<PAGE>
As filed with the Securities and Exchange Commission on September 27, 1996
Registration No. 333-08731
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------
AMENDMENT NO. 1 TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
GEOTEK COMMUNICATIONS, INC.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of
incorporation or organization)
22-2358635
(I.R.S. Employer Identification Number)
20 Craig Road
Montvale, New Jersey 07645
(201) 930-9305
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
---------------
Robert Vecsler, Esq.
General Counsel and Secretary
Geotek Communications, Inc.
20 Craig Road
Montvale, New Jersey 07645
(201) 930-9305
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
With a copy to:
Stephen T. Burdumy, Esq.
Klehr, Harrison, Harvey, Branzburg & Ellers
1401 Walnut Street
Philadelphia, PA 19102
(215) 568-6060
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the Registration Statement becomes effective.
------------------------------
If the only securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, check the following box: |_|
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
investment plans. Check the following box. |X|
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. |_|
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. |_|
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. |_|
<PAGE>
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
=========================================================================================================================
Title of each class of securities to Amount to be Proposed Proposed Maximum Amount of
be registered registered Maximum Aggregate Offering Registration
Aggregate Price Price Fee
Per Unit
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value $ .01 per 23,200,878(1) $9.00(2) $235,773,701.44(3) $81,301.28(4)
share
=========================================================================================================================
Warrants to acquire Common 1,000,000 $8.6250 $8,625,000(5) $0(5)
Stock at an exercise price of
$8.6250 per share
=========================================================================================================================
Warrants to acquire Common 1,000,000 $10.7813 $10,781,300(5) $0(5)
Stock at an exercise price of
$10.7813 per share
=========================================================================================================================
Warrants to acquire Common 500,000 $12.9375 $6,468,750(5) $0(5)
Stock at an exercise price of
$12.9375 per share
=========================================================================================================================
</TABLE>
(1) Includes additional shares of registrant's Common Stock which may be
issued to certain of the Selling Stockholders in satisfaction of
dividends payable on the Series N Preferred Stock. Pursuant to Rule 416
of the Securities Act, this Registration Statement also registers such
additional number of shares of registrant's Common Stock issued as a
result of stock splits, stock dividends and anti-dilution provisions of
the HNS Note, HNS Warrants, Series L Preferred Stock, S-C Rig Warrants,
Series N Preferred Stock, Series N Warrants, Klehr Options, Anam Options,
Kim Options and Tamir Note (as such terms are defined in the Prospectus).
(2) Based on the closing sale price of the registrant's Common Stock as
reported on the Nasdaq National Market on September 23, 1996. Estimated
solely for the purpose of calculating the registration fee in accordance
with Rule 457(c) of the Securities Act of 1933, as amended (the
"Securities Act").
(3) Based on the sale of (i) 20,545,371 shares of Registrant's Common Stock
at $10.3125 per share (the closing sale price of the Registrant's Common
Stock as reported on the Nasdaq National Market on July 23, 1996 which
was utilized in connection with the original filing of the Registration
Statement) and (ii) 2,655,507 shares of Registrant's Common Stock at
$9.00 per share (the closing sale price of the Registrant's Common Stock
as reported on the Nasdaq National Market on September 23, 1996 utilized
in connection with the filing of this Amendment No. 1 to the Registration
Statement). Estimated solely for the purpose of calculating the
registration fee in accordance with Rule 457(c) under the Securities Act.
(4) $73,060.05 of such fee was previously paid at the time of the initial
filing of this Registration Statement.
(5) Pursuant to Rule 457(g) promulgated under the Securities Act, no separate
registration fee is required in connection with the registration of the
HNS Warrants as the shares of Registrant's Common Stock underlying the
HNS Warrants are being registered for distribution pursuant to this
Registration Statement.
The Registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with section 8(a) of the
Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said section 8(a),
may determine.
<PAGE>
GEOTEK COMMUNICATIONS, INC.
23,200,878 Shares of Common Stock
Warrants to Purchase 2,500,000 Shares of Common Stock
PROSPECTUS
This Prospectus concerns the offer and sale by Hughes Network Systems,
Inc. ("HNS"), from time to time, of up to 3,888,889 shares of common stock, par
value $.01 per share (the "Common Stock") of Geotek Communications, Inc., a
Delaware corporation ("Geotek" or the "Company"). The 3,888,889 shares of Common
Stock offered hereby (the "HNS Note Shares"), are issuable upon the conversion
of a convertible note, in the aggregate principal amount of up to $24,500,000
(the "HNS Note"), issued by Geotek Financing Corporation ("GFC"), a wholly owned
subsidiary of the Company, to HNS pursuant to the Loan Agreement made as of
December 21, 1995 by and among GFC, the Company and HNS (as amended, the "HNS
Loan Agreement"). The HNS Note is guaranteed by the Company.
This Prospectus also concerns the offer and sale by HNS, from time to
time, of certain Warrants (the "HNS Warrants") issued by the Company to HNS in
connection with the execution of that certain HNS Financing Agreement (as
hereinafter defined) in September 1996. The HNS Warrants are exercisable to
purchase 1,000,000 shares of Common Stock at an exercise price of $8.6250 per
share, 1,000,000 shares of Common Stock at an exercise price of $10.7813 per
share and 500,000 shares of Common Stock at an exercise price of $12.9375 per
share. Subject to certain restrictions, the HNS Warrants may be exercised, from
time to time, at any time during the period beginning on the earlier to occur of
September 27, 1997 and a Change of Control of the Company (as hereinafter
defined) and ending on the seven year anniversary of the date of issuance. See
"Description of the HNS Warrants."
This Prospectus also concerns the issuance and sale to the holders of
the HNS Warrants, from time to time, of up to 2,500,000 shares of Common Stock
issuable upon exercise of the HNS Warrants. The shares of Common Stock issuable
upon exercise of the HNS Warrants are hereinafter referred to as the "HNS
Warrant Shares."
This Prospectus also concerns the offer and sale by the holders of the
HNS Warrants of the HNS Warrant Shares.
(continued on next page)
This Prospectus incorporates documents by reference which are not
presented herein or delivered herewith. These documents are available upon
request from General Counsel, Geotek Communications, Inc., 20 Craig Road,
Montvale, New Jersey 07645, (201) 930-9305.
SEE "RISK FACTORS" FOR CERTAIN INFORMATION THAT SHOULD BE
CONSIDERED BY PROSPECTIVE INVESTORS.
-----------
THE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION (THE "COMMISSION") OR
ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is September 27, 1996.
<PAGE>
This Prospectus also concerns the offer and sale by TDI, from time to
time, of an aggregate of 531,463 shares of Common Stock issuable upon the
conversion of 531,463 shares of the Company's Series L Cumulative Convertible
Preferred Stock, par value $.01 per share (the "Series L Preferred Stock"). The
Series L Preferred Stock was issued by the Company to TDI on May 25, 1995. Each
share of Series L Preferred Stock is immediately convertible into that number of
shares of Common Stock as is determined by dividing (i) the sum of the $9.408
stated value per share of the Series L Preferred Stock plus all unpaid dividends
accrued and deemed to have accrued, if any, with respect to such shares of
Series L Preferred Stock through the last dividend payment date by (ii) a
conversion price of $9.408 per share, subject to certain adjustments. Assuming
there are no accrued and unpaid dividends on the Series L Preferred Stock at the
time of conversion, the Series L Preferred Stock is convertible into an
aggregate of 531,463 shares of Common Stock. The shares of Common Stock issuable
upon conversion of the Series L Preferred Stock are hereinafter referred to as
the "Series L Shares."
This Prospectus also concerns the offer and sale by S-C Rig Investments
- - III, L.P. ("S-C Rig"), from time to time, of an aggregate of 4,210,526 shares
of Common Stock issuable upon the exercise of certain warrants issued by the
Company to S-C Rig (the "S-C Rig Warrants") on April 4, 1996 in connection with
a capital-raising transaction undertaken by the Company. The S-C Rig Warrants
are exercisable at a per share price of $9.50 and may be exercised, either in
full or from time to time in part, at any time on or before April 4, 2001. The
shares of Common Stock issuable by the Company to S-C Rig upon exercise of the
S-C Rig Warrants are hereinafter referred to as the "S-C Rig Warrant Shares."
This Prospectus also concerns the offer and sale by certain selling
stockholders (the "Series N Investors"), from time to time, of (i) 5,000,000
shares of Common Stock issuable upon the conversion of the Company's Series N
Cumulative Convertible Preferred Stock, par value $.01 per share (the "Series N
Preferred Stock"); (ii) 1,650,000 shares of Common Stock issuable upon exercise
of warrants issued to the Series N Investors (the "Series N Warrants") in
connection with their investment in the Series N Preferred Stock; and (iii) up
to 4,500,000 shares of Common Stock which may be issued in satisfaction of
dividends on the Series N Preferred Stock. The Series N Preferred Stock and the
Series N Warrants were issued by the Company to the Series N Investors on June
20, 1996. The Series N Preferred Stock provides for a dividend of 10% per annum
of the stated value of the Series N Preferred Stock on a cumulative basis.
Dividends accrue from the date of issuance and are payable quarterly. Dividends
must be paid in shares of Common Stock valued as of the respective dividend
payment dates. Each share of Series N Preferred Stock is convertible into the
number of shares of Common Stock as is determined by dividing (i) the sum of
$1,000 stated value per share of the Series N Preferred Stock plus all unpaid
dividends accrued and deemed to have accrued, if any, with respect to such
shares of Series N Preferred Stock through the last dividend payment date by
(ii) a conversion price of $11.00 per share, subject to certain adjustments.
Assuming there are no accrued and unpaid dividends on the Series N Preferred
Stock at the time of conversion, the Series N Preferred Stock is convertible
into an aggregate of 5,000,000 shares of Common Stock. The Series N Warrants are
exercisable at a per share price of $11.00 and may be exercised, from time to
time, at any time during the period beginning on June 20, 1996 and ending on
June 20, 2001. The shares of Common Stock issuable by the Company to the Series
N Investors upon conversion of the Series N Preferred Stock, upon exercise of
the Series N Warrants and in satisfaction of dividends on the Series N Preferred
Stock are hereinafter referred to as the "Series N Conversion Shares," the
"Series N Warrant Shares," and the "Series N Dividend Shares," respectively.
This Prospectus also concerns the offer and sale by Leonard M. Klehr or
his transferee ("Klehr"), from time to time, of 50,000 shares of Common Stock
issuable upon the exercise of certain options issued by the Company to Klehr
(the "Klehr Options") on May 13, 1996 contingent upon the successful application
by Anam Industrial Co. Ltd. ("Anam") (the Company's joint venture partner in
Korea) for a license to operate a nationwide trunked radio system in Korea. Anam
was awarded such license in July 1996, at which time the Klehr Options vested.
The Klehr Options are exercisable at a per share price of $10.00 and may be
exercised, either in full or from time to time in part, at any time prior to May
13, 2001. The shares of Common Stock issuable by the Company to Klehr upon
exercise of the Klehr Options are hereinafter referred to as the "Klehr Shares."
-2-
<PAGE>
This Prospectus also concerns the offer and sale by Anam, from time to
time, of 500,000 shares of Common Stock issuable upon the exercise of certain
options issued by the Company to Anam (the "Anam Options") on May 13, 1996
contingent upon the successful application by Anam for a license to operate a
nationwide trunked radio system in Korea. Anam was awarded such license in July
1996, at which time the Anam Options vested. The Anam Options are exercisable at
a per share price of $10.00 and may be exercised, either in full or from time to
time in part, at any time prior to May 13, 1999. The shares of Common Stock
issuable by the Company to Anam upon exercise of the Anam Options are
hereinafter referred to as the "Anam Shares."
This Prospectus also concerns the offer and sale by James J. Kim,
Chairman of the Anam Group, ("Kim"), from time to time of 250,000 shares of
Common Stock issuable upon the exercise of certain options issued by the Company
to Kim (the "Kim Options") on May 13, 1996 contingent upon the successful
application by Anam for a license to operate a nationwide trunked radio system
in Korea. Anam was awarded the license in July 1996, at which time the Kim
Options vested. The Kim Options are exercisable at a per share price of $10.00
and may be exercised, either in full or from time to time in part, at any time
prior to May 13, 1999. The shares of Common Stock issuable by the Company to Kim
upon exercise of the Kim Options are hereinafter referred to as the "Kim
Shares."
This Prospectus also concerns the offer and sale by David Tamir
("Tamir"), from time to time, of up to 120,000 shares of Common Stock issuable
upon the conversion by Tamir of a convertible promissory note in the principal
amount of $800,000 issued by the Company to Tamir (the "Tamir Note") on July 3,
1996 in connection with the acquisition by a subsidiary of the Company of
Tamir's interest in PowerSpectrum Technology, Ltd., a subsidiary of the Company
("PST"). The Tamir Note bears interest at a rate of 6% per annum and is
convertible into shares of Common Stock by either Tamir or the Company at any
time prior to December 31, 1996. In the event of a conversion, the Tamir
Note shall be canceled and Tamir shall receive the number of shares of Common
Stock as is determined by dividing the amount of principal and accrued and
unpaid interest outstanding by the closing bid price for the Common Stock on the
NASDAQ National Market on the trading day immediately prior to the date of
conversion. The shares of Common Stock issuable by the Company to Tamir upon
conversion of the Tamir Note are hereinafter referred to as the "Tamir Shares."
The HNS Note, HNS Warrants, Series L Preferred Stock, S-C Rig Warrants,
Series N Preferred Stock, Series N Warrants, Klehr Options, Anam Options, Kim
Options and Tamir Note are collectively referred to as the "Securities." The HNS
Note Shares, the HNS Warrant Shares, the Series L Shares, the S-C Rig Warrant
Shares, the Series N Conversion Shares, the Series N Warrant Shares, the Series
N Dividend Shares, the Klehr Shares, the Anam Shares, the Kim Shares and the
Tamir Shares are collectively referred to as the "Offered Shares." HNS, TDI,
S-C Rig, the Series N Investors, Klehr, Anam, Kim and Tamir are collectively
referred to as the "Selling Stockholders."
This Prospectus also concerns, pursuant to Rule 416 of the Securities
Act, the offer and sale by the Selling Stockholders of any and all shares of
Common Stock issued with respect to the Securities as a result of stock-splits,
stock dividends and anti-dilution provisions.
The Company's Common Stock is listed on the NASDAQ National Market
("NNM") under the symbol "GOTK" and on the Pacific Stock Exchange ("PSE") under
the symbol "GEO." On September 23, 1996, the closing sale price for the Common
Stock, as quoted on the NNM, was $9.00 per share.
Pursuant to this Prospectus, the Offered Shares may be sold by the
Selling Stockholders, from time to time while the Registration Statement to
which this Prospectus relates is effective, on the PSE, NNM or otherwise at
prices and terms prevailing at the time of sale, at prices and terms related to
such prevailing prices and terms, in negotiated transactions or at fixed prices.
Although none of the Selling Stockholders has advised the Company of the manner
in which it currently intends to sell the Offered Shares pursuant to this
Registration Statement, the Selling Stockholders may choose to sell all or a
-3-
<PAGE>
portion of such Offered Shares from time to time in any manner described herein.
The methods by which the Offered Shares may be sold by the Selling Stockholders
include, without limitation: (i) ordinary brokerage transactions, which may
include long or short sales, (ii) transactions which involve cross or block
trades or any other transactions permitted by the PSE or NNM, (iii) purchases by
a broker or dealer as principal and resale by such broker or dealer for its
account pursuant to this Prospectus, (iv) "at the market" to or through market
makers or into an existing market for the Common Stock, (v) in other ways not
involving market makers or established trading markets, including direct sales
to purchasers or sales effected through agents, (vi) through transactions in
options or swaps or other derivatives (whether exchange-listed or otherwise), or
(vii) any combination of any such methods of sale. In effecting sales, brokers
and dealers engaged by any of the Selling Stockholders may arrange for other
brokers or dealers to participate. Brokers or dealers may receive commissions or
discounts from the Selling Stockholders to sell a specified number of shares at
a stipulated price per share, and, to the extent such a broker or dealer is
unable to do so acting as agent for the Selling Stockholders, may purchase as
principal any unsold shares at the price required to fulfill such broker or
dealer commitment to the Selling Stockholders. Brokers or dealers who acquire
shares as principals may thereafter resell such shares from time to time in
transactions (which may involve cross and block transactions and which may
involve sales to and through other brokers or dealers, including transactions of
the nature described above) in the over-the-counter market, in negotiated
transactions or otherwise, at market prices and terms prevailing at the time of
sale, at prices and terms related to such prevailing prices and terms, in
negotiated transactions or at fixed prices, and in connection with the methods
as described above. There is currently no established trading market for the HNS
Warrants, and it is uncertain whether there will ever be a trading market for
the HNS Warrants. It is not presently anticipated that the HNS Warrants will be
listed for trading on the NNM, the PSE or otherwise. As a result, it is
presently anticipated that sales of the HNS Warrants by the Selling Stockholders
will be effected, from time to time, in ways not involving market makers or
established trading markets, including direct sales to purchasers or sales
effected through agents, at negotiated prices. If at any time the HNS Warrants
are listed for trading on the NNM, the PSE or otherwise, sales of the HNS
Warrants could be effected in the same manner in which sales of Offered Shares
are effected. The Offered Shares or HNS Warrants held by the Selling
Stockholders may also be sold hereunder by brokers, dealers, banks or other
persons or entities who receive such Offered Shares or HNS Warrants as pledgees
of the Selling Stockholders. The Selling Stockholders and brokers and dealers
through whom sales of Offered Shares or HNS Warrants may be effected may be
deemed to be "underwriters," as defined under the Securities Act of 1933, as
amended (the "Securities Act"), and any profits realized by them in connection
with the sale of the Offered Shares or HNS Warrants may be considered to be
underwriting compensation.
The agreements between the Company and the Selling Stockholders
referenced herein provide that the Company will indemnify any such person deemed
an underwriter and the Selling Stockholders against certain liabilities,
including civil liabilities under the Securities Act, or will contribute to
payments such underwriters or Selling Stockholders may be required to make in
respect thereof. Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers, or persons controlling
the Company pursuant to the foregoing provisions, its certificate of
incorporation or by-laws, the Company has been informed that in the opinion of
the Commission such indemnification is against public policy as expressed in the
Securities Act and is therefore unenforceable.
-----------
-4-
<PAGE>
<TABLE>
<CAPTION>
=====================================================================================================================
Price Underwriting Discounts Proceeds to Proceeds to the
to Public and Commissions the Company Selling Stockholders
=====================================================================================================================
<S> <C> <C> <C> <C>
Per Share........... $(1)(2) $(1)(2) $(3) $(1)(4)
=====================================================================================================================
Total................. $(1)(2) $(1)(2) $(3) $(1)(4)
=====================================================================================================================
</TABLE>
(1) It is anticipated that the Offered Shares registered for resale
hereunder will be sold by the Selling Stockholders in market or private
transactions at prevailing prices, from time to time. It is anticipated
that the HNS Warrants registered for resale hereunder will be sold by
HNS in transactions not involving established trading markets at
negotiated prices, from time to time.
(2) In connection with the sale of the Offered Shares or HNS Warrants by
the Selling Stockholders pursuant to this Prospectus, the Selling
Stockholders may pay underwriting or broker-dealer discounts or
commissions. The amounts of such discounts and commissions, if any,
cannot be determined by the Company at this time.
(3) The Company will not receive any proceeds from the resale of the
Offered Shares by the Selling Stockholders. Upon conversion of the HNS
Note by HNS, an aggregate of up to $24,500,000 principal amount of the
Company's indebtedness will be retired. Upon conversion of the Tamir
Note by Tamir, $800,000 of the Company's indebtedness will be retired.
Upon an exercise of the HNS Warrants by HNS, exercise of the S-C Rig
Warrants by S-C Rig, exercise of the Series N Warrants by any of the
Series N Investors, exercise of the Klehr Options by Klehr, exercise of
the Anam Options by Anam or exercise of the Kim Options by Kim, the
Company will receive the exercise price of the HNS Warrants, the S-C
Rig Warrants, the Series N Warrants, the Klehr Options, the Anam
Options or the Kim Options as the case may be. To the extent the HNS
Warrants, S-C Rig Warrants, Series N Warrants, Klehr Options, the Anam
Options or the Kim Options are exercised, the Company will apply the
proceeds thereof to its general corporate purposes.
(4) The Company will pay all expenses of the offering of the Common Stock
to which this Prospectus relates, which are estimated to be
$109,801.28. The Selling Stockholders will pay any brokerage
compensation in connection with their sale of the Offered Shares or the
HNS Warrants.
-----------
-5-
<PAGE>
ADDITIONAL INFORMATION
The Company has filed a registration statement on Form S-3 (together
with any amendments thereto, the "Registration Statement") with the Commission
under the Securities Act with respect to the securities offered hereby. This
Prospectus, which constitutes a part of the Registration Statement, omits
certain information contained in the Registration Statement and reference is
made to the Registration Statement and the exhibits and schedules thereto for
further information with respect to the Company and the securities offered
hereby. Statements contained in this Prospectus as to the contents of certain
documents filed with, or incorporated by reference in, the Registration
Statement are not necessarily complete, and in each instance reference is made
to such document, each such statement being qualified in all respects by such
reference.
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements and other information with
the Commission. Such reports, proxy statements and other information filed by
the Company can be inspected and copied at the public reference facilities
maintained by the Commission at Room 1024, 450 Fifth Street, N.W., Washington,
D.C. 20549, and at the Commission's Regional Offices located at 7 World Trade
Center, New York, NY 10048, and Northwestern Atrium Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661. Copies of such material can also be
obtained at prescribed rates from the Public Reference Section of the
Commission, Washington, D.C. 20549. The Common Stock is listed on both the NNM
and the PSE and such reports, proxy statements and other information filed with
the Commission should also be available for inspection at the offices of the
National Association of Securities Dealers, Inc., Report Section, 1735 K Street,
N.W., Washington, D.C. 20006, and at the PSE facilities located at 115 Sansome
Street, San Francisco, California. Such reports and other information can be
reviewed through the Commission's Electronic Data Gathering Analysis and
Retrieval System, which is publicly available through the Commission's web site
(http://www.sec.gov).
