SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. ___________)
Filed by the Registrant |X|
Filed by a Party other than the Registrant |_|
Check the appropriate box:
|X| Preliminary Proxy Statement
|_| Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2)
|_| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
GEOTEK COMMUNICATIONS, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if Other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
|X| $125 per Exchange Act Rules 0-11(c)(1)(ii), WP-6(i)(1), or 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
|_| $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
|_| Fee computed on table below per Exchange Act Rules 14(a)-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
|_| Fee paid previously with preliminary materials.
|_| Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1) Amounts Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
GEOTEK COMMUNICATIONS, INC.
20 CRAIG ROAD
MONTVALE, NEW JERSEY 07645
April , 1996
DEAR STOCKHOLDER:
You are cordially invited to attend the Annual Meeting of the
Stockholders (the "Annual Meeting") of Geotek Communications, Inc. (the
"Corporation") to be held on June 3, 1996, at _____ a.m., local time, at the
Marriott Marquis Hotel, 1535 Broadway, New York, New York.
The proposals for the Annual Meeting relate to: (i) the election of
eleven directors; (ii) an amendment to the Corporation's Restated Certificate of
Incorporation to increase the number of authorized shares of Common Stock; and
(iii) the ratification of the appointment of Coopers & Lybrand L.L.P. as the
Corporation's independent auditors for the 1996 fiscal year.
We look forward to seeing you at the Annual Meeting. Whether or not you
are planning to attend, I urge you to return the enclosed proxy at your earliest
convenience if you own shares of Common Stock, Series H Cumulative Convertible
Preferred Stock, Series I Cumulative Convertible Preferred Stock, Series K
Cumulative Convertible Preferred Stock, Series L Cumulative Convertible
Preferred Stock or Series M Cumulative Convertible Preferred Stock.
Sincerely,
YARON EITAN
President and
Chief Executive Officer
<PAGE>
GEOTEK COMMUNICATIONS, INC.
20 CRAIG ROAD
MONTVALE, NEW JERSEY 07645
--------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 3, 1996
--------------------
NOTICE IS HEREBY GIVEN THAT the Annual Meeting of the Stockholders (the
"Annual Meeting") of GEOTEK COMMUNICATIONS, INC. (the "Corporation") will be
held on June 3, 1996 at ___________ a.m., local time, at the Marriott Marquis
Hotel, 1535 Broadway, New York, New York to consider and act upon the following
proposals: (i) the election of eleven directors; (ii) an amendment to the
Corporation's Restated Certificate of Incorporation to increase the number of
authorized shares of Common Stock; and (iii) the ratification of the appointment
of Coopers & Lybrand L.L.P. as the Corporation's independent auditors for the
1996 fiscal year, as well as any other business which may properly come before
the Annual Meeting.
Holders of record of the Corporation's Common Stock, par value $.01 per
share ("Common Stock"), Series H Cumulative Convertible Preferred Stock, $.01
par value (the "Series H Stock"), Series I Cumulative Convertible Preferred
Stock, $.01 par value (the "Series I Stock"), Series K Cumulative Convertible
Preferred Stock, $.01 par value (the "Series K Stock"), Series L Cumulative
Convertible Preferred Stock, $.01 par value ("Series L Stock") and Series M
Cumulative Convertible Preferred Stock, $.01 par value ("Series M Stock" and,
collectively with the Series H Stock, the Series I Stock, Series K Stock and
Series L Stock, the "Preferred Stock") as of the close of business on April 23,
1996 shall be entitled to notice of, to attend, and to vote at the Annual
Meeting and any adjournment(s) thereof.
All stockholders are cordially invited to attend the Annual Meeting.
Whether or not you plan to attend the Annual Meeting, all holders of shares of
Common Stock and Preferred Stock are urged to complete and sign the enclosed
proxy, and return it promptly to the Corporation. At any time prior to their
being voted, proxies are revocable by delivering written notice to the
Corporation in accordance with the instructions set forth in the Proxy Statement
or by voting at the Annual Meeting in person.
ROBERT VECSLER
Secretary
IT IS IMPORTANT, IF YOU ARE A HOLDER OF SHARES OF COMMON STOCK OR
PREFERRED STOCK, THAT YOU RETURN YOUR SIGNED PROXY PROMPTLY, REGARDLESS OF THE
NUMBER OF SHARES YOU OWN. IF YOU ARE A HOLDER OF SHARES OF COMMON STOCK OR
PREFERRED STOCK, PLEASE COMPLETE, SIGN, DATE AND MAIL THE ENCLOSED PROXY
PROMPTLY, WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING.
APRIL 29, 1996
<PAGE>
GEOTEK COMMUNICATIONS, INC.
