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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of THE SECURITIES
EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) June 20, 1996
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GEOTEK COMMUNICATIONS, INC.
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(Exact name of registrant as specified in charter)
<TABLE>
<CAPTION>
<S> <C> <C>
Delaware 0-17581 22-2358635
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(State or other juris- (Commission File Number) (IRS Employer Identi-
diction of incorporation) fication No.)
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20 Craig Road, Montvale, New Jersey 07645
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 201-930-9305
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N/A
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(Former name or former address, if changed since last report.)
Exhibit Index appears at Page 5
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Item 5. Other Events
On June 20, 1996, pursuant to several Subscription Agreements
(collectively, the "Subscription Agreement") between Geotek Communications, Inc.
(the "Company") and the signatories thereto, including among others, Renaissance
Fund LDC, Charles Bronfman Family Trust, The Kolber Trust and S-C Rig
Investments - III, L.P. (collectively, the "Series N Investors"), the Company
sold 55,000 units (the "Units") for an aggregate purchase price of $55,000,000.
Each Unit consists of (i) one share of the Company's Series N Cumulative
Convertible Preferred Stock (the "Series N Stock") and (ii) warrants (the
"Warrants") to purchase thirty (30) shares of the Company's common Stock, $.01
par value per share ("Common Stock"). A form of Subscription Agreement is
attached hereto as Exhibit (c)(1).
As set forth in the Certificate of Designation of Series N Cumulative
Convertible Preferred Stock (the "Certificate of Designation"), the Series N
Stock is convertible at any time by the holder thereof into shares of Common
Stock at a price of $11.00 per share of Common Stock. The Company is able, at
its option, to call the Series N Stock for mandatory conversion at any time
after the June 20, 1998 in the event the average closing price of the Common
Stock is greater than $17.75 (subject to certain adjustments for the number of
shares outstanding) for any twenty consecutive trading days. In addition, annual
dividends on the Series N Stock accrue at the rate of 10% and are payable
quarterly in shares of Common Stock until all the shares of Series N Stock have
been converted. Each share of Series N Stock entitles the holder thereof to
certain voting rights, including the right to vote on all matters voted on by
holders of Common Stock as if such Series N Stock had already been converted. A
copy of the Certificate of Designation is attached hereto as Exhibit (c)(2).
The Warrants are exercisable at any time before the June 20, 2001 to
purchase shares of Common Stock at an exercise price of $11 per share (subject
to adjustment in certain circumstances). A Form of Warrant is attached hereto as
Exhibit (c)(3).
Pursuant to the Subscription Agreement, the Company has agreed to file
registration statements under the Securities Act of 1933, as amended (the
"Securities Act") with respect to the shares of Common Stock issuable (i) with
respect to dividends payable on the Series N Stock, (ii) upon conversion of the
Series N Stock and (iii) upon exercise of the Warrants. If the Company fails to
register such shares of Common Stock or otherwise comply with the procedures set
forth in the Subscription Agreement within the time periods prescribed by the
Subscription Agreement, the Company will be subject to substantial monetary
penalties.
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Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(c) Exhibits
(1) Form of Subscription Agreement
(2) Certificate of Designation of Series N Cumulative
Convertible Preferred Stock
(3) Form of Warrant
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
GEOTEK COMMUNICATIONS, INC.
Date: June 26, 1996 By: /s/ Robert Vecsler
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Name: Robert Vecsler
Title: Secretary and General Counsel
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EXHIBIT INDEX
Exhibit No.
(c)(1) Form of Subscription Agreement
(c)(2) Certificate of Designation of Series N Cumulative Convertible
Preferred Stock
(c)(3) Form of Warrant
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SUBSCRIPTION AGREEMENT
THIS SUBSCRIPTION AGREEMENT, by and between Geotek Communications,
Inc., a Delaware corporation (the "Company"), and the subscribers whose name and
signature appear on the signature page hereof (together with any assignees
pursuant to any assignment which is permitted under Section 2.5 hereof and which
occurs prior to the closing hereunder, the "Subscribers"), is made as of June
14, 1996.
In consideration of the mutual covenants and agreements contained
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, intending to
be legally bound hereby, agree as follows:
ARTICLE 1. Subscription for Units
1.1 Subscription. Each Subscriber hereby subscribes for such number of
units ("Units") as set forth above such Subscriber's name on the signature page
hereof (the "Subscription"). Each Unit consisting of (i) one (1) share (the
"Preferred Shares") of the Company's Series N Cumulative Convertible Preferred
Stock, $.01 par value per share ("Series N Preferred Stock") and (ii) a warrant
("Warrant") to purchase thirty (30) shares of the Company's common stock, par
value $.01 per share ("Common Stock"). The Subscriber understands that the
subscription price is one thousand dollars ($1000.00) per Unit. A description of
the designations, powers, preferences and rights of the Series N Preferred Stock
is set forth in the Certificate of Designation of the Series N Preferred Stock,
a copy of which is attached hereto as Exhibit A (the "Certificate of
Designation"). The terms of the Warrant are set forth in the form of Warrant
attached hereto as Exhibit B.
1.2 Payment of Capital Contribution. On the Closing Date (as defined
herein), the Subscriber shall deliver, by certified check or wire transfer, the
amount of one thousand dollars ($1000.00) per Unit subscribed, being the
Subscriber's full Subscription hereunder as set forth on the signature page
hereof, and the Company shall deliver to the Subscriber a certificate
representing the number of Preferred Shares and such number of Warrants
subscribed to and accepted pursuant hereto.
1.3 Conditions to Acceptance of Subscription. The Subscriber
acknowledges that the Company is offering (the "Offering") for sale from time to
time, solely to "accredited investors" (as defined herein), a minimum of
forty-five thousand (45,000) Units to be subscribed for on or prior to May 28,
1996 and a maximum of fifty-five thousand (55,000) Units to be subscribed for on
or prior to June 15, 1996, at the subscription price of one thousand dollars
($1000.00) per Unit. Purchasers of Units in the Offering are referred to herein
as "Investors."
1.4 Closing. Subject to the satisfaction or waiver of the conditions
set forth herein, the closing of the purchase and sale of the Units (the
"Closing") shall take place at the offices of Klehr, Harrison, Harvey, Branzburg
& Ellers, 1401 Walnut Street, Philadelphia, Pennsylvania 19102 at 10:00 A.M., on
June 20, 1996 (the "Closing Date") or at such other place and time and date as
may
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be mutually agreed; provided, however, that in the event a Subscriber in the
Offering is required to file a premerger notification under the HSR Act (as
defined herein), the Closing Date shall be extended to the third business day
following the expiration or earlier termination of the waiting period with
respect to such filing.
ARTICLE 2. Representations and Agreements of the Subscriber
2.1 Receipt of Materials. The Subscriber hereby acknowledges receipt of
copies of the Company's (i) Annual Report on Form 10-K for the fiscal year ended
December 31, 1995 (excluding exhibits), (ii) Quarterly Report on Form 10-Q for
the fiscal quarter ended March 31, 1996, (iii) proxy statement (as supplemented,
the "Proxy Statement") relating to the Company's 1996 annual meeting of
stockholders, (iv) all Current Reports on Form 8-K filed since December 31, 1995
and (v) registration statement on Form S-3 (Reg. No. 333-02849) (the "S-3")
filed with the Securities and Exchange Commission (the "SEC") on April 25, 1996.
All such documents being referred to herein as the "Materials".
2.2 Agreement Not To Sell Securities. The Subscriber hereby
acknowledges, understands and agrees that:
(a) Except as provided in Article 4 hereof, the Units,
Preferred Shares, Warrants and shares of Common Stock issuable (A) upon
conversion of, and as a dividend on, the Preferred Shares in accordance with the
provisions of the Certificate of Designation (collectively, the "Conversion
Shares") and (B) upon exercise of the Warrants in accordance with the terms and
provisions of the Warrants (the "Warrant Shares" and collectively with the
Conversion Shares, the "Common Shares" and collectively with the Units,
Preferred Shares and Warrants, the "Securities") have not been and are not being
registered under the Securities Act or any state securities laws, and may not be
transferred unless (X) subsequently registered thereunder, or (Y) the Subscriber
shall have delivered to the Company an opinion of counsel (which opinion and
counsel shall be reasonably acceptable to the Company) to the effect that the
Securities to be sold or transferred may be sold or transferred pursuant to an
exemption from such registration, or (Z) sold pursuant to Rule 144 promulgated
under the Securities Act (or a successor rule).
(b) The Preferred Shares, Warrants and, until such time as the
Common Shares have been sold pursuant to a registration statement pursuant to
the Securities Act or otherwise sold by Subscriber pursuant to Rule 144 under
the Securities Act (or any successor rule thereto), the certificates for the
Common Shares, may bear a restrictive legend in substantially the following form
(and a stop-transfer order may be placed against transfer of the certificates
for such securities):
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"The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended. The securities
may not be sold, transferred or assigned in the absence of an effective
registration statement for the securities under said Act, or an opinion
of counsel, in form, substance and scope reasonably acceptable to the
Company, that registration is not required under said Act or unless
sold pursuant to Rule 144 under said Act."
2.3 Acknowledgments. The Subscriber hereby acknowledges, understands
and agrees that:
(a) No Federal or state agency has made any findings or
determination as to the fairness of the Offering of the Units for public
investment, or any recommendation or endorsement of the Units. The Subscriber
acknowledges that the Units are being purchased for its own account, not as a
nominee or agent, for investment and not for distribution or resale of any part
thereof to others. The Subscriber acknowledges that the Company has made
available at a reasonable time prior to its investment the opportunity to ask
questions and receive answers concerning the terms and conditions of the
Offering and to obtain any additional information which the Company possesses or
can acquire without unreasonable effort or expense that is necessary to evaluate
an investment in the Company or to verify the accuracy of the information set
forth in the Materials.
(b) None of the Securities have been registered under the
Securities Act and the Subscriber must bear the economic risk of the investment
indefinitely (subject to the rights set forth in Article 4 hereof) because none
of the Securities may be sold except in accordance with Section 2.2 above and
Article 4 hereof.
(c) The Securities are subject to the particular investment
restrictions and conditions established by various states and the Subscriber
shall comply with the restrictions and conditions which are applicable in the
Subscriber's state of residence.
(d) Arnhold and S. Bleichroeder, Inc. (the "Placement Agent")
has acted as placement agent on behalf of the Company with respect to the
Offering. As compensation for its services, the Company has agreed to pay the
Placement Agent a fee equal to three percent (3.0%) of the gross proceeds of the
Offering, payable upon consummation of the Offering.
2.4 Representation and Warranties. Each Subscriber hereby further
severally represents and warrants that:
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(a) The Subscriber understands that there is no established
market for the Preferred Shares or Warrants and that no public market for the
Preferred Shares or Warrants is currently foreseeable.
(b) The Subscriber is acquiring the Units for its own account
for investment purposes only and not with a view to the resale or distribution
thereof.
(c) The Subscriber has not and will not, directly or
indirectly, offer, sell, transfer, assign, exchange or otherwise dispose of all
or any part of the Units, except in accordance with the provisions of this
Subscription Agreement, the Certificate of Designation or the Warrants, as
applicable, as long as such documents remain in effect.
(d) The Subscriber is acquiring the Units without having
relied upon any offering literature or prospectus other than the Materials. The
Subscriber has such knowledge and experience in financial, business and tax
matters that the Subscriber is capable of evaluating the merits and risks
relating to the Subscriber's investment in the Securities and making an
investment decision with respect to the Company.
(e) To the full satisfaction of the Subscriber, the Subscriber
has been given the opportunity to obtain information and documents relating to
the Company and to ask questions of and receive answers from representatives of
the Company concerning the Company and the investment in the Securities.
(f) The Subscriber has adequately analyzed the risks of an
investment in the Securities and it has determined that the Securities are a
suitable investment for the Subscriber and that the Subscriber is able at this
time, and in the foreseeable future, to bear the economic risk of a total loss
of its investment in the Company.
(g) The Subscriber is aware that there are substantial risks
attendant to an investment in the Securities, including those summarized under
"Risk Factors" in the S-3.
(h) In the case of each Subscriber other than Todd Investments
Limited, the Subscriber is an "accredited investor" within the meaning of Rule
501 of Regulation D of the Act as presently in effect and is purchasing the
Securities for its own account and the Subscriber has not been formed for the
specific purpose of acquiring the Securities.
(i) Todd Investments Limited further represents, warrants and
covenants as follows:
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(i) It is not a U.S. Person (as defined in Rule
902(o) of Regulation S of the Securities Act ("Regulation S")) and is not an
affiliate of the Company.
(ii) This transaction constitutes an "offshore
transaction" (as defined in Regulation S).
(iii) At the time the Units were offered to it and
at the time of its execution of this Subscription Agreement, it was located
outside the United States.
(iv) It understands that the Securities have not
been and until registered under the Securities Act may only be offered or sold
pursuant to registration under the Securities Act or an available exemption
therefrom. It further understands that the certificates representing the
Preferred Shares, Warrants and Common Shares issued to it may bear a legend (the
"Legend") to the effect of the foregoing, and further that the Securities issued
to it may not be offered for sale, sold or otherwise transferred during the
Restricted Period (as defined below) except pursuant to Regulation S. Following
the expiration of the Restricted Period, unless prohibited by applicable law,
the Company will remove or will promptly instruct its transfer agent to remove
the Legend from the Preferred Shares and Warrants and, if applicable, the Common
Shares issued during the Restrictive Period (and will instruct its transfer
agent to issue without the Legend, any Common Shares issuable as dividends with
respect to, or upon conversion of, the Preferred Shares or upon exercise of the
Warrants occurring after the Restricted Period).
(v) It:
(A) will not, during the period commencing
on the Closing and ending on the later to occur of (x) the day 40 days after the
Closing Date or (y) the date it is entitled to sell the Common Shares pursuant
to an effective registration statement (the "Restricted Period"), offer to sell
the Securities in the United States, to a U.S. Person or to any person acting
for the account or benefit of a U.S. Person or other than in accordance with
Rule 904 of Regulation S;
(B) will, after the expiration of the
Restricted Period, offer, sell, pledge or otherwise transfer the Securities only
pursuant to registration under the Securities Act or an available exemption
therefrom or pursuant to Regulation S and, in any case, in accordance with
applicable state securities laws; and
(C) does not have any present plan or
intention to sell any Securities in the United States or to a U.S. Person.
(vi) The purchase by it contemplated by this
Subscription Agreement:
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(A) has not been pre-arranged by it with a
purchaser who is located in the United States or is a U.S. Person; and
(B) is not part of a plan or scheme by it
to evade the registration provisions of the Securities Act.