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The Company incorporates by reference into this Prospectus the
documents listed below:
(1) The Company's Annual Report on Form 10-K for the year ended
December 31, 1995;
(2) The Company's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1996;
(3) The Company's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1996;
(4) The Company's Current Reports on Form 8-K, dated June 18, 1993 (as
amended on Form 8-K/A filed on or about July 12, 1993), June 8, 1994 (as amended
on Form 8-K/A filed on or about June 27, 1995), July 5, 1994 (as amended on Form
8-K/A filed on or about September 14, 1994), August 2, 1994 (as amended on Form
8-K/A filed on or about October 13, 1994 and Form 8-K/A filed on or about May
25, 1995), March 4, 1996, June 20, 1996, August 29, 1996 and September 1, 1996;
and
(5) The description of the Common Stock contained in the Company's
Registration Statement on Form 8-A, dated December 15, 1992.
All reports and other documents filed by the Company pursuant to
Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act subsequent to the date
of this Prospectus, and prior to the filing of a post-effective amendment to the
Registration Statement which indicates that all securities offered hereby have
been sold or which deregisters all securities then remaining unsold, shall be
deemed to be incorporated by reference herein and to be a part hereof from the
date of the filing of such reports and documents. Any statement contained in a
document incorporated by reference herein shall be deemed to be modified or
superseded for all purposes to the extent that a statement contained herein or
in any other subsequently filed document which also is incorporated by reference
herein modifies or supersedes such statement. Any statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
-6-
<PAGE>
The Company hereby undertakes to provide, without charge, to each
person to whom a copy of this Prospectus has been delivered, upon the written or
oral request of such person, a copy of all documents incorporated by reference
in this Prospectus, other than exhibits to such documents unless such exhibits
are specifically incorporated by reference herein. Requests for such copies
should be directed to Corporate Secretary, Geotek Communications, Inc., 20 Craig
Road, Montvale, New Jersey 07645; telephone number (201) 930-9305.
The Company will furnish its stockholders with annual reports
containing audited financial statements and reports by independent accountants.
In addition, the Company will distribute unaudited quarterly reports to its
stockholders for the first three quarters of each fiscal year.
ADDRESS AND TELEPHONE NUMBER
The mailing address and telephone number of the Company's principal
executive offices are as follows:
Geotek Communications, Inc.
20 Craig Road
Montvale, New Jersey 07645
Telephone Number: (201) 930-9305
-7-
<PAGE>
RISK FACTORS
The securities described herein involve a substantial degree of risk.
The following factors, in addition to those discussed elsewhere in the
Prospectus or incorporated herein by reference, should be carefully considered
in evaluating the Company and its business prospects before purchasing the
securities offered by this Prospectus. This Prospectus contains and incorporates
by reference forward-looking statements within the "safe harbor" provisions of
the Private Securities Litigation Reform Act of 1995. Reference is made in
particular to the discussion under "Management's Discussion and Analysis of
Financial Condition and Results of Operations" in the Company's Annual Report on
Form 10-K for the year ended December 31, 1995 (the "Form 10-K") and the
Quarterly Reports on Form 10-Q for the quarters ended March 31, 1996 and June
30, 1996, and under "Business" in the Form 10-K, incorporated in this Prospectus
by reference. Such statements are based on current expectations that involve a
number of uncertainties including those set forth in the Risk Factors below.
Actual results could differ materially from those projected in the
forward-looking statements.
Commercial Implementation of GEONET(TM)
The Company's current business plan contemplates the commercial
implementation of its integrated digital voice and data wireless communications
network ("GEONET(TM)") in up to 12 U.S. target markets by the end of 1996 and in
36 U.S. target markets by the end of 1997. In each of these markets, the Company
expects gradually to add subscribers and increase its service offerings. The
Company expects to continue to generate negative cash flow in each of its target
markets until it achieves an adequate subscriber base in such market.
The successful and timely implementation of GEONET(TM) will depend upon
a number of factors, many of which are beyond the control of the Company,
including, but not limited to, the timely and cost-effective manufacture,
construction and integration of the system infrastructure and software, the
acquisition and control of additional radio spectrum, the procurement and
preparation of base station and remote sites, the receipt of all necessary
regulatory approvals and the need for substantial additional financing. See
"- Dependence on Third Party Providers," "- Need for Spectrum; Need for
Transmission Sites," "- Government Regulation" and "- Need for Additional
Financing." However, there can be no assurances in this regard and the failure
or delay with respect to any of the aforementioned items could adversely affect
the timing of the implementation of GEONET(TM) in one or more of the Company's
U.S. target markets, which could have a material adverse effect on the Company.
The Company will make continuing hardware and software modifications to
GEONET(TM) prior to, during and after the system's commercial roll-out. For
example, the Company must integrate the initial GEONET(TM) data applications,
which are expected to be completed in the third quarter of 1996 or soon
thereafter, with the initial GEONET(TM) voice applications. Subsequent
applications also will need to be integrated with existing GEONET(TM)
applications. There can be no assurance that the Company will be able
satisfactorily to complete such modifications and/or integration efforts, or
that such modifications and integration will be able to be completed in a manner
that enables the Company to offer its GEONET(TM) services on a profitable basis.
A failure by the Company to complete satisfactorily any such modifications or
integration efforts or to complete them on a cost-effective and timely basis
could have a material adverse effect on the Company.
To date, no other wireless service provider has been successful at
providing the level of integrated voice and data services contemplated by the
Company. Accordingly, in implementing GEONET(TM), the Company may encounter
unforeseen technical issues. In addition, each of the Company's U.S. target
markets is expected to present unique technical issues due to differences in
geography and the level of local development. Technical difficulties in the
operation and/or performance of GEONET(TM) also may be experienced as
subscribers are added to the system in a given market or as the coverage area in
any market is increased. There can be no assurance that the Company will be able
adequately to address any such issues in any given market or that such issues
will be able to be addressed in a cost-effective manner. Any failure by the
Company adequately to address such issues or to address them in a cost-effective
manner could have a material adverse effect on the Company.
-8-
<PAGE>
Loading of Subscribers
The Company has generated a backlog of orders for the Company's
services from a number of customers, many of which have indicated their desire
to utilize the Company's advanced data services. The Company expects to offer
these advanced data services after integrating the Company's current services
with such advanced data services and the production by the Company of enhanced
mobile workstation units. The Company expects that these units and its initial
data services will be available during the third quarter of 1996 or soon
thereafter. In addition, the Company believes that it will need to accelerate
the expansion of its coverage area in certain of its target markets to meet its
customer demand. The Company is currently addressing this issue, the solution to
which may require modifications to the GEONET(TM) roll-out plan. There can be no
assurances that the Company will be able to adequately address these issues,
either individually or in the aggregate, or that the Company will be able to
address such issues in a timely manner. Any failure on the part of the Company
to address these issues in an adequate or timely manner could result in delays
in loading subscribers and the loss of current backlog subscribers which could
have a material adverse effect on the Company.
Limited Operating History; Management of Growth
The Company entered the wireless communications industry in 1992 and,
therefore, has limited experience in developing, establishing and operating
wireless communications systems. To date, most of the Company's wireless
communications services experience has been in foreign markets and has involved
technology different than that to be employed by the Company in its U.S. target
markets. In addition, the Company's only experience to date in the United States
with respect to its digital wireless communications services has been testing
GEONET(TM) in Philadelphia and providing wireless communication services to
customers in: Philadelphia (beginning in January 1996); Washington, Baltimore
and New York (beginning in March 1996); Boston (beginning in April 1996); and
Miami and Dallas (beginning in May 1996). Prospective investors, therefore, have
limited historical financial information about the Company on which to make a
determination as to the prospects for the Company's U.S. wireless communications
operations or financial condition and as to an investment in the securities
offered hereby.
Although the Company has added experienced senior management and has
filled a substantial number of technical, sales and field service positions
during the last year, the Company will need to increase rapidly and
significantly the number of technical personnel and sales personnel that it
employs in its target markets as the roll-out of GEONET(TM) progresses. The
Company's success will depend upon its ability to continue to attract, motivate,
train and manage additional employees. Management's ability to manage the
Company's growth effectively also will require it to expand significantly the
Company's operational, financial and management systems. The failure of the
Company to manage its growth effectively would have a material adverse effect on
the Company's future operations.
Need for Spectrum; Need for Transmission Sites
The Company requires additional spectrum to add capacity and to service
anticipated demand in certain of its target markets, including certain of its
1996 U.S. target markets. The Company also requires additional spectrum to
initiate services in certain of its 1997 target markets.
To that end, the Company has entered into certain agreements pursuant
to which the Company has the right to acquire spectrum are subject to regulatory
approval. Although the Company believes that such approval will be forthcoming
prior to its expected roll-out in each such market, there can be no assurance
that such approvals will be received on a timely basis or at all. The failure by
the Company to obtain any such approvals could have a material adverse effect on
the Company.
In an effort to acquire sufficient spectrum in each of its target
markets in which it does not have sufficient spectrum to initiate service and to
add additional capacity in certain of its other U.S. target markets, the Company
participated in the Federal Communication Commission's (the "FCC") 900 MHz
Specialized Mobile Radio ("SMR") spectrum auctions which ended on April 15,
1996. The Company was the successful bidder on 181 10-channel blocks in 42
regional service areas known as Major Trading Areas ("MTA") within the United
States. Its successful bids for these frequency blocks totaled $30,965,290. Upon
award of these MTA licenses, the Company can greatly expand its coverage area.
-9-
<PAGE>
As an MTA licensee in a service area, the Company will be permitted to operate
throughout the MTA on its designated frequencies except where an incumbent
licensee is already operating. In many markets, the Company was the successful
bidder on frequency blocks where it is already the incumbent licensee. In
certain MTAs, however, the frequency block on which the Company was the
successful bidder is encumbered by a third party existing licensee. In such an
event, the Company will seek to acquire access to the encumbered spectrum
through cooperative or management agreements or may seek to acquire the
incumbent license from its licensee, although there can be no assurances it will
be able to do so. In some markets, other entities secured an MTA license
surrounding an area where the Company is licensed on a site specific basis. In
these circumstances, the Company may either attempt to acquire the MTA license
from the winning bidder, remain as the incumbent, sell the license to the MTA
licensee or "swap" the license with another licensee. In addition, there can be
no assurance that any licenses currently owned or acquired in the future by the
Company will be renewed. The failure of the Company to renew existing or future
SMR licenses could have a material adverse effect on the Company. A failure by
the Company to obtain sufficient radio spectrum on commercially acceptable terms
could have a material adverse effect on the Company. See "- Commercial
Implementation of GEONET(TM)."
There are only a limited number of existing communications towers
capable of providing the Company with optimal coverage area for its radio
transmissions and that are capable of supporting the Company's transmission
equipment. Although the FCC recently initiated a rule making proceeding designed
to make sites available on government owned property, in the event the Company
cannot obtain leases for existing towers, it may be required to purchase sites,
obtain necessary permits and build such towers, a process which the Company
estimates could take up to one year to complete for each tower. If the Company
is required to build new towers, the roll-out of GEONET(TM) in one or more
target markets could be delayed, which could have a material adverse effect on
the Company.
Deficiency of Earnings; Net Losses; Substantial Indebtedness
On a consolidated basis, the Company experienced net losses from
continuing operations of $50.4 million, $42.4 million, $87.2 million and $57.7
million for the years ended December 31, 1993, December 31, 1994 December 31,
1995, and the six month period ended June 30, 1996, respectively. In addition,
the Company had a deficiency of earnings before interest, taxes, depreciation
and amortization ("EBITDA") of $15.2 million, $34.2 million, $63.3 million and
$36.6 million for the years ended December 31, 1993, December 31, 1994 and
December 31, 1995 and for the six month period ended June 30, 1996,
respectively. The Company anticipates that its net operating losses from
operations and its EBITDA deficiency will increase significantly during the
roll-out of GEONET(TM). There can be no assurance that the Company will ever
operate at profitable levels or have positive EBITDA. Until sufficient cash flow
is generated from operations, the Company will have to utilize its capital
resources or external sources of funding to satisfy its working capital needs.
In the event the Company cannot achieve profitability or have positive EBITDA,
it may not be able to make required payments on certain debt instruments to
which it is a party. Failure to make such payments could have a material adverse
effect on the Company.
The Company has significant indebtedness, a substantial portion of
which is represented by its 15% Senior Secured Discount Notes, due 2005 (the
"Senior Discount Notes"), which have an aggregate principal amount at maturity
of $227.7 million and by the Company's 12% Senior Subordinated Convertible Notes
due 2001 (the "Subordinated Notes"), in the aggregate principal amount of $75.0
million. The Subordinated Notes are convertible into shares of the Company's
Common Stock at a price equal to $9.50 per share. Although no payments of
interest or principal are due on the Senior Discount Notes and no principal
payments are due on the Subordinated Notes in the immediate future, the Company
will have significant debt service obligations beginning in July 2000.
Additionally, the Company is obligated to pay cash dividends on certain
classes of its preferred stock. See " - Dividends on Common Stock Not Likely."
In addition, on December 21, 1995, GFC, a newly incorporated
wholly-owned subsidiary of the Company, entered into the HNS Loan Agreement.
Pursuant to the HNS Loan Agreement, HNS has provided GFC with up to $24.5
million of financing, in the form of the HNS Note bearing interest at a rate of
12% per annum, the proceeds of which will be utilized to reimburse a subsidiary
of the Company for the purchase price of certain 900 MHz licenses acquired by
such subsidiary in the recently completed FCC auction (the "HNS Licenses"). The
HNS Note matures two years from the date of the initial funding (the "Initial
Funding Date") by HNS pursuant to the HNS Loan Agreement (the "Maturity Date").
The HNS Note is collateralized by a pledge of the stock of the subsidiary
holding the HNS Licenses and a guarantee by the Company. The HNS Note is
convertible, at the option of HNS, into shares of Common Stock at an exercise
-10-
<PAGE>
price per share equal to the lesser of (i) ninety percent (90%) of the weighted
average sales price per share of Common Stock on the trading day next preceding
the date of conversion (or over the ten trading days immediately preceding the
date of conversion to the extent (and only to the extent) the conversion relates
to greater than $300,000 of loans drawn down under the HNS Loan Agreement as
reported by Bloomberg Financial Services or similar reporting service and
(ii) $9.75.
In addition, on April 4, 1996, the Company and S-C Rig entered into a
Senior Loan Agreement pursuant to which S-C Rig will make a $40.0 million
unsecured credit facility available to the Company (the "S-C Rig Credit
Facility"). All borrowings under the S-C Rig Credit Facility are required to be
made on or prior to April 5, 1998, accrue interest at a rate of 10% per annum
and mature four years from the date of the final borrowing thereunder. The
Company is obligated to pay S-C Rig a fee equal to 3% of each borrowing under
the S-C Rig Credit Facility at the time of such borrowing. Borrowings under the
S-C Rig Credit Facility will constitute senior indebtedness of the Company. In
connection with the establishment of the S-C Rig Credit Facility, the Company
issued to S-C Rig the S-C Rig Warrant to purchase the S-C Rig Warrant Shares, at
an exercise price of $9.50 per share, subject to adjustment in certain
circumstances. The S-C Rig Warrants are exercisable at any time and from time to
time after June 5, 1996.
Further, in September 1996, the Company and GFC entered into a Vendor
Credit Financing Agreement and certain related documents (the "HNS Financing
Agreement")with HNS pursuant to which HNS agreed to manufacture certain of the
components required for the construction of the FHMATM network equipment and to
provide up to $100.0 million of financing to the Company for up to 90% of the
purchase price of such portion of these components which are scheduled for
delivery to the Company on or prior to June 30, 1999. GFC currently intends to
utilize all of the funds to be made available to GFC under this credit facility.
All borrowings under the HNS Financing Agreement accrue interest at a rate of
11% per annum. Repayment of principal under the HNS Financing Agreements shall
be made in ten equal semi-annual payments beginning on July 10, 1999. HNS will
be granted a security interest in the components manufactured by HNS.
Additionally, GFC has pledged to HNS the intercompany note of Geotek License
Holdings, Inc. ("License Holdings") entered into in connection with the HNS Loan
Agreement as well as the capital stock of License Holdings as security under the
HNS Financing Agreement. In connection with the execution of the HNS Financing
Agreement, the Company issued to HNS the HNS Warrants. For a discussion of the
terms of the HNS Warrants, see "Description of the HNS Warrants".
The Company also anticipates seeking additional financing which may
impose additional and earlier debt service obligations on the Company. See "--
Need for Additional Financing." The degree to which the Company is leveraged may
impair the ability of the Company to obtain additional financing in the future
for working capital, capital expenditures, acquisitions or other general
corporate purposes. In addition, the indenture governing the Senior Discount
Notes and certain documents executed in connection therewith (collectively, the
"Senior Notes Indenture"), together with the HNS Loan Agreement, S-C Rig Credit
Facility and HNS Financing Agreement, impose significant operating and financial
restrictions on the Company, affecting, among other things, the ability of the
Company to incur indebtedness, make prepayments of certain indebtedness, pay
dividends, make investments, engage in transactions with stockholders and
affiliates, issue capital stock of its subsidiaries, create liens, sell assets
and engage in mergers and acquisitions. Although these loan agreements contain
various exceptions that are generally designed to allow the Company to operate
its business without undue restraint, these restrictions, in combination with
the leveraged nature of the Company, could limit the ability of the Company to
effect future financings and respond to changing market conditions, and
otherwise may restrict corporate activities.
The Company's business plan assumes the roll-out of GEONET(TM) in each
of its U.S. target markets and substantial growth in the Company's subscriber
base. There can be no assurance that the Company will be able to achieve the
growth contemplated by its business plan. If such growth is not achieved, the
Company may not be able to make required payments on its debt instruments and
may have to refinance such instruments in order to repay these obligations. No
assurance can be given that the Company would be able to refinance such
instruments.
Need for Additional Financing
The Company's existing cash on hand and expected cash flow from
operations will not be sufficient to fund the Company's full roll-out of
GEONET(TM). The Company estimates that it will need additional financing in an
aggregate amount of approximately $150.0 million for the full roll-out of
GEONET(TM) in all of its 36 target markets through 1997. Such amount may
increase should the Company determine to increase the scope of its roll-out,
-11-
<PAGE>
including a possible increase in the number of its target markets to include
some or all of the 42 markets in which the Company acquired spectrum pursuant to
the recently concluded FCC 900 MHz auction. See "-Need for Spectrum; Need for
Transmission Sites." Additionally, the Company may need to raise additional
funds to meet the needs of its anticipated increased international and equipment
sales activities. In the event the Company is unable to raise such financing on
a timely basis, it may be required to adjust its roll-out schedule and may
experience delays in initiating or expanding its service in certain markets.
Additionally, if the Company is unable to raise additional financing, it may
also be required to adjust its planned international and equipment sales
activities. However, the Company believes that the macrocellular architecture of
GEONET(TM) will allow the Company to adjust its aggregate cash expenditures by
focusing its activities in certain markets while reducing its planned
investments in other markets.
The Company's need for additional financing will increase if the
Company experiences delays in the commercial implementation of GEONET(TM), cost
overruns or unanticipated cash needs. In this regard, the Company has
experienced certain delays in its roll-out schedule in the past. See " -
Commercial Implementation of GEONET(TM)." Moreover, additional financing may be
necessary to satisfy the terms of certain financing transactions, including, but
not limited to, possible redemption obligations of the Company in connection
with the Company's preferred stock. Additional financing also may be required to
fund acquisitions of additional spectrum and businesses. The amount of
additional funding required will depend upon the timing of such expenditures,
the availability of cash flow from operations and, to the extent applicable, the
availability of lease and vendor financing. It is presently anticipated that
additional financing, if obtained, would be obtained from one or more sources,
including, but not limited to, equity or debt financing (whether through public
or private offerings), strategic partners, joint ventures, vendor financing,
leasing arrangements or a combination thereof. The Senior Notes Indenture, the
indenture governing the Subordinated Notes (the "Subordinated Notes Indenture"),
the HNS Loan Agreement, the HNS Financing Agreement and the S-C Rig Credit
Facility limit the ability of the Company to incur additional indebtedness and
engage in certain other financing transactions. There can be no assurance that
additional financing will be available to the Company on terms desirable to the
Company or at all.
Competition
Although the Company believes that the quality, array and flexibility
of services to be offered through GEONET(TM) will meaningfully differentiate
such services from those offered by other wireless communications providers in
the Company's target markets, the Company will face significant competition from
such other providers. The Company expects to experience competition for each
type of service it intends to offer from existing dispatch, cellular telephony,
paging and public data service providers. In addition, the Company expects to
experience competition from manufacturers of Private Mobile Radio ("PMR")
equipment, which target existing private network operators and SMR customers and
urge them to build or upgrade their own private networks rather than utilize SMR
service providers. Many of these providers and manufacturers are larger, more
established, have more experience in the telecommunications industry, have
greater name recognition, have larger sales staffs and/or have greater financial
resources than the Company.
NEXTEL has announced plans to construct a nationwide digital Enhanced
Specialized Mobile Radio ("ESMR") network and is offering services in several
cities. NEXTEL has also secured a significant number of 800 MHz SMR channels in
most U.S. markets. In addition, to the extent that Motorola is the largest
provider of PMR equipment, Motorola may be deemed to be an indirect competitor
of the Company. Moreover, recent regulatory changes may permit the Bell
Operating Company's ("BOCs") to enter the Commercial Mobile Radio Service
("CMRS") marketplace. See " - Governmental Regulation."
