as of December 31,
1995 and 1994, and for the years ended December 31, 1995 and 1994 and the
fifteen month period ended December 31, 1993, which report is included in the
annual report of the Company on Form 10-K for the fiscal year ended December 31,
1995.
/s/ Shachak Peer Reznick & Co.
- ------------------------------
Shachak Peer Reznick & Co.
Certified Public Accountants (Isr.)
July 18, 1996
Tel Aviv, Israel
Exhibit 23.3
[LETTERHEAD OF COOPERS & LYBRAND]
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this Registration Statement on
Form S-3 of Geotek Communications, Inc. (the "Company") of our report dated
March 27, 1996 on our audits of the financial statements of National Band Three
Limited as of December 31, 1995 and 1994, and for the years ended December 31,
1995 and 1994, which report is included in the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1995.
.
/s/ Coopers & Lybrand
- ---------------------
Coopers & Lybrand
London, United Kingdom
July 19, 1996
Exhibit 23.4
[LETTERHEAD OF COOPERS & LYBRAND L.L.P.]
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this Registration Statement on
Form S-3 of Geotek Communications, Inc. (the "Company") of our reports dated
March 21, 1996 with respect to the consolidated financial statements of Bogen
Communications International, Inc. (formerly European Gateway Acquisition Corp.)
as of December 31, 1995 and 1994, and for each of the three years in the period
ended December 31, 1995, which reports are included in the annual report of the
Company on Form 10-K for the fiscal year ended December 31, 1995.
/s/ Coopers & Lybrand L.L.P.
Coopers & Lybrand L.L.P.
New York, New York
July 18, 1996
Exhibit 23.5
[LETTERHEAD OF KPMG]
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors and Stockholders
Band Three Radio Limited
We consent to the incorporation by reference in this Registration Statement on
Form S-3 of Geotek Communications, Inc. (the "Company") of our report dated 15
July 1991, relating to the Band Three Radio Limited statements of the net loss
and cash flows for the year ended 31 March 1991, which report was included in
the Current Report on Form 8-K/A of the Company, dated June 18, 1993.
/s/ KPMG
- ----------------
KPMG
Reading, England
18 July 1996
Exhibit 23.6
[LETTERHEAD OF COOPERS & LYBRAND GmbH]
CONSENT OF INDEPENDENT AUDITORS RELATING TO
PREUSSAG BUNDELFUNK GMBH, SALZGITTER/GERMANY
As independent auditors, we hereby consent to the incorporation by reference in
this Registration Statement of Geotek Communications, Inc. (the "Company") on
Form S-3 of our report, dated August 30, 1994, relating to the balance sheet of
Preussag Bundelfunk GmbH as of September 30, 1993 and the related statement of
operations, shareholders' equity and cash flow for the year then ended, which
report was included in the Current Report on Form 8-K of the Company, dated July
5, 1994, as amended.
Hannover,
July 18, 1996
/s/ Coopers & Lybrand GmbH
--------------------------
Coopers & Lybrand GmbH
Wirtschaftsprufungsgesellschaft
Exhibit 23.7
[LETTERHEAD OF
ALTENBURG & TEWES AG]
Consent of Independent Accountants
We consent to the incorporation by reference in this Registration Statement on
Form S-3 of Geotek Communications, Inc. (the "Company") of our report dated
September 6, 1994, on our audit of the financial statements of DBF Bundelfunk
GmbH & Co. Betriebs-KG as of December 31, 1993, and for the year ended December
31, 1993, which report appears in the Company's Current Report on Form 8-K dated
August 2, 1994, as amended.
Wuppertal, July 18, 1996
ALTENBURG & TEWES AG
WIRTSCHAFTSPRUFUNGSGESELLSCHAFT
former
DUSSELDORFER TREUHAND-GESELLSCHAFT
ALTENBURG & TEWES AG
WIRTSCHAFTSPRUFUNGSGESELLSCHAFT
STEUERBERATUNGSGESELLSCHAFT
/s/ Spielberg
- -------------
Spielberg
Wirtschaftsprufer
Exhibit 23.8
[LETTERHEAD OF DELOITTE & TOUCHE]
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement on
Form S-3 of Geotek Communications, Inc. (the "Company") of (i) our report dated
June 10, 1993 with respect to the financial statements of National Band Three
Limited (ii) our report dated November 24, 1992 with respect to the financial
statements of GEC-Marconi Communications Networks Limited and (iii) our report
dated January 27, 1993 with respect to the financial statements of Vodanet
Limited, each appearing in the Current Report on Form 8K/A of the Company, dated
June 18, 1993.
/s/ Deloitte & Touche
- ---------------------
Deloitte & Touche
London, England
22 July 1996