(j) The Subscriber understands that the Units, Preferred
Shares and Warrants are being offered and sold to it in reliance upon specific
exemptions from the registration requirements of United States federal and state
securities laws and that the Company is relying upon the truth and accuracy of,
and the Subscriber's compliance with, the representations, warranties,
agreements, acknowledgments and understandings of the Subscriber set forth
herein in order to determine the availability of such exemptions and the
eligibility of the Subscriber to acquire the Units, Preferred Shares and
Warrants. Each Subscriber hereby severally agrees to indemnify and hold harmless
the Company, the Placement Agent and all Persons deemed to be in control of any
of the foregoing from and against any and all damage, loss, liability and
expense (including, without limitation, reasonable expenses of investigation and
attorneys' fees and expenses in connection with any action, suit or proceeding
brought against the Company) incurred or suffered by the Company out of the
inaccuracy of any of the representations or warranties made by the Subscriber in
this Article 2; provided, however, that in no event shall Todd Investments
Limited's indemnity obligation hereunder exceed the aggregate purchase price
paid by Todd Investments Limited for the Units purchased by it hereunder. All
such representations shall survive the delivery of the Materials and the
purchase by the Subscriber of any Securities until the second anniversary of the
Closing Date. The Company shall give prompt written notice to the Subscriber of
the assertion of any claim for which indemnity may be sought hereunder,
specifying with reasonable particularity the basis therefor, together with any
supporting information reasonably requested by the Subscriber, and the amount of
the damage, loss, liability or expense. If any amount is due by the Subscriber
to the Company pursuant to this paragraph, the Subscriber will make such payment
not later than 60 days after receipt by the Subscriber of notice of the amount
due.
The foregoing representations and warranties and all other
information which the Subscriber has provided to the Company concerning itself
and its financial condition are true and accurate as of the date hereof and
shall be true and accurate as of the date of Closing. If in any respect such
representations, warranties or information shall not be true and accurate at any
time prior to the Closing, the Subscriber will give written notice of such fact
to the Company specifying which representations, warranties or information are
not true and accurate and the reasons therefor.
2.5 Transferability. Without the Company's consent (which shall not be
unreasonably withheld), the Subscriber agrees not to transfer or assign this
Subscription Agreement or any interest herein and not to sell or assign the
Securities except in accordance with all applicable laws; provided, however,
that a Subscriber shall be allowed to transfer or assign this Subscription
Agreement or any
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interest herein, without the consent of the Company, to any of the following
(collectively, the "Permitted Assignees"):
(i) any investor in Renaissance Fund LDC, or any person
or entity affiliated or associated with an investor
in Renaissance Fund LDC;
(ii) (a) Charles R. Bronfman or any of his lineal
descendants and/or their spouses and/or any
trust established for the benefit of any one
or more of such persons;
(b) a partnership in which one or more of the
foregoing persons or entities owns a
majority equity interest; and
(c) any company directly or indirectly under the
control of one or more of the foregoing; or
(iii) (a) Jonathan Kolber, his siblings, his lineal
descendants and/or their spouses and/or any
trust established for the benefit of any one
or more of such persons;
(b) a partnership in which one or more of the
foregoing persons or entities owns a
majority equity interest; and
(c) any company directly or indirectly under the
control of one or more of the foregoing.
2.6 Execution Authorized. If this Subscription Agreement is executed on
behalf of a corporation, partnership, trust or other entity, the execution of
this Subscription Agreement in connection with the purchase of the Units has
been duly authorized, and this Subscription Agreement is binding upon such
corporation, partnership, trust or other entity.
2.7 HSR Act Compliance. For purposes of complying with any applicable
provisions of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR Act"), the Subscriber or the Company (as the case may be)
agrees to provide promptly to the other, upon the other's written request, all
reasonable requested information regarding itself which is necessary for the
requesting party to file any notifications or other information with the United
States Justice Department or Federal Trade Commission pursuant to the HSR Act.
In the event a Subscriber is required to file a premerger notification under the
HSR Act with respect to the transactions contemplated hereby, the Subscriber and
the Company shall promptly prepare and make all such required filings and shall
request early termination of the waiting period with respect thereto.
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2.8 Consent Issues. So long as Subscribers (or transferees therefrom
which qualify as Permitted Assignees) own shares of Series N Preferred Stock
having an aggregate Stated Value (as defined in the Certificate of Designation)
of at least $25,000,000, the Company shall not, without (i) the prior written
consent of Renaissance Fund LDC ("Renaissance") (which consent shall not be
unreasonably withheld and shall not be conditioned by Renaissance upon the
payment of any additional consideration or the imposition of any additional
restrictions or burdens on the Company) or (ii) the expiration of the Consent
Period (as defined below), (A) issue any shares of preferred stock which rank
junior to the Series N Preferred Stock ("Junior Securities") and which provide
that the Company must pay dividends thereon, or cause a redemption thereof, in
cash or in any shares of the Company's preferred stock which rank senior to or
on parity with the Series N Preferred Stock (collectively, "Senior Securities")
or which allow the holder thereof to require the Company to pay dividends
thereon, or cause a redemption thereof, in cash or in Senior Securities or (B)
declare or pay any dividends on, or redeem or repurchase for, cash or for any
shares of Senior Securities (or any combination thereof), any shares of the
Company's capital stock which rank junior to the Series N Preferred Stock
(including, without limitation, the Company's Common Stock); provided, however,
that no consent shall be required pursuant to this clause (B) for dividends
declared or payable on, or redemptions of, any Junior Securities the issuance of
which was approved by Renaissance prior to its issuance (so long as such
dividends or such redemption is effected in accordance with the terms which were
approved by Renaissance). The Company shall have the right to require
Renaissance to make a determination with respect to the foregoing issues at any
time prior to the issuance of the Junior Securities (in the case of clause (A))
or prior to the declaration or payment of the subject dividend or the subject
redemption or repurchase (in the case of clause (B)). Renaissance shall respond
to any request for a consent under this Section 2.8 within seven (7) business
days after the Company's written request for such consent (such seven (7) day
period being referred to herein as the "Consent Period"). All determinations to
be made by Renaissance hereunder may be based upon factors relevant to the
Subscribers and their investment in the Company. In the event the Company
authorizes any class of Junior Securities which allows the Company to pay a
dividend thereon in, or redeem such Junior Securities for, cash or Senior
Securities, the Company shall include in the certificate of designation creating
such class of Junior Securities a reference to the need to obtain Renaissance's
consent prior to the declaration or payment of any dividend thereon in, or any
redemption thereof for, cash or Senior Securities (to the extent such consent is
still required).
ARTICLE 3. Representations and Warranties of the Company
The Company hereby represents and warrants to each Subscriber that, as
of the date hereof and as of the Closing Date, except as set forth in the
Schedule of Exceptions attached hereto as Schedule 1 (the "Schedule of
Exceptions"):
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3.1 Organization and Qualification. The Company is a corporation duly
organized and validly existing under the laws of the State of Delaware and has
all requisite corporate power and authority to enter into this Subscription
Agreement and the Warrant and to consummate the transactions contemplated hereby
and thereby. The Company is duly qualified and in good standing in each
jurisdiction in which the property owned, leased or operated by it or the nature
of the business conducted by it makes such qualification necessary and where the
failure to be so qualified has or would be reasonably expected to have a
Material Adverse Effect (as defined below). The term "Material Adverse Effect"
means any change or effect that is or is reasonably likely to be materially
adverse to the business, results of operations or financial condition or
prospects of the Company and the Subsidiaries (as defined below), taken as a
whole.
3.2 Subsidiaries. The Schedule of Exceptions sets forth each Person in
which the Company directly or indirectly owns any of the capital stock or any
partnership or other ownership interest (the "Subsidiaries"). Other than as set
forth on the Schedule of Exceptions, there are no outstanding preemptive rights,
conversion rights, options, warrants or other rights or agreements for the
purchase or acquisition of any shares of the Subsidiaries. The Subsidiaries were
duly organized and are validly existing and in good standing under the laws of
the jurisdiction of their organization. The Subsidiaries have not qualified to
do business as foreign corporations in any jurisdiction, and such qualification
is not presently required in any jurisdiction in which the failure so to qualify
would have a Material Adverse Effect.
3.3 Capitalization. As of the date hereof, the authorized capital stock
of the Company consists of (i) 135,000,000 shares of Common Stock of which
57,933,433 shares were issued and outstanding, 4,145,136 shares were reserved
for issuance pursuant to the Company's stock option plans and 48,171,535 other
shares were reserved for issuance pursuant to securities (other than the
Preferred Shares and the Warrants) exercisable for, or convertible into or
exchangeable for any shares of Common Stock as of June 10, 1996 and (ii)
4,000,000 authorized shares of preferred stock, $.01 par value per share
("Preferred Stock"), of which an aggregate of 1,508,573.5 shares were issued and
outstanding as of the date hereof, consisting of 444,445 shares of Series H
Cumulative Convertible Preferred Stock which is convertible into 4,444,450
shares of Common Stock, 20 shares of Series I Cumulative Convertible Preferred
Stock which is convertible into 851,050 shares of Common Stock, 20 shares of
Series K Cumulative Convertible Preferred Stock which is convertible into
851,050 shares of Common Stock, 1,062,926 shares of Series L Cumulative
Convertible Preferred Stock which is convertible into 1,062,926 shares of Common
Stock and 1,162.5 shares of Series M Cumulative Convertible Preferred Stock
which is convertible into 1,223,684 shares of Common Stock (the amount of Common
Stock set forth above into which the shares of Preferred Stock are convertible
assumes that at the time of conversion of such Preferred Stock there are no
accrued or unpaid dividends thereon). In addition, pursuant to waivers granted
by certain stockholders of the Company, as of May 14, 1996, the Company had not
reserved for issuance an aggregate of 11,646,026 shares of Common Stock issuable
in connection with four unrelated
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transactions set forth under "Proposal II" in the Proxy Statement. Upon the
effective date of the amendment to the Company's Certificate of Incorporation to
increase its authorized shares of Common Stock to 135,000,000 (the "Amendment"),
the Company reserved all such 11,646,026 shares of Common Stock for issuance.
Except as set forth on the Schedule of Exceptions, since April 4, 1996 the
Company has not issued any Common Stock or any securities exercisable for,
convertible into or exchangeable for any shares of Common Stock.
Except as set forth on the Schedule of Exceptions, there were,
and on the Closing Date there will be, no other outstanding preemptive rights,
conversion rights, options, warrants or other rights or agreements for the
purchase or acquisition from the Company of any shares of its capital stock.
3.4 Authorization.(i) All corporate action on the part of the Company
necessary for the authorization, execution and delivery of this Agreement, the
Warrants and the performance of all obligations of the Company under this
Agreement and the Warrants has been taken and (ii) all corporate action on the
part of the Company necessary for the authorization, issuance (and reservation
for issuance) and delivery of the (A) Preferred Shares on the terms set forth in
the Certificate of Designation, (B) the Warrants and (C) the Common Shares will
have been taken as of the Closing. This Agreement and the Warrants issuable
hereunder constitute valid and legally binding obligations of the Company,
enforceable in accordance with their terms.
3.5 Valid Issuance of Preferred Shares and Common Shares; Reservation
of Shares.
When issued and paid for pursuant hereto, the Preferred Shares will be
duly and validly issued, fully paid and nonassessable. Upon issuance, the Common
Shares shall be duly authorized and, upon conversion of, or issuance as a
dividend on, the Preferred Shares and upon the proper exercise of the Warrants,
as applicable, the Common Shares shall be validly issued, fully paid and
non-assessable and free from all taxes, liens (imposed through the actions or
failure to act of the Company) and charges with respect to the issue thereof and
shall not be subject to preemptive rights or other similar rights of
stockholders of the Company. The outstanding shares of Common Stock are all duly
and validly authorized and issued, fully paid and nonassessable.
The Company shall at all times have authorized, and reserved
for the purpose of issuance, a sufficient number of shares of Common Stock to
provide for (i) the full conversion of the outstanding Preferred Shares and
issuance of the Conversion Shares in connection therewith and for the payment of
dividends payable thereon for the following year at the then current Market
Price (as defined in the Certificate of Designation), (ii) the full exercise of
the Warrants and the issuance of the Warrant Shares in connection therewith
(based on the exercise price of the Warrants in effect from time to time) and
(iii) the payment of dividends payable on the Company's Series I Cumulative
Convertible Preferred Stock, Series K Cumulative Convertible Preferred Stock and
Series L Cumulative Convertible Preferred Stock for the following year at the
then current market price (as
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determined in the respective Certificates of Designation for such preferred
stock) so as to ensure the Company's ability to pay dividends on the Series N
Preferred Stock (subject to the limitations contained in Section 170 of the
Delaware General Corporate Law ("DGCL")). The Company shall not reduce the
number of shares of Common Stock reserved for issuance upon conversion of the
Preferred Shares and for the payment of dividends thereon and the full exercise
of the Warrants without the consent of holders of Series N Preferred Stock and
Warrants entitling them to purchase a majority of the shares of Common Stock
issuable upon conversion and exercise thereof, which consent will not be
unreasonably withheld.
3.6 Organizational Documents and Corporate Records. The Company has
heretofore made available to each Subscriber true and complete copies of the
Restated Certificate of Incorporation and Bylaws of the Company as in effect on
the date hereof. The minute books of the Company, which have been made available
to each Subscriber for inspection, contain true and complete records of all
meetings (other than the minutes for the meetings at which the transactions
contemplated hereby were considered for which minutes have not been finalized)
and consents in lieu of meeting of the Board of Directors and the stockholders
of the Company since January 1, 1992.
3.7 Governmental Consents. No consent, approval, order or authorization
of, or registration, qualification, designation, declaration or filing with, any
governmental authority, including without limitation the Federal Communications
Commission, on the part of the Company or any of its Subsidiaries is required in
connection with the consummation of the transactions contemplated by this
Agreement, the Certificate of Designation and the Warrant, except for (i) the
applicable pre-merger notification requirements, if any, of the HSR Act, and
(ii) where the failure to comply with any such requirement would not have a
Material Adverse Effect.
3.8 Litigation. There is no action, suit, claim, proceeding or
investigation (collectively, a "Claim") pending or, to the Company's knowledge,
threatened against the Company or its Subsidiaries or any of their respective
properties which (i) questions the validity of this Agreement, or the right of
the Company to enter into this Agreement or to consummate the transactions
contemplated hereby, (ii) relates to the Company's capital structure or (iii)
individually or in the aggregate would have a Material Adverse Effect. The
Company is not a party or subject to the provisions of any order, writ,
injunction, judgment or decree of any court or government agency or
instrumentality which, individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect. There are no Claims pending or, to
the knowledge of the Company, threatened that would give rise to any right of
indemnification on the part of any director or officer of the Company or its
Subsidiaries, or the heirs, executors or administrators of such director or
officer, against the Company or its Subsidiaries.