The Company also may face competition from technologies and services
introduced in the future. In March 1995, the FCC completed auctions for wideband
Personal Communications Services ("PCS") licenses on a MTA basis. The wideband
PCS auction winners have already begun to provide service in certain
introductory markets. In December 1995, the FCC commenced its auction of 493
broadband basic trading area ("BTA") PCS licenses. In addition, the FCC has also
licensed national and regional narrowband PCS licenses. Additional narrowband
PCS licenses on an MTA basis will be issued under government regulation in the
future. Narrowband PCS service will be similar to paging services already
offered and may compete with the Company's proposed SMR service. The FCC also
intends to license additional spectrum for other wireless services. It is also
possible that satellite technology ultimately could be developed to permit urban
use equal to or superior to that available through SMR systems, which would
-12-
<PAGE>
result in increased competition for the Company's services. The
commercialization or further development of any such technologies could have a
material adverse effect on the Company. See "- Rapid Technological Changes."
Many of the target customers for GEONET(TM) currently use other
wireless communications services. In order to be successful, the Company will
need to migrate a portion of its target customers from their existing services
to those provided by the Company over GEONET(TM). The Company's ability to
migrate its target customers over to its services will be highly dependent on
the perceived utility of the Company's services to its target customers as
compared to the services currently utilized by such customers. Because there
currently is no integrated wireless communications network commercially
available that is comparable to that expected to be offered by the Company over
GEONET(TM), the extent of the demand for the Company's wireless communication
services cannot be predicted with any degree of certainty. The demand for the
Company's digital wireless communications services also could be affected by
other matters beyond the Company's control, such as the future cost of
subscriber equipment, marketing and pricing strategies of competitors and
general economic conditions.
The Company also expects to experience competition for radio spectrum
from existing and future providers of wireless communications services and for
communications tower space. See "- Need for Spectrum; Need for Transmission
Sites."
The Company experiences competition for each of its products and
services other than GEONET(TM) in the markets in which it sells such products
and services. Such competition is expected to remain strong for the foreseeable
future.
Government Regulation
The licensing, construction, operation and acquisition of SMR systems
in the United States is regulated by the FCC under the Communications Act of
1934, as amended (the "Communications Act"). During 1994, the FCC initiated
several regulatory proceedings with wide-ranging implications for the wireless
telecommunications industry. A primary intent of these amendments was to
encourage competition among mobile communications service providers by removing
regulatory distinctions between common carriers, such as cellular telephone
companies, and private carriers, such as SMR service providers. These
regulations may materially impact the Company's operations in the future. For
example, the Company will be required to provide services on a
"nondiscriminatory basis" and on terms that are not "unjust and unreasonable,"
as such terms are defined by the Communications Act. In addition, the Company
will be prohibited from unreasonably restricting the resale of its services to
any requesting entity. The Company will also be required to comply with certain
technical capability and compatibility standards for emergency "911" calls,
including automatic caller identification and location identification. In the
near future, the Company will likely be required to ensure that it can find and
deliver calls to telephone numbers anywhere in the country through roaming
capabilities regardless of whether the telephone number is offered through the
local exchange company or by a new local telephone service competitor. In
addition, the Company may be required to offer capacity on its system for resale
by the Company's competitors in the wireless telecommunications marketplace. The
FCC has recently determined that CMRS providers will be permitted to offer
"fixed" services in addition to mobile services. As a result, the Company will
be permitted to offer an array of communications capabilities to its customers,
including wireless links between home, office, and car. The FCC may in the
future specify by rule other common carrier regulations that would apply to
commercial mobile services providers such as the Company. Moreover, the FCC did
not delay the effective date of the applicability of its rules concerning the
25% limitation on foreign investment in any entity holding an FCC license. These
limitations may affect the Company's ability to secure foreign financing through
the sale of shares of Common Stock or Common Stock equivalents and to issue
Common Stock in the acquisition of foreign subsidiaries. In a recent decision,
the FCC revised standards for regulating entry of foreign carriers and their
affiliates into the U.S. market for international telecommunications services.
The FCC will apply these standards in the application process for foreign entry,
principally by taking into consideration whether "effective competitive
opportunities" exist for U.S. carriers in the destination markets of foreign
carriers seeking to enter the U.S. international services market. In addition,
and of specific impact for the Company, the FCC determined that it will examine
reciprocal foreign market competitive opportunities in considering requests by
CMRS providers seeking foreign investment in excess of the existing 25%
benchmark. The Company cannot predict the effect of any of these regulations or
any future regulation adopted by the FCC on the Company's operations. Moreover,
there has been little experience in the interpretation and implementation
-13-
<PAGE>
of these regulations. Future interpretations or practices with respect to such
regulations could have a material adverse effect on the Company.
The FCC granted the Company a waiver (the "Rule Waiver") which
permitted the Company to construct and activate certain systems it acquired
prior to the FCC's 900 MHz SMR spectrum auctions for licenses issued on a site
specific basis on a longer schedule than would otherwise be permitted under
applicable FCC regulations. In the event the Company fails to construct or
activate such systems in accordance with the dates set forth in the Rule Waiver,
the FCC could revoke the Rule Waiver and the Company would consequently lose all
of the licenses covered by such waiver which have not been constructed or
activated. The Rule Waiver is currently subject to a pending challenge that was
filed by a third party with whom the Company failed to negotiate a satisfactory
management and purchase agreement. The Company believes that this challenge is
without merit and is vigorously opposing it. A loss of the licenses covered by
the Rule Waiver that have not been constructed or activated would have a
material adverse effect on the Company.
The Rule Waiver is not necessary for the additional MTA spectrum which
the Company acquired through the FCC's 900 MHz SMR spectrum auctions. See "-Need
for Spectrum; Need for Transmission Sites." In addition, in many markets where
the Company is licensed on a site specific basis where surrounding MTA spectrum
was acquired through the FCC's 900 MHz SMR spectrum auctions, the Rule Waiver
has been superseded and the construction schedule extended in accordance with
the FCC's rules relevant for MTA Licenses. An MTA licensee must provide coverage
to one-third of the MTA population within three years after initial licensing,
and coverage to two-thirds of the MTA population within five years after initial
licensing. The Rule Waiver will continue to be necessary in certain
circumstances for existing site specific licenses where the Company was not the
successful bidder for surrounding MTA spectrum pursuant to such auctions. This
relief from the Rule Waiver with respect to the MTA sites will provide the
Company with a greater degree of flexibility with respect to the timing of the
GEONET(TM) roll-out in such markets. For a description of the terms, conditions
and restrictions of the MTA licenses, see "-Need for Spectrum; Need for
Transmission Sites."
All of the equipment utilizing the Company's technology, to the extent
it is used to send or receive signals, must meet FCC technical standards.
Although GEONET(TM) base stations and current subscriber units have received
such approval, there can be no assurance that the future generations of
subscriber units will meet such criteria. A failure of such subscriber units or
any of the Company's other equipment to meet FCC standards could have a material
adverse effect on the Company.
Early this year, the President of the United States signed into law the
Telecommunications Act of 1996 (the "Telecommunications Act") which imposes
sweeping reforms to telecommunications policy. Although the majority of the
Telecommunications Act's measures will directly impact large common carriers,
cable and broadcast operators, and internet service providers, many of the
Telecommunications Act's provisions will have an effect upon the CMRS
marketplace, and upon the Company. In particular, the Telecommunications Act may
require the Company to contribute to a Universal Service Fund and may require
the Company to ensure that its equipment is accessible to persons with
disabilities. In addition, the FCC recently initiated a rule making proceeding
as a response to a mandate of the Telecommunications Act, to determine whether
more extensive regulation with respect to reciprocal compensation arrangements
between CMRS and local telephone companies is necessary. All of these provisions
of the Telecommunications Act which may have an effect upon the Company will be
the subject of FCC rule making proceedings through the end of 1997. The FCC has
been granted authority to forbear some of these requirements where appropriate.
Accordingly, it is currently difficult to predict if and how the provisions of
the Telecommunications Act will impact upon the Company, although such impact
could be materially adverse to the Company.
Future changes in regulation or legislation affecting digital wireless
telecommunications service or the allocation by the FCC or Congress of
additional spectrum for services that compete with such service could adversely
affect the Company's business. See "- Competition."
Dependence on Third Party Providers
The Company's digital wireless telecommunications system is being
enhanced and commercialized by its subsidiary, PST. However, the development by
PST of the technology and systems is dependent in large part upon the efforts
-14-
<PAGE>
of Rafael Armament Development Authority ("Rafael"), a PST contractor, to adapt
frequency hopping from a military to a commercial application, to integrate the
frequency hopping technology with other digital technologies required for
optimal commercial deployment of GEONET(TM), and, as discussed below, for the
cost-effective manufacture of the base station hardware. In this regard,
approximately 90 employees of Rafael are presently engaged on a full-time
subcontract basis in the further development of the Company's proprietary
FHMA(TM) technology. Rafael's employees are represented by a labor union, and,
from time to time, there have been labor disputes between Rafael and its
employees which have resulted in slow-downs. To date, these slow-downs have not
had a material effect upon the Company's business. There can be no assurance,
however, that any future disputes will not have a material adverse effect on the
development or introduction of GEONET(TM) services by the Company in its U.S.
target markets. In addition, if Rafael reduces its commitment to PST or if
continuing development efforts are not successful, the Company's prospects could
be materially adversely affected.
Neither the Company nor PST manufacture the system architecture,
hardware and mobile subscriber units necessary for the commercial implementation
of GEONET(TM). Rafael entered into contracts with PST pursuant to which Rafael
will manufacture the system hardware for GEONET(TM) on a schedule which is
intended to enable the Company to meet its projected roll-out. Third parties,
including Mitsubishi Consumer Electronics America ("Mitsubishi"), HNS, a unit of
GM Hughes Electronics, and Kenwood Corporation of Japan ("Kenwood"), will
manufacture subscriber units and certain other components of the system hardware
for GEONET(TM) on a schedule based upon the Company's projected roll-out. There
can be no assurance that such third parties will deliver such equipment on a
timely basis or that the Company will be able to integrate such components and
hardware in a cost effective system on a timely basis, if at all. The Company
has only a single manufacturing source for certain of the components of the
GEONET(TM) system hardware, including the base stations and subscriber units.
Although the Company believes that it can obtain all components necessary to
build GEONET(TM) from other sources, delays may be encountered in the event of a
component shortage because of the time it may take to identify substitute
sources and manufacture substitute components. A failure by the Company to
obtain hardware components on a timely basis or at satisfactory prices could
adversely affect the ability of the Company to roll-out and market GEONET(TM),
which could have a material adverse effect on the Company.
See "- Commercial Implementation of GEONET(TM)."
Additionally, in September 1996, the Company and GFC entered into the
HNS Financing Agreement with HNS pursuant to which HNS has agreed to manufacture
certain of the components required for the construction of FHMA(TM) network
equipment and to provide up to $100.0 million of financing for up to 90% of the
purchase price of such portion of these components which are scheduled for
delivery to the Company prior to June 30, 1999. In connection with the execution
of the HNS Financing Agreement, the Company also entered into a Sales
Representation Agreement with HNS pursuant to which HNS will act as the
Company's non-exclusive sales representative to sell base stations and related
equipment in certain countries - See"-Commercial Implementation of GEONET(TM)."
The Company has also entered into an agreement with IBM Corporation
("IBM") to manage the construction of the GEONET(TM) stations and the
installation of FHMA(TM) equipment in the Company's U.S. target markets. The
Company has also engaged, and intends to engage, other third party contractors
to manage all or certain aspects of such construction or installation in certain
of its U.S. target markets. A failure by IBM or such other contractors to manage
properly the preparation and construction of the Company's base stations and
remote sites could have a material adverse effect on the Company. See
"- Commercial Implementation of GEONET(TM)".
The Company anticipates that, in order to meet the needs of its
expanding international and equipment sales activities, it will be required to
establish and maintain additional manufacturing, distribution and licensing
arrangements with other third party providers. The Company is currently
exploring various alternatives to meet these needs. However, there can be no
assurances that the Company will be able to identify or maintain relationships
with such providers. Any failure to do so could have a material adverse effect
on the Company.
Rapid Technological Changes
The telecommunications industry is subject to rapid and significant
changes in technology which could lead to new products and services that compete
with those offered by the Company or could lower the cost of current competing
products and services to the point where the Company's products and services
-15-
<PAGE>
could become non-competitive and the Company could be required to reduce the
prices of its services. While the Company is not aware of any proposed changes
that will materially affect the attractiveness of its product and service
offerings, the effect of technological changes on the businesses of the Company
cannot be determined. In the future, the Company expects to experience
competition from new technologies such as ESMR networks, PCS and, possibly,
satellite technology, as well as from advances with respect to existing
technologies such as cellular, paging and mobile data transmission. See
"- Competition."
Dependence on Key Personnel
The success of the Company will depend greatly upon the active
participation and the experience of its management. The Company has entered into
agreements with three employees pursuant to which such employees will oversee
the operations of the Company's three main operating units. However, despite
such developments, the Company remains dependent upon the services and abilities
of Yaron Eitan, the Company's President and Chief Executive Officer. The loss of
Mr. Eitan's services could adversely affect the conduct of the Company's
business. In addition, the successful implementation of the Company's business
plan will depend, to a large extent, upon the ability of the Company's and its
subsidiaries' engineers and scientific personnel to perfect and improve upon
existing and proposed products. The loss of some or all of such personnel, the
inability of the Company to attract additional personnel, or the inability of
such persons to design such systems or to continue product enhancement will
inhibit the ability of the Company to sell its products and services and to
operate profitably.
Risks of International Business
The Company operates in and sells products and services to clients in
various countries and certain of its products and components are manufactured
abroad. The Company's research and development activities are dependent upon
foreign providers. The Company is also pursuing a strategy of expansion into
international markets, including, but not limited to, Germany, Korea, Canada and
the United Kingdom. Such efforts may be conducted by the Company alone or in
conjunction with strategic partners. Accordingly, the Company is subject to the
risks inherent in conducting business across national boundaries, including, but
not limited to, currency exchange rate fluctuations, international incidents,
military outbreaks, economic downturns, government instability, nationalization
of foreign assets, government protectionism and changes in governmental policy,
any of which risks could have a material adverse impact on the Company. In
addition, the licensing and other operational risks attendant upon commencing
and maintaining wireless telecommunications systems in foreign countries are
similar to those which prevail in the United States, including, but not limited
to, availability of spectrum capacity and transmission sites, competition, and
government regulation. Development of the business in international markets may
stretch the Company's financial, managerial, and personnel resources. There can
be no assurance that the Company will be successful in developing its business
in these markets or that any such expansion of the Company's business will be
profitable.
Influence by Significant Stockholders; Preemptive Rights
As of June 30, 1996, approximately 25% of the total voting power of the
Common Stock (on a fully diluted basis, but without giving effect to the
exercise of the warrants held by S-C Rig) was beneficially owned by the
directors and executive officers of the Company and their affiliates. (S-C Rig
holds warrants to purchase approximately 4.8 million shares of Common Stock.)
Consequently, the Company's directors and executive officers will be able to
exert significant influence with respect to all matters upon which stockholder
approval is required.
Pursuant to certain agreements among them, certain of the principal
stockholders of the Company have the right to require the other stockholders to
cause (to the extent permitted by law and to the extent within such other
stockholders' control) the directors of the Company to vote, or refrain from
voting, in accordance with such stockholders' direction with respect to the
election of directors. In addition, S-C Rig and Vanguard Cellular Systems, Inc.
("Vanguard") have preemptive rights with respect to certain issuances of voting
securities by the Company which permit them to purchase voting securities of the
Company, at the same price and on the same terms as the Company may offer to
third parties, in an amount sufficient to maintain their respective percentage
interests in the voting securities of the Company on a fully-diluted basis. The
Company also has granted to S-C Rig, Vanguard and certain other holders of the
Company's preferred stock the right to elect additional directors to the Board
-16-
<PAGE>
of Directors of the Company upon the occurrence of certain events of default
under certain series of the Company's outstanding preferred stock. The operation
of such provisions could result in such stockholders exerting significant
influence over the Board of Directors of the Company.
Transactions with Affiliates
During the period since its inception, the Company has undertaken a
wide variety of financing and merger/acquisition activity which has resulted in
its present corporate and financial structure. Included in such activity have
been transactions which have involved persons who now serve, or who did serve at
the time, as directors and officers of the Company or persons or entities
related to such persons. In every instance where such transactions have involved
any such persons or entities, the specific transaction has been approved
unanimously by directors of the Company, including all disinterested and outside
directors, with the affected parties abstaining. It is the Company's view that
each such transactions have been on terms no less favorable to the Company than
other similar transactions available to the Company with unaffiliated parties,
if available at all. Despite the foregoing, prospective purchasers may wish to
consider the circumstances in which such transactions were made, the terms of
such transactions and the Company's possible alternative courses of action. The
Company may enter into transactions in the future with affiliates in order to
meet its financing needs and/or business goals.
Proprietary Information and Patent Issues
The Company protects its proprietary information by way of
confidentiality and non-disclosure agreements with employees and third parties
who may have access to such information. The Company continually reviews its
technology developments in order to file patent applications and has filed
patent applications with respect to certain aspects of its FHMA(TM) technology
and GEONET(TM) in Israel and the United States and expects to file additional
patent applications in Israel and the United States. Generally, the Company
intends to file all patent applications in the United States, Israel and in such
other countries as it deems appropriate. There can be no assurance that any such
applications will be granted. There can be no assurance that any patents issued
will afford meaningful protection against competitors with similar technology or
that any patents issued will not be challenged by third parties. There also can
be no assurance that others will not independently develop similar technologies,
duplicate the Company's technologies, or design around the patented aspects of
any technologies developed by the Company. Many patents and patent applications
have been filed by third parties with respect to wireless communications
technology. The Company does not believe that its technology infringes on the
patent rights of third parties. However, there can be no assurance that certain
aspects of the Company's technology will not be challenged by the holders of
such patents or that the Company will not be required to license or otherwise
acquire from third parties the right to use certain technology. The failure to
overcome such challenges or obtain such licenses or rights could have a material
adverse effect on the Company's operations.
Dividends on Common Stock Not Likely
The Company has not declared or paid any cash dividends on Common Stock
since commencing operations and does not anticipate paying any dividends on
Common Stock in the foreseeable future. At present, the Company is obligated to
pay cumulative dividends of $2,000,000 per year, in cash, for a five-year period
following the issuance of the Company's Series H Cumulative Convertible
Preferred Stock, $.01 par value (the "Series H Preferred Stock"), cumulative
dividends of $700,000 per year, in cash of shares of Common Stock, for a
five-year period following the issuance of the Company's Series I Cumulative
Convertible Preferred Stock $.01 par value (the "Series I Preferred Stock"), and
cumulative dividends of $700,000 per year, in cash or shares of Common Stock,
for a five-year period following the issuance of the Company's Series K
Cumulative Convertible Preferred Stock, $.01 par value (the "Series K Preferred
Stock"), all before any cash dividends may be paid on Common Stock. In addition,
the Company is presently obligated to pay cumulative annual dividends of
$750,000 per year on the Series L Preferred Stock, and cumulative annual
dividends of $988,125 per year on the Company's Series M Cumulative Convertible
Preferred Stock, $.01 par value, in cash or shares of Common Stock, before any
cash dividends may be paid on Common Stock. The Series N Preferred Stock
prohibits the declaration or payment of any dividend on Common Stock (other than
in shares of Common Stock) without the consent of the holders thereof, provided
such holders hold $25,000,000 of the stated value of the Series N Preferred
Stock. At present, the Company is current in payment of all required dividends
on its outstanding preferred stock. In addition, the terms of certain
-17-
<PAGE>
indebtedness of the Company prohibit, during the term of such indebtedness, the
declaration or payment of any dividend on Common Stock (other than in shares of
Common Stock).
Shares of Common Stock Eligible for Sale; Dilution.
The Company has in the past registered for offer and sale under the
Securities Act certain of the issued and outstanding shares of Common Stock and
certain of the shares of Common Stock issuable upon the exercise or conversion,
as applicable, of outstanding options, warrants and convertible securities held
by the Company's stockholders, including certain officers, directors, employees
and "affiliates" of the Company (as such term is defined pursuant to the
Exchange Act). The sale of such shares would have been subject to substantial
limitations in the absence of such registration. A substantial number of such
shares may still be held by the registered holders thereof and available for
resale under currently effective registration statements. In addition, certain
stockholders of the Company hold the right (subject to certain conditions) to
require that the Company register for offer and sale issued and outstanding
shares of Common Stock and/or shares of Common Stock issuable upon the exercise
or conversion, as applicable, of options, warrants and convertible securities.
Sales of substantial amounts of such shares could adversely affect the market
value of the Common Stock and, in the case of convertible securities, may effect
a dilution of the book value per share of Common Stock, depending upon the
timing of any such sales.
DESCRIPTION OF THE HNS WARRANTS
In connection with the execution of the HNS Financing Agreement, the
Company issued to HNS the HNS Warrants. The following summary of certain
provisions of the HNS Warrants does not purport to be complete and is qualified
in its entirety by reference to the HNS Warrants, including the definitions
therein of certain terms. As used in this section, the term "Company" refers
only to Geotek Communications, Inc. and not to its subsidiaries.
General
Each HNS Warrant, when exercised, will entitle the holder thereof to
receive one share of Common Stock of the Company at exercise prices ranging from
$8.6250 to $12.9375 per share (the "Exercise Price") (such shares of Common
Stock are sometimes referred to herein as "HNS Warrant Shares"). The Exercise
Price and the number of HNS Warrant Shares issuable on exercise of an HNS
Warrant are both subject to adjustment in certain cases. See "- Adjustments."
Subject to the limitations contained below, the HNS Warrants are exercisable at
any time on or after the earlier of September 27, 1997 and the occurrence of a
Change of Control of the Company (as defined below) (the "Exercisability Date").