20 CRAIG ROAD
MONTVALE, NEW JERSEY 07645
--------------------
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 3, 1996
--------------------
PROXY STATEMENT
GENERAL INFORMATION
This Proxy Statement (this "Proxy Statement") has been prepared and is
being distributed in connection with the solicitation by the Board of Directors
of Geotek Communications, Inc. (the "Corporation") of proxies in the enclosed
form for use at the Annual Meeting of Stockholders of the Corporation to be held
on June 3, 1996 at _____ a.m., local time, at the Marriott Marquis Hotel, 1535
Broadway, New York, New York, and any adjournment(s) thereof. (Such meeting and
any adjournment(s) thereof will be hereinafter referred to as the "Annual
Meeting.")
VOTING AND REVOCABILITY OF PROXIES
Unless authority to vote is withheld or an abstention is rendered with
respect to the proposals, all shares represented by properly signed proxies
received pursuant to this solicitation (and not revoked before they are voted)
will be voted FOR (i) the election of those persons set forth herein as nominees
to the Board of Directors; (ii) an amendment to the Corporation's Restated
Certificate of Incorporation to increase the number of authorized shares of
Common Stock; and (iii) the ratification of the appointment of Coopers & Lybrand
L.L.C. as the Corporation's independent auditors for the 1996 fiscal year.
As of the date of this Proxy Statement, the Board of Directors knows of
no business that will be presented for consideration at the Annual Meeting other
than that referred to above. If any other business properly comes before the
Annual Meeting, the persons designated in the enclosed proxy will vote on such
business in accordance with their best judgment.
Proxies for use by holders of the Corporation's Common Stock, $.01 par
value ("Common Stock"), Series H Cumulative Convertible Preferred Stock, $.01
par value (the "Series H Stock"), Series I Cumulative Convertible Preferred
Stock, $.01 par value (the "Series I Stock"), Series K Cumulative Convertible
Preferred Stock, $.01 par value (the "Series K Stock"), Series L Cumulative
Convertible Preferred Stock, $.01 par value ("Series L Stock") and Series M
Cumulative Convertible Preferred Stock, $.01 par value ("Series M Stock" and,
collectively with the Series H Stock, the Series I Stock, Series K Stock and
Series L Stock, the "Preferred Stock") accompany this Proxy Statement.
Any stockholder who executes and returns a proxy may revoke it at any
time before it is exercised by delivering to Robert Vecsler, Secretary of the
Corporation, at the offices of the Corporation at the address set forth above,
either an instrument revoking the proxy or a duly executed proxy bearing a later
date, or by attending the Annual Meeting and voting in person.
This Proxy Statement is being first given or sent to the Corporation's
stockholders on or about April 29, 1996.
<PAGE>
FOR ADDITIONAL INFORMATION
Questions concerning the voting of your shares should be directed to
Corporate Investor Communications, Inc. at (201) 896-1900 which you may call
between the hours of 9:00 a.m. and 5:00 p.m. Monday through Friday.
SOLICITATION OF PROXIES
The enclosed proxy is being solicited by the Board of Directors of the
Corporation for use in connection with the Annual Meeting. The Corporation has
engaged Corporate Investor Communications, Inc. ("CIC") to solicit proxies in
connection with the Annual Meeting. The Corporation has agreed to pay CIC a fee
of $5,000 and to reimburse CIC for its reasonable out of pocket expenses.
Solicitation may also be made by directors, officers, employees and management
of the Corporation; however, such persons will not receive any fees for such
solicitation. Proxies may be solicited in person or by mail, telephone,
telegram, mailgram or other means. Brokers, nominees, fiduciaries and other
custodians have been requested to forward such soliciting material to the
beneficial owners of shares held of record by such custodians. Such custodians
may be reimbursed for their expenses.
VOTING SECURITIES AND HOLDERS THEREOF
As of the close of business on April 23, 1996, the record date for
receiving notice of and/or voting at the Annual Meeting, the Corporation had
approximately ____________ shares of Common Stock outstanding, 444,445 shares of
Series H Stock outstanding, 20 shares of each of the Series I Stock and Series K
Stock outstanding, 1,062,926 shares of Series L Stock outstanding, and 1,162.5
shares of Series M Stock outstanding. Each share of Common Stock is entitled to
one vote, each share of Series H Stock is entitled to ten votes, each share of
Series I Stock and Series K Stock is entitled to 42,553 votes, each share of
Series L Stock is entitled to one vote, and each share of Series M Stock is
entitled to 1,052 votes on each matter being submitted to the Corporation's
stockholders at the Annual Meeting. As of such date, there were approximately
_____________ holders of record of Common Stock and one holder of record each
of the Series H Stock, the Series I Stock and Series K Stock, two holders of
record of the Series L Stock and eight holders of record of the Series M Stock.