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3.9 Compliance with Laws. Neither the Company nor any of its
Subsidiaries is or has been in violation of any applicable order, judgment,
injunction, award, decree or writ (collectively, "Orders"), or any applicable
law, statute, code, ordinance, regulation or other requirement (collectively
"Laws"), of any government or political subdivision thereof, or any agency or
instrumentality of any such government or political subdivision, or any court or
arbitrator (collectively, "Governmental Bodies") including, without limitation,
laws and regulations relating to the communications industry and environmental
laws, which violations either individually or in the aggregate would have a
Material Adverse Effect. The Company has not received any written notice that
any such violation has been alleged.
3.10 Conflicting instruments. The execution and delivery of this
Agreement and the Warrant does not, and the consummation of the transactions
contemplated hereby in compliance with the terms hereof (including the full
performance and compliance by the Company of all the terms of the Series N
Preferred Stock) will not as of the date hereof and the Closing Date: (i)
conflict with or result in any violation of the laws of its jurisdiction of
incorporation or other applicable statutory requirements, or any provision of
its articles of association or other applicable organizational documents, (ii)
conflict with, result in a violation or breach of, or constitute a default (or
give rise to any right of termination, revocation, cancellation or acceleration)
under, any note, bond, mortgage, indenture, deed of trust, license, lease,
contract, commitment, agreement or arrangement to which it is a party or by
which it is bound, or by or to which any of its properties or assets may be
bound or subject, (iii) result in the creation or imposition of a lien on any
properties or assets owned or leased and operated by the Company or any of its
Subsidiaries, (iv) conflict with or result in a violation of any judgment,
order, decree, writ, injunction, statute, law, ordinance, rule or regulation
applicable to it or any of its property or assets, or (v) violate or result in
the revocation or suspension of any Permit (as defined in Section 3.14 herein)
held by the Company or any of its Subsidiaries.
3.11 Registration Rights. Except as provided in Article 4 of this
Agreement or as described in the Schedule of Exceptions, the Company has not
granted or agreed to grant any registration rights under any applicable
securities laws to any individual, corporation, limited liability company,
partnership, association, trust or other entity or organization (each, a
"Person").
3.12 Intangible Property. The Schedule of Exceptions sets forth a list
of all patents, trademarks, copyrights, service marks and trade names owned by
the Company or its Subsidiaries, and all permits, grants and licenses or other
rights running to or from the Company or its Subsidiaries relating to any of the
foregoing. The Company and its Subsidiaries have the right to use (to the
Company's knowledge, free and clear of any claims or rights of others) all trade
secrets, know-how, processes, technology, blue prints and designs utilized in or
incident to their businesses as presently conducted ("Trade Secrets") together
with the intangible property listed on Exhibit 3.12, the "Intangible Property").
The Company and its Subsidiaries have taken such action as was reasonably
necessary to ensure that they have not infringed any patent, copyright,
trademark, trade
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name or other intangible rights of any other Person. Neither the Company nor its
Subsidiaries has received any written communication alleging that it has
infringed any patent, copyright, trademark, trade name or other intangible
rights of any other Person, and no proceedings in connection therewith have been
instituted or are pending. All Trade Secrets are protected against the use of
such Trade Secrets by other Persons to an extent and in a manner customary in
the industries in which the Company and its Subsidiaries operate. There is no
present or, to the knowledge of the Company, threatened use or encroachment of
any Trade Secret. The Company knows of no material violation or infringement by
others of the rights of the Company or its Subsidiaries with respect to any
Intangible Property.
3.13 Tax Matters.
(a) The Company and its Subsidiaries have paid all taxes
(including, without limitation, to the extent that such taxes exist and are
applicable, income, profits, premium, estimated, excise, sales, use, occupancy,
gross receipts, franchise, ad valorem, severance, capital levy, production,
transfer, withholding, employment, unemployment compensation, payroll-related
and property taxes, import duties and other governmental charges and
assessments), whether or not measured in whole or in part by net income, and
including deficiencies, interest, additions to tax or interest, and penalties
with respect thereto (hereinafter "Taxes" or individually, a "Tax"), required to
be paid by any of them through the date hereof and shall timely pay all Taxes
required (under the law and procedures of the applicable taxing jurisdiction) to
be paid by any of them before the Closing (except to the extent such Taxes are
reserved for on the combined balance sheet of the Company and its Subsidiaries
as of December 31, 1995 and with respect to Taxes accruing after the date of
such balance sheet that are similar in nature and amount to those shown in such
balance sheet). Neither the Company nor any Subsidiary has any liability for
Taxes subsequent to the date of its most recent applicable tax return other than
as arise in the ordinary course of business and consistent with past practice.
(b) The Company and its Subsidiaries have timely filed all
reports, declarations, statements or other reports with respect to Taxes ("Tax
Returns") required to be filed through the date hereof taking into account any
extensions permitted by law or practice.
(c) With respect to all Tax Returns of the Company and its
Subsidiaries, no extension of time is in force with respect to any date on which
Tax Return was or is to be filed, and no waiver or agreement is in force for the
extension of time for the assessment or payment of any Tax.
(d) There are no ongoing, pending or, to the Company's
knowledge, threatened Tax audits, investigations or reviews of the Company or
its Subsidiaries.
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3.14 Permits. The Company and its Subsidiaries have all licenses,
permits, orders or approvals of, and have made all required registrations with,
all state and federal government bodies that are material to the conduct of the
business of the Company or its Subsidiaries (collectively, "Permits"),
including, without limitation, all Permits relating to compliance with any
environment laws, except where the failure to have such Permits would not,
individually or in the aggregate, have a Material Adverse Effect. All such
Permits are in full force and effect and neither the Company nor its
Subsidiaries have violated any of the terms thereof except where the failure to
keep such permits in full force and effect or where such violations would not,
individually or in the aggregate, have a Material Adverse Effect.
3.15 Environmental Matters. (a) The operations of the Company and its
Subsidiaries comply and have complied with all applicable environmental laws
except where the failure to comply would not have a Material Adverse Effect; (b)
the Company and its Subsidiaries have obtained all material environmental,
health and safety permits, licenses and approvals necessary for its operations,
all such permits, licenses and approvals are in effect, no appeal is pending
therefrom and no action to revoke the same is pending, and the Company and each
Subsidiary are in compliance with all material terms and conditions thereof; and
(c) there has not been a release into the environment of a hazardous substance
in, on or under any real property, asset or facility currently or previously
owned, leased or operated by the Company or its Subsidiaries.
3.16 SEC Filings; Financial Statements. The Company has filed all
forms, reports and documents required to be filed by it with the Securities and
Exchange Commission (the "SEC") since December 31, 1994, and has heretofore made
available to each Subscriber, in the form filed with the SEC (excluding any
exhibits thereto) each of the Materials. The Materials were prepared in
accordance with the requirements of the Securities Act of 1933, as amended (the
"Securities Act"), and the Exchange Act, as the case may be, and the rules and
regulations thereunder and did not at the time they were filed and as of the
date hereof contain any untrue statement of a material fact or omit to state a
material fact required to be stated herein or necessary in order to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading. Each of the consolidated financial statements (including,
in each case, any notes thereto), contained in the Materials filed by the
Company was prepared in accordance with generally accepted accounting principles
applied on a consistent basis throughout the periods indicated (except as may be
indicated in the notes thereto) and each fairly presented the financial
position, results of operations and cash flows and change in stockholders'
equity of the Company and its consolidated Subsidiaries as at the respective
dates thereof and for the respective periods indicated therein (subject, in the
case of unaudited statements, to normal and recurring year-end adjustments which
were not and are not expected, individually or in the aggregate, to be material
in amount). Except and to the extent set forth in the Materials filed with the
SEC prior to the date of this Agreement, the Company and its Subsidiaries do not
have any liability or obligation of any nature (whether accrued, absolute,
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contingent or otherwise) other than liabilities and obligations which would not,
individually or in the aggregate, have a Material Adverse Effect.
3.17 Changes. Other than as set forth in the Schedule of Exceptions,
since March 31, 1996, there has not been, with respect to the Company or any of
its Subsidiaries:
(a) any agreement (whether in principle or definitive) to
issue any equity or debt security;
(b) any damage, destruction or loss, whether or not covered by
insurance, which could reasonably be expected to have a Material Adverse Effect;
(c) any waiver by the Company or any of its Subsidiaries of a
valuable right or of a debt owed to it which could reasonably be expected to
have a Material Adverse Effect;
(d) any satisfaction or discharge of any lien, claim or
encumbrance or payment of any obligation by the Company or any of its
Subsidiaries, except in the ordinary course of business and which could not
reasonably be expected to have a Material Adverse Effect;
(e) any change or amendment to a material contract or
arrangement by or to which the Company or any of its Subsidiaries or any of
their respective assets or properties are bound or subject which could
reasonably be expected to have a Material Adverse Effect;
(f) any change by the Company in its accounting methods,
principles or priorities;
(g) any material agreement entered into by the Company or any
of its Subsidiaries;
(h) any sale, abandonment or other disposition of any of its
properties or assets except for inventory and equipment sold in the ordinary
course of business and the disposition of obsolete properties and assets;
(i) to the knowledge of the Company, any other event or
condition of any character which could reasonably be expected to have a Material
Adverse Effect; or
(j) any declaration of dividends on the Common Stock.
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Notwithstanding the above, the Company shall provide written
notice to the Subscribers of any material change to the Company's business,
operations or financial condition which occurs prior to the Closing Date.
3.18 Projections. The written financial projections that were delivered
to the Subscribers in connection with the Offering were prepared in good faith
and were made after due and proper consideration and represent reasonable and
fair expectations honestly held based on facts known to, and assumptions
reasonably made by, the Company.
3.19 Conflicts. The entering into the Subscription Agreement and the
Warrant and the filing with the Secretary of State of the State of Delaware of
the Certificate of Designation will not conflict with (i) the Company's Restated
Certificate of Incorporation or Bylaws, or (ii) any material indenture, note,
bond, debt, or other material agreement to which the Company is bound or its
property is subject.
3.20 Use of Proceeds. The proceeds from the Offering will be used by
the Company for general corporate purposes (including, without limitation,
working capital and dividend and interest obligations), capital expenditures in
connection with its wireless communications systems in the United States and
international markets, and pursuit of United States and international wireless
communications opportunities.
ARTICLE 4. Registration Rights
4.1 Definitions. For purposes of this Article 4:
(a) The term "register", "registered", and "registration"
refer to a registration effected by preparing and filing a registration
statement or similar document in compliance with the Securities Act, and the
declaration or ordering of effectiveness of such registration statement or
document;
(b) The term "Registrable Securities" means the Common Shares
and any shares of Common Stock or other securities subsequently issued with
respect to such Common Shares (by stock split, stock dividend or otherwise); and
(c) The term "Holder" means any Person owning or having the
right to acquire Registrable Securities.
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4.2 Registration.
(a) The Company shall use its good faith best efforts to cause
a registration statement ("Registration Statement") under the Securities Act
with respect to all of the Registrable Securities to become effective on or
before September 30, 1996 (the "Registration Date").
(i) If the Company fails to cause the Registration
Statement to become effective on or before the Registration Date, then, upon
each Dividend Payment Date (as defined in the Certificate of Designation)
following the Registration Date, the Company shall make a cash payment to each
holder of Registrable Securities (other than Registrable Securities issuable
with respect to Preferred Shares sold to Todd Investments Limited hereunder) in
an amount equal to the Stated Value of the Preferred Shares held by such holder
multiplied by the Registration Default Rate (as defined below) for the period
beginning on the day following the later of the Registration Date and the
immediately preceding Dividend Payment Date (if any) and ending on the Dividend
Payment Date upon which such payment is being made. No payments shall be made
hereunder to a holder of Registrable Securities with respect to any period of
time following either the date the Registration Statement becomes effective or
the expiration of the Effectiveness Period.
(ii) If the Registration Statement is declared
effective and thereafter ceases to be effective or thereafter the prospectus
which is a part thereof cannot be used (other than because of an action or
failure to act on the part of a Holder) for a period of more than 60 consecutive
days (the sixtieth day in any such period is referred to herein as the
"Suspension Date"), then, upon each Dividend Payment Date following the
Suspension Date, the Company shall make a cash payment to each holder of
Registrable Securities (other than Registrable Securities issuable with respect
to Preferred Shares sold to Todd Investments Limited hereunder) in an amount
equal to the Stated Value of the Preferred Shares held by such holder multiplied
by the Registration Default Rate for the period beginning on the day following
the later of the Suspension Date and the immediately preceding Dividend Payment
Date and ending on the Dividend Payment Date upon which such payment is being
made. No payments shall be made hereunder to a holder of Registrable Securities
with respect to any period of time following either the date the Registration
Statement may then be used to sell Registrable Securities or the expiration of
the Effectiveness Period.
(iii) For purposes of this Section 4, "Registration
Default Rate" shall mean 0.50% per annum for the first 90 day period immediately
following the Registration Date (in the case of a failure under clause (i) of
this Section 4.2(a)) or the first 60 day period immediately following the
Suspension Date (in the case of a suspension under clause (ii) of this Section
4.2(a)) and shall increase by an additional 0.25% per annum at the beginning of
each subsequent 90 day period in the case of a failure under clause (i) or at
the beginning of each subsequent 60 day period in the case of a suspension under
clause (ii); provided, however, that in no event shall the Registration Default
Rate exceed 1.0%.
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(iv) All payments required to be made to holders of
Registrable Securities under this Section 4.2(a) shall be in addition to any
dividends to which such holder is otherwise entitled under the Certificate of
Designation.
(b) Neither the Company nor any other Person other than the
Holders shall be entitled to include shares in a registration made under Section
4.2(a) without the prior written consent of the Holders of a majority of the
Registrable Securities included in such registration. Notwithstanding the
foregoing, the Company may include in such registration securities held by third
parties which are subject to registration rights granted by the Company on or
prior to May 28, 1996.
(c) If (but without any obligation to do so) the Company
proposes at any time to register any shares of its capital stock or other
securities under the Securities Act for itself or for other stockholders of the
Company (other than a registration relating solely to the sale of securities to
participants in a stock plan of the Company, or a registration on any form which
does not include substantially the same information, other than information
related to the selling shareholders or their plan of distribution, as would be
required to be included in a registration statement covering the sale of the
Registrable Securities), which registration shall involve an underwritten
offering, the Company shall, at such time, promptly give each Holder written
notice of such registration. Upon the written request of each Holder given
within twenty (20) days after mailing of such notice by the Company, the Company
shall, subject to the provisions of Section 4.2(d), cause to be registered under
the Securities Act, and to be included in such underwritten offering, all of the
Registrable Securities then outstanding which each such Holder has requested to
be so registered. The right of a Holder to have Registrable Securities then
outstanding included in registrations contemplated by this Section 4.2(c) (i)
shall continue for a period of three years from the date of the Closing and (ii)
shall not be transferable (other than to a single transferee of all of such
Holder's Registrable Securities, and to subsequent such single transferees).