Unless exercised, the HNS Warrants automatically will expire on September 27,
2003 (the "Expiration Date"). The HNS Warrants will entitle the holders thereof
to purchase in the aggregate 2,500,000 shares of Common Stock.
The HNS Warrants may be exercised at any time on or after the
Exercisability Date by surrendering to the Company the warrant certificates
evidencing such HNS Warrants, if any, with the accompanying form of election to
purchase, properly completed and executed, and delivering payment of the
Exercise Price no later than the third trading day thereafter; provided that a
condition to the exercise of the HNS Warrants will be that there be an effective
registration statement covering the offer and sale of the HNS Warrant Shares to
be issued upon the exercise of the HNS Warrants or that the holder of the HNS
Warrants, if so requested by the Company, provide the Company with an opinion of
counsel to the effect that the offer and sale of the HNS Warrant Shares to be
issued upon the exercise of the HNS Warrants is exempt from registration under
the Securities Act. Payment of the Exercise Price may be made in the form of
cash or a certified or official bank check payable to the order of the Company
or by application of any past due amounts owing under the HNS Financing
Agreement. Upon surrender of the HNS Warrant certificate and payment of the
Exercise Price, the Company will deliver or cause to be delivered, to or upon
the written order of such holder, stock certificates representing the number of
whole HNS Warrant Shares or other securities or property to which such holder is
entitled under the HNS Warrants, including, without limitation, any cash payable
to adjust for fractional interests in HNS Warrant Shares issuable upon such
exercise. If less than all of the HNS Warrants evidenced by an HNS Warrant
certificate are to be exercised, the Company will issue a new HNS Warrant
certificate for the remaining number of HNS Warrants.
-18-
<PAGE>
No fractional HNS Warrant Share will be issued upon exercise of the HNS
Warrants. If any fraction of an HNS Warrant Share would, except for the
foregoing provision, be issuable upon the exercise of any HNS Warrants (or
specified portion thereof), the Company will pay an amount in cash equal to the
current market price per HNS Warrant Share, as determined on the trading day
immediately preceding the date the HNS Warrant is presented for exercise,
multiplied by such fraction, computed to the nearest whole cent. The Company may
require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection with any registration or transfer or
exchange of HNS Warrant certificates.
The holders of the HNS Warrants have no right to vote on matters
submitted to the stockholders of the Company and have no right to receive cash
dividends. The holders of the HNS Warrants are not entitled to share in the
assets of the Company in the event of the liquidation, dissolution or winding up
of the Company's affairs.
Change of Control
As stated above, the HNS Warrants become exercisable upon the earlier
of September 27, 1997 or upon a Change of Control of the Company. "Change of
Control" means the occurrence of any of the following events: (a) any "person"
or "group" (as such terms are used in Sections 13(d) and 14(d) of the Exchange
Act), is or becomes the "beneficial owner" (as defined in Rules 13d-3 and 13d-5
under the Exchange Act, except that a person shall be deemed to have "beneficial
ownership" of all securities that such person has the right to acquire, whether
such right is exercisable immediately or only after the passage of time, upon
the happening of an event or otherwise), directly or indirectly, of more than
50% of the total voting stock of the Company; (b) the Company 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 Company, in
any such event pursuant to a transaction in which the outstanding voting stock
of the Company is converted into or exchanged for cash, securities or other
property, other than any such transaction where (i) the outstanding voting stock
of the Company is converted into or exchanged for (A) voting stock of the
surviving or transferee corporation or (B) cash, securities and other property
in an amount which could then be paid by the Company as a "Restricted Payment"
under the Senior Notes Indenture, or a combination thereof, and (ii) immediately
after such transaction, the persons who, immediately prior to such transaction,
beneficially owned the voting stock of the Company, beneficially own, in the
aggregate, more than 50% of the total voting stock of the surviving or
transferee corporation ("beneficially owned" shall have a meaning correlative to
that of "beneficial owner" as defined in Rules 13d-3 and 13d-5 under the
Exchange Act, except that a person shall be deemed to have "beneficial
ownership" of all securities that such person has the right to acquire, whether
such right is exercisable immediately or only after the passage of time, upon
the happening of an event or otherwise), provided, however, that no Change of
Control will be deemed to occur pursuant to this clause (b) if (i) the surviving
or transferee corporation has outstanding debt securities having a maturity at
original issuance of at least one year and if such debt securities are rated
Investment Grade by Standard & Poor's 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 to the extent that the rating of such debt
securities is under publicly announced consideration for possible downgrading by
the applicable rating agency), or (ii) the surviving or transferee corporation
(A) does not have any outstanding debt securities that are rated by Standard &
Poor's, 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 90 additional days to the extent that any
such rating agency has publicly announced that such corporation or debt thereof
will be rated), 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 Standard & Poor's or Moody's and remain so rated for
the remainder of the period referred to in clause (i) of this proviso, and (B)
as of the trading day immediately before and the trading day immediately after
the date of such event, has total common equity (as defined in the Subordinated
Notes Indenture) of at least $10,000,000,000; or (c) at any time during any
consecutive two-year period, individuals who at the beginning of such period
constituted the Board of Directors (together with any new directors whose
election by the Board of Directors or whose nomination for election by the
stockholders of the Company was approved by a vote of at least 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 then in office.
-19-
<PAGE>
Adjustments
Each of the number of HNS Warrant Shares purchasable upon the exercise
of the HNS Warrants and the Exercise Price will be subject to adjustment in
certain events including: (i) the payment by the Company of dividends (or other
distributions) on the Common Stock of the Company payable in shares of such
Common Stock or other shares of the Company's capital stock, (ii) subdivisions,
combinations and reclassifications of the Common Stock, (iii) the issuance to
all holders of the Common Stock of rights, options or warrants entitling them to
subscribe for shares of the Common Stock, or of securities convertible into or
exchangeable for shares of the Common Stock or additional shares of Common
Stock, for a consideration per share which is less than the current market price
per share (as provided for in the HNS Warrant) of the Common Stock to the extent
that the below market portion of such issuances is greater than 2.0% of the
Company's total market capitalization (as determined pursuant to the HNS
Warrant), (iv) the distribution to all holders of the Common Stock of any of the
Company's assets (other than non-extraordinary cash dividends or distributions
as determined pursuant to the HNS Warrant), debt securities or any rights or
warrants to purchase securities (excluding those rights and warrants referred to
in clause (iii) above), (v) the issuance of shares of Common Stock or securities
convertible into or for Common Stock for a consideration per share (including
any consideration payable upon conversion of any securities convertible into
Common Stock) less than the current market price per share (excluding securities
issued in transactions referred to in clauses (i) through (iv) above) to the
extent that the below market portion of such issuances is greater than 2.0% of
the Company's total market capitalization (as determined pursuant to the HNS
Warrant), and (vi) certain other events that could have the effect of depriving
holders of HNS Warrants of the benefit of all or a portion of the purchase
rights evidenced by the HNS Warrants. The events described in clauses (v) and
(vi) above are subject to certain exceptions described in the HNS Warrant
including, without limitation, (A) certain bona fide public offerings and
private placements and (B) Common Stock (and options exercisable therefor)
issued to the Company's directors, officers and employees. In addition, the
Exercise Price may be reduced under certain circumstances in the event of
purchases of shares of Common Stock and securities convertible into Common Stock
pursuant to a tender or exchange offer made by the Company or any subsidiary
thereof at a price greater than the market price of the Common Stock immediately
following the time such tender or exchange offer expires; provided, however,
that this provision only applies to the extent that the above market portion of
such tender or exchange offers (together with the portion of any below market
issuances within clause (iii) or (v) above for which no adjustment has been
made) is greater than 2.0% of the Company's total market capitalization (as
determined pursuant to the HNS Warrant).
No adjustment in the Exercise Price will be required unless such
adjustment would require an increase or decrease of at least one percent (1%) in
the Exercise Price; provided, however, that any adjustment which is not made
will be carried forward and taken into account in any subsequent adjustment.
In case of certain reclassifications, redesignations, reorganizations
or changes in the number of outstanding shares of Common Stock or consolidations
or mergers of the Company or the sale of all or substantially all of the assets
of the Company, each HNS Warrant shall thereafter be exercisable for the right
to receive the kind and amount of shares of stock or other securities or
property to which such holder would have been entitled as a result of such
consolidation, merger or sale had the HNS Warrants been exercised immediately
prior thereto.
-20-
<PAGE>
Mandatory Exercise
The Company may, in its sole discretion, require the holders of the HNS
Warrants to exercise (a "Mandatory Exercise") the HNS Warrants following any
period occurring after September 27, 2000 during which for ten (10) consecutive
trading days the Closing Price (as defined in the HNS Warrants) equals or
exceeds 150% of the initial exercise price of the HNS Warrants (the "Mandatory
Exercise Price"). In the event that the Company undertakes a Mandatory Exercise,
the holder of the HNS Warrants shall have five (5) business days to deliver a
standing order to a nationally recognized brokerage firm to sell in an orderly
manner the number of shares of Common Stock (not to exceed such number of shares
of Common Stock that the Company may designate to such holder) that such
brokerage firm can sell at a price equal to or greater than the Mandatory
Exercise Price. Within four (4) trading days after any sale of shares of Common
Stock pursuant to a Mandatory Exercise, the holder of the HNS Warrant pursuant
to which such shares were sold shall exercise its HNS Warrant for the full
number of shares so sold. In the event that a holder of HNS Warrants fails to
comply with the terms of a Mandatory Exercise, the exercise price of such HNS
Warrants shall increase on the thirtieth day following receipt by such holder of
notice ("Mandatory Exercise Failure Notice") from the Company of such holder's
failure to comply with the Mandatory Exercise procedures by an amount equal to
ten percent (10%) of the exercise price in effect at the time the Company
elected to require a Mandatory Exercise. Thereafter such exercise price shall
increase at a rate of ten percent (10%) per month of the exercise price in
effect at the time the Company elected to require such Mandatory Exercise until
such holder fully cures such failure. In the event a holder of HNS Warrants
fails to fully cure any Mandatory Exercise failure during the five (5) month
period following receipt of a Mandatory Exercise Failure Notice, the Company has
the right, in addition to all other remedies available to it at law or in
equity, to terminate the HNS Warrant subject to the Mandatory Exercise.
Limitation on Sale of HNS Warrant Shares
No holder of HNS Warrants may, without the Company's prior written
consent, sell greater than 10,000 HNS Warrant Shares prior to October 1, 1996 or
greater than the "Maximum Sales Amount" on or after October 1, 1996. The Maximum
Sales Amount shall mean the greater of (i) the number of shares of Common Stock
having an aggregate market value equal to $500,000 and (ii) such number of
shares of Common Stock which is equal to five percent (5%) of the average daily
trading volume of the Company's Common Stock on the NNM or other primary
interdealer quotation system or national securities exchange on which the
Company's Common Stock is traded for the thirty-day period immediately preceding
such sale.
Reservation of Shares
The Company has authorized and reserved for issuance such number of
shares of Common Stock as shall be issuable upon the exercise of all outstanding
HNS Warrants. Such shares of Common Stock, when paid for and issued, will be
duly and validly issued, fully paid and non-assessable, free of pre-emptive
rights and free from all taxes, liens, charges and security interests with
respect to the issue thereof.
Amendment
The HNS Warrants may not be modified or amended except by an instrument
in writing signed by the Company and the holders of HNS Warrants that hold HNS
Warrants entitling them to purchase at least 50% of the HNS Warrant Shares
entitled to be purchased by all holders of the HNS Warrants.
-21-
<PAGE>
BUSINESS
The Company is a provider of wireless communications services for
mobile business users. Since 1992, the Company has devoted substantial financial
and management resources to the development of GEONET(TM), its low cost, high
quality integrated digital voice and data wireless communications network. The
Company started providing commercial services in: Philadelphia in January 1996;
Washington, Baltimore and New York in March 1996; Boston in April 1996; and
Miami and Dallas in May 1996. The Company intends to offer GEONET(TM) in a
number of other cities in the United States, by the end of 1996, and in a
total of 36 markets by the end of 1997. Each market will consist of a major
United States city and its surrounding area. In certain markets, the Company may
also offer its services regionally.
The Company, through operating subsidiaries, also provides analog
wireless mobile communications services to approximately 70,000 business
subscribers in the United Kingdom and Germany. The Company is also engaged in
the manufacture and sale of (i) telephone and facsimile peripherals and sound
and communications equipment through Bogen Communications International, Inc.,
and (ii) equipment for the mobile data market through GMSI, Inc. These
operations currently generate substantially all of the Company's operating
revenues.
RECENT DEVELOPMENTS
Korea
In early June 1996, the Korean Ministry of Information and
Communications awarded a consortium, in which the Company holds a 21% interest,
a license to operate a nationwide trunked radio system in Korea. The consortium,
also includes approximately 53 Korean companies, among them Anam Industrial Co.
Ltd. (the Company's joint venture partner in Korea), Hyundai Electronics, Korean
Mobile Telecom, Ssangyong Corporation and Korea Express. The license covers a
geographic area with a population of approximately 45 million people and is
based on the implementation of the Company's FHMA(TM) system on an 800 MHz
frequency. The Company's FHMA(TM) system currently operates in the 900 MHz
frequency band. Although the Company believes that it will successfully adapt
its FHMA(TM) system to the 800 MHz frequency, such adaptation is subject to a
number of contingencies and the manufacture of certain equipment required in
connection therewith. There can be no assurance that the Company will be able to
successfully adapt its FHMA(TM) system to the 800 MHz frequency on a timely
basis. Any failure on the part of the Company to successfully adapt its FHMA(TM)
technology pursuant to the terms of the Korean license could have a material
adverse effect on the Company's prospects in Korea. In addition, the Company
will provide FHMA(TM) related infrastructure equipment and broad business and
engineering support for the design, implementation and operation of the network
in Korea. Finally, the development of a FHMA(TM) based digital system in Korea
will be subject to the same risks attendant to the development of the Company's
GEONET(TM) system in the United States.
United Kingdom
In late June 1996, the United Kingdom Department of Trade and Industry
awarded the Company's United Kingdom operating subsidiary a license to operate a
digital Public Access Mobile Radio ("PAMR") network in the United Kingdom. Under
the terms of the new digital license, the operating subsidiary will receive up
to two megahertz of spectrum in the 410-430 MHz band for the construction of a
network based on the new Trans European Trunked Radio ("TETRA") standard.
Currently, there are no TETRA systems available for commercial application.
While some potential vendors have indicated an interest in supplying a
TETRA-based system to National Band Three Limited, the Company's United Kingdom
subsidiary ("NB3"), management of the Company and NB3 cannot accurately estimate
the availability, quality and costs associated with the implementation of a
TETRA-based network. Management is continuing to work with potential vendors and
regulatory authorities in the United Kingdom regarding implementation of such
system. However, there can be no assurance that NB3 will be able to implement
such a system or, if implemented, when NB3 will be in a position to roll-out a
TETRA-based system. Finally, the development of a TETRA-based system in the
United Kingdom will be subject to the same risks attendant to the development of
the Company's GEONET(TM) system in the United States.
The Company expects that the digital network to be implemented by the
Company in the United Kingdom will offer a full range of mobile voice and data
services, including telephony, digital dispatch, automatic vehicle location and
packet data The Company hopes to commence commercial operations of such a
digital network in 1998. The Company's United Kingdom operating subsidiary
already provides PAMR services to over 60,000 business subscribers throughout
the United Kingdom.
Canada
In April 1996, Industry Canada, the Canadian agency responsible for
spectrum allocation, approved in principle an award of certain 900 MHz
frequencies in Ontario, Quebec, British Columbia and Alberta to a joint venture
consisting of the Company, Cogeco Cable, Inc. ("Cogeco") and Techcom, Inc., a
Canadian SMR operator. These entities had entered into a letter of intent to
form such joint venture in Canada to launch mobile wireless communications
-22-
<PAGE>
services based on the Company's proprietary FHMA(TM) technology. In July 1996,
the Company announced that it had been unable to reach a final agreement with
Cogeco and that the Company is actively negotiating with other potential
Canadian partners to replace Cogeco, so as to comply with Canadian foreign
ownership and regulatory requirements. There can be no assurance that the
Company will be able to identify such a partner or, if such a partner is
identified, that an agreement can be reached on terms favorable to the Company.
Any failure on the part of the Company to enter into such an arrangement could
have a material adverse effect on the Company's prospects in Canada.
Hughes Network Systems, Inc.
In September 1996, the Company and GFC entered into the HNS Financing
Agreement with HNS pursuant to which HNS has agreed to manufacture certain of
the components required for the construction of FHMA(TM) network equipment and
to provide up to $100.0 million of financing for up to 90% of the purchase price
of such portion of these components which are scheduled for delivery to the
Company prior to June 30, 1999. HNS will be granted a security interest in the
components manufactured by HNS pursuant to the manufacturing agreement executed
in connection with the HNS Financing Agreement. Additionally, GFC has pledged to
HNS the intercompany note of License Holdings entered into in connection with
the HNS Loan Agreement as well as the capital stock of License Holdings as
security under the HNS Financing Agreement. In connection with the execution of
the HNS Financing Agreement, the Company also entered into a Sales
Representation Agreement with HNS pursuant to which HNS will act as the
Company's non-exclusive sales representative to sell base stations and related
equipment in certain countries - See"-Commercial Implementation of GEONET(TM)."
USE OF PROCEEDS
The Company will not receive any proceeds from the resale of the
Offered Shares or HNS Warrants by the Selling Stockholders. Upon conversion of
the HNS Note by HNS, an aggregate of up to $24,500,000 principal amount of the
Company's indebtedness will be retired. Upon an exercise of the HNS Warrants by
HNS, exercise of the S-C Rig Warrants by S-C Rig, exercise of the Series N
Warrants by any of the Series N Investors or exercise of the Klehr Options by
Klehr, the Company will receive the exercise price of the HNS Warrants, the S-C
Rig Warrants, the Series N Warrants or the Klehr Options, as the case may be. To
the extent the HNS Warrants, S-C Rig Warrants and Series N Warrants are
exercised, the Company will apply the proceeds thereof to its general corporate
purposes. There can be no assurance that the HNS Note will be converted or that
the HNS Warrants, S-C Rig Warrants, Series N Warrants or Klehr Options will be
exercised.
-23-
<PAGE>
SELLING STOCKHOLDERS AND WARRANTHOLDERS
On December 21, 1995, the Company, GFC and HNS entered into the HNS
Loan Agreement, pursuant to which HNS agreed to provide GFC with up to $24.5
million of financing, in the form of a convertible note bearing interest at a
rate of 12% per annum, for use in connection with the purchase by GFC of
additional 900 MHz licenses to be utilized in the commercial implementation of
GEONET(TM). The HNS Note is convertible, at the option of HNS, into shares of
Common Stock at an exercise price equal to the lesser of (i) ninety percent
(90%) of the weighted average sales price per share of Common Stock on the
trading day next preceding the date of conversion (or over the ten trading days
immediately preceding the date of conversion to the extent (and only to the
extent) the conversion relates to less than $500,000 of loans drawn down under
the HNS Loan Agreement (provided, however, that HNS may convert the entire
remaining principal balance on the trading day next preceding the Maturity Date)
as reported by Bloomberg Financial Services or similar reporting service and
(ii) $9.75 per share.
In September 1996, the Company and GFC entered into the HNS Financing
Agreement with HNS pursuant to which HNS agreed to manufacture certain of the
components required for the construction of the FHMATM network equipment and to
provide up to $100.0 million of financing to the Company for up to 90% of the
purchase price of such portion of these components which are scheduled for
delivery to the Company prior to June 30, 1999. GFC currently intends to utilize
all of the funds to be made available to GFC under this credit facility. All
borrowings under the HNS Financing Agreement accrue interest at a rate of 11%
per annum. Repayment of principal under the HNS Financing Agreements shall be
made in ten equal semi-annual payments beginning on July 10, 1999. HNS will be
granted a security interest in the components manufactured by HNS pursuant to
the manufacturing agreement executed in connection with the HNS Financing
Agreement. Additionally, GFC has pledged to HNS the intercompany note of License
Holdings entered into in connection with the HNS Loan Agreement as well as the
capital stock of License Holdings as security under the HNS Financing Agreement.
In connection with the execution of the HNS Financing Agreement, the Company
issued to HNS the HNS Warrants. For a discussion of the terms of the HNS
Warrants, see "Description of the HNS Warrants".
On May 25, 1995, the Company completed a private transaction pursuant
to which it issued and sold to TDI 531,463 shares of Series L Preferred Stock.
The aggregate gross proceeds to the Company for the issuance and sale of the
Series L Preferred Stock was approximately $5,000,000. The shares of Series L
Preferred Stock issued and sold to TDI are immediately convertible into the
number of shares of Common Stock as is determined by dividing (i) the sum of the
$9.408 stated value per share of the Series L Preferred Stock plus all unpaid
dividends accrued and deemed to have accrued, if any, with respect to such
shares of Series L Preferred Stock through the last dividend payment date by
(ii) a conversion price of $9.408 per share, subject to certain adjustments.
On April 4, 1996, the Company completed a private transaction pursuant
to which it issued and sold, among other things, the S-C Rig Warrants. The S-C
Rig Warrants were issued by the Company in connection with the S-C Rig Credit
Facility more fully described under "Risk Factors - Deficiency of Earnings; Net
Losses; Substantial Indebtedness." The S-C Rig Warrants are exercisable at a per
share price of $9.50 and may be exercised, from time to time, at any time during
the period which began on June 5, 1996 and ends on April 4, 2001.