The total number of votes entitled to be cast at the Annual Meeting is
_______________.
Abstentions and broker non-votes are not counted in the calculation of
the vote. The presence, in person or by proxy, of stockholders entitled to cast
at least a majority of the votes that all stockholders are entitled to cast on
each matter to be acted upon at the Annual Meeting shall constitute a quorum for
the purposes of consideration and action on that matter. In the election of
directors, stockholders will not have cumulative voting rights and directors
will be elected upon receiving the affirmative vote of a plurality of the votes
cast by all stockholders entitled to vote thereon. The affirmative vote of a
majority of the votes cast by all holders of Common Stock (voting as a separate
class) and the affirmative vote of a majority of the votes cast by all holders
of Common Stock and Preferred Stock (voting as a single class) is required in
order to approve the proposal to amend the Corporation's Restated Certificate of
Incorporation to increase the number of authorized shares of Common Stock. Each
other matter to be voted on shall be authorized upon receiving the affirmative
vote of a majority of the votes cast by all stockholders entitled to vote
thereon.
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<PAGE>
PROPOSAL I
ELECTION OF DIRECTORS
INFORMATION CONCERNING NOMINEES
Each of the persons listed below has agreed to be named as a nominee
for director in this Proxy Statement and has consented to serve as a director if
elected. It is the intention of the persons named in the accompanying form of
proxy to vote for those nominees listed below. The Corporation expects all
nominees to be willing and able to serve. The Board of Directors may designate a
substitute nominee to replace any bona fide nominee who was nominated and who,
for any reason, becomes unavailable for election as a director. If any of the
nominees shall become unable to serve, the persons designated in the enclosed
proxy will vote for the election of such other person or persons as the Board of
Directors may recommend.
Winston Churchill (Chairman of the Board of the Corporation), Yaron
Eitan (President and Chief Executive Officer of the Corporation), Evergreen
Canada-Israel Investment & Co., Ltd. ("Evergreen"), S-C Rig Investments-III,
L.P. ("S-C Rig") and Vanguard Cellular Systems, Inc. ("Vanguard") have agreed to
vote their shares to elect a representative of each of Evergreen, S-C Rig and
Vanguard, respectively, to the Board of Directors of the Corporation. This
obligation shall continue with respect to each of the parties for so long as
Vanguard, S-C Rig and Evergreen beneficially own at least 2,500,000, 2,500,000
and 1,000,000 shares of Common Stock, respectively. In the event that the
beneficial ownership of any such party drops below its designated ownership
level, then the agreement terminates with respect to such party only and the
agreement continues in full force and effect with respect to the remaining
parties thereto. Mr. Purnendu Chatterjee is the designated representative of S-C
Rig and Mr. Haynes G. Griffin is the designated representative of Vanguard.
Evergreen has waived its right to designate a representative to the
Corporation's Board of Directors. In addition, the Corporation has agreed,
pursuant to an agreement entered into in connection with the Corporation's
acquisition of Metro Net Systems, Inc. ("Metro Net"), to use its best efforts to
cause the election of Mr. Richard Krants as a director of the Corporation
through the 1996 fiscal year. See "Certain Relationships and Related
Transactions." The Corporation has also agreed to use its best efforts to have
Mr. Eitan elected as a member of the Board of Directors during the term of his
employment. See "Executive Compensation - Employment Agreements and Other
Matters."
Set forth below is certain information with respect to each of the
nominees for election to the Corporation's Board of Directors.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
NAME AGE POSITION WITH CORPORATION/BACKGROUND DIRECTOR SINCE
- ---- --- ------------------------------------ --------------
Walter E. Auch 75 Director. Chairman and Chief Executive Officer of 1989
the Chicago Board of Options Exchange,
Chicago, IL (securities exchange),August
1979 to December 1986. Presently a Director
of Fort Dearborn Funds, Chicago, IL
(investment fund), Smith Barney Trak Fund,
New York, NY (investment fund), Smith Barney
VIP Fund, San Diego, CA (investment fund),
Smith Barney Advisors Fund, New York, NY
(investment fund), Banyan Funds, Chicago, IL
(real estate company), Pinco Advisors, L.P.
Stamford, CT (asset management-company),
Express America Corp., Phoenix, AZ (mortgage
company), Brinson Funds, Chicago, IL
(investment funds) and Nicholas/Applegate,
San Diego, CA (investment funds).