(d) In connection with any offering involving an underwriting
of shares as contemplated by Section 4.2(c), the Company shall not be required
under this Section 4.2(d) to include any of the Holders' Registrable Securities
then outstanding in such underwriting unless they accept the customary and
reasonable terms of the underwriting as agreed upon between the Company and the
underwriters selected by it, and then only in such quantity as will not, in the
opinion of the underwriters, jeopardize the success of the offering. If the
total amount of Registrable Securities then outstanding requested to be included
in such offering exceeds the amount of securities that the underwriters believe
in their sole discretion to jeopardize the success of the offering, then Holders
may include in the offering only that number of such Registrable Securities then
outstanding which the underwriters believe will not jeopardize the success of
the offering (the securities so included to be apportioned first among the other
stockholders of the Company with rights as of May 21, 1996 to include Common
Stock in such underwriting ("Other Holders") and then pro rata among the
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Holders according to the total amount of Registrable Securities entitled to be
included therein owned by each Holder or in such other proportions as shall
mutually be agreed to by the Holders); provided, however, that no Registrable
Securities shall be excluded from any such offering if any securities other than
those sold for the account of the Company, Holders and Other Holders are to be
included in such offering. Notwithstanding the foregoing provisions of Section
4.2(c) and Section 4.2(d), if the registration contemplated by Section 4.2(c) is
initiated in response to the exercise of demand registration rights of Vanguard
Cellular Systems, Inc. ("Vanguard") and/or Toronto Dominion Investments, Inc.
("TDI") or their successors, the Holders shall not have the right to require the
exclusion from such registration of any securities owned by Vanguard and/or TDI
(or their successors). In such circumstances, any exclusion shall be
accomplished among the Holders and Other Holders (other than Vanguard, TDI and
their successors) in accordance with the order of priority and otherwise as set
forth above.
4.3 Obligations of the Company. Whenever required under this Article 4
to effect the registration of any Registrable Securities, the Company shall,
within the time limits set forth in this Article 4, or if no specific time limit
is specified, as expeditiously as reasonably possible:
(a) Prepare and file with the SEC a registration statement
with respect to such Registrable Securities and use its best efforts to cause
such registration statement to become effective, and thereafter keep such
registration statement effective at all times until the third anniversary of the
Closing Date (the "Effectiveness Period"), or until such earlier time as all
securities registered thereby have been sold; provided, however, that the
Company shall keep such registration statement thereafter effective with respect
to any Registerable Securities which were or are paid as dividends on the
Preferred Shares (the "Dividend Shares") until the earlier of (i) such date that
all such Dividend Shares have been sold, (ii) such date that is six months
following the last dividend payment on the Preferred Shares and (iii) such date
that all such Dividend Shares are, or upon issuance will be, eligible for resale
under Rule 144 under the Securities Act and provided, further, that the Company
shall use all commercially reasonable efforts to keep such registration
statement thereafter effective with respect to any Registrable Securities issued
or issuable upon exercise of the Warrants until the earlier of (x) such date
that all such Registrable Securities have been sold pursuant to such
registration statement and (y) the fifth anniversary of the Closing Date.
(b) Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement, including but not limited to,
any amendments or supplements which must be prepared as a result of the
engagement of an underwriter by a Holder in the distribution of its Registrable
Securities pursuant to Sections 4.2(a) of this Agreement.
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(c) Furnish to the Holders such numbers of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents as they may
reasonably request in order to facilitate the disposition of Registrable
Securities owned by them.
(d) Use its best efforts to register and qualify the
securities covered by such registration statement under such other securities or
Blue Sky laws of such jurisdictions as shall be reasonably requested by the
Holders, provided that the Company shall not be required to qualify to do
business or to file a general consent to service of process in any such states
or jurisdictions.
(e) In the event of any underwritten public offering, enter
into and perform its obligations under an underwriting agreement, in usual and
customary form, with the managing underwriter of such offering. Each Holder
participating in such underwriting shall also enter into and perform its
obligations under such an agreement.
(f) Notify each Holder of Registrable Securities covered by
such registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing.
(g) In the case of an underwritten public offering, furnish,
on the date that such Registrable Securities are delivered to the underwriters
for sale in connection with a registration pursuant to this Article 4, (i) an
opinion, dated such date, of the counsel representing the Company for the
purposes of such registration, in such form and substance as is customarily
given to under writers in an underwritten public offering, addressed to the
underwriters and the Holders, and (ii) a letter, dated such date, from the
independent certified public accountants of the Company, in such form and
substance as is customarily given by independent certified public accountants to
underwriters in an underwritten public offering, addressed to the underwriters
and the Holders.
4.4 Furnish Information. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this Article 4 with
respect to the Registrable Securities of any selling Holder that such Holder
shall have furnished to the Company such information regarding itself, the
Registrable Securities held by it, and the intended method of disposition of
such securities as shall be required to effect the registration of such Holder's
Registrable Securities.
4.5 Expenses of Registration. All expenses (other than underwriting
discounts and commissions) incurred in connection with registrations, filings or
qualifications pursuant to this Article 4, including without limitation all
registration, filing and qualification fees, printers, and
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accounting fees, fees and disbursements of counsel for the Company, and the
reasonable fees and disbursements of one counsel for the selling Holders shall
be borne by the Company; provided, however, in the event the Company includes in
any registration statement shares for sale for its own account, it shall pay the
pro rata portion of any underwriting discounts and commission attributable to
such securities for its own account.
4.6 Indemnification and Contribution. In connection with a registration
statement under this Article 4:
(a) To the extent permitted by law, the Company will indemnify
and hold harmless each Holder, any underwriter (as defined in the Securities
Act) and each Person if any, who controls such Holder or underwriter within the
meaning of the Securities Act or the Exchange Act against any losses, claims,
damages or liabilities (joint or several) to which they or any of them may
become subject under the Securities Act, the Exchange Act or any other federal
or state law, insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of or are based upon any of the following
statements, omissions or violations (collectively a "Violation"): (i) any untrue
statement or alleged untrue statement of a material fact contained in such
registration statement, including any preliminary prospectus (but only if such
is not corrected in the final prospectus) contained therein or any amendments or
supplements thereto, (ii) the omission or alleged omission to state therein a
material fact required to be stated therein, or necessary to make the statements
therein not misleading (but only if such is not corrected in the final
prospectus), or (iii) any violation or alleged violation by the Company in
connection with the registration of Registrable Securities under the Securities
Act, the Exchange Act, any state securities law or any rule or regulation
promulgated under the Securities Act, the Exchange Act or any state securities
law; and the Company will pay to each such Holder, underwriter or controlling
Person, as incurred, any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the indemnity agreement contained
in this Section 4.6(a) shall not apply to amounts paid in settlement of any such
loss, claim, damage, liability or action if such settlement is effected without
the consent of the Company (which consent shall not be unreasonably withheld),
nor shall the Company be liable to any such Holder, underwriter or controlling
person in any such case for any such loss, claim, damage, liability or action to
the extent that it arises out of or is based upon a Violation which occurs in
reliance upon and in conformity with written information furnished expressly for
use in connection with such registration by any such Holder, underwriter or
controlling Person.
(b) To the extent permitted by law, each selling Holder will
indemnify and hold harmless the Company, each of its directors, each of its
officers who has signed the registration statement, each Person, if any, who
controls the Company within the meaning of the Securities Act, any underwriter,
any other Holder selling securities in such registration statement and any con
trolling Person of any such underwriter or other Holder, against any losses,
claims, damages or
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liabilities (joint or several) to which any of the foregoing Persons may become
subject, under the Securities Act, the Exchange Act or other federal or state
law, insofar as such losses, claims, damages or liabilities (or actions in
respect thereto) arise out of or are based upon any Violation, in each case to
the extent (and only to the extent) that such Violation occurs in reliance upon
and in conformity with written information furnished by such Holder expressly
for use in connection with such registration; and each such Holder will pay, as
incurred, any legal or other expenses reasonably incurred by any Person intended
to be indemnified pursuant to this Section 4.6(b), in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided, however, that the indemnity agreement contained in this Section 4.6(b)
shall not apply to amounts paid in settlement of any such loss, claim, damage,
liability or action if such settlement is effected without the consent of the
Holder, which consent shall not be unreasonably withheld; provided that in no
event shall any indemnity under this Section 4.6(b) exceed the net proceeds from
the offering received by such Holder.
(c) Promptly after receipt by an indemnified party under this
Section 4.6 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this Section 4.6, deliver to
the indemnifying party a written notice of the commencement thereof and the
indem nifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party who is
a named party in such action shall have the right to retain its own counsel,
with the fees and expenses to be paid by the indemnifying party, if
representation of such indemnified party by the counsel retained by the
indemnifying party would, in the reasonable opinion of counsel to the
indemnifying party, be inappropriate due to actual or potential differing
interests between such indemnified party and any other party represented by such
counsel in such proceeding. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action, if prejudicial to its ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party under this Section
4.6(a) and 4.6(b), but the omission so to deliver written notice to the
indemnifying party will not relieve it of any liability (including contribution
pursuant to Section 4.6(d) hereof) that it may have to any indemnified party
other than this Section 4.6.
(d) In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in Section 4.6(a) is
applicable but for any reason is held to be unavailable from the Company with
respect to all Holders or any Holder, the Company and the Holder or Holders, as
the case may be, shall contribute to the aggregate losses, claims, damages and
liabilities (including any investigation, legal and other expenses incurred in
connection with, and any amount paid in settlement of, any action, suit or
proceeding or any claims asserted) to which the Company and one or more of the
Holders may be subject in such proportion as is appropriate to
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reflect the relative fault of the Company on the one hand, and the Holder or
Holders on the other, in connection with statements or omissions which resulted
in such losses, claims, damages or liabilities. Notwithstanding the foregoing,
no Holder shall be required to contribute any amount in excess of the net
proceeds received by such Holder from the Registrable Securities sold by such
Holder pursuant to the registration statement. No Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation. Each Person, if any, who controls a Holder within
the meaning of the Securities Act shall have the same rights to contribution as
such Holder.
(e) The obligations of the Company and Holders under this
Section 4.6 shall survive the completion of any offering of Registrable
Securities in a registration statement under this Article 4 or otherwise.
4.7 Amendment of Registration Rights. Any provision of this Article 4
may be amended or the observance thereof may be waived (either generally or in a
particular instance and either retroactively or prospectively), only with the
written consent of the Company and the Holders of a majority of the Registrable
Securities then outstanding. An amendment or waiver effected in accordance with
this Section shall be binding upon each Holder of Registrable Securities then
outstanding, each future Holder of all such securities, and the Company.
ARTICLE 5. Conditions of Subscriber's Obligations at Closing.
The obligations of the Subscribers under Section 1.1 of this
Subscription Agreement are subject to the fulfillment at or before the Closing
of each of the following conditions, or their waiver by Subscribers subscribing
for 66 2/3% of the Units offered in the Offering:
(a) Representations and Warranties. The representations and
warranties of the Company contained in Article 3 shall be true at and as of the
Closing Date with the same effect as though such representations and warranties
had been made on and as of the Closing Date.
(b) Performance. The Company shall have performed and complied
in all material respects with all agreements, obligations and conditions
contained in this Subscription Agreement that are required to be performed or
complied with at or before the Closing Date.
(c) Since the date of this Subscription Agreement, there shall
have been no change, occurrence of circumstances affecting the business, results
of operations or financial condition, stockholders' equity or prospects of the
Company having or reasonably likely to have a Material Adverse Effect.
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(d) Since the date of this Subscription Agreement, there shall
have been no material adverse change to the projections of the Company delivered
to the Subscribers in connection with the Offering.
(e) Compliance Certificate. The President of the Company shall
have delivered to the Subscribers at the Closing a certificate certifying that
the conditions specified in Sections 5(a), 5(b), 5(c) and 5(d) have been
fulfilled.
(f) Restated Certificate of Incorporation. Prior to the
Closing Date, the Company's stockholders shall have approved the Amendment and
the Amendment shall have been filed with, and accepted by, the Secretary of
State of the State of Delaware in accordance with the DGCL, as evidenced by the
certified copy of the Restated Certificate of Incorporation of the Company to be
delivered at Closing pursuant to Section 5(h) hereof.
(g) Certificate of Designation. Prior to the Closing Date, the
Certificate of Designation shall have been filed with, and accepted by, the
Secretary of State of the State of Delaware in accordance with the DGCL.
(h) Delivery of Documents. The Subscribers shall have
received: (i) a certified copy of the Restated Certificate of Incorporation of
the Company certified by the Secretary of State of the State of Delaware; (ii) a
copy of the By-Laws of the Company certified by the Secretary of the Company and
(iii) incumbency certificates, board resolutions and such other evidence of
corporate authority for the transactions contemplated hereby as the Subscriber
and its counsel shall reasonably request.
(i) Approvals and Consents. The Company (and, if applicable
the Subscribers) shall have duly obtained, received or effected (and all
applicable waiting and termination periods, if any, including any extensions
thereof, under any applicable law, statute, regulation or rule, including,
without limitation, the applicable waiting period, if any, under the HSR Act,
shall have expired or terminated) all authorizations, consents, approvals,
licenses, franchises, permits and certificates by or of, and shall have made all
filings and effected all notifications, registrations and qualifications with,
all federal, state, local and foreign governmental and regulatory authorities to
the extent required to be obtained, received, effected or filed by the Company
for the issuance, sale and delivery of the Units being issued and sold at the
Closing and the consummation of the transactions contemplated hereby.
(j) Delivery of Share Certificates and Warrants. The
Subscriber shall have received duly executed stock certificates of the Company
evidencing the ownership of the Preferred Shares being purchased by such
Subscriber hereunder and warrant certificates duly executed by the Company with
respect to the Warrants being purchased by such Subscriber hereunder.
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(k) Opinions of Counsel to the Company. The Subscribers shall
have received favorable opinions from Robert Vecsler, General Counsel for the
Company and from Klehr, Harrison, Harvey, Branzburg & Ellers, corporate counsel
to the Company ("Klehr Harrison"), dated as of the Closing Date as to the
matters to which Klehr, Harrison and the General Counsel for the Company opined
in the Company's sale of its 12% Senior Subordinated Convertible Notes due 2001
(with appropriate adjustments for the nature of the securities being sold
hereunder). In addition, the opinion from Robert Vecsler shall include those
matters set forth in (i) the first sentence of paragraph 6 and (ii) paragraph 8
of the opinion delivered to Vanguard Cellular Systems, Inc. ("Vanguard") in
connection with the closing of those transactions contemplated by that certain
Stock Purchase Agreement dated December 29, 1993 by and between the Company and
Vanguard.