On June 20, 1996, the Company completed a private transaction pursuant
to which it issued and sold to the Series N Investors 55,000 shares of Series N
Preferred Stock and 1,650,000 Series N Warrants. Each share of Series N
Preferred Stock is convertible into the number of shares of Common Stock as is
determined by dividing (i) the sum of $1,000 stated value per share of the
Series N Preferred Stock plus all unpaid dividends accrued and deemed to have
accrued, if any, with respect to such shares of Series N Preferred Stock through
the last dividend payment date by (ii) a conversion price of $11.00 per share,
subject to certain adjustments. Assuming there are no accrued and unpaid
dividends on the Series N Preferred Stock at the time of conversion, the Series
N Preferred Stock is convertible into an aggregate of 5,000,000 shares of Common
Stock. From and after June 20, 1998, the Company may, in its sole discretion,
require the conversion of all, but not less than all, of the then outstanding
Series N Preferred Stock following a mandatory conversion calculation period.
The Series N Preferred Stock provides for a dividend of 10% per annum of the
stated value of the Series N Preferred Stock on a cumulative basis. Dividends
accrue from the date of issuance and are payable quarterly. Dividends must be
paid in shares of Common Stock valued as of the respective dividend payment
dates. The beneficial ownership figures set forth below for holders of shares of
Series N Preferred Stock do not include Series N Dividend Shares to be issued to
such holders because the number of such shares that will be issued is
indeterminable. However, the Series N Dividend Shares are being offered by the
-24-
<PAGE>
Series N Investors pursuant to this Prospectus. Therefore, the amount of shares
of Common Stock actually offered by the Selling Stockholders which are holders
of shares of Series N Preferred Stock will be greater than the numbers set forth
below to the extent Series N Dividend Shares are issued to them in the future.
The Series N Warrants are exercisable at a per share price of $11.00 and may be
exercised, from time to time, at any time during the period beginning on June
20, 1996 and ending on June 20, 2001.
On May 13, 1996, in connection with the application by Anam for a
license to operate a nationwide trunked radio system in Korea, the Company
issued to Klehr the Klehr Options, to Anam the Anam Options and to Kim the Kim
Options. Anam was awarded such License in July 1996, at which time the Klehr
Options, the Anam Options and the Kim Options vested. The Klehr Options are
exercisable at a per share price of $10.00 and may be exercised, either in full
or from time to time in part, at any time prior to May 13, 2001. The Anam
Options and the Kim Options are exercisable at a per share price of $10.00 and
may be exercised, either in full or from time to time in part, at any time prior
to May 13, 1999.
On July 3, 1996, the Company issued a convertible note in connection
with a Company subsidiary's acquisition of Tamir's interest in PST. The Tamir
Note bears interest at a rate of 6% per annum and is convertible into shares of
Common Stock, by either Tamir or the Company, at any time prior to December 3,
1996. In the event of a conversion, the Tamir Note shall be canceled and Tamir
shall receive the number of shares of Common Stock as is determined by dividing
the amount of principal and accrued and unpaid interest outstanding by the
closing bid price for the Common Stock on the NASDAQ National Market on the
trading day immediately prior to the date of conversion.
This Prospectus also concerns, pursuant to Rule 416 of the Securities
Act, the offer and sale by the Selling Stockholders of any and all shares of
Common Stock issued with respect to the Securities as a result of stock-splits,
stock dividends and anti-dilution provisions.
The agreements between the Company and the Selling Stockholders
referenced herein provide that the Company will indemnify any person deemed an
underwriter and the Selling Stockholders against certain liabilities, including
civil liabilities under the Securities Act, or will contribute to payments such
underwriters or Selling Stockholders may be required to make in respect thereof.
Insofar as indemnification for liabilities arising under the Securities Act may
be permitted to directors, officers, or persons controlling the Company pursuant
to the foregoing provisions, its certificate of incorporation or by-laws, the
Company has been informed that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act and
is therefore unenforceable.
Included below concerning each Selling Stockholder beneficially owning
Offered Shares or Warrants, as applicable, is (i) a table showing the total
amount of the Offered Shares beneficially owned by such person, the amount
subject to sale hereunder, and the resulting amount and percentage of the
outstanding Common Stock if all Offered Shares which are beneficially owned by
such person are sold, and (ii) a table showing the total amount of the Warrants
beneficially owned by such person, the amount subject to sale hereunder, and the
resulting amount and percentage if all Warrants offered hereby which are owned
by such person are sold.
None of the Selling Stockholders has, or within the past three years
has had, any position, office or other material relationship with the Company or
any of its predecessors or affiliates, except as noted in the discussion above
or in the footnotes to this table. The Selling Stockholders identified below may
have sold, transferred or otherwise disposed of all or a portion of their
Securities since the date of this Prospectus in transactions exempt from the
registration requirements of the Securities Act.
-25-
<PAGE>
<TABLE>
<CAPTION>
Pre-Offering Post Offering(1)
- ------------------------------------------------------------ ----------------------------------------
Selling Amount of Shares Amount of Shares Amount of Shares Percentage
Stockholder Beneficially Owned Being Offered Beneficially Owned of Class (2)
----------- ------------------ ------------- ------------------ ------------
<S> <C> <C> <C> <C>
Hughes Network Systems, Inc. 5,524,691 (3) 5,524,691 0 *
Toronto Dominion Investments, Inc. 531,463 (4) 531,463 0 *
S-C Rig Investments - III, L.P. 10,580,445 (5) 4,663,935 5,916,510 9.12%
Renaissance Fund LDC 1,209,090 (6) 1,209,090 0 *
Todd Investments Limited 1,191,196 (7) 1,191,196 0 *
Stockton Partners, L.P. 17,894 (8) 17,894 0 *
Charles Bronfman Family Trust 1,088,181 (9) 1,088,181 0 *
The Kolber Trust 362,727(10) 362,727 0 *
Continental Casualty Company 527,042(11) 527,042 0 *
Goldman, Sachs & Co. 541,292(12) 527,042 14,250 *
S. Daniel Abraham 263,460(13) 263,460 0 *
Arnhold and S. Bleichroeder, Inc. 575,047(14) 474,447 100,600 *
BEA Associates 2,596,317(15) 263,460 2,332,857 3.96%
PEC Israel Economic Corporation 3,029,437(16) 120,909 2,908,528 4.93%
Winston Partners II LDC 100,838(17) 100,838 0 *
Winston Partners II LLC 50,298(18) 50,298 0 *
Leonard M. Klehr 176,000(19) 50,000 126,000 *
Anam Industrial Co., Ltd. 1,351,063(20) 500,000 851,063 1.44%
James J. Kim 250,000(21) 250,000 0 *
David Tamir 88,889(22) 88,889 0 *
</TABLE>
- --------------------------
* Less than 1%.
(1) Assumes the sale of Common Stock offered by this Prospectus by the
Selling Stockholders to third parties unaffiliated with such Selling
Stockholder.
(2) This percentage is calculated in accordance with Section 13(d) of the
Securities Act and the rules promulgated thereunder, without giving
effect to the sixty (60) day limitation regarding conversion of
convertible securities. Based upon 58,962,780 shares of Common Stock
issued and outstanding as of August 31, 1996.
(3) Consists of HNS Note Shares and HNS Warrant Shares. The number of HNS
Note Shares set forth in this table assumes that the HNS Note has been
converted into Common Stock at a conversion price of $8.10 per share.
As noted above, the HNS Note is convertible, at the option of HNS, into
shares of Common Stock at a conversion price equal to the lesser of (i)
ninety percent (90%) of the weighted average sales price per share of
Common Stock on the trading day next preceding the date of conversion
(or over the ten trading days immediately preceding
-26-
<PAGE>
the date of conversion to the extent (and only to the extent) the
conversion relates to greater than $300,000 of loans drawn down under
the HNS Loan Agreement as reported by Bloomberg Financial Services or
similar reporting service and (ii) $9.75 per share. The actual number
of HNS Note Shares offered hereunder by HNS will be higher than that
set forth in this table to the extent the market price of the Common
Stock declines. To account for this contingency, the Company is
registering 3,888,889 shares of Common Stock issuable upon conversion
of the HNS Note, based on a conversion price of $6.30 per share.
(4) Consists of 531,463 shares of Common Stock issuable upon conversion of
the Series L Preferred Stock.
(5) Consists of 4,210,526 shares of Common Stock issuable upon exercise of
the S-C Rig Warrants, 340,909 shares of Common Stock issuable upon
conversion of the Series N Preferred Stock and 112,500 shares of Common
Stock issuable upon exercise of the Series N Warrants. To the extent
shares of Common Stock are issued in satisfaction of dividends payable
with respect to the Series N Preferred Stock, the number of shares
offered may be higher. S-C Rig also holds 444,445 shares of Series H
Preferred Stock, which it purchased from the Company in a private
placement in December 1993 for $40,000,000. The Series H Preferred
Stock is, under certain circumstances, convertible into Common Stock by
dividing (i) the sum of the $90.00 per share stated value and any
dividend arrearage by (ii) $9.00 per share (as adjusted from time to
time for certain events of dilution). Assuming there are no accrued and
unpaid dividends on the Series H Preferred Stock at the time of
conversion, the Series H Preferred Stock is convertible into an
aggregate of 4,444,450 shares of Common Stock. S-C Rig also holds 20
shares of Series I Preferred Stock, which it purchased from the Company
in a private placement in December 1994 for $10,000,000. The Series I
Preferred Stock is, under certain circumstances, convertible into
Common Stock by dividing (x) the sum of $500,000 per share stated value
and any dividend arrearage by (y) $11.75 per share (as adjusted from
time to time for certain events of dilution). Assuming there are no
accrued and unpaid dividends on the Series I Preferred Stock at the
time of conversion, the Series I Preferred Stock is convertible into an
aggregate of 851,060 shares of Common Stock. In addition, S-C Rig holds
a warrant to purchase 621,000 shares of Common Stock. See "Risk Factors
- Deficiency of Earnings; Net Losses; Substantial Indebtedness -
Influence of Significant Stockholders; Preemptive Rights Dividends on
Common Stock Not Likely." Purnendu Chatterjee, an affiliate of S-C Rig,
is a director of the Company. Dr. Chatterjee holds options which are
currently exercisable to purchase 20,000 shares of Common Stock. Dr.
Chatterjee is also deemed to beneficially own options to purchase
400,000 shares of Common Stock held by one of his affiliates, XTEC
International, Inc. In addition, Winston Partners II LDC and Winston
Partners II LLC are affiliates of S-C Rig.
(6) Consists of 909,090 shares of Common Stock issuable upon conversion of
the Series N Preferred Stock and 300,000 shares of Common Stock
issuable upon exercise of the Series N Warrants. To the extent shares
of Common Stock are issued in satisfaction of dividends payable with
respect to the Series N Preferred Stock, the number of shares offered
may be higher.
(7) Consists of 895,636 shares of Common Stock issuable upon conversion of
the Series N Preferred Stock and 295,560 shares of Common Stock
issuable upon exercise of the Series N Warrants. To the extent shares
of Common Stock are issued in satisfaction of dividends payable with
respect to the Series N Preferred Stock, the number of shares offered
may be higher.
(8) Consists of 13,454 shares of Common Stock issuable upon conversion of
the Series N Preferred Stock and 4,440 shares of Common Stock issuable
upon exercise of the Series N Warrants. To the extent shares of Common
Stock are issued in satisfaction of dividends payable with respect to
the Series N Preferred Stock, the number of shares offered may be
higher.
(9) Consists of 818,181 shares of Common Stock issuable upon conversion of
the Series N Preferred Stock and 270,000 shares of Common Stock
issuable upon exercise of the Series N Warrants. To the extent shares
-27-
<PAGE>
of Common Stock are issued in satisfaction of dividends payable with
respect to the Series N Preferred Stock, the number of shares offered
may be higher.
(10) Consists of 272,727 shares of Common Stock issuable upon conversion of
the Series N Preferred Stock and 90,000 shares of Common Stock issuable
upon exercise of the Series N Warrants. To the extent shares of Common
Stock are issued in satisfaction of dividends payable with respect to
the Series N Preferred Stock, the number of shares offered may be
higher.
(11) Consists of 396,272 shares of Common Stock issuable upon conversion of
the Series N Preferred Stock and 130,770 shares of Common Stock
issuable upon exercise of the Series N Warrants. To the extent shares
of Common Stock are issued in satisfaction of dividends payable with
respect to the Series N Preferred Stock, the number of shares offered
may be higher.
(12) Includes 396,272 shares of Common Stock issuable upon conversion of the
Series N Preferred Stock and 130,770 shares of Common Stock issuable
upon exercise of the Series N Warrants. To the extent shares of Common
Stock are issued in satisfaction of dividends payable with respect to
the Series N Preferred Stock, the number of shares offered may be
higher. Includes 14,250 shares of Common Stock held in customers'
accounts as of September 24, 1996 with respect to which Goldman, Sachs
& Co. has investment discretion which may be deemed to be beneficially
owned by Goldman, Sachs & Co.; Goldman, Sachs & Co. disclaims
beneficial ownership of such shares.
(13) Consists of 198,090 shares of Common Stock issuable upon conversion of
the Series N Preferred Stock and 65,370 shares of Common Stock issuable
upon exercise of the Series N Warrants. To the extent shares of Common
Stock are issued in satisfaction of dividends payable with respect to
the Series N Preferred Stock, the number of shares offered may be
higher.
(14) Includes 356,727 shares of Common Stock issuable upon conversion of the
Series N Preferred Stock and 117,720 shares of Common Stock issuable
upon exercise of the Series N Warrants. To the extent shares of Common
Stock are issued in satisfaction of dividends payable with respect to
the Series N Preferred Stock, the number of shares offered may be
higher. The Series N Preferred Stock and Series N Warrants held by
Arnold and S. Bleichroeder, Inc. ("Bleichroeder") were issued to it as
a placement fee in connection with its services as placement agent for
the offering to the other Series N Investors. Bleichroeder provides
investment banking services to the Company from time to time.
(15) Includes 198,090 shares of Common Stock issuable upon conversion of the
Series N Preferred Stock and 65,370 shares of Common Stock issuable
upon exercise of the Series N Warrants. To the extent shares of Common
Stock are issued in satisfaction of dividends payable with respect to
the Series N Preferred Stock, the number of shares offered may be
higher. BEA Associates, an investment advisor, is the beneficial owner
of such securities, which it holds for the following entities: The
Common Fund, Connecticut Mutual Dimension Fund, BEA Income Fund, Inc.
(formerly CSFB Income Fund), General Retirement System of the City of
Detroit, Omaha Public School Employee Retirement System, BEA High Yield
Portfolio, RJR Nabisco Domestic High Yield, SEI Institutional Managed
Trust, The Emerging Markets Infrastructure Fund Inc., The First Israel
Fund Inc., and VAIL. The information set forth in the table with
respect to BEA Associates and the information set forth in this
footnote was provided by BEA Associates.
(16) Includes 90,909 shares of Common Stock issuable upon conversion of the
Series N Preferred Stock and 30,000 shares of Common Stock issuable
upon exercise of the Series N Warrants. To the extent shares of Common
Stock are issued in satisfaction of dividends payable with respect to
the Series N Preferred Stock, the number of shares offered may be
higher.
(17) Consists of 75,818 shares of Common Stock issuable upon conversion of
the Series N Preferred Stock and 25,020 shares of Common Stock issuable
upon exercise of the Series N Warrants. To the extent shares of
-28-
<PAGE>
Common Stock are issued in satisfaction of dividends payable with
respect to the Series N Preferred Stock, the number of shares offered
may be higher. Winston Partners II LLC and S-C Rig are affiliates of
Winston Partners II LDC.
(18) Consists of 37,818 shares of Common Stock issuable upon conversion of
the Series N Preferred Stock and 12,480 shares of Common Stock issuable
upon exercise of the Series N Warrants. To the extent shares of Common
Stock are issued in satisfaction of dividends payable with respect to
the Series N Preferred Stock, the number of shares offered may be
higher. Winston Partners II LDC and S-C Rig are affiliates of Winston
Partners II LLC.
(19) Includes 50,000 shares of Common Stock issuable upon exercise of the
Klehr Options. Klehr is a partner in the law firm of Klehr, Harrison,
Harvey, Branzburg and Ellers, Philadelphia, Pennsylvania. Such law firm
acts as the Company's principal outside legal counsel.
(20) Includes 500,000 shares of Common Stock issuable upon exercise of the
Anam Options and 851,063 shares of Common Stock issuable upon
conversion of the Company's Series K Cumulative Convertible Preferred
Stock.
(21) Consists of 250,000 shares of Common Stock issuable upon exercise of
the Kim Options.
(22) The number of Offered Shares set forth in this table assumes that the
Tamir Note has been converted into Common Stock at a conversion price
of $9.00 per share. As noted above, the Tamir Note is convertible at
any time prior to December 31, 1996, at the option of Tamir or the
Company, into the number of shares of Common Stock as is determined by
dividing the amount of principal and accrued and unpaid interest
outstanding by the closing bid price for the Common Stock on the NASDAQ
National Market on the trading day immediately prior to the date of
conversion. The actual number of Offered Shares offered hereunder by
Tamir will be higher than that set forth in this table to the extent
the market price of the Common Stock declines. To account for this
contingency, the Company is registering 120,000 shares of Common Stock
pursuant to this Registration Statement, based on a conversion price of
$6.66 per share.
<TABLE>
<CAPTION>
Warrants Pre-Offering (1) Post-Offering(2)
Total Number of Total Number of
Warrants Warrants
Beneficially Beneficially Percentage of
Selling Stockholders Owned Warrants Owned Class
<S> <C> <C> <C> <C>
Hughes Network Systems, Inc. 2,500,000(3) 2,500,000 0 0%
</TABLE>
- --------
(1) Beneficial ownership figures include the HNS Warrants issued in
connection with the execution of the HNS Financing Agreement, all of
which are owned by HNS. For information regarding beneficial ownership
of Common Stock, including the HNS Warrant Shares issuable upon
exercise of the HNS Warrants, see the table regarding beneficial
ownership of Common Stock above.
(2) Assumes the sale of all HNS Warrants offered by this Prospectus by HNS
to third parties unaffiliated with HNS.
(3) Consists of warrants to purchase 1,000,000 shares of Common Stock at an
exercise price of $8.6250 per share, warrants to purchase 1,000,000
shares of Common Stock at an exercise price of $10.7813 per share and
warrants to purchase 500,000 shares at an exercise price of $12.9375
per share.
-29-
<PAGE>
PLAN OF DISTRIBUTION
Pursuant to this Prospectus, the Offered Shares may be sold by the
Selling Stockholders from time to time while the Registration Statement to which
this Prospectus relates is effective, on the PSE, NNM or otherwise at prices and
terms prevailing at the time of sale, at prices and terms related to such
prevailing prices and terms, in negotiated transactions or at fixed prices.
Although none of the Selling Stockholders has advised the Company of the manner
in which it currently intends to sell the Offered Shares pursuant to this
Registration Statement, the Selling Stockholders may choose to sell all or a
portion of such Offered Shares from time to time in any manner described herein.
The methods by which the Offered Shares may be sold by the Selling Stockholders
include, without limitation: (i) ordinary brokerage transactions, which may
include long or short sales, (ii) transactions which involve crosses or block
trades or any other transactions permitted by the PSE or NNM, (iii) purchases by
a broker or dealer as principal and resale by such broker or dealer for its
account pursuant to this Prospectus, (iv) "at the market" to or through market
makers or into an existing market for the Common Stock, (v) in other ways not
involving market makers or established trading markets, including direct sales
to purchasers or sales effected through agents, (vi) through transactions in
options or swaps or other derivatives (whether exchange-listed or otherwise), or
(vii) any combinations of any such methods of sale. In addition, the Selling
Stockholders may enter into hedging transactions with broker-dealers. In
connection with such transactions, broker-dealers may engage in short sales of
Common Stock in the course of hedging the positions they assume with Selling
Stockholders. The Selling Stockholders may also sell Common Stock short and
deliver the shares of Common Stock registered hereby at any time to close out
such short positions, provided such short sales were effected pursuant to this
Prospectus. The Selling Stockholders may also enter into option or other
transactions with broker-dealers which require the delivery to such
broker-dealers of the Common Stock offered hereby, which Common Stock such
broker-dealers may resell pursuant to this Prospectus.
There is currently no established trading market for the HNS Warrants,
and it is uncertain whether there will be a trading market for the HNS Warrants.
It is not presently anticipated that the HNS Warrants will be listed for trading
on the NNM, the PSE or otherwise. As a result, it is presently anticipated that
sales of the HNS Warrants by the Selling Stockholders will be effected from time
to time, in ways not involving market makers or established trading markets,
including direct sales to purchasers or sales effected through agents, at
negotiated prices. If at any time the HNS Warrants are listed for trading on the
NNM, the PSE or otherwise, sales of the HNS Warrants could be effected in the
same manner in which sales of Offered Shares are effected.
In effecting sales, brokers and dealers engaged by any of the Selling
Stockholders may arrange for other brokers or dealers to participate. Brokers or
dealers may receive commissions or discounts from the Selling Stockholders to
sell a specified number of shares or warrants at a stipulated price per share,
and, to the extent such a broker or dealer is unable to do so acting as agent
for the Selling Stockholders, may purchase as principal any unsold shares or
warrants at the price required to fulfill such broker or dealer commitment to
the Selling Stockholders. Brokers or dealers who acquire shares or warrants as
principals may thereafter resell such shares from time to time in transactions
(which may involve crosses and block transactions and which may involve sales to
and through other brokers or dealers, including transactions, of the nature
described above) in the over-the-counter market, in negotiated transactions or
otherwise, at market prices and terms prevailing at the time of sale, at prices
and terms related to such prevailing prices and terms, in negotiated
transactions or at fixed prices, and in connection with the methods as described
above. The Offered Shares or HNS Warrants held by the Selling Stockholders may
also be sold hereunder by brokers, dealers, banks or other persons or entities
who receive such Offered Shares or HNS Warrants as a pledgee of the Selling
Stockholders. The Selling Stockholders and brokers and dealers through whom
sales of Offered Shares or HNS Warrants may be effected may be deemed to be
"underwriters", as defined under the Securities Act, and any profits realized by
them in connection with the sale of the Offered Shares or HNS Warrants may be
considered to be underwriting compensation.