</TABLE>
-3-
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
George Calhoun 43 Director. President of the Corporation's Wireless 1993
Communications Group since July 1993. Director of
National Band Three Limited, a wholly owned
subsidiary of the Corporation ("NB3"), since
July 1993. Mr. Calhoun joined the
Corporation in June 1992 as President, Chief
Operating Officer and director of
PowerSpectrum, Inc., a wholly owned
subsidiary of the Corporation
("PowerSpectrum"). Cofounder of
International Digital Communications
Corporation (formerly International Mobile
Machines Corporation ("IMM"), King of
Prussia, PA, a corporation engaged in the
development of digital radio technology.
General Manager of the Equipment Division of
IMM, 1987 to 1990, and General Manager of
the Intellectual Property Licensing Division
of IMM, 1990 to 1992.
Purnendu Chatterjee 46 Director. Director and President of S-C Rig Co., 1993
New York, NY (general partner of S-C Rig, a
Delaware limited partnership, the sole business of
which is to make investments and the sole limited
partner of which is a charitable trust created by Mr.
George Soros). Investor in public and private
companies. Dr. Chatterjee has been associated with
the George Soros organization for approximately nine
years. Presently a director of Falcon Drilling
Company, Inc., Houston, TX (oil and gas) and
Viatel, Inc., New York, NY (international voice long
distance telecommunications services).
Winston J. Churchill 55 Director and Chairman of the Board. Principal of 1991
CIP Capital Management, Inc., Malvern, PA, a
private investment firm formed in 1989.
Practiced law with and served as Chairman of
the Banking and Financial Institutions
Department and the Finance Committee of
Saul, Ewing, Remick & Saul, Philadelphia, PA,
for 16 years prior thereto. Director of
Central Sprinkler Corp., Landsdale, PA
(sprinkler systems) since 1984 and of IBAH,
Inc., Blue Bell, PA (biotechnology company).
Jonathan C. Crane 46 President of the Corporation's United States *
operations. President and Chief Executive Officer of
LightStream Corporation, a private ATM switch
company, from January 1994 to January 1995. Prior
to that employed by MCI Communications Corp.
("MCI"), Washington, D.C. (telecommunications)
for nine years; rose from Regional Vice President to
Executive Vice President, Multinational Accounts.
</TABLE>
-4-
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Yaron Eitan 40 Director. President and Chief Executive Officer of 1989
the Corporation since March 1989. Since August
1995, Chairman of the Board of Bogen
Communications International, Inc., a subsidiary of
the Corporation ("Bogen"), Ramsey, NJ
(develops, produces and sells sound and
communications equipment, and telephone and
telecommunications peripherals). From April
1991 to August 1995, Chairman of the Board
of Bogen Corporation and Bogen
Communications, Inc., both subsidiaries of
Bogen. Chairman of the Board and Chief
Executive Officer of PowerSpectrum since
June 1992. Director of GMSI, Inc., a
majority-owned subsidiary of the Corporation
("GMSI"), since May 1993. Director of NB3
since July 1993.
Haynes G. Griffin 49 Director. President, Chief Executive Officer and 1994
Director of Vanguard, Greensboro, NC (cellular
telecommunications carrier), since 1984. Director of
Lexington Global Asset Managers, Inc., Saddle
Brook, NJ (diversified financial services holding
company).
Richard Krants 52 Director. President and Chief Executive Officer of 1994
Metro Net, Plainview, NY, October 1990 to January
1994. Vice President of Famous Make
Communications, Inc., Plainview, NY
(communications equipment), December 1979 to
October 1993. Currently President of Mobile
Message Service of N.Y., Inc., Plainview, NY
(antenna site management).
Richard T. Liebhaber 61 Director. Currently Director of Precision Systems, 1995
Inc., St. Petersburg, Florida (telecommunications)
and Alcatel, Richardson, TX (manufacturing
communications). Executive Vice President of MCI
from 1986 to June 1995. Director of MCI from June
1992 to June 1995.
Kevin W. Sharer 48 President and Chief Operating Officer of Amgen, 1994
Inc. Thousand Oaks, CA (biotechnology) since
October 1992. Executive Vice President and
President Business Markets Division of MCI
from November 1990 to October 1992.
Executive Vice President Sales and Marketing
of MCI from April 1989 to November 1990.
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
William Spier 61 Director. Chairman of the Board of the Corporation 1990
from August 1991 to May 1992. Director of USI
Venture Corp. ("USI"), New York, NY (holding
company). Chairman of the Board and CEO of
DeSoto Corp., Joliet, IL (detergent and
household cleaning products manufacturer).