ARTICLE 6. Conditions of the Company's Obligations at Closing.
The obligations of the Company to the Subscribers under Section 1.1 of
this Agreement are subject to the fulfillment or waiver at or before the Closing
of each of the following conditions:
(a) Representations and Warranties. The representations and
warranties of each Subscriber contained in Article 2 shall be true at and as of
the Closing Date with the same effect as though such representations and
warranties had been made at and as of the Closing Date.
(b) Payment of Purchase Price. The Subscribers shall have paid
in check or by wire transfer to the accounts specified by the Company the
purchase price specified in Section 1.1.
(c) HSR Act. In the event a Subscriber is required to file a
notification under the HSR Act, the applicable waiting period, if any, under the
HSR Act shall have expired or have been earlier terminated.
(d) Restated Certificate of Incorporation. Prior to the
Closing Date, the Company's stockholders shall have approved the Amendment. In
this regard, the Company agrees to use its best efforts to obtain such
stockholder approval.
(e) Minimum Subscription. A minimum of 45,000 Units shall be
sold at Closing to the Subscribers and/or their Permitted Assignees.
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ARTICLE 7. Termination.
7.1 Termination by Mutual Written Consent. This Subscription Agreement
may be terminated and the transactions contemplated hereby may be abandoned, for
any reason, at any time prior to the Closing Date, by the mutual written consent
of the Company and any Subscriber.
7.2 Termination by the Company or the Subscriber. This Subscription
Agreement may be terminated and the transactions contemplated hereby abandoned
by action of the Company or any Subscriber if and to the extent that (a) the
Closing shall not have occurred at or prior to the later of (i) 5:00 p.m. on the
Closing Date and (ii) the sixtieth day following any required filing of any
premerger notification under the HSR Act by a Subscriber as contemplated by
Section 2.7 hereof or after substantial compliance with any request for
additional information which may have been issued, whichever is later (or such
time as agreed to by the parties pursuant to Section 1.4); provided, however,
that the right to terminate this Subscription Agreement under this Section 7.2
shall not be available to any party whose failure to fulfill any obligation
under this Subscription Agreement has been the cause of, or resulted in, the
failure of the Closing to occur on or before the Closing Date; or (b) any court
or governmental authority of competent jurisdiction shall have issued an order,
decree, writ or ruling or taken any other action, or there shall be in effect
any statute, rule or regulation, temporarily, preliminarily or permanently
restraining, enjoining or otherwise prohibiting the purchase of the Units
hereunder, or the consummation of the transactions contemplated by this
Subscription Agreement.
7.3 Termination by a Subscriber. This Subscription Agreement may be
terminated and the transactions contemplated hereby may be abandoned by action
of a Subscriber, if (a) the Company shall have failed to comply in any material
respect with any of the covenants or agreements contained in this Subscription
Agreement to be complied with or performed by the Company at or prior to such
date of termination, and the Company shall not, within a reasonable period of
time after notice of such failure, have cured or commenced prompt and diligent
measures which would promptly cure such failure, (b) there shall have been a
misrepresentation or breach by the Company with respect to any representation or
warranty made by it in this Subscription Agreement and such misrepresentation or
breach cannot be cured prior to the Closing Date, or (c) there shall have
occurred and be continuing any condition, event or development having, or
reasonably likely to have, a Material Adverse Effect.
7.4 Tax Withholding Issues. The parties acknowledge that the Company
may have certain tax withholding obligations with respect to distributions made
on the Preferred Shares and that the parties have not agreed on the specific
provisions to be inserted in the Certificate of Designation to address such
obligations. The parties hereby agree to negotiate in good faith to reach an
agreement with respect to this issue and to revise the Certificate of
Designation to provide (i) a mechanism mutually agreeable to the parties whereby
the Company satisfies its withholding
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obligation by either (x) withholding shares of Common Stock payable as dividends
on the Preferred Shares or (y) collecting an amount of cash from the holders of
Preferred Shares and (ii) the basis upon which the Company will withhold in the
context of distributions to foreign partnerships. In the event an Agreement is
not reached on this issue prior to June 7, 1996, either party may terminate this
Agreement, and upon any such termination neither party shall have any liability
to the other under this Agreement (except for a breach of such party's
obligation to negotiate in good faith hereunder).
ARTICLE 8. Miscellaneous
8.1 Survival of Warranties; Indemnity. (a) The representations and
warranties of the Company set forth in Article 3 hereof shall survive until the
later of the second anniversary of the Closing Date or the date first upon which
the Subscribers (and transferees which are Permitted Assignees) collectively no
longer retain beneficial ownership of at least 50% of the Preferred Shares (or
shares of Common Stock into which the Preferred Shares are convertible) except
that (x) the representations and warranties set forth in Section 3.13 and claims
based on allegations of common law fraud with respect to Sections 3.16 and 3.18
shall survive until the expiration of the applicable statute of limitations (or
any extension thereof), and (y) the representations and warranties set forth in
Sections 3.1, 3.3, 3.4, 3.5, the first sentence of Section 3.6 and clause (i) of
Section 3.10 shall survive indefinitely. The survival of the representations and
warranties set forth in Article 3 shall in no way be affected by any
investigation of the subject matter thereof made by or on behalf of the
Subscribers or the Company.
(b) The Company hereby indemnifies each Subscriber against and
agrees to hold each Subscriber harmless from any and all damage, loss, liability
and expense (including, without limitation, reasonable expenses of investigation
and attorneys' fees and expenses in connection with any action, suit or
proceeding brought against the Subscriber) ("Losses") incurred or suffered by
such Subscriber arising out of the inaccuracy of any of the representations or
warranties made by the Company in Article 3 hereof to the extent such
representation or warranty has survived the closing as provided in Section
8.1(a) above and to the extent that such Losses to all the Investors are in the
aggregate greater than $20,000 (including out-of-pocket expenses) and less than
the aggregate Stated Value of the Preferred Shares sold in the Offering plus
out-of-pocket expenses. A Subscriber shall give prompt written notice to the
Company of the assertion of any claim for which indemnity may be sought
hereunder, specifying with reasonable particularity the basis therefor, together
with any supporting information reasonably requested by the Company, and the
amount of the Loss. If any amount is due by the Company to the Subscriber
pursuant to this Section 8.1(b), the Company will make such payment not later
than 60 days after notice of the amount due.
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(c) A Subscriber shall give prompt notice to the Company of
the commencement of any suit, action or proceeding against the Subscriber in
respect of which indemnity may be sought hereunder. The Company may, at its own
expense, participate in and, upon notice to the Subscriber, assume the defense
of any such suit, action or proceeding; provided, that (i) the Company's counsel
is reasonably satisfactory to Investors holding a majority of the Preferred
Shares entitled to indemnification with respect to the subject action, suit or
proceeding, and (ii) the Company shall thereafter consult with such Subscriber
upon such Subscriber's reasonable request for such consultation from time to
time with respect to such suit, action or proceeding. If the Company assumes
such defense, such Subscriber shall have the right (but not the duty) to
participate in the defense thereof and to employ counsel, at its own expense,
separate from the counsel employed by the Company. The Company shall be liable
for the fees and expenses of one counsel employed by all Investors entitled to
indemnification hereunder with respect to the subject action, suit or proceeding
for any period during which the Company has not assumed the defense thereof.
Whether or not the Company chooses to defend or prosecute any claim, all of the
parties hereto shall cooperate in the defense or prosecution thereof. The
Company shall not be liable under this Section 8.1 for any settlement effected
without its consent or resulting from a proceeding against Subscriber in which
the Company was not permitted an opportunity to participate, of any claim,
litigation or proceeding in respect of which indemnity may be sought hereunder
unless (x) such settlement includes an unconditional release of the Company from
all liability on claims that are the subject matter of such claim, litigation or
proceeding, and (y) such settlement shall not require that the Company incur any
obligation (monetary or otherwise) or forego any rights. The Company shall not
effect any settlement relating to a proceeding against a Subscriber without the
consent of such Subscriber (which consent shall not be unreasonably withheld),
unless such settlement includes (as to such Subscriber) money damages only and
an unconditional release of such Subscriber from all Losses relating to such
proceeding.
8.2 Definition of Terms. All pronouns and any variations thereof used
herein shall be deemed to refer to the masculine, feminine, neuter, singular or
plural as the identity of the Person or Persons may require.
8.3 Governing Law. This Subscription Agreement shall be governed by the
laws of the State of Delaware applicable to contracts made and wholly performed
in that jurisdiction.
8.4 Notices. All notices or other communications hereunder shall be in
writing and shall be delivered by hand or mailed by registered or certified
mail, return receipt requested, to the Subscriber at the address provided below
and the Company at its principal executive offices located at 20 Craig Road,
Montvale, New Jersey 07645, Attention: Robert Vecsler, Esquire, General Counsel
and Secretary. The Company and the Subscriber may change their addresses for
notices by written notice to each other, as required.
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8.5 Expenses. The Company shall pay the reasonable legal fees (not to
exceed $50,000) for legal counsel representing all of the Subscribers in the
Offering with respect to the negotiation and preparation of that certain letter
of intent regarding the Offering, this Subscription Agreement and the Closing of
the Offering. In the event this Subscription Agreement is terminated by the
Subscriber pursuant to Section 7.3 or Section 7.2 (but only in the event the
Company has not satisfied its conditions under Section 5 hereof), the Company
shall be obligated to pay such reasonable legal fees. In the event this
Subscription Agreement is terminated other than pursuant to Section 7.3 or 7.2
as set forth above, the Company shall be under no obligation to pay any of the
Subscribers' legal fees. Except as set forth above and as otherwise provided
under Article 4 hereof, each party hereto shall be responsible for the payment
of its own expenses incurred in connection with the negotiation, preparation,
execution, delivery and performance of this Subscription Agreement and the other
agreements, including without limitation the Warrants, to be executed in
connection herewith.
8.6 THE UNITS, PREFERRED SHARES AND WARRANTS OFFERED HEREBY HAVE NOT
BEEN APPROVED OR DISAPPROVED BY, OR REGISTERED WITH, THE UNITED STATES
SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE,
NOR HAS THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS SUBSCRIPTION
AGREEMENT. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
8.7 Prior Subscription Agreements. This Agreement (including the
Schedule of Exceptions and Exhibits hereto) constitutes the entire agreement of
the parties hereto with respect to the subscription hereunder and supersedes all
previous subscription agreements executed by the parties hereto in connection
with the Offering.
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Number of Units Subscribed for:________________________
Total Cost of Units Subscribed for:____________________
[SUBSCRIBER]
By:______________________________ DATE: ___________, 1996
Name:
Title:
GEOTEK COMMUNICATIONS, INC.
By:_______________________________ DATE: ___________, 1996
Name:
Title:
<PAGE>
The following is a summary of all omitted Exhibits and Schedules to the
foregoing Subscription Agreement.
Exhibit A Certificate of Designation of Series N
Cumulative Convertible Preferred Stock
(filed as Exhibit (c)(2) to the Form 8-K).
Exhibit B Warrant (filed as Exhibit (c)(3) to the
Form 8-K).
Schedule I Schedule of Exceptions.
The Registrant hereby agrees to furnish supplementally to the
Commission a copy of Schedule I upon request of the Commission.
<PAGE>
EXHIBIT (c)(2)
<PAGE>
CERTIFICATE OF DESIGNATION
of
SERIES N CUMULATIVE CONVERTIBLE PREFERRED STOCK
of
GEOTEK COMMUNICATIONS, INC.
(Pursuant to Section 151 of the
Delaware General Corporation Law)
Geotek Communications, Inc., a corporation organized and existing under
the General Corporation Law of the State of Delaware (the "Corporation"), hereby
certifies that the following resolutions were adopted by the Board of Directors
of the Corporation pursuant to authority of the Board of Directors as required
by Section 151 of the Delaware General Corporation Law:
RESOLVED, that pursuant to the authority granted to and vested in the
Board of Directors of this Corporation (the "Board of Directors" or the "Board")
in accordance with the provisions of its Restated Certificate of Incorporation,
the Board of Directors hereby creates a series of the Corporation's previously
authorized Preferred Stock, par value $.01 per share (the "Preferred Stock"),
and hereby states the designation and number of shares, and fixes the relative
rights, preferences, privileges, powers and restrictions thereof as follows:
Series N Cumulative Convertible Preferred Stock:
I. Designation and Amount
The designation of this series, which consists of fifty-five thousand
(55,000) shares of Preferred Stock, is Series N Cumulative Convertible Preferred
Stock (the "Series N Preferred Stock") and the stated value shall be one
thousand dollars ($1000.00) per share (the "Stated Value"). The number of shares
of the Series N Preferred Stock may be decreased from time to time by a
resolution or resolutions of the Board of Directors; provided, however, that no
such amendment shall reduce the number of shares of the Series N Preferred Stock
to a number less
<PAGE>
than the aggregate number of shares of the Series N Preferred Stock then
outstanding. Notwithstanding any other provision in this Certificate of
Designation, the Corporation shall not be required to issue fractional shares of
Series N Preferred Stock.
II. Rank
All Series N Preferred Stock shall rank (i) prior to the Corporation's
common stock, par value $.01 per share (the "Common Stock"); (ii) junior to the
Corporation's Series H Cumulative Convertible Preferred Stock, Series I
Cumulative Convertible Preferred Stock (the "Series I Stock"), Series K
Cumulative Convertible Preferred Stock, Series L Cumulative Convertible
Preferred Stock and Series M Cumulative Convertible Preferred Stock and (iii)
unless the holders of Series N Preferred Stock shall otherwise consent pursuant
to Article VIII.B, prior to any other class or series of the Corporation's
capital stock, both as to payment of dividends and as to distribution of assets
upon liquidation, dissolution or winding up of the Corporation, whether
voluntary or involuntary.
III. Dividends
A. The holders of shares of Series N Preferred Stock shall be
entitled to receive dividends, payable in shares of Common Stock as set forth
below, at the rate (the "Dividend Rate") of ten percent (10.0%) per annum, from
and after the date of issuance of such shares, which dividends shall be payable
(subject to the limitations contained in Article IX) in equal quarterly
installments on March 31, June 30, September 30 and December 31 each year,
commencing September 30, 1996 (each such date, regardless of whether any
dividends have been paid or declared and set aside for payment on such date,
being a "Dividend Payment Date"), to holders of record as they appear on the
stock books on such record dates as are fixed by the Board of Directors, but
only when, as and if declared by the Board of Directors out of funds at the time
legally available for the payment of dividends. For purposes of calculation of
such dividends, the Series N Preferred Stock shall be valued at the Stated
Value. The Corporation shall pay such dividends by issuing to each holder shares
of Common Stock that have an aggregate Market Value (as defined below) equal to
the amount of the dividends payable to such holder on the applicable Dividend
Payment Date. For purposes of this paragraph, the aggregate "Market Value" of
the Common Stock with respect to any Dividend Payment Date shall mean the
average of the Closing Prices (as defined in subparagraph (b) of Article VI.B)
of the shares of Common Stock for the thirty (30) consecutive Trading Days (as
defined in subparagraph (b) of Article VI.B) commencing forty-five (45) Trading
Days prior to the Dividend Payment Date. Such dividends shall begin to accrue on
outstanding shares of Series N Preferred Stock from the date of issuance and
shall be deemed to accrue from day to day whether or not earned or declared
until paid; provided, however, that dividends accrued or deemed to have accrued
for any period longer or shorter than a three-month period between Dividend
Payment Dates shall be computed based on the actual
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number of days elapsed in the period for which such dividends are payable.