LEGAL MATTERS
The validity of the Offered Shares and the HNS Warrants will be passed
upon by Robert Vecsler, Esquire, General Counsel of the Company.
-30-
<PAGE>
EXPERTS
The consolidated balance sheets of the Company as of December 31, 1995
and 1994 and the consolidated statements of operations, stockholders' equity,
and cash flows for the years ended December 31, 1995, 1994 and 1993,
incorporated by reference in this Prospectus, have been incorporated by
reference herein in reliance on the report of Coopers & Lybrand L.L.P.,
independent accountants, given on the authority of that firm as experts in
accounting and auditing. In such report, Coopers & Lybrand L.L.P. states that,
with respect to a certain affiliated company, its opinion is based upon the
reports of other independent accountants.
-31-
<PAGE>
===============================================================================
No person is authorized to give any information or to make any
representations not contained or incorporated by reference in this Prospectus,
and, if given or made, such information or representation must not be relied
upon as having been authorized by the Company. This Prospectus does not
constitute an offer to sell or a solicitation of an offer to buy any securities
other than the securities to which it relates or an offer to sell or a
solicitation of an offer to buy such securities in any circumstances or in any
jurisdiction in which such offer or solicitation is unlawful. Neither the
delivery of this Prospectus nor any sale made hereunder shall, under any
circumstances, create an implication that there has not been any change in the
affairs of the Company since the date hereof or that the information contained
herein is correct as of any time subsequent to its date.
--------
TABLE OF CONTENTS
Page
Additional Information...................... 6
Incorporation of Certain Information
by Reference.............................. 6
Address and Telephone Number................ 7
Risk Factors................................ 8
Description of HNS Warrants................. 18
Business.................................... 22
Recent Developments......................... 22
Use of Proceeds............................. 23
Selling Stockholders and Warrantholders..... 24
Plan of Distribution........................ 30
Legal Matters............................... 30
Experts..................................... 31
===============================================================================
===============================================================================
GEOTEK
COMMUNICATIONS, INC.
23,200,878 Shares of Common Stock
----------
PROSPECTUS
Dated: September 27, 1996
----------
===============================================================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following is an itemized statement of the estimated amounts of all
expenses payable by the registrant in connection with the registration of the
Offered Shares and HNS Warrants, other than underwriting discounts and
commissions:
Registration Fee--Securities and Exchange Commission ....... $ 81,301.28
*Blue Sky fees and expenses ................................. $ 1,000.00
*Accountants' fees and expenses ............................. $ 10,000.00
*Legal fees and expenses .................................... $ 10,000.00
*Printing and engraving expenses ............................ $ 5,000.00
*Miscellaneous .............................................. $ 2,500.00
-----------
Total .............................................. $109,801.28
===========
- ------------------
* Estimate
Item 15. Indemnification of Directors and Officers.
A. The Delaware Corporation Law provides that, to the extent that any
director, officer, employee or agent of the Company has been successful on the
merits or otherwise in defense of any action, suit or proceeding, whether civil,
criminal, administrative or investigative (including an action by or in the
right of the Company) to which such person was a party by reason of the fact
that such person is or was a director, officer, employee or agent of the Company
or is or was serving at the request of the Company as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, the Company shall indemnify any such person against expenses
(including attorneys' fees) actually and reasonably incurred in connection
therewith.
B. In addition, the Company has the power to indemnify any of the
persons referred to above against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
in connection with any such actions, suit or proceeding, if such person acted in
good faith and in a manner such person reasonably believed to be or not opposed
to the best interests of the Company, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe such person's conduct was
unlawful.
Notwithstanding the foregoing, in connection with any action or suit by
or in the right of the Company to procure a judgment in its favor, the Company
shall not make any indemnification as described above in respect of any claim,
issue or matter as to which such person shall have been adjudged to be liable to
the Company unless, and only to the extent that, the Court of Chancery (in the
State of Delaware) or the court in which such action or suit was brought shall
determine, upon application, that despite adjudication of liability, but in view
of all the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which the Court of Chancery or such
other court shall deem proper.
C. The Company also has the power, under the Delaware Corporation Law,
to purchase and maintain insurance on behalf of any person who is or was a
director, officer, employee or agent of the Company, or is or was serving at the
request of the Company as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against any
other liability asserted against such person and incurred by such person in any
such capacity, or arising out of such person's status as such, whether or not
the Company would have the power to indemnify such person against such liability
under the foregoing provisions.
II-1
<PAGE>
D. The indemnification provided by or allowable pursuant to the
Delaware Corporation Law shall or may, as applicable, continue as to a person
who has ceased to be a director, officer, employee or agent of the Company and
shall inure to the benefit of the heirs, executors and administrators of such
person.
Item 16. Exhibits and Financial Statement Schedules.
(a) Schedule of Exhibits.
Exhibit
Number Exhibit
------- -------
*4.1 Warrant to purchase Common Stock issued to S-C Rig
Investments-III, L.P.
**4.2 Form of Warrant issued in connection with Series N
Cumulative Convertible Preferred Stock.
**4.3 Certificate of Designation of Series N Cumulative
Convertible Preferred Stock.
4.4 Form of Warrant to purchase Common Stock issued to HNS.
5 Opinion and Consent of Robert Vecsler, Esquire.
23.1 Consent of Coopers & Lybrand L.L.P. - Geotek
Communications, Inc.
23.2 Consent of Shachak Peer Reznick & Co. - PowerSpectrum
Technology Ltd.
23.3 Consent of Coopers & Lybrand - National Band Three
Limited.
23.4 Consent of Coopers & Lybrand L.L.P. -- Bogen
Communications International, Inc.
23.5 Consent of KPMG - Band Three Radio Limited.
23.6 Consent of Coopers & Lybrand GmbH - Preussag
Bundelfunk GmbH.
23.7 Consent of Dusseldorfer Treuhand-Gesellschaft Altenburg
& Tewes AG - DBF Bundelfunk GmbH & Co. Betriebs-KG.
23.8 Consent of Deloitte & Touche - National Band Three
Limited.
- -------------
* Previously filed.
** Incorporated by reference in the Company's Current
Report on Form 8-K dated June 20, 1996.
II-2
<PAGE>
Item 17. Undertakings.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by section 10(a)(3)
of the Securities Act;
(ii) To reflect in the Prospectus any facts or events arising
after the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the Registration
Statement. Notwithstanding the foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of securities offered would not
exceed that which was registered) and any deviation from the low or high and of
the estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 20 percent change in the
maximum aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective Registration Statement.
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the Registration Statement or
any material change to such information in the Registration Statement.
Provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if
the information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the registrant pursuant to
Section 13 or Section 15(d) of the Exchange Act that are incorporated by
reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the registrant of expenses incurred or
paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
For purposes of determining any liability under the Securities Act, each
filing of the registrant's annual report pursuant to Section 13(a) or 15(d) of
the Exchange Act that is incorporated by reference in this registration
statement shall be deemed to be a new Registration Statement relating to the
securities offered herein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, the Registrant certifies that it has reasonable grounds to believe that
it meets all of the requirements for filing form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in Montvale, New Jersey, on September 26, 1996.
GEOTEK COMMUNICATIONS, INC.
By: /s/ Yaron I. Eitan
-------------------------------------------------
Yaron I. Eitan
President, Chief Executive Officer and Director
Pursuant to the requirements of the Securities Act of 1933,
this Registration Statement has been duly signed below by the following persons
in the capacities indicated on September 26, 1996.
Signatures Title
- ---------- -----
*
- ------------------------- Chairman of the Board; Director
Winston J. Churchill
/s/ Yaron I. Eitan
- ------------------------- President and Chief Executive Officer
Yaron I. Eitan (Principal Executive Officer); Director
*
- ------------------------- Director
Walter E. Auch
*
- ------------------------- Director
George Calhoun
*
- ------------------------- Director
Purnendu Chatterjee
*
- ------------------------- Director
Haynes G. Griffin
<PAGE>
Signatures Title
- ---------- -----
*
- ------------------------ Director
Richard Krants
*
- ------------------------ Director
Richard T. Liebhaber
*
- ------------------------ Director
Jonathan C. Crane
*
- ------------------------ Director
Kevin W. Sharer
*
- ------------------------ Director
William Spier
/s/ Michael McCoy
- ------------------------ Chief Financial Officer
Michael McCoy (Principal Financial Officer)
/s/ Michael Carus
- ------------------------ Chief Accounting Officer
Michael Carus (Principal Accounting Officer)
* An original Power of Attorney authorizing Yaron Eitan and Michael McCoy
to sign any amendment to this Registration Statement on behalf of
certain officers and directors of the Registrant was included with the
signature pages to the originally filed Registration Statement to which
this Amendment No. 1 relates.
By: /s/ Yaron I. Eitan
--------------------------------
Yaron I. Eitan, Attorney-in-Fact
<PAGE>
EXHIBIT INDEX
Exhibit
Number Exhibit
- ------- -------
4.4 Form of Warrant to purchase Common Stock issued to HNS.
5 Opinion and Consent of Robert Vecsler, Esquire.
23.1 Consent of Coopers & Lybrand L.L.P. - Geotek Communications, Inc.
23.2 Consent of Shachak Peer Reznick & Co. - PowerSpectrum Technology Ltd.
23.3 Consent of Coopers & Lybrand - National Band Three Limited.
23.4 Consent of Coopers & Lybrand L.L.P. -- Bogen Communications
International, Inc.
23.5 Consent of KPMG - Band Three Radio Limited.
23.6 Consent of Coopers & Lybrand GmbH - Preussag Bundelfunk GmbH.
23.7 Consent of Dusseldorfer Treuhand-Gesellschaft Altenburg & Tewes AG -
DBF Bundelfunk GmbH & Co. Betriebs-KG.
23.8 Consent of Deloitte & Touche - National Band Three Limited
<PAGE>
EXHIBIT 4.4
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, SEPTEMBER ___, 2003
***************************************
FORM OF
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
Hughes Network Systems, Inc., a Delaware corporation, or permitted assigns (the
"Warrantholder" or "Warrantholders"), the right to subscribe for and purchase
from the Company, at a purchase price of $ _____ per share (the "Exercise
Price"), at any time and from time to time after the Initial Exercise Date (as
defined below), and to and including 5:00 P.M. New York City time on September
___, 2003 (the "Expiration Date"), [One Million (1,000,000)] 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 1.5(c) and Section 6. The Initial
Exercise Date shall be the earlier of (x) September __, 1997 and (y) a Change of
Control (as defined in the Indenture dated as of June 30, 1995 by and between
the Company and IBJ Schroder Bank & Trust Company, as trustee, as in effect on
the date hereof).
This Warrant has been issued as part of a duly authorized issue of
warrants expiring September __, 2003 (which warrants are hereinafter referred to
collectively as the "Warrants") pursuant to that certain Vendor Credit Financing
Agreement made as of the __ day of September, 1996 (the "Credit Agreement") by
and among Geotek Financing Corporation ("Finance Corporation"), the Company and
Hughes Network Systems, Inc. ("HNS").
SECTION 1. Exercise of Warrant; Limitation on Exercise; Payment of
Taxes.
1.1 Exercise of Warrant.
(a) Subject to the limitations set forth in Section 1.2
hereof, the Warrantholder may exercise this Warrant, in whole or in part at any
time and from time to time on or 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,
<PAGE>
if any, with the Subscription Form annexed hereto duly executed and payment of
the full Exercise Price for each Warrant Share to be purchased in accordance
with Section 1.3 hereof.
(b) Upon receipt of this Warrant, with the Subscription Form
duly executed and payment of the aggregate Exercise Price in accordance with
Section 1.3 hereof 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 8.8 hereof) in such
denominations as are requested for delivery to the Warrantholder, and the
Company shall thereupon promptly 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 of Warrants and Sales of Warrant Shares.
(a) If this Warrant is not exercised prior to 5:00 p.m. on the
Expiration Date (or the next succeeding Business Day, if the Expiration Date is
a Saturday, Sunday or a day on which the New York Stock Exchange is authorized
to close or on which the Company is otherwise closed for business (a
"Nonbusiness Day")), this Warrant, or any new Warrant issued pursuant to Section
1.1, shall cease to be exercisable and shall become void and all rights of the
Warrantholder hereunder shall cease. This Warrant shall not be exercisable and
no Warrant Shares shall be issued hereunder prior to 9:00 a.m. New York City
time on the Initial Exercise Date.
(b) Notwithstanding anything herein to the contrary, no
Warrantholder, without the Company's prior written consent, shall be entitled to
sell or otherwise transfer (other than sales or transfers between Warrantholder
and one or more of its affiliates (as defined in Rule 501 under the Securities
Act) or between its affiliates) greater than 10,000 Warrant Shares on any
trading day occurring prior to October 1, 1996 or greater than the Maximum Sales
Amount (as defined below) on any trading day occurring on or after October 1,
1996. All sales and transfers by Warrantholder and its affiliates on a trading
day shall be aggregated for purposes of determining whether Warrantholder has
complied with this Section. For purposes of this Section 1.2(b), the "Maximum
Sales Amount" shall mean the greater of (x) a number of shares of Common Stock
with an aggregate market value (based on the Quoted Price (as defined herein) of
the Common Stock on the trading day immediately preceding the sale or transfer
for which the determination is being made) equal to $500,000 and (y) such number
of shares which is equal to 5% of the average daily trading volume of the
Company's Common Stock on the primary interdealer quotation system or national
securities exchange on which the Common Stock is traded for the thirty (30)
trading day period immediately preceding the date of sale or transfer.
(c) For so long as HNS or any of its affiliates own any
Warrants or Warrant Shares, neither HNS nor any of its affiliates may sell on
any day more shares of the Company's Common Stock than HNS and its affiliates
(other than HNS Retirement Plans (as defined below)) own on such day (including
shares in respect of which it has or will properly exercise its exercise rights
under the Warrants on such day). Nothing in this Section 1.2(c) shall restrict
-4-
<PAGE>
(i) the ability of HNS or any of its affiliates to sell, assign or otherwise
transfer this Warrant in accordance with the terms, and subject to the
limitations, contained herein or (ii) the ability of any pension or other
retirement plan (other than a pension or retirement plan which owns Warrants or
Warrant Shares) for the primary benefit of employees or former employees of HNS
and its affiliates (each such plan is referred to herein as an "HNS Retirement
Plan") from engaging in any trading activity with respect to the Company's
Common Stock.
1.3 Payment of Exercise Price. Payment of the Exercise Price pursuant
to Section 1.1(a) shall be made to the Company no later than the fourth trading
day following delivery of the Subscription Form with respect to such exercise by
one of the following methods (at the option of the Warrantholder): (a) in cash;
(b) by certified or official bank check payable in United States dollars to the
order of the Company; (c) by wire transfer of same day funds in accordance with
the Company's written wiring instructions; (d) by applying all or any portion of
the Obligations under the Credit Agreement that are then past due and payable
under the Credit Agreement against the Exercise Price; or (e) by any combination
of the foregoing. Any portion of the Exercise Price paid by the Warrantholder in
the manner set forth in clause (d) of this Section 1.3 shall be in complete
satisfaction of Finance Corporation's and the Company's obligations to pay such
amount under the Credit Agreement.
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.
1.5 Mandatory Exercise.
(a) From and after September __, 2000, the Company may, in its
sole discretion, require the exercise of all or any portion of this Warrant
following a Mandatory Exercise Calculation Period in accordance with the
Mandatory Exercise Procedures (as defined in Section 1.5(b) below). "Mandatory
Exercise Calculation Period" shall be any period during which for ten (10)
consecutive trading days after September __, 2000, the Closing Price (as defined
below) of the Common Stock equaled or exceeded the Mandatory Exercise Price. The
initial Mandatory Exercise Price shall be equal to _____________ ($______) [150%
of Initial Exercise Price]. The Mandatory Exercise Price shall be subject to
equitable adjustment in accordance with the antidilution provisions set forth in
Section 6(a) to the same extent as the Exercise Price is subject to adjustment.
At any time during the ten (10) business day period immediately following the
conclusion of a Mandatory Exercise Calculation Period, the Company may mail to
the holder of this Warrant at its last address reflected on the Company's books
and records (and in the case of HNS, with copies of such notice sent by
certified or registered mail, postage prepaid and return receipt requested, to
each of the General Counsel and the Chief Financial Officer of HNS at 11717
Exploration Lane, Germantown, Maryland 20876 and to the Treasurer of Hughes
Electronics Corporation at 7200 Hughes Terrace, Los Angeles, California 90045) a
notice ( a "Mandatory Exercise Notice") notifying such holder that the Company
has exercised its right pursuant to this Section 1.5 and that the Holder is
subject to the Mandatory Exercise Procedures set forth in Section 1.5(b). Such
notice shall set forth (i) the last date by which the Warrantholder must have
initiated the Mandatory Exercise Procedures, (ii) the aggregate number of shares
of Common Stock issuable upon exercise of this Warrant which are subject to
Mandatory Exercise Procedures and (iii) any restrictions on the number of shares
of Common Stock which the Warrantholder may sell pursuant to the Mandatory
Exercise Procedures (the "Volume Limitations"). Notwithstanding the foregoing,
this Warrant shall not be subject to mandatory exercise pursuant to this Section
1.5 at any time that the issuance of the Warrant Shares upon exercise of the
Warrant or the resale of such is not registered under the Securities Act. As
used in this Agreement, "Closing Price" shall mean 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,
as reported on the NASDAQ Stock Market or on the principal securities market on
which the Common Stock is then being traded.
(b) As used in this Section 1.5, "Mandatory Exercise
Procedures" shall consist of the following:
(i) Within five (5) business days after receiving a
Mandatory Exercise Notice, the Warrantholder shall deliver a standing order to a
nationally recognized brokerage firm to use its reasonable best efforts
-5-
<PAGE>
to sell, in an orderly manner and subject to the Volume Limitations and the
restrictions contained in Section 1.2 hereof, such number of shares of Common
Stock that such brokerage firm can sell at a price at or above the Mandatory
Exercise Price. The Warrantholder shall not revoke or otherwise modify such
standing order other than as contemplated by subparagraph (iii) of these
Mandatory Exercise Procedures or otherwise with the written consent of the
Company and shall deliver to the Company (when delivered to the brokerage firm)
copies of all correspondence to the brokerage firm which relates to such
standing order.
(ii) Within four (4) trading days after any sale by
the Warrantholder of any shares of Common Stock pursuant to these Mandatory
Exercise Procedures, the Warrantholder shall exercise this Warrant to purchase
the full number of shares so sold.
(iii) In the event the Company shall modify or impose
any new Volume Limitations or increase the Maximum Sales Amount with respect to
any Mandatory Exercise Procedures then in effect, such modified or new Volume
Limitations and/or Mandatory Sales Amount shall become effective on the third
trading day following the Company's written notice to the Warrantholder of such
modified or new Volume Limitations and/or Mandatory Sales Amount. The
Warrantholder shall promptly (but in no event later than one (1) trading day
prior to the effective date of such new criteria) notify the brokerage firm
implementing the Mandatory Exercise Procedures of the new or modified Volume
Limitations and/or Mandatory Sales Amount and shall deliver a copy of such
notification to the Company.
(c) In the event the holder of this Warrant (i) fails to
implement the Mandatory Exercise Procedures within the time frames set forth
therein (including, without limitation, any failure by the brokerage firm
referenced in Section 1.5(b)(i) hereof to utilize its reasonable best efforts to
sell, in an orderly manner, the maximum number of Shares it is authorized to
sell under such Mandatory Exercise Procedures) or fails to exercise this Warrant
in accordance with such procedures and (ii) fails to fully cure all such
failures during the thirty (30) day period (the "Maximum Exercise Cure Period")
following the date upon which such holder receives notice from the Company of
its failure to exercise any portion of this Warrant pursuant to the Mandatory
Exercise Procedures, then, effective on the first day following the Maximum
Exercise Cure Period and continuing until such time as such holder shall fully
cure all such failures which have occurred through the date of such cure (the
"Cure Date"), the Exercise Price with respect to each Warrant Share (a "Default
Share") which would have been purchased upon exercise of this Warrant in
accordance with the Mandatory Exercise Procedures through the Cure Date shall be
equal to the Mandatory Exercise Default Exercise Price. The Mandatory Default
Exercise Price shall initially equal one hundred and ten percent (110%) of the
Exercise Price then in effect and shall increase, on a daily basis, at a rate of
ten percent (10%) of the Exercise Price in effect at the time of the Mandatory
Exercise Notice per month until the Cure Date. In the event the Cure Date does
not occur within five (5) months after the expiration of the Mandatory Exercise
Cure Period, the Company, in addition to all other remedies available to it at
law or in equity, may terminate this Warrant effective on the Mandatory Exercise
Date.
(d) In no event shall any Mandatory Exercise Procedures
(including, without limitation, any Volume Limitations set forth therein) limit
the Warrantholder's ability to exercise this Warrant or sell Warrant Shares in
accordance with and subject to the limitations contained elsewhere in this
Warrant (including, without limitation, Section 1.2 hereof). For the avoidance
of doubt, any Volume Limitations established by the Company as part of the
Mandatory Exercise Procedures shall not limit the Warrantholder's ability to
elect to sell up to the Maximum Sales Amount as contemplated by Section 1.2
hereof even if such Maximum Sales Amount is greater than any such Volume
Limitations.
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
-6-
<PAGE>
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 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 (as defined in
Section 7.1 hereof) 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;
(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
-7-
<PAGE>
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 are to be determined. Failure to provide
such notice shall not affect the validity of any action taken in connection with
such dividend, distribution, issuance or subscription rights, or proposed
merger, consolidation, sale, conveyance, tender offer, exchange offer,
dissolution, liquidation or winding up.
SECTION 5. Split-Up, Combination, Exchange and Transfer of Warrants.
(a) Subject to the provisions of Section 5(b), this Warrant
may be split up, combined or exchanged for another Warrant or Warrants
containing the same terms to purchase a like aggregate number of Warrant Shares.
If the Warrantholder desires to split up, combine or exchange this Warrant, he,
she or it shall make such request in writing delivered to the Company and shall
surrender to the Company this Warrant and any other Warrants to be so split up,
combined or exchanged. Upon any such surrender for a split up, combination or
exchange, the Company shall execute and deliver to the Person entitled thereto a
Warrant or Warrants, as the case may be, as so requested. The Company shall not
be required to effect any split up, combination or exchange which will result in
the issuance of a warrant entitling the Warrantholder to purchase upon exercise
a fraction of a share of Common Stock or a fractional Warrant. The Company may
require such Warrantholder to pay a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any split up,
combination or exchange of Warrants.
(b) Neither this Warrant nor 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 issuance of the Warrant Shares, this
Warrant may only be transferred to an "Accredited Investor" (as defined in the
Securities Act) and 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.
(c) Warrantholder shall not sell or otherwise transfer any
Warrants to a competitor of the Company engaged or, to the knowledge of
Warrantholder, planning to engage in the business of providing wireless voice or
data communications services to mobile customers or of providing equipment in
connection therewith; provided, however, that nothing in this Section 5(c) shall
restrict the ability of any Warrantholder from selling or transferring any
Warrants to a Hughes Subsidiary (as defined in the Credit Agreement) or to any
pension or retirement plan which is a "qualified institutional buyer" within the
meaning of Rule 144A under the Securities Act.
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.
-8-
<PAGE>
(a) Adjustment for Change in Capital Stock.
If the Company:
(i) pays a dividend or makes a distribution on its
Common Stock in shares of its Common Stock;
(ii) subdivides its outstanding shares of Common
Stock into a greater number of shares;
(iii) combines its outstanding shares of Common Stock
into a smaller number of shares;
(iv) makes a distribution on its Common Stock in
shares of its capital stock other than Common Stock; or
(v) issues by reclassification of its Common Stock
any shares of its capital stock,
then the Exercise Price and the number and kind of shares of capital stock of
the Company issuable upon the exercise of this Warrant (as in effect immediately
prior to such action) shall be proportionately adjusted so that the
Warrantholder may receive, upon exercise of this Warrant, the aggregate number
and kind of shares of capital stock of the Company which he would have owned
immediately following such action if this Warrant had been exercised immediately
prior to such action.
The adjustment shall become effective immediately after the
record date, subject to subsection (n) of this Section 6, in the case of a
dividend or distribution and immediately after the effective date in the case of
a subdivision, combination or reclassification.
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.
-9-
<PAGE>
N = the number of additional shares of Common Stock offered.
P = the offering price per share of the additional shares.
M = the current market price per share of Common Stock on the
record date.
The adjustment shall be made successively whenever any such
rights, options or warrants are issued and shall become effective immediately
after the record date for the determination of stockholders entitled to receive
the rights, options or warrants. If at the end of the period during which such
rights, options or warrants are exercisable, not all rights, options or warrants
shall have been exercised, the Exercise Price shall be immediately readjusted to
what it would have been if "N" in the above formula had been the number of
shares actually issued.
(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 of
the Company shall determine the fair market value.
The adjustment shall be made successively whenever any such
distribution is made and shall become effective immediately after the record
date for the determination of stockholders entitled to receive the distribution.
This subsection (c) does not apply to:
(i) rights, options or warrants referred to in
subsection (b) of this Section 6, or
(ii) cash dividends or cash distributions paid out of
consolidated current or retained earnings as shown on the books of the Company
prepared in accordance with generally accepted accounting principles other than
any Extraordinary Cash Dividend (as defined below). An "Extraordinary Cash
Dividend" shall be that portion, if any, of the aggregate amount of all cash
dividends paid in any fiscal year which exceeds $25 million. In all cases, the
Company shall give the Warrantholders 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
following formula:
P
-
E' = E x O + M
-----
A
-10-
<PAGE>
where:
E' = the adjusted Exercise Price.
E = the then current Exercise Price.
O = the number of shares outstanding immediately prior to
the issuance of such additional shares.
P = the aggregate consideration received for the issuance
of such additional shares.
M = the current market price per share on the date the
Company fixes the offering price of such additional
shares.
A = the number of shares outstanding immediately after
the issuance of such additional shares.
The adjustment shall be made successively whenever any such
issuance is made, and shall become effective immediately after such issuance.
This subsection (d) does not apply to:
(i) any of the transactions described in subsections
(a), (b) and (c) of this Section 6,
(ii) the conversion, exercise or exchange of
securities convertible or exchangeable for Common Stock,
(iii) Common Stock issuable upon the exercise of
rights or warrants issued to the holders of Common Stock,
(iv) Common Stock issued to shareholders of any
Person which merges into the Company in proportion to their stock holdings of
such Person immediately prior to such merger, upon such merger,
(v) Common Stock issued in a bona fide public
offering pursuant to a firm commitment underwriting, or
(vi) Common Stock issued in a bona fide private
placement through a placement agent which is a member firm of the National
Association of Securities Dealers, Inc. (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.
-11-
<PAGE>
E = the then current Exercise Price.
O = the number of shares outstanding immediately prior to
the issuance of such securities.
P = the aggregate consideration received for the issuance
of such securities.
M = the current market price per share on the date the
Company fixes the offering price of such securities.
D = the maximum number of shares deliverable upon
conversion or exercise of or in exchange for such
securities at the initial conversion, exercise or
exchange rate.
The adjustment shall be made successively whenever any such
issuance is made, and shall become effective immediately after such issuance.
If all of the Common Stock deliverable upon conversion,
exercise or exchange of such securities has not been issued when such securities
are no longer outstanding, then the Exercise Price shall promptly be readjusted
to the Exercise Price which would then be in effect had the adjustment upon the
issuance of such securities been made on the basis of the actual number of
shares of Common Stock issued upon conversion, exercise or exchange of such
securities.
This subsection (e) does not apply to:
(i) convertible, exercisable or exchangeable
securities issued to shareholders of any Person which merges into the Company,
or with a subsidiary of the Company, in proportion to their stock holdings of
such Person immediately prior to such merger, upon such merger,
(ii) convertible, exercisable or exchangeable
securities issued in a bona fide public offering pursuant to a firm commitment
underwriting or pursuant to agreements in effect on the date of issuance of this
Warrant,
(iii) convertible, exercisable or exchangeable
securities issued in a bona fide private placement through a placement agent
which is a member firm of the National Association of Securities Dealers, Inc.
(except to the extent that any discount from the current market price
attributable to restrictions on transferability of Common Stock issuable upon
conversion, as determined in good faith by the Board of Directors and described
in a Board resolution which shall be filed with the Trustee, shall exceed 20% of
the then current market price) or
(iv) stock options issued to the Company's directors,
officers or employees.
(f) Adjustment for Tender or Exchange Offer. If the Company or
any Subsidiary of the Company consummates a tender or exchange offer for all or
any portion of the Common Stock or any securities convertible into or
exercisable or exchangeable for Common Stock, to the extent that the cash and
value of any other consideration included in such payment per share of Common
Stock (determined on an as-converted basis in the case of any such convertible,
exercisable or exchangeable securities so tendered or exchanged) exceeds the
average of the Quoted Prices (as defined in subsection (g) of this Section 6) of
the Common Stock for the five consecutive trading days (the "Adjustment Period")
commencing on the first trading day (such trading day, the "First Trading Day")
immediately following the last time tenders or exchanges may be made pursuant to
such tender or exchange offer (the "Expiration Time"), the Exercise Price shall
be adjusted in accordance with this formula:
E' = E x O x M
-----------
P + (A x M)
E' = the adjusted Exercise Price.
-12-
<PAGE>
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
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 Warrantholder 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
-13-
<PAGE>
(iii) in the case of the issuance of securities
convertible into or exercisable or exchangeable for shares, the aggregate
consideration received therefor shall be deemed to be the consideration received
by the Company for the issuance of such securities plus the additional minimum
consideration, if any, to be received by the Company upon the conversion,
exercise or exchange thereof (the consideration in each case to be determined in
the same manner as provided in clauses (i) and (ii) of this subsection).
(i) When De Minimis Adjustment May Be Deferred. No adjustment
in the Exercise Price need be made unless the adjustment would require an
increase or decrease of at least 1% in the Exercise Price. Any adjustments that
are not made shall be carried forward and taken into account in any subsequent
adjustment.
All calculations under this Section 6 shall be made to the
nearest cent or to the nearest 1/100th of a share, as the case may be.
(j) When No Adjustment Required. No adjustment need be made
for a transaction referred to in subsections (a), (b), (c), (d), (e) or (f) of
this Section 6 if Warrantholders 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 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 Warrantholders 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.
-14-
<PAGE>
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.
(ii) If this subsection (l) applies, subsections (a),
(b), (c), (d), (e) and (f) of this Section 6 do not apply.
(m) Company Determinations. 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 HNS Warrants entitling them to purchase more than 50% of the shares of
Common Stock issuable upon exercise of HNS Warrants held by all holders other
than the Company and entities controlled by the Company (the "Consent
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 Consent
Warrantholders, which resolution shall be conclusive and binding on the Company
and the Warrantholders.
(n) When Issuance or Payments 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 8.8 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 Section 1.5(c) or this Section 6 (other than an
adjustment pursuant to Section 6(k) hereof), 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.
-15-
<PAGE>
N = the number of Warrant Shares previously issuable
upon exercise of this Warrant by payment of the
Exercise Price prior to adjustment.
E' = the adjusted Exercise Price.
E = the Exercise Price prior to adjustment.
(p) Certificate as to Adjustments. Upon the occurrence of each
adjustment or readjustment of the Exercise Price or number of Warrant Shares
issuable upon exercise hereof pursuant to this Section 6, the Company, at its
expense, shall promptly compute such adjustment or readjustment in accordance
with the terms hereof and prepare and furnish to each Warrantholder a
certificate prepared by the Company 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. Registration Rights
7.1 Definitions. For purposes of this Section 7:
(a) The term "HNS Warrants" shall mean this Warrant and the
other warrants to purchase Common Stock issued to HNS on the date this Warrant
was originally issued.
(b) The term "Holder" means any Person owning or having the
right to acquire Registrable Securities.
(c) The term "Person" shall mean an individual, partnership,
corporation, trust or unincorporated organization, or a government or agency or
political subdivision thereof.
(d) 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;
(e) The term "Registrable Securities" shall mean the HNS
Warrants and the Warrant Shares; provided, however, that (i) the HNS Warrants
shall cease to be Registrable Securities when (A) a Registration Statement with
respect to the HNS Warrants shall have been declared effective under the
Securities Act and such HNS Warrants shall have been disposed of by a Holder
pursuant to such Registration Statement, (B) the HNS Warrants may be distributed
to the public pursuant to Rule 144(k) (or any similar provision then in force)
under the Securities Act or (c) the HNS Warrants shall have ceased to be
outstanding and (ii) the Warrant Shares shall cease to be Registrable Securities
when (w) if the Holders can resell publicly the Warrant Shares issuable upon
exercise of the HNS Warrants without further registration under the Securities
Act, a Registration Statement with respect to the issuance of the Warrant Shares
shall have been declared effective under the Securities Act and such Warrant
Shares shall have been issued pursuant to such Registration Statement, (x) if
the Holders can not resell publicly the Warrant Shares issuable upon exercise of
the HNS Warrants without further registration under the Securities Act, a
Registration Statement with respect to the resale of the Warrant Shares shall
have been declared effective under the Securities Act and such Warrant Shares
shall have been disposed of by a Holder pursuant to such Registration Statement,
(y) the Warrant Shares may be distributed to the public pursuant to Rule 144(k)
(or any similar provision then in force) under the Securities Act or (z) the
Warrant Shares shall have ceased to be outstanding.
(f) The term "Registration Statement" shall mean a "shelf"
registration statement of the Company pursuant to the provisions of Section 7.2
of this Agreement covering the resale of the Warrants and the issuance and
resale of all of the Warrant Shares on an appropriate form under Rule 415 under
the Securities Act, or any similar rule that may be adopted by the SEC, and all
amendments and supplements to such registration statement,
-16-
<PAGE>
including post-effective amendments, and in each case including the prospectus
contained therein, all exhibits thereto and all material incorporated by
reference therein; provided, that, if more than one Registration Statement is
required in order to satisfy the registration requirements set forth in this
Agreement, the term "Registration Statement" shall refer to all such
Registration Statements prepared pursuant to this Agreement, unless the context
otherwise requires.
(g) The term "SEC" shall mean the Securities and Exchange
Commission.
7.2 Registration Under the Securities Act. The Company shall file and
shall use all reasonable efforts to cause a Registration Statement pertaining to
the Registrable Securities to be declared effective by the SEC prior to
September 30, 1996. The Company agrees to use all reasonable efforts to keep the
Registration Statement continuously effective until the earlier of October __,
2003 and such date that no Registrable Securities are issuable or outstanding
(the "Registration Period"). The Company further agrees to supplement or amend
the Registration Statement, if required by the rules, regulations or
instructions applicable to the registration form used by the Company for the
Registration Statement or by the Securities Act or by any other rules and
regulations thereunder for shelf registration or if reasonably requested by a
Holder with respect to information relating to such Holder in order to
accurately reflect information regarding such Holder or such Holder's plan of
distribution as required by the Registration Statement, and to use all
reasonable efforts to cause any such amendment to become effective and such
Registration Statement to become usable as soon as thereafter practicable. The
Company agrees to furnish to the Holders copies of any such supplement or
amendment promptly after its being made available for use or filed with the SEC.
7.3 Obligations of the Company. Whenever required under this Section 7
to effect the registration of any Registrable Securities, the Company shall,
during the Registration Period and within the time limits set forth in this
Section 7, or if no specific time limit is specified, as expeditiously as
reasonably possible:
(a) use its best efforts to keep such Registration Statement
continuously effective. Upon the occurrence of any event that would cause any
such Registration Statement or the prospectus contained therein (i) to contain a
material misstatement or omission or (ii) not to be effective and usable for the
issuance and resale of Registrable Securities during the Registration Period,
the Company shall file promptly an appropriate amendment to such Registration
Statement or file appropriate documents that will be so incorporated by
reference, (A) in the case of clause (i), correcting any such misstatement or
omission, and (B) in the case of either clause (i) or (ii), use all reasonable
efforts to cause such amendment to be declared effective and such Registration
Statement and the related prospectus to become usable for their intended
purpose(s) as soon as practicable thereafter;
(b) prepare and file with the SEC such amendments and
post-effective amendments to the Registration Statement as may be necessary to
keep the Registration Statement effective for the Registration Period; cause the
prospectus to be supplemented by any required prospectus supplement, and as so
supplemented to be filed pursuant to Rule 424 under the Securities Act and to
comply fully with Rule 424, as applicable, under the Securities Act in a timely
manner; and comply in all material respects with the provisions of the
Securities Act with respect to the disposition of all securities covered by such
Registration Statement during the Registration Period in accordance with the
intended method or methods of distribution by the sellers thereof set forth in
such Registration Statement or supplement to the prospectus; the Company shall
not be deemed to have used all reasonable efforts to keep a Registration
Statement effective during the Registration Period if it voluntarily takes any
action that would result in Holders of the Registrable Securities covered
thereby not being able to sell Registrable Securities or the Company not being
able to issue Warrant Shares, in each case, pursuant to the Registration
Statement and during that period unless such action is required or advisable
under applicable law or the action is for a valid business purpose in the
interest of the Company and its effect on the Registration Statement is not the
purpose of the action;
(c) advise Holders promptly and, if requested by such Holders,
confirm such advice in writing, (1) when the prospectus or any prospectus
supplement or post-effective amendment has been filed, and, with respect to any
Registration Statement or any post-effective amendment thereto, when the same
has become effective, (2) of any request by the SEC for amendments to the
Registration Statement or amendments or supplements to the prospectus or for
additional information relating thereto, (3) of the issuance by the SEC of any
stop order suspending the effectiveness of the Registration Statement under the
Securities Act or of the suspension by any state securities commission of the
qualification of the Registrable Securities for offering or sale in any
jurisdiction, or the initiation of any proceeding for
-17-
<PAGE>
any of the preceding purposes, (4) of the existence of any fact or the happening
of any event that makes any statement of a material fact made in the
Registration Statement, the prospectus, any amendment or supplement thereto or
any document incorporated by reference therein untrue, or that requires the
making of any additions to or changes in the Registration Statement in order to
make the statements therein not misleading, or that requires the making of any
additions to or changes in the prospectus in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. If at any time during the Registration Period the SEC shall issue
any stop order suspending the effectiveness of the Registration Statement, or
any state securities commission or other regulatory authority shall issue an
order suspending the qualification or exemption from qualification of the
Registrable Securities under state securities or blue sky laws, the Company
shall use its best efforts to obtain the withdrawal or lifting of such order at
the earliest practicable time;
(d) make available to each selling Holder named in any
Registration Statement or prospectus before filing with the SEC copies of any
Registration Statement or any prospectus included therein or any amendments or
supplements to any such Registration Statement or prospectus (including all
documents incorporated by reference after the initial filing of such
Registration Statement), portions of which relating to such Holders or their
plan of distribution (the "Covered Provisions") will be subject to the review
and comment of such Holders for a period of three business days, and the Company
will not file any such Registration Statement or prospectus or any amendment or
supplement to any such Registration Statement or prospectus and will correct all
of the Covered Provisions to which the selling Holders covered by such
Registration Statement shall reasonably object within three business days after
the receipt thereof. A selling Holder shall be deemed to have reasonably
objected to such filing of such Registration Statement, amendment, prospectus or
supplement, as applicable, as proposed to be filed, if the Covered Provision
contains a material misstatement or omission or fails to comply with the
applicable requirements of the Securities Act;
(e) promptly upon the filing of any document that is to be
incorporated by reference into a Registration Statement or prospectus, make
available copies of such document to the selling Holders, make the Company's
representatives available for discussion of such document and other customary
due diligence matters, and include such information in such document prior to
the filing thereof as such selling Holders reasonably may request;
(f) make available at reasonable times for inspection by the
selling Holders and any attorney or accountant retained by such selling Holders,
all financial and other records, pertinent corporate documents and properties of
the Company and cause the Company's officers, directors and employees to supply
all information reasonably requested by any such Holder, attorney or accountant
in connection with such Registration Statement or any post-effective amendment
thereto subsequent to the filing thereof and prior to its effectiveness;
provided, that, any Person to whom information is provided under this clause (f)
agrees in writing to maintain the confidentiality of such information to the
extent such information is not in the public domain;
(g) if requested by any selling Holders, promptly include in
any Registration Statement or prospectus, pursuant to a supplement or
post-effective amendment if necessary, such information as such selling Holders
may reasonably request to have included therein, including, without limitation,
information relating to the "Plan of Distribution" of the Registrable
Securities, the purchase price being paid therefor and any other terms of the
offering of the Registrable Securities to be sold in such offering; and make all
required filings of such prospectus supplement or post-effective amendment as
soon as practicable after the Company is notified of the matters to be included
in such prospectus supplement or post-effective amendment;
(h) furnish to each Holder, without charge, at least one copy
of the Registration Statement, as first filed with the SEC, and of each
amendment thereto;
(i) deliver to each selling Holder, without charge, as many
copies of the prospectus (including each preliminary prospectus) and any
amendment or supplement thereto as such Holder reasonably may request; the
Company hereby consents to the use of the prospectus and any amendment or
supplement thereto by each of the selling Holders in connection with the
offering and the sale of the Registrable Securities covered by the prospectus or
any amendment or supplement thereto;
(j) furnish to each selling Holder, upon the effectiveness of
the Registration Statement:
-18-
<PAGE>
(i) a certificate, dated the date of effectiveness of
the Registration Statement, signed by (x) the President or any Vice President
and (y) a principal financial or accounting officer of the Company, confirming,
as of the date thereof, the matters set forth in Section 3.2 (iv)(a) and (b) of
the Credit Agreement;
(ii) an opinion, dated the date of the effectiveness
of the Registration Statement, of counsel for the Company, covering (A) a
statement to the effect that such counsel has participated in conferences with
officers and other representatives of the Company and representatives of the
independent public accountants for the Company and have considered the matters
required to be stated therein and the statements contained therein, although
such counsel has not independently verified the accuracy, completeness or
fairness of such statements; and that such counsel advises that, on the basis of
the foregoing (relying as to materiality to a large extent upon facts provided
to such counsel by officers and other representatives of the Company and without
independent check or verification), no facts came to such counsel's attention
that caused such counsel to believe that the applicable Registration Statement,
at the time such Registration Statement or any post-effective amendment thereto
became effective, contained an untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading, or that the prospectus contained in such
Registration Statement as of its date contained an untrue statement of a
material fact or omitted to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading and (B) such other matters of the type customarily covered
in opinions of counsel for an issuer in connection with similar securities
offerings, as may reasonably be requested by such parties. Without limiting the
foregoing, such counsel may state further that such counsel assumes no
responsibility for, and has not independently verified, the accuracy,
completeness or fairness of the financial statements, notes and schedules and
other financial, statistical and accounting data included in any Registration
Statement contemplated by this Section 7 or the related prospectus;
(iii) a customary comfort letter, dated as of the
date of effectiveness of the Registration Statement, from the Company's
independent accountants, in the customary form and covering matters of the type
customarily covered in such comfort letters; and
(iv) such other documents and certificates as may be
reasonably requested by such parties to evidence compliance with clauses
(i)-(iii) above.