Dividends on the Series N Preferred Stock shall be cumulative, and from and
after any Dividend Payment Date on which any dividend that has accrued and is
payable or been deemed to have accrued and is payable through such date has not
been paid in full, the amount of such unpaid dividends (the "Dividend
Arrearage"), valued at the full such amount, shall accrue dividends at an annual
rate equal to 15% per annum. Such dividends in respect of any Dividend Arrearage
shall be deemed to accrue from day to day whether or not earned or declared
until the Dividend Arrearage is paid, shall be calculated as of each successive
Dividend Payment Date and shall constitute an additional Dividend Arrearage from
and after any Dividend Payment Date to the extent not paid on such Dividend
Payment Date. References in any Article herein to dividends that have accrued or
that have been deemed to accrue shall include the amount, if any, of any
Dividend Arrearage together with any dividends accrued or deemed to have accrued
on such Dividend Arrearage pursuant to the immediately preceding two sentences.
Dividends on account of any Dividend Arrearage may be declared and paid at any
time, in whole or in part, without reference to any regular Dividend Payment
Date, to holders of record on such date as may be fixed by the Board of
Directors of the Corporation.
B. No dividends or other distributions, other than dividends
or other distributions payable solely in shares of capital stock of the
Corporation which are junior to the Series N Preferred Stock and liquidating
distributions which are subject to the provisions of Article IV, shall be
declared, paid or set aside for payment on, and no purchase, redemption or other
acquisition shall be made of, any shares of capital stock of the Corporation
(other than any class or series of Preferred Stock that, in accordance with
Article II hereof, ranks senior to the Series N Preferred Stock), unless and
until all accrued and unpaid dividends on the Series N Preferred Stock,
including the full dividend for the then current quarterly dividend period and
all outstanding Dividend Arrearages and accrued and unpaid dividends thereon,
shall have been declared and paid or a sum sufficient for the payment thereof
set aside for such purposes.
C. Any reference to "distribution" contained in this Article
III shall not be deemed to include any stock dividend or distributions made in
connection with any liquidation, dissolution or winding up of the Corporation,
whether voluntary or involuntary.
D. In the event any holder of Series N Preferred Stock shall
be entitled to a fractional share of Common Stock on account of dividends on the
Series N Preferred Stock, such fractional shares shall be disregarded and the
number of shares of Common Stock issuable on account of such dividend shall be
the next higher number of shares.
E. A holder of shares of Series N Preferred Stock shall not be
entitled to receive any dividends or other distributions with respect to any
share of Series N Preferred Stock except as provided herein and shall have no
right to receive dividends with respect to any such
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<PAGE>
share of Series N Preferred Stock (i) after a conversion of such share of Series
N Preferred Stock pursuant to Article VII or (ii) after any Mandatory Conversion
Date with respect to such share of Series N Preferred Stock; provided, however,
that dividends on such share of Series N Preferred Stock (other than a Dividend
Arrearage converted into Common Stock pursuant to Article VI) shall accrue and
be payable on such share of Series N Preferred Stock through and including any
redemption thereof pursuant to Article V or conversion thereof pursuant to
Article VI or VII.
IV. Liquidation Preference
A. If the Corporation shall commence a voluntary case under
the Federal bankruptcy laws or any other applicable Federal or State bankruptcy,
insolvency or similar law, or consent to the entry of an order for relief in an
involuntary case under any law or to the appointment of a receiver, liquidator,
assignee, custodian, trustee, sequestrator (or other similar official) of the
Corporation or of substantially all of its property, or make an assignment for
the benefit of its creditors, or if a decree or order for relief in respect of
the Corporation shall be entered by a court having jurisdiction in the premises
in an involuntary case under the Federal bankruptcy laws or any other applicable
Federal or State bankruptcy, insolvency or similar law resulting in the
appointment of a receiver, liquidator, assignee, custodian, trustee,
sequestrator (or other similar official) of the Corporation or of substantially
all of its property, or ordering the winding up or liquidation of its affairs,
and any such decree or order shall be unstayed and in effect for a period of 60
consecutive days and, on account of any such event (a "Liquidation Event"), the
Corporation shall liquidate, dissolve or wind up, or if the Corporation shall
otherwise liquidate, dissolve or wind up, no distribution shall be made to the
holders of any shares of capital stock of the Corporation (other than any class
or series of Preferred Stock that, in accordance with Article II hereof, ranks
senior to the Series N Preferred Stock) upon liquidation, dissolution or winding
up unless prior thereto, the holders of shares of Series N Preferred Stock,
subject to Article VI, shall have received the Liquidation Preference (as
defined in Article IV.C) with respect to each share. If upon the occurrence of a
Liquidation Event, the assets and funds available for distribution among the
holders of the Series N Preferred Stock shall be insufficient to permit the
payment to such holders of the preferential amounts payable thereon, then the
entire assets and funds legally available for distribution to the Series N
Preferred Stock shall be distributed ratably among such shares.
B. Neither the consolidation, merger or other business
combination of the Corporation with or into any other Person (as defined below)
or Persons nor the sale of all or substantially all the assets of the
Corporation shall be deemed to be a liquidation, dissolution or winding up of
the Corporation for purposes of this Article IV. "Person" shall mean any
individual, corporation, limited liability company, partnership, association,
trust or other entity or organization.
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C. For purposes hereof, the "Liquidation Preference" with
respect to a share of the Series N Preferred Stock shall mean an amount equal to
the unpaid dividends accrued or deemed to have accrued thereon to the date of
final distribution to the holder thereof, whether or not declared, plus an
amount equal to the Stated Value.
V. Redemption
A. Subject to the limitations set forth in this Article V, in
the event of a Change of Control (as defined in Article V.E), the Corporation
shall redeem (the "Redemption") the shares of Series N Preferred Stock held by
Electing Holders (as defined in Article V.B) in accordance with the provisions
of this Article V. The Redemption shall be made as of a date (the "Redemption
Date") specified by the Corporation not later than the later of (i) the date of
the Change of Control; or (ii) 60 days after the Corporation first received
written notice of the Change of Control. The redemption price payable upon a
Redemption shall be paid in cash or shares of Common Stock (or, in the case of a
Change of Control in which the Corporation is not the surviving entity, in the
common equity of the successor entity) or a combination thereof, at the
Corporation's option, in accordance with Article V.D and shall be in an amount
per share of Series N Preferred Stock (the "Redemption Price") equal to the sum
of (i) the Stated Value and (ii) an amount equal to all unpaid dividends accrued
or deemed to have accrued with respect to such share of Series N Preferred Stock
to the Redemption Date or the date of actual payment of the Redemption Price,
whichever is later. If the Redemption Price is not paid in full within 30 days
after the Redemption Date (unless such delay results from the need for approval
or other action by governmental bodies or other Persons which approval or other
action is sought by the Corporation with reasonable diligence any unpaid
Redemption Price shall accrue interest at the greater of (x) 15% per annum or
(y) the interest rate per annum at which deposits in United States dollars are
offered by the principal office of Citibank in London, England, to prime banks
in the London interbank market at 11:00 a.m. (London time) during the period
covered plus 6% per annum from the Redemption Date until the date of payment,
and such interest shall be compounded daily and the Redemption Price shall be
deemed to include all such accrued and unpaid interest.
B. Not more than 60 nor fewer than 15 Trading Days prior to
the Redemption Date, notice by first class mail, postage prepaid, shall be sent
to the holders of record of the shares of Series N Preferred Stock eligible to
be redeemed, addressed to such stockholders at their last addresses as shown by
the records of the Corporation. Such notice shall (i) notify such holders of
their right to elect redemption, subject to the applicable provisions of this
Article V; (ii) state the amount and form or forms of consideration to be paid;
and (iii) provide a summary of other relevant details of the transaction. The
right of each holder to elect redemption shall terminate unless notice of such
election from such holder is received by the Corporation not later
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than 10 Trading Days prior to the Redemption Date. Holders who elect redemption
in accordance with the foregoing are referred to herein as the "Electing
Holders."
C. The Corporation shall, on or prior to the Redemption Date,
but not earlier than 45 days prior to the Redemption Date, deposit with its
transfer agent or other redemption agent in the United States selected by the
Board of Directors, as a trust fund, cash and/or shares of Common Stock (or, in
the case of a Change of Control in which the Corporation is not the surviving
entity, common equity of the successor entity) sufficient in amount to pay the
Redemption Price in full on all outstanding shares of Series N Preferred Stock
held by Electing Holders with irrevocable instructions and authority to such
transfer agent or other redemption agent to give or complete the notice of
redemption thereof and to pay to the applicable holders (as evidenced by a list
of such holders certified by an officer of the Corporation) the Redemption Price
upon surrender of their respective share certificates. Such deposit shall be
deemed to constitute full payment for such shares to their holders, and from and
after the date of such deposit all rights of the holders of the shares of Series
N Preferred Stock that are to be redeemed, as stockholders of the Corporation
with respect to such shares, except the right to receive the Redemption Price
without interest or any dividends thereon, upon the surrender of their
respective certificates, and except any right as provided in Article VI to
convert their shares into Common Stock or other property or securities prior to
the date fixed for redemption, shall cease and terminate. In case an Electing
Holder of any shares of Series N Preferred Stock called for redemption shall
not, within one year after such deposit, claim the cash deposited for redemption
thereof, such transfer agent or other redemption agent shall, upon demand, pay
over to the Corporation the balance so deposited. Thereupon, such transfer agent
or other redemption agent shall be relieved of all responsibility to the holder
thereof and the sole right of such holder, with respect to shares to be
redeemed, shall be as general creditors of the Corporation. To the extent that
shares of Series N Preferred Stock called for redemption are converted into
Common Stock (or other property or securities pursuant to Article VI hereof)
prior to the date fixed for redemption, the amount deposited by the Corporation
for the redemption of such shares shall immediately be returned to the
Corporation. Any interest accrued on any funds so deposited shall belong to the
Corporation, and shall be paid to it from time to time on demand.
D. In the event that the Corporation exercises its option to
pay the Redemption Price in whole or in part in shares of Common Stock, the
number of shares of Common Stock to be issued per share of Series N Preferred
Stock shall be determined by dividing the Redemption Price by the Market Value
(as defined below) of a share of Common Stock. For purposes of this
subparagraph, the "Market Value" of a share of Common Stock shall mean the
average of the 20 highest Closing Prices of the shares of Common Stock during
the period of 30 consecutive Trading Days ending on the Trading Day immediately
prior to the Redemption Date. To the extent the Redemption Price in a Change of
Control Redemption is paid in common equity of a
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successor entity, the amount of such common equity shall be determined by the
Board of Directors applying the principles of this Article V.D to the extent
practicable.
E. Solely for purposes of this Article V, the following terms
shall have the following meanings:
"Capital Stock" means any and all shares, interests, rights to
purchase, warrants, options, participations or other equivalents of or interests
in (however designated) corporate stock and any and all equity, beneficial or
ownership interests in, or participations or other equivalents in, any
partnership, association, joint venture or other business entity.
"Change of Control" means an event or series of events by which (i) (A)
any "person" or "group" (as such terms are defined in Sections 13(d) and 14(d)
of the Securities Exchange Act of 1934 (the "Exchange Act")), is or becomes the
"beneficial owner" (as defined in Rule 13d-3 and Rule 13d-5 under the Exchange
Act), directly or indirectly, of more than 50% of the total voting power of the
then outstanding Voting Stock of the Corporation or (B) the Corporation
consolidates with, or merges with or into, another Person or sells, assigns,
conveys, transfers, leases or otherwise disposes of all or substantially all of
its assets to any Person, or any Person consolidates with, or merges with or
into, the Corporation, if, immediately thereafter, the Persons who, immediately
prior to such transaction, beneficially owned the Voting Stock of the
Corporation, own, in the aggregate, less than 50% of the total voting power of
the Voting Stock of the surviving or transferee Person; provided, however, that
no Change of Control will be deemed to occur pursuant to this clause (i) (x) if
the Person is a corporation with outstanding debt securities having a maturity
at original issuance of at least one year and if such debt securities are rated
Investment Grade by S&P or Moody's for a period of at least 90 consecutive days,
beginning on the date of such event (which period will be extended up to 90
additional days for as long as the rating of such debt securities is under
publicly announced consideration for possible downgrading by the applicable
rating agency), or (y) if the Person is a corporation (1) that is not, and does
not have any outstanding debt securities that are, rated by S&P, Moody's or any
other rating agency of national standing at any time during a period of 90
consecutive days beginning on the date of such event (which period will be
extended up to an additional 90 days for as long as any such rating agency has
publicly announced that such corporation or debt thereof will be rated), unless
after such date but during such period debt securities of such corporation
having a maturity at original issuance of at least one year are rated Investment
Grade by S&P or Moody's and remain so rated for the remainder of the period
referred to in clause (x) above and (2) that, when determined as of the Trading
Day immediately before the Trading Day immediately after the date of such event,
has Total Common Equity of at least $10 billion (provided that, solely for the
purpose of calculating Total Common Equity as of such later Trading Day, the
average Closing Price of Common Stock of the such Person will be deemed to equal
the Closing Price of such Common Stock on such later Trading Day, subject to the
last sentence of the definition of "Total
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Common Equity"); or (ii) during any consecutive two-year period, individuals who
at the beginning of such period constituted the Board of Directors of the
Corporation (together with any directors who are members of the Board of
Directors on the date of the initial issuance of shares of Series N Preferred
Stock and any new directors whose election by such Board of Directors or whose
nomination for election by the stockholders of the Corporation was approved by a
vote of 66 2/3% of the directors then still in office who were either directors
at the beginning of such period or whose election or nomination for election was
previously so approved) cease for any reason to constitute a majority of the
Board of Directors of the Corporation then in office.
"Closing Price" shall have the meaning set forth in subparagraph (b) of
Article VI.B.
"Common Stock" of any Person means Capital Stock of such Person that
does not rank prior, as to the payment of dividends or as to the distribution of
assets upon any voluntary or involuntary liquidation, dissolution or winding up
of such Person, to shares of Capital Stock of any other class of such Person.