The above shall be done in connection with the filing of the
Registration Statement and if at any time the representations and warranties of
the Company contemplated in (i) above cease to be true and correct, the Company
shall so advise the selling Holders promptly and if requested by such Persons,
shall confirm such advice in writing;
(k) prior to any public offering of Registrable Securities,
cooperate with the Holders and their respective counsel in connection with the
registration and qualification of the Registrable Securities under the
securities or blue sky laws of such jurisdictions as the selling Holders may
reasonably request and use its best efforts to do any and all other acts or
things necessary or advisable to enable the disposition in such jurisdictions of
the Registrable Securities covered by the applicable Registration Statement;
provided, however, that the Company shall not be required to register or qualify
as a foreign corporation where it is not now so qualified or where its principal
executive offices are not currently located or to take any action that would
subject it to service of process in suits or to taxation, other than as to
matters and transactions relating to the Registration Statement, in any
jurisdiction where it is not now so subject;
(l) in connection with any sale of Registrable Securities that
will result in such securities no longer being Transfer Restricted Securities
(as defined below), cooperate with the selling Holders to facilitate the timely
preparation and delivery of certificates representing Registrable Securities to
be sold and not bearing any restrictive legends; and to register such
Registrable Securities in such denominations and such names as the Holders may
request at least two business days prior to such sale of Registrable Securities.
For purposes of this Section 7, "Transfer Restricted Securities" shall mean the
Warrants and Warrant Shares until such Warrants or Warrant Shares, as
applicable, (i) have been effectively registered under the Securities Act and
disposed of in accordance with the Registration Statement covering it, (ii) are
distributed to the public pursuant to Rule 144 under the Securities Act, (iii)
may be sold or transferred pursuant to Rule 144(k) (or any similar provisions
then in force) under the Securities Act or otherwise or (iv) may be sold freely
in full in any one three month period before Rule 144(k) is available;
-19-
<PAGE>
(m) use its best efforts to cause the Registrable Securities
covered by the Registration Statement to be registered with or approved by such
other governmental agencies or authorities as may be necessary to enable the
seller or sellers thereof to consummate the disposition of such Registrable
Securities, subject to the proviso contained in clause (k) above;
(n) if any fact or event contemplated by clause (c)(4) above
shall exist or have occurred, prepare a supplement or post-effective amendment
to the Registration Statement or related prospectus or any document incorporated
therein by reference or file any other required document so that, as thereafter
delivered to the purchasers of Registrable Securities, the prospectus will not
contain an untrue statement of a material fact or omit to state any material
fact necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading;
(o) provide a CUSIP number for all Registrable Securities not
later than the effective date of a Registration Statement covering such
Registrable Securities;
(p) otherwise use its best efforts to comply with all
applicable rules and regulations of the SEC, and make generally available to its
security holders with regard to the Registration Statement, as soon as
practicable, but in any event within sixteen months of the effectiveness of the
Registration Statement, a consolidated earnings statement meeting the
requirements of Rule 158 under the Securities Act (which need not be audited)
covering a twelve-month period beginning after the effective date of the
Registration Statement (as such term is defined in paragraph (c) of such Rule
158); and
(q) cause all Registrable Securities covered by the
Registration Statement to be listed on each securities exchange on which similar
securities issued by the Company are then listed if requested by the Holders of
a majority in aggregate principal amount of Registrable Securities. For purposes
of this Section 7.3(q), the HNS Warrants shall not be deemed to be securities
which are similar to the Company's Common Stock.
7.4 Restrictions on Holders. Each Holder agrees by acquisition of a
Registrable Security that, upon receipt of any notice from the Company of the
existence of any fact of the kind described in Section 7.3(c)(4) hereof, such
Holder will forthwith discontinue disposition of Registrable Securities pursuant
to the Registration Statement until such Holder's receipt of the copies of the
supplemented or amended prospectus contemplated by Section 7.3(n) hereof, or
until it is advised in writing (the "Advice") by the Company that the use of the
prospectus may be resumed, and has received copies of any additional or
supplemental filings that are incorporated by reference in the prospectus. If so
directed by the Company, each Holder will deliver to the Company (at the
Company's expense) all copies, other than permanent file copies then in such
Holder's possession, of the prospectus covering such Registrable Securities that
was current at the time of receipt of such notice. In the event the Company
shall give any such notice, the time period regarding the effectiveness of such
Registration Statement set forth herein shall be extended by the number of days
during the period from and including the date of the giving of such notice
pursuant to Section 7.3(c)(4) hereof to and including the date when each selling
Holder covered by such Registration Statement shall have received the copies of
the supplemented or amended prospectus contemplated by Section 7.3(c)(4) hereof
or shall have received the Advice.
7.5 Furnish Information. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this Section 7 with
respect to the Registrable Securities of any selling Holder that such Holder
shall have furnished to the Company such information regarding itself, the
Registrable Securities held by it, and the intended method of disposition of
such securities as shall be reasonably required to effect the registration of
such Holder's Registrable Securities.
7.6 Expenses of Registration. All expenses (other than selling
discounts and commissions) incurred by the Company in connection with
registrations, filings or qualifications pursuant to this Section 7 (including
without limitation all registration, filing and qualification fees, printers,
and accounting fees and fees and disbursements of counsel for the Company) shall
be borne by the Company.
7.7 Indemnification and Contribution. In connection with a Registration
Statement covering the resale of HNS Warrants or Warrant Shares under this
Section 7:
-20-
<PAGE>
(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") incurred in
connection with the resale of Registrable Securities: (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 and copies of such final prospectus have been
provided to the Holders)) 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 and copies
of such final prospectus have been provided to the Holders), 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 7.7(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 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
controlling Person of any such underwriter or other Holder, against any losses,
claims, damages or liabilities (joint or several) to which any of the foregoing
Persons may become subject, under the Securities Act, the Exchange Act or other
federal or state law, insofar as such losses, claims, damages or liabilities (or
actions in respect thereto) arise out of or are based upon any Violation, in
each case to the extent (and only to the extent) that such Violation occurs in
reliance upon and in conformity with written information furnished by such
Holder expressly for use in connection with such registration; and each such
Holder will pay, as incurred, any legal or other expenses reasonably incurred by
any Person intended to be indemnified pursuant to this Section 7.7(b), in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the indemnity agreement contained
in this Section 7.7(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.
(c) Promptly after receipt by an indemnified party under
Section 7.7(a) or (b) of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this Section 7.7, deliver to
the indemnifying party a written notice of the commencement thereof and the
indemnifying party shall, jointly with any other indemnifying party similarly
noticed, 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, it being
understood, however, that the indemnifying party shall not, in connection with
any one such action or proceeding or separate but substantially similar or
related actions or proceedings in the same jurisdiction arising out of the same
general allegations or circumstances, be liable for the reasonable fees and
expenses of more than one separate firm of attorneys at any time for such
indemnified party and any other indemnified parties, which firm shall be
designated in writing by such indemnified parties. The failure to deliver
written notice to the indemnifying party within a reasonable time of the
commencement of any such action, if materially prejudicial to its ability to
defend such
-21-
<PAGE>
action, shall relieve such indemnifying party of any liability to the
indemnified party under this Section 7.7(a) and 7.7(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 7.7(d) hereof) that it may
have to any indemnified party other than under Section 7.7(a) or (b).
(d) In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in Section 7.6(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 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. No Person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) in connection with
the sale of Registrable Securities 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 7.6 shall survive the completion of any offering of Registrable
Securities in a Registration Statement under this Section 7 or otherwise.
SECTION 8. Miscellaneous.
8.1 Entire Agreement. This Warrant and the Loan Agreement dated as of
December 21, 1996 by and among Finance Corporation, Geotek and Hughes Network
Systems, Inc. (as the same may have been or hereinafter may be amended)
constitute the entire agreement between the Company and the Warrantholder with
respect to this Warrant and the Warrant Shares.
8.2 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.
8.3 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 50% of the Warrant Shares
entitled to be purchased by all Warrantholders. Notwithstanding the foregoing,
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; provided, however, that such waiver shall only be effective
against the Person delivering such waiver. 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.
8.4 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.
8.5 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.
-22-
<PAGE>
8.6 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 on the date delivered if delivered
personally or three business days after being sent (or, in the case of a
Mandatory Exercise Notice, when the last notice required to be sent to HNS or
Hughes Electronics Corporation pursuant to Section 1.5(a) hereof is sent) if
sent by United States certified or registered first class mail, postage prepaid,
or one business day after dispatch by recognized overnight carrier (provided
delivery is confirmed by the courier) 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 (subject to Section 1.5(a) hereof).
8.7 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.
8.8 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) of a share of such stock as of the date of such exercise.
8.9 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.
8.10 Governing Law. 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.
IN WITNESS WHEREOF, the Company has caused this Warrant to be
signed by its duly authorized officer.
GEOTEK COMMUNICATIONS, INC.
By:_______________________________________
Name:
Title:
Dated: September ___, 1996
-23
<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 Warrant Shares 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 Warrant Shares shall not be all the Warrant Shares
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 Warrant
Shares represented by said Warrant Certificate.
Dated: ________________, 19___
------------------------------------------------------
Note: The above signature should correspond exactly with the
name on the face of this Warrant Certificate.
-24-
<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 agrees
to deliver, within four (4) trading days after the date hereof, payment in full
of the Exercise Price in the amount of $ __________ as follows:
Cash or Wire Transfer $_________
Certified or Official bank check $_________
Amount of past due Obligations
under the Credit Agreement to be
applied against the Exercise Price $_________
Upon receipt of the full Exercise Price, 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.
-25-
<PAGE>
Geotek Communications, Inc.
September 27, 1996
Page 1
Exhibit 5
[GEOTEK COMMUNICATIONS, INC. LETTERHEAD]
September 27, 1996
Geotek Communications, Inc.
20 Craig Road
Montvale, New Jersey 07645
Gentlemen:
I am general counsel to Geotek Communications, Inc., a Delaware
corporation (the "Company"), and have served in such capacity in connection with
the preparation of the Company's Registration Statement on Form S-3 which the
Company intends to file with the Securities and Exchange Commission (the "SEC")
on or about September 26, 1996 under the Securities Act of 1933, as amended (the
Registration Statement as amended at the time it becomes effective being
referred to herein as the "Registration Statement"). The Registration Statement
relates to, among other things, (i) the offer and sale by Hughes Network
Systems, Inc. ("HNS") of up to 3,888,889 shares of Common Stock, par value $.01
per share ("Common Stock"), of the Company issuable by the Company upon the
conversion of a convertible note (the "HNS Note"), in the aggregate principal
amount of $24,500,000 issued by the Company to HNS pursuant to the Loan
Agreement, made as of December 21, 1995, by and among Geotek Financing
Corporation, the Company and HNS (the "HNS Loan Shares"); (ii) the issuance and
sale, to and the offer and sale by, HNS of warrants to purchase up to 2,500,000
shares of Common Stock at exercise prices ranging from $8.6250 to $12.9375 (the
"HNS Warrants"); (iii) the offer and sale by HNS of the shares of Common Stock
issuable pursuant to exercise of the HNS Warrants (the "HNS Warrant Shares");
(iv) the offer and sale by Toronto Dominion Investments, Inc. ("TDI") of an
aggregate of 531,463 shares of Common Stock issuable upon the conversion of
531,463 shares of the Company's Series L Cumulative Convertible Preferred Stock
(the "TDI Shares"); (v) the offer and sale by S-C Rig Investments-III, L.P.
("S-C Rig") of an aggregate of 4,210,526 shares of Common Stock issuable by the
Company upon the exercise of certain warrants issued by the Company to S-C Rig
(the S-C Rig Warrant Shares"); (vi) the offer and sale by certain investors of
(x) up to 5,000,000 shares of Common Stock issuable upon the conversion of
55,000 shares of the Company's Series N Cumulative Convertible Preferred Stock
(the "Series N Conversion Shares"), (y) 1,650,000 shares of Common Stock
issuable by the Company upon exercise of certain warrants issued by the Company
to such investors (the "Series N Warrant Shares") and (z) up to 3,500,000 shares
of Common Stock which may be issued in satisfaction of dividends on the Series N
Cumulative Convertible Preferred Stock (the "Series N Dividend Shares," and
together with the Series N Conversion Shares and Series N Warrant Shares, the
"Series N Shares"); (vii) the offer and sale by Leonard M. Klehr ("Klehr") of
50,000 shares of Common Stock issuable by the Company (the "Klehr Shares") upon
the exercise of certain options issued by the Company to Klehr; (viii) the offer
and sale by Anam Industrial Co., Ltd. ("Anam") of 500,000 shares of Common Stock
issuable by the Company (the "Anam Shares") upon the exercise of certain options
issued by the Company to Anam; (ix) the offer and sale by James J. Kim ("Kim")
of 250,000 shares of Common Stock issuable by the Company (the "Kim Shares")
upon the exercise of certain options issued by the Company to Kim and (x) the
offer and sale by David Tamir ("Tamir") of up to 120,000 shares of Common Stock
issuable by the Company (the "Tamir Shares") upon the conversion of a promissory
note (the "Tamir Note") issued by the Company to Tamir.
I have examined, among other things, (i) the Amended and Restated
Certificate of Incorporation (including all Certificates of Designation filed in
connection therewith) and the Bylaws of the Company, as amended;
<PAGE>
Geotek Communications, Inc.
September 27, 1996
Page 2
(ii) the minutes and records of the corporate proceedings of the Company with
respect to the issuance of the shares of Common Stock described above; and other
instruments and documents and statutory and other materials as I have deemed
necessary as a basis for the opinions hereinafter expressed.
In rendering the opinion below, I have assumed, without any independent
investigation or verification of any kind the genuineness of all signatures on,
and the authenticity and completeness of, all documents submitted to me as
originals and the conformity to original documents and completeness of all
documents submitted to me as certified, conformed or photostatic copies.
Based on and subject to the foregoing and subject to the
qualifications, limitations and exceptions contained below, I am of the opinion
that:
(i) Upon the conversion of the HNS Note in accordance with the
terms thereof, the HNS Loan Shares will be legally issued, fully paid and
non-assessable;
(ii) The HNS Warrants have been duly authorized, executed and
delivered by the Company, and when exercised in accordance with the terms
thereof, the HNS Warrant Shares will be legally issued, fully paid and
non-assessable;
(iii) Upon the conversion of the Series L Cumulative
Convertible Preferred Stock in accordance with the terms thereof, the TDI Shares
will be legally issued, fully paid and non-assessable;
(iv) Upon the exercise of the S-C Rig Warrants in accordance
with the terms thereof, the S-C Rig Warrant Shares will be legally issued, fully
paid and non-assessable;
(v) Upon the conversion of the Series N Cumulative Convertible
Preferred Stock in accordance with the terms thereof, the Series N Conversion
Shares will be legally issued, fully paid and non-assessable;
(vi) Upon the exercise of the Series N Warrants in accordance
with the terms thereof, the Series N Warrant Shares will be legally issued,
fully paid and non-assessable;
(vii) Upon the issuance of the Series N Dividend Shares in
accordance with the terms of the Series N Cumulative Convertible Preferred
Stock, the Series N Dividend Shares will be legally issued, fully paid and
non-assessable;
(viii) Upon the exercise of the Klehr options by Klehr in
accordance with the terms thereof, the Klehr Shares will be legally issued,
fully paid and non-assessable;
(ix) Upon exercise of the Anam Options by Anam in accordance
with the terms thereof, the Anam Shares will be legally issued, fully paid and
non-assessable;
(x) Upon exercise of the Kim Options by Kim in accordance with
the terms thereof, the Kim Shares will be legally issued, fully paid and
non-assessable; and
(xi) Upon the conversion of the Tamir Note in accordance with
the terms thereof, the Tamir Shares will be legally issued, fully paid and
non-assessable.
The opinions expressed herein are limited to the laws of the State of
New York, the General Corporation Law of the State of Delaware and United States
Federal law. No opinion is expressed on any matters other than those expressly
referred to herein. The opinions set forth herein are as of the date of this
letter and I do not render any opinion as to the effect of any matter which may
occur subsequent to the date hereof.
<PAGE>
Geotek Communications, Inc.
September 27, 1996
Page 3
I hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to me under "Legal Matters" in the
Prospectus forming a part of the Registration Statement. In giving such consent,
I do not admit hereby that I come within the category of persons whose consent
is required under Section 7 of the Securities Act of 1933, as amended, or the
rules and regulations of the SEC promulgated thereunder.
Very truly yours,
/s/ Robert Vecsler
Robert Vecsler
General Counsel and Corporate Secretary
<PAGE>
Exhibit 23.1
[LETTERHEAD OF COOPERS & LYBRAND L.L.P]
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this Amendment No. 1 to the
Registration Statement of Geotek Communications, Inc. (the "Company") on Form
S-3 (Reg. No. 333-08731) of our report, which includes a reference to the report
of other auditors, dated March 26, 1996, on our audits of the consolidated
financial statements and consolidated financial statement schedule of Geotek
Communications, Inc. and Subsidiaries as of December 31, 1995 and 1994, and for
the years ended December 31, 1995, 1994 and 1993, which report is included in
the Company's Annual Report on Form 10-K. We also consent to the reference to
our firm under the caption "Experts" in this Amendment No. 1 to the Registration
Statement.
COOPERS & LYBRAND L.L.P.
New York, New York
September 24, 1996
<PAGE>
Exhibit 23.2
[LETTERHEAD OF SHACHAK PEER REZNICK & CO.]
CONSENT OF INDEPENDENT ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this Amendment No. 1 to the Registration Statement of Geotek
Communications, Inc. (the "Company") on Form S-3 (Reg. No. 333-08731) of our
report, dated March 26, 1996, with respect to the financial statements of
PowerSpectrum Technology Ltd. ("PST") as of December 31, 1995 and 1994, and for
the years ended December 31, 1995 and 1994 and the fifteen month period ended
December 31, 1993, which report is included in the annual report of the Company
on Form 10-K for the fiscal year ended December 31, 1995.
Shachak Peer Reznick & Co.
Certified Public Accountants (Isr.)
September 24, 1996
Ramat Gan, Israel
<PAGE>
Exhibit 23.3
[LETTERHEAD OF COOPERS & LYBRAND]
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in Amendment No. 1 to the Registration Statement on
Form S-3 of Geotek Communications, Inc. of our report dated March 27, 1996 on
our audits of the financial statements of National Band Three Limited as of 31
December 1995 and 1994, and for the years ended 31 December 1995 and 1994, which
report is included in the Company's Annual Report on Form 10-K for the fiscal
year ended 31 December 1995.
Coopers & Lybrand
London, United Kingdom
September 24, 1996
<PAGE>
Exhibit 23.4
[LETTERHEAD OF COOPERS & LYBRAND L.L.P.]
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this Amendment No. 1 to the
Registration Statement on Form S-3 (Reg. No. 333-08731) of Geotek
Communications, Inc. (the "Company") of our reports dated March 21, 1996 with
respect to the consolidated financial statements of Bogen Communications
International, Inc. (formerly European Gateway Acquisition Corp.) as of December
31, 1995 and 1994, and for each of the three years in the period ended December
31, 1995, which reports are included in the annual report of the Company on Form
10-K for the fiscal year ended December 31, 1995.
Coopers & Lybrand L.L.P.
New York, New York
September 24, 1996
<PAGE>
Exhibit 23.5
[LETTERHEAD OF KPMG]
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors and Stockholders
Band Three Radio Limited
We consent to the incorporation by reference in this Amendment No. 1 to the
Registration Statement on Form S-3 (Reg. No. 333-08731) of Geotek
Communications, Inc. (the "Company") of our report dated 15 July 1991, relating
to the Band Three Radio Limited statements of the net loss and cash flows for
the year ended 31 March 1991, which report was included in the Current Report on
Form 8-K/A of the Company, dated June 18, 1993.
KPMG
Reading, England
23 September 1996
<PAGE>
Exhibit 23.6
[LETTERHEAD OF COOPERS & LYBRAND GmbH]
CONSENT OF INDEPENDENT AUDITORS RELATING TO
PREUSSAG BUNDELFUNK GMBH, SALZGITTER/GERMANY
As independent auditors, we hereby consent to the incorporation by reference in
this Amendment No. 1 to the Registration Statement of Geotek Communications,
Inc. (the "Company") on Form S-3 (Reg. No. 333-08731) of our report, dated
August 30, 1994, relating to the balance sheet of Preussag Bundelfunk GmbH as of
September 30, 1993 and the related statement of operations, shareholders' equity
and cash flow for the year then ended, which report was included in the Current
Report on Form 8-K of the Company, dated July 5, 1994, as amended.
Hannover,
September 23, 1996
Coopers & Lybrand GmbH
Wirtschaftsprufungsgesellschaft
<PAGE>
Exhibit 23.7
[LETTERHEAD OF
ALTENBURG & TEWES AG]
Consent of Independent Accountants
We consent to the incorporation by reference in this Amendment No. 1 to the
Registration Statement on Form S-3 (Reg. No. 333-08731) of Geotek
Communications, Inc. (the "Company") of our report dated September 6, 1994, on
our audit of the financial statements of DBF Bundelfunk GmbH & Co. Betriebs-KG
as of December 31, 1993, and for the year ended December 31, 1993, which report
appears in the Company's Current Report on Form 8-K dated August 2, 1994, as
amended.
Wuppertal, September 23, 1996
ALTENBURG & TEWES AG
WIRTSCHAFTSPRUFUNGSGESELLSCHAFT
former
DUSSELDORFER TREUHAND-GESELLSCHAFT
ALTENBURG & TEWES AG
WIRTSCHAFTSPRUFUNGSGESELLSCHAFT
STEUERBERATUNGSGESELLSCHAFT
Spielberg
Wirtschaftsprufer
<PAGE>
Exhibit 23.8
[LETTERHEAD OF DELOITTE & TOUCHE]
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Amendment No. 1 to the
Registration Statement on Form S-3 (Reg. No. 333-08731) of Geotek
Communications, Inc. (the "Company") of (i) our report dated June 10, 1993 with
respect to the financial statements of National Band Three Limited (ii) our
report dated November 24, 1992 with respect to the financial statements of
GEC-Marconi Communications Networks Limited and (iii) our report dated January
27, 1993 with respect to the financial statements of Vodanet Limited, each
appearing in the Current Report on Form 8K/A of the Company, dated June 18,
1993.
Deloitte & Touche
London, England
25 September 1996