"Investment Grade" means a rating of at least BBB-, in the case of S&P,
or Baa3, in the case of Moody's.
"Moody's" means Moody's Investors Service, Inc. and its successors.
"S&P" means Standard & Poor's Corporation and its successors.
"Trading Day" shall have the meaning set forth in subparagraph (b) of
Article VI.B.
"Total Common Equity" of any Person means, as of any day of
determination (and as modified for purposes of the definition of "Change of
Control"), the product of (i) the aggregate number of outstanding primary shares
of Common Stock of such Person on such day (which shall not include any options
or warrants on, or securities convertible or exchangeable into, shares of Common
Stock of such Person) and (ii) the average Closing Price of such Common Stock
over the 20 consecutive Trading Days immediately preceding such day. If no such
Closing Price exists with respect to shares of any such class, the value of such
shares for purposes of clause (ii) of the preceding sentence shall be determined
by the Board of Directors of the Corporation in good faith and evidenced by a
written opinion as to such value issued by an investment banking firm of
recognized national standing.
"Voting Stock" of any Person means Capital Stock of such Person which
ordinarily has voting power for the election of directors (or persons performing
similar functions) of such Person.
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VI. Conversion at the Option of the Holder
A. Subject to all applicable state and federal laws, rules and
regulations ("Applicable Law") and the limitations contained in Article IX, each
holder of shares of Series N Preferred Stock may, at its option at any time and
from time to time, upon surrender of the certificates therefor, convert any or
all of its shares of Series N Preferred Stock into Common Stock as follows. Each
share of Series N Preferred Stock shall be convertible into such number of fully
paid and nonassessable shares of Common Stock as is determined by dividing (i)
the sum of the Stated Value and the Dividend Arrearage, if any, with respect to
such share through the date of conversion, but no later, by (ii) the then
effective Conversion Price (as defined below). The "Conversion Price" initially
shall be eleven dollars ($11.00) per share of Common Stock and shall be subject
to adjustment from time to time as provided in connection with the antidilution
adjustments set forth in Article VI.B.
B. The Conversion Price shall be subject to adjustment from
time to time as follows:
(a) In case the Corporation shall (i) declare a
dividend or make a distribution on the outstanding shares of its Common Stock in
shares of its Common Stock, (ii) subdivide its outstanding shares of Common
Stock into a greater number of shares, or (iii) combine its outstanding shares
of Common Stock into a smaller number of shares, the Conversion Price in effect
at the time of the record date for such dividend or distribution or the
effective date of such subdivision or combination shall be proportionately
adjusted so that the holder of any shares of Series N Preferred Stock
surrendered for conversion after such time shall be entitled to receive the
aggregate number of shares of Common Stock which the holder would have owned or
been entitled to receive had such shares of Series N Preferred Stock been
converted immediately prior to such record date or effective date and the
resulting Common Stock had been subject to such dividend, distribution,
subdivision or combination. Any shares of Common Stock issuable in payment of a
dividend shall be deemed to have been issued immediately prior to the time of
the record date for such dividend for purposes of calculating the number of
outstanding shares of Common Stock under subparagraphs (b) and (c) below. Such
adjustment shall be made successively whenever any event specified above shall
occur.
(b) In case the Corporation shall fix a record date
for the issuance of rights, options or warrants to all holders of shares of
Common Stock entitling them to subscribe for or purchase shares of Common Stock
(or securities convertible into shares of Common Stock) at a price per share (or
having a Conversion Price per share) less than the average of the Closing Prices
(as defined below) of the Common Stock for the twenty (20) consecutive Trading
Days (as defined below) ending five (5) Trading Days prior to the record date
(the "Conversion Average Closing Price"), the Conversion Price shall be adjusted
immediately thereafter so that it shall
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equal the price determined by multiplying the Conversion Price in effect
immediately prior thereto by a fraction, the numerator of which shall be the
number of shares of Common Stock outstanding on such record date plus the number
of shares of Common Stock that the aggregate offering price of the total number
of shares of such Common Stock so offered (or the aggregate initial conversion
price of the convertible securities so offered) would purchase on such record
date at the Conversion Average Closing Price, and the denominator of which shall
be the number of shares of Common Stock outstanding on such record date plus the
number of additional shares of Common Stock offered for subscription or purchase
(or into which the convertible securities so offered are initially convertible).
Shares of Common Stock owned by or held for the account of the Corporation shall
not be deemed outstanding for the purpose of any such computation. Such
adjustment shall be made successively whenever such a record date is fixed. In
the event and to the extent that such rights, options, warrants or convertible
securities are not so issued, the Conversion Price then in effect shall be
readjusted to the Conversion Price which would then be in effect if such record
date had not been fixed. The "Closing Price" for each day shall be the last
reported sales price regular way on that day or, in case no such reported sale
takes place on such day, the reported closing bid price regular way, in either
case as reported in the principal consolidated transaction reporting system for
the principal United States national securities exchange or the Nasdaq Stock
Market's National Market ("NASDAQ") on which the Common Stock is admitted to
trading or listed, or if not so listed or admitted to trading, the last quoted
bid price or, if not quoted, the average of the high bid and the low asked
prices in the over-the-counter market as reported by NASDAQ or such other system
then in use (reduced in each case to reflect any dividend for the period during
which the Common Stock is traded on an ex-dividend basis). If the Common Stock
is not publicly held or so listed or traded, the "Closing Price" shall mean the
fair value per share as determined in good faith by the Board of Directors,
whose determination shall be conclusive, and described in a resolution of the
Board of Directors certified by the Secretary or an Assistant Secretary of the
Corporation. A "Trading Day" shall be any day on which the principal national
securities exchange (or NASDAQ) on which the Common Stock is admitted to trading
or listed is open or, if the Common Stock is not so admitted to trading or so
listed, any day except Saturday, Sunday, a legal holiday or any day on which
banking institutions in the City of New York are obligated or authorized to
close.
(c) The Conversion Price of shares of Series N
Preferred Stock shall be adjusted in the event that the Corporation shall fix a
record date for the making of a distribution to all holders of shares of Common
Stock of (i) shares of any class of capital stock other than Common Stock, (ii)
evidences of its indebtedness, (iii) assets (excluding regular cash dividends at
rates in effect from time to time, and excluding dividends or distributions
referred to in subparagraph (a) above) or (iv) rights, options or warrants
(excluding those referred to in subparagraph (b) above). In such case, the
Conversion Price in effect immediately thereafter shall be determined by
multiplying the Conversion Price in effect immediately prior thereto by a
fraction, the numerator of which shall be the total number of shares of Common
Stock outstanding
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on such record date multiplied by the average of the Closing Prices of the
Common Stock for the twenty (20) consecutive Trading Days ending five (5)
Trading Days prior to such record date, less the fair market value (as
determined in good faith by the Board of Directors, whose determination shall be
conclusive, and described in a resolution of the Board of Directors certified by
the Secretary or an Assistant Secretary of the Corporation) of said shares or
evidences of indebtedness or assets or rights, options or warrants so
distributed, and the denominator of which shall be the total number of shares of
Common Stock outstanding on such record date multiplied by the average of the
Closing Prices of the Common Stock for the twenty (20) consecutive Trading Days
ending five (5) Trading Days prior to such record date. Such adjustment shall be
made successively whenever such a record date is fixed. In the event that such
distribution is not so made, the Conversion Price then in effect shall be
readjusted to the Conversion Price which would then be in effect if such record
date had not been fixed.
(d) In any case in which this Article VI.B shall
require that an adjustment become effective immediately after a record date for
an event, the Corporation may defer until the occurrence of such event by (i)
issuing to the holder of any shares of Series N Preferred Stock converted after
such record date and before the occurrence of such event the additional shares
of Common Stock issuable upon such conversion by reason of the adjustment
required by such event over and above the shares of Common Stock issuable upon
such conversion before giving effect to such adjustment and (ii) paying to such
holder any amount in cash in lieu of a fractional share pursuant to Article
VI.C; provided, however, that the Corporation shall deliver to such holder a due
bill or other appropriate instrument evidencing such holder's rights to receive
such additional shares of Common Stock and such cash, upon the occurrence of the
event requiring such adjustment.
(e) All calculations under this Article VI.B shall be
made to the nearest cent or to the nearest one one-hundredth of a share of
Common Stock as the case may be.
C. No fractional shares of Common Stock or other securities,
if any, or scrip representing fractional shares of Common Stock or other
securities, if any, shall be issued upon the conversion of any share or shares
of Series N Preferred Stock. If the conversion of a share or shares of Series N
Preferred Stock results in a fraction of Common Stock or other securities, an
amount equal to such fraction multiplied by the Closing Price of the Common
Stock or other securities, if any, on the Trading Day prior to the conversion
shall be paid to such holder in cash by the Corporation. The "Closing Price" for
other securities shall be determined in the same manner and with the same effect
as the "Closing Price" for the Common Stock as defined in Article VI.B.(b).
D. The right of the holders of shares of Series N Preferred
Stock to convert their shares shall be exercised by surrendering for such
purpose to the Corporation or its agent,
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as provided above, certificates representing shares to be converted, duly
endorsed in blank or accompanied by proper instruments of transfer. The
Corporation shall not, however, be required to pay any tax which may be payable
in respect of any transfer involved in the issue and delivery upon conversion of
shares of Common Stock or other securities or property in a name other than that
of the registered holder of the shares of the Series N Preferred Stock being
converted.
E. A number of shares of the authorized but unissued Common
Stock sufficient to provide for the conversion of the Series N Preferred Stock
outstanding at the then current Conversion Price and to provide for the payment
of dividends payable thereon during the present and following year at the then
current Market Price shall at all times be reserved by the Corporation, free
from preemptive rights, subject to the provisions of the next succeeding
paragraph. If the Corporation shall issue any securities or make any change in
its capital structure which would change the number of shares of Common Stock
into which each share of the Series N Preferred Stock shall be convertible at
the then current Conversion Price, the Corporation shall at the same time also
make proper provision so that thereafter there shall be a sufficient number of
shares of Common Stock authorized and reserved, free from preemptive rights, for
conversion of the outstanding Series N Preferred Stock on the new basis and for
the payment of dividends to the extent set forth above.
F. In case of (i) any reclassification or change of the
outstanding shares of Common Stock (other than a change in par value, or from
par value to no par value, or from no par value to par value, or as a result of
a subdivision or combination), (ii) any consolidation or merger of the
Corporation with any other corporation (other than a merger in which the
Corporation is the surviving or continuing corporation and its outstanding
capital stock is unchanged), (iii) any sale or transfer of all or substantially
all of the assets of the Corporation or (iv) any share exchange pursuant to
which all of the outstanding shares of Common Stock are converted into other
securities or property, the Corporation shall in each such case make appropriate
provision or cause appropriate provision to be made so that the holders of
shares of Series N Preferred Stock then outstanding shall have the right
thereafter to convert each such share of Series N Preferred Stock into the kind
and amount of other securities and property receivable upon such
reclassification, consolidation, merger, sale, transfer or share exchange by a
holder of the number of shares of Common Stock into which each such share of
Series N Preferred Stock might have been converted immediately prior to such
reclassification, consolidation, merger, sale, transfer or share exchange. To
the extent that as a result of any such reclassification, consolidation, merger,
sale, transfer or share exchange the Series N Preferred Stock becomes
convertible into a new common stock of the Corporation or the common stock of
any other corporation involved in a merger with the Corporation, the Corporation
shall make appropriate provision or cause appropriate provision to be made so
that the Conversion Price with respect to such new common stock shall be subject
to further adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to Common
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Stock contained in this Article VI. If in connection with any such
reclassification, consolidation, merger, sale, transfer or share exchange, each
holder of shares of Common Stock is entitled to elect to receive alternative
forms of consideration upon completion of such transaction, the Corporation
shall provide or cause to be provided to each holder of Series N Preferred Stock
upon conversion thereof the shares of capital stock or other securities or
property receivable by a holder of Common Stock who failed to make an election
with respect to the form of consideration receivable in such transaction. The
Corporation shall not effect any such transaction unless the provisions of this
paragraph have been complied with. The above provisions shall similarly apply to
successive reclassifications, consolidations, mergers, sales, transfers or share
exchanges.
G. Upon the surrender of certificates representing shares of
Series N Preferred Stock in accordance with the terms hereof, the person
converting shall be deemed to be the holder of record at such time of the shares
of Common Stock and other securities or property issuable on such conversion and
all rights with respect to the shares of Series N Preferred Stock surrendered
shall forthwith terminate except the right to receive the shares of Common Stock
or other securities or property issuable on such conversion. Except as otherwise
provided in Article VI.B, no adjustment in the Conversion Price shall be made at
the time of conversion in respect of distributions or dividends theretofore
declared and paid or payable on the Common Stock.
H. Upon the occurrence of each adjustment or readjustment of
the Conversion Price pursuant to this Article VI, the Corporation, at its
expense, shall promptly compute such adjustment or readjustment in accordance
with the terms hereof and prepare and furnish to each holder of Series N
Preferred Stock a certificate setting forth such adjustment or readjustment and
showing in detail the facts upon which such adjustment or readjustment is based.
The Corporation shall, upon the written request at any time of any holder of
Series N Preferred Stock, furnish or cause to be furnished to such holder a like
certificate setting forth (i) such adjustment or readjustment, (ii) the
Conversion Price at the time in effect and (iii) the number of shares of Common
Stock and the amount, if any, of other securities or property which at the time
would be received upon conversion of a share of Series N Preferred Stock.
VII. Mandatory Conversion
From and after that date which is twenty-four (24) months following the
issuance of the Series N Preferred Stock, 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 on a Mandatory Conversion Date following a
Mandatory Conversion Calculation Period. "Mandatory Conversion Calculation
Period" shall be any period during which for twenty consecutive Trading Days,
the Closing Price of the Common Stock equaled or exceeded the Mandatory
Conversion Price. The initial Mandatory Conversion Price shall be equal to
seventeen dollars and seventy-five cents ($17.75). The Mandatory Conversion
Price shall be subject to equitable adjustment in accordance with the
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antidilution provisions set forth in Article VI.B and Article VI.F to the same
extent as the Conversion Price is subject to adjustment. At any time during the
ten (10) Business Day period immediately following the conclusion of a Mandatory
Conversion Calculation Period in respect of which the Company determines to
convert the Series N Preferred Stock pursuant to this Article VII, the Company
shall cause to be mailed to all holders of Series N Preferred Stock at their
last address reflected on the Company's books and records a notice notifying
such holders that the Company has exercised its conversion right pursuant to
this Article VII. Such notice shall set forth the date fixed for such conversion
(the "Mandatory Conversion Date"), which shall be a date not less than ten (10)
nor more than thirty (30) Business Days following the conclusion of such
Mandatory Conversion Calculation Period, the applicable conversion price and the
procedures applicable to such conversion (as may reasonably be determined by the
Company; provided, however, that a holder of Series N Preferred Stock may, by
providing written notice of such election to the Corporation at least five (5)
business days prior to the Mandatory Conversion Date, delay a Mandatory
Conversion Date with respect to any of its shares of Series N Preferred Stock if
the Common Stock issuable upon conversion of and in respect to dividends on such
Series N Preferred Stock is not, and until such date as the Common Stock
issuable upon conversion of and in respect to dividends on such Series N
Preferred Stock is, either (i) registered for resale under the Securities Act of
1933, as amended (the "Securities Act") or (ii) permitted to be sold pursuant to
Rule 144 under the Securities Act and, with respect to any nonaffiliate of the
Corporation, without any restriction applicable to such holder as to the number
of shares of such Common Stock which can be sold pursuant to such rule. In the
event of any delay of a Mandatory Conversion Date pursuant to the proviso
contained in the immediately preceding sentence, the Corporation may not cause a
mandatory redemption of the Series N Preferred Stock under this Article VII
until the occurrence of an additional Mandatory Conversion Period and then only
if the Company again complies with the terms of this Article VII.
VIII. Voting Rights
In addition to any voting rights provided by law, the holders of shares
of Series N Preferred Stock shall have the following rights:
A. So long as the Series N Preferred Stock is outstanding,
each share of Series N Preferred Stock shall entitle the holder thereof to vote
on all matters voted on by holders of the capital stock of the Corporation into
which such share of Series N Preferred Stock is convertible, voting together as
a single class with the other shares entitled to vote, at all meetings of the
stockholders of the Corporation. With respect to any such vote, each share of
Series N Preferred Stock shall entitle the holder thereof to cast the number of
votes equal to the number of votes which could be cast in such vote by a holder
of the shares of capital stock of the Corporation into which such share of
Series N Preferred Stock is convertible on the record date for such vote.
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B. The affirmative vote of the holders of at least sixty-six
and two-thirds percent (662/3%) of the voting power represented by the
outstanding shares of Series N Preferred Stock, voting separately as a single
class, shall be necessary to (i) increase the authorized number of shares of, or
issue beyond the number of shares issued in that certain offering of Series N
Preferred Stock to close on or about June 20, 1996 (including on conversion or
exchange of any convertible or exchangeable securities or by reclassification),
any shares of, Series N Preferred Stock, (ii) authorize, adopt or approve an
amendment to the Restated Certificate of Incorporation of the Corporation that
would either (A) increase or decrease the aggregate number (or par value) of
authorized shares of Series N Preferred Stock, (B) alter or change the powers,
preferences or special rights of any shares of capital stock so as to affect the
shares of Series N Preferred Stock adversely or (C) increase the rate or period
of time at or for which dividends accrue on the Corporation's Series H
Cumulative Convertible Preferred Stock, (iii) allow the Corporation to purchase
any shares of Series N Preferred Stock when dividends on the Series N Preferred
Stock are in arrears, or (iv) issue any shares of capital stock of the
Corporation which is senior to the Series N Preferred Stock (either as to
dividends or upon liquidation) (other than shares of the Corporation's Series L
Cumulative Convertible Preferred Stock in order to pay dividends on the Series L
Cumulative Convertible Preferred Stock pursuant to Article III.B of the
Certificate of Designation for such preferred stock). The affirmative vote of
holders of at least 662/3% of the voting power represented by the outstanding
shares of Series N Preferred Stock, voting separately as a class, shall be
necessary to issue any additional shares of Series N Preferred Stock.
C. If on any date, (i) dividends or distributions payable on
the Series N Preferred Stock shall have been in arrears and not paid in full
with respect to two Dividend Payment Dates, or (ii) the Corporation shall have
failed to satisfy its obligation to redeem shares of Series N Preferred Stock
pursuant to Article V, then the number of directors constituting the Board of
Directors shall, without further action, be increased by one and the holders of
shares of Series N Preferred Stock shall have, in addition to the other voting
rights as set forth herein, the exclusive right, voting separately as a single
class, to elect the director of the Corporation to fill such newly created
directorship, the remaining directors of the Corporation to be elected by the
other classes of stock entitled to vote therefor (including the Series N
Preferred Stock in accordance with Article VIII.A), at each meeting of
stockholders held for the purpose of electing directors. Such additional
director shall continue as a director and such additional voting rights shall
continue until such time as (A) all dividends payable on the Series N Preferred
Stock shall have been paid in full and (B) any redemption obligation provided in
Article V which has become due shall have been satisfied or all necessary funds
shall have been set aside for payment, as the case may be, at which time such
additional director shall cease to be a director and such additional voting
rights of the holders of Series N Preferred Stock shall terminate subject to
revesting in the event of each and every subsequent event of the character
indicated above.
-15-
<PAGE>
D. (i) The rights of holders of shares of Series N Preferred
Stock to take any actions as provided in Paragraphs B and C of this Article VIII
may be exercised at any annual meeting of stockholders or any special meeting of
stockholders or holders of Series N Preferred Stock held for such purposes as
hereinafter provided or at any adjournment thereof, or by the written consent,
delivered to the Secretary of the Corporation, of the holders of the minimum
number of shares of Series N Preferred Stock required to take such action.
So long as such right to vote continues (and unless such right has been
exercised by written consent of the minimum number of shares required to take
such action), the Chairman of the Board of the Corporation may call, and upon
the written request addressed to the Secretary of the Corporation at the
principal office of the Corporation of holders of record of twenty percent (20%)
of the voting power represented by the outstanding shares of Series N Preferred
Stock, shall call a special meeting of the holders of shares entitled to vote as
provided herein. Such meeting shall be held within thirty (30) days after
delivery of such request to the Secretary, at the place and upon the notice
provided by law and in the Bylaws of the Corporation for the holding of meetings
of stockholders.
(ii) At each meeting of stockholders at which the
holders of shares of Series N Preferred Stock shall have the right, voting
separately as a single class, to elect a director of the Corporation as provided
in this Article VIII or to take any action, the presence in person or by proxy
of the holders of record of one-third of the voting power represented by the
total number of shares of Series N Preferred Stock voting separately as a single
class then outstanding and entitled to vote on the matter shall be necessary and
sufficient to constitute a quorum. At any such meeting or at any adjournment
thereof:
(A) the absence of a quorum of the holders of shares
of Series N Preferred Stock shall not prevent the election of
directors, other than any director to be elected by the holders of
Series N Preferred Stock and the absence of a quorum of the holders of
shares of any other class or series of capital stock shall not prevent
the election of a director to be elected by the holders of shares of
Series N Preferred Stock or the taking of any action as provided in
this Article VIII; and
(B) in the absence of a quorum of the holders of
shares of Series N Preferred Stock, the holders of a majority of the
voting power represented by such shares present in person or by proxy
shall have the power to adjourn the meeting as to the actions to be
taken by the holders of shares of Series N Preferred Stock from time to
time and place to place without notice other than announcement at the
meeting until a quorum shall be present.
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<PAGE>
For the taking of any action as provided in Paragraphs B and C of this
Section VIII by the holders of shares of Series N Preferred Stock, each such
holder shall have the right to cast such number of votes as may be cast by the
holder of the number of shares of Common Stock into which such Series N
Preferred Stock is convertible as of any record date fixed for such purpose or,
if no such date is fixed, at the close of business on the Trading Day next
preceding the day on which notice is given, or if notice is waived, at the close
of business on the Trading Day next preceding the day on which the meeting is
held.
E. Any director elected by the holders of shares of Series N
Preferred Stock, as provided in Paragraph C of this Article VIII shall, unless
his term shall expire earlier or be terminated in accordance with such Article
VIII.C, hold office until the annual meeting of stockholders next succeeding his
election or until his successor, if any, is elected and qualified.
In case any vacancy shall occur with respect to the
director elected by the holders of shares of Series N Preferred Stock, as
provided in Article VIII.C, such vacancy may be filled for the unexpired portion
of the term by vote of the holders of Series N Preferred Stock then outstanding
and entitled to vote for such directors, acting by written consent as herein
provided, or at a special meeting of such holders called as provided herein.
Any director elected by the holders of shares of
Series N Preferred Stock voting separately as a single class may be removed from
office with or without cause by the vote or written consent of the holders of at
least a majority of the voting power represented by the outstanding shares of
Series N Preferred Stock. A special meeting of the holders of shares of Series N
Preferred Stock may be called in accordance with the procedures set forth in
subparagraph (i) of this Article VIII.E.
F. Except as otherwise required by law, the holders of shares
of Series N Preferred Stock shall have no voting rights except as set forth in
this Article VIII.
IX. Withholding Taxes.
A. In the case of any holder of shares of Series N Preferred
Stock that is a Foreign Person (as defined below), such Foreign Person shall, no
later than one (1) business day prior to payment of any distribution in respect
of the Series N Preferred Stock payable in Common Stock, including without
limitation, dividends payable in Common Stock pursuant to Article III, deposit
(the "Initial Deposit") with the Corporation an amount of cash sufficient to
enable the Corporation to satisfy its withholding tax obligations (if any) (the
"Withholding Tax") with respect to any such distribution; provided, however,
that the provisions of this Article IX shall not apply to, and the Corporation
shall be solely responsible for the payment of, any Withholding
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<PAGE>
Tax with respect to dividends related to the fiscal year ended 1996. The amount
of the Initial Deposit shall equal the amount that would be necessary to enable
the Corporation to satisfy its withholding obligation at the applicable
statutory withholding rate (or at a reduced withholding rate if the Corporation
has received from such Foreign Person such certificates, documents or other
evidence satisfactory to it or as otherwise may be required under the Internal
Revenue Code of 1986, as amended, or treasury regulations promulgated
thereunder, establishing that such distributions either are not subject to
United States Federal withholding tax or are subject to tax at a rate reduced by
an appropriate tax treaty (such evidence is collectively referred to herein as
"Reduced Withholding Evidence")) as if the Common Stock being so distributed
were valued at the Closing Price for such Common Stock on the third business day
(the "Initial Deposit Notification Date") immediately preceding the scheduled
date for the distribution to which such Withholding Tax relates. Prior to the
Initial Deposit Notification Date with respect to a distribution, the
Corporation shall notify each holder that is a Foreign Person of the number of
shares which such holder shall receive in such distribution and remind such
holder of its obligations under this Article IX. If the Corporation shall
determine in advance that no Withholding Tax shall be payable with respect to a
distribution on the Series N Preferred Stock, the Corporation shall so notify
each holder that is a Foreign Person no later than the Initial Deposit
Notification Date and no payment shall be due hereunder with respect to such
distribution. In the event that a holder of Shares of Series N Preferred Stock
fails to make an Initial Deposit required to be made under this Article IX.A,
the Corporation shall not be required to deliver to such holder the share
certificates representing the dividends to which such Initial Deposit relates
until such time as such holder remits the applicable payment to the Corporation.
In the event the actual Withholding Tax with respect to any distribution differs
from the amount of the Initial Deposit, the Corporation (in the case of any
excess Initial Deposit) or the holder (in the case of any Initial Deposit
deficiency (an "Initial Deposit Deficiency")) shall, no later than the fifth
business day following the date of such distribution, pay such difference to the
other. The Corporation shall not be required to deliver to any holder the share
certificates representing the dividends with respect to, or effectuate any
conversions of, any Series N Preferred Stock held by a holder at any time that
such holder has failed to pay any Initial Deposit Deficiency (including, without
limitation, any deficiency caused by a failure to make an Initial Deposit) due
and payable hereunder unless the amount of such Initial Deposit Deficiency is
then subject to a good faith dispute between the Corporation and the holder.
B. For purposes of this Article IX, the term Foreign Person
means a person other than (i) a citizen or resident of the United States, (ii) a
corporation, partnership or other entity created or organized in or under the
laws of the United States or of any state or political subdivision thereof, or
(iii) an estate or trust the income of which is subject to United States federal
income taxation regardless of its source.
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<PAGE>
IN WITNESS WHEREOF, this Certificate of Designation is executed on
behalf of the Corporation by its President this 19th day of June, 1996.
GEOTEK COMMUNICATIONS, INC.
By: /s/ Yaron I. Eitan
--------------------------------
Yaron I. Eitan, President
-19-
<PAGE>
EXHIBIT (C)(3)
<PAGE>
NEITHER THIS WARRANT NOR THE SECURITIES ISSUABLE UPON EXERCISE HEREOF NOR ANY
INTEREST OR PARTICIPATION HEREIN OR THEREIN MAY BE OFFERED, SOLD, 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, JUNE __, 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
_________________________________, a ______________________, or permitted
registered assigns (the "Warrantholder" or "Warrantholders"), the right to
subscribe for and purchase from the Company, at a purchase price of $11.00 per
share (the "Exercise Price"), at any time and from time to time after the date
hereof (the "Initial Exercise Date"), and to and including 5:00 P.M. New York
City time on June __, 2001 (the "Expiration Date"),
___________________________________________ (_________) shares, as such number
of shares may be adjusted from time to time (the "Warrant Shares"), of the
Company's Common Stock, par value $.01 per share (the "Common Stock"), subject
to the provisions and upon the terms and conditions herein set forth. The
Exercise Price and the number of Warrant Shares are subject to adjustment from
time to time as provided in Section 6. This warrant constitutes part of a duly
authorized issue of warrants expiring June __, 2001, which warrants are
hereinafter referred to collectively as the "Warrants".
<PAGE>
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 issuance of the Warrant Shares 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.
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,
-2-
<PAGE>
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.
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 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
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<PAGE>
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;
-4-
<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
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<PAGE>
governmental charge that may be imposed in connection with any split up,
combination or exchange of Warrants.
(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
-6-
<PAGE>
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.
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 (as defined below) 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.
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<PAGE>
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.
(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
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<PAGE>
(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:
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,
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<PAGE>
(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. (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, 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.
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<PAGE>
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 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.
-11-
<PAGE>
(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.
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
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<PAGE>
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 (reduced in each case to
reflect any dividend for the period during which the Common Stock is traded on
an ex-dividend basis). In the absence of one or more such quotations, the 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
-13-
<PAGE>
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 (as defined
below) 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) 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
-14-
<PAGE>
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.
(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.
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<PAGE>
(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 (other than the Company and entities controlled by the
Company) that hold Warrants entitling them to purchase more than 50% of the
Warrant Shares held by all holders other than the Company and entities
controlled by the Company (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.
(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.
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<PAGE>
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) 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 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 Warrantholders
that hold Warrants entitling them to purchase at least 66 2/3% of the Warrant
Shares entitled to be purchased by all 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.
-17-
<PAGE>
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.
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,
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<PAGE>
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]
-19-
<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: June ___, 1996
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<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.
<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.