Director of Video Lottery Technologies,
Bozeman, MN (video technology) since 1992;
Holmes Protection Group, Inc. New York, NY
(security alarm systems and services) since
1994; and EA Industries, Inc., West Long
Brandy, NJ (electronics contracting
manufacturer) since 1995 .
</TABLE>
INFORMATION CONCERNING OTHER DIRECTORS
Set forth below is certain information with respect to each person who
is currently serving on the Corporation's Board of Directors and who is not a
nominee at the Annual Meeting.
<TABLE>
<CAPTION>
NAME AGE POSITION WITH CORPORATION/BACKGROUND DIRECTOR SINCE
- ---- --- ------------------------------------ --------------
<S> <C> <C> <C>
Haim Rosen 60 Director. Vice President of Tadiran Ltd., Israel 1993
(manufacturer of telecommunications equipment,
systems and software) and President of Tadiran Ltd.
Telecommunications Group (a division of Tadiran
Ltd.) since 1980.
</TABLE>
Mr. Churchill is paid $50,000 per year for serving as Chairman of the
Board of Directors. All other directors receive only options as compensation for
acting as directors of the Corporation. During 1995, each director of the
Corporation (including Messrs. Churchill, Calhoun, Crane and Eitan) received
10,000 options with an exercise price equal to the fair market value of the
Common Stock on the date of grant. Directors are reimbursed for expenses related
to their attendance at Board of Directors meetings. All options granted to
directors expire ten years from the date of grant.
During the Corporation's 1995 fiscal year, the Board of Directors held
a total of eleven (11) regularly scheduled and special meetings. Mr. Rosen
attended fewer than 75% of the meetings of the Board of Directors. All other
directors attended more than 75% of the meetings of the Board of Directors and
all committees of which they were members held while they were serving on the
Board of Directors during 1995.
During the past five years, except as set forth below, none of the
directors of the Corporation has been: (a) convicted in a criminal proceeding or
(b) a party to any civil proceeding as a result of which either has been subject
to a judgment, decree or final order enjoining future violations of, or
prohibiting or mandating activities subject to, federal or state securities
laws, or finding any violation with respect to such laws. On January 13, 1993,
the Securities and Exchange Commission (the "Commission") filed a civil
complaint in the United States District Court for the District of Massachusetts
against certain defendants, including Dr. Chatterjee, wherein the Commission
alleged that Dr. Chatterjee engaged in conduct in violation of, or aided and
abetted certain alleged violations of, Sections 10(b) and 14(e) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and certain
rules promulgated thereunder. Dr. Chatterjee settled the Commission's action on
the same date it was filed without admitting or denying the allegations of the
complaint. Dr. Chatterjee consented to the entry of a Final Judgment restraining
and enjoining him from, inter alia, violating, or aiding and abetting violations
of, Sections 10(b) and 14(e) of the Exchange Act and the rules promulgated
thereunder. Dr. Chatterjee also agreed to pay a civil penalty of $643,855.
BOARD COMMITTEES
Set forth below is information concerning the standing committees of
the Board of Directors.
Executive Committee. The Executive Committee is authorized to exercise
all of the authority of the Board of Directors in the management of the
Corporation between Board meetings. The Executive Committee met one time
during 1995. The present members of the Executive Committee are Messrs.
Churchill, Eitan, Chatterjee and Griffin.
Audit Committee. The Audit Committee is responsible for overseeing the
Corporation's internal accounting and auditing methods and procedures and
recommends to the Board of Directors a firm of outside independent public
accountants for the Corporation, the selection of which is being submitted for
ratification by stockholders. The Audit Committee may meet with the outside
independent public accountants to review their findings and recommendations.
-6-
<PAGE>
The Audit Committee met three times during 1995. The present members of the
Audit Committee are Messrs. Krants, Sharer and Spier.
Compensation Committee. The Compensation Committee provides general
oversight in all employee personnel matters through periodic meetings with
management of the Corporation. A primary function of this committee is to review
and determine the compensation of present and proposed members of management of
the Corporation. The Compensation Committee met one time during 1995. The
present members of the Compensation Committee are Messrs. Auch, Churchill, Eitan
and Griffin.
Rule 16b-3 Stock Option Committee. The Rule 16b-3 Stock Option
Committee (the "16b-3 Committee") is responsible for administering the
Corporation's stock option plans. The Rule 16b-3 Committee met four times during
1995. The present members of the 16b-3 Committee are Messrs. Auch and Griffin.
PROVISIONS AFFECTING LIABILITY OF DIRECTORS
Pursuant to the Corporation's Restated Certificate of Incorporation, no
director shall be personally liable to the Corporation or its stockholders for
monetary damages for breach of his fiduciary duty as a director, except for a
breach of the director's duty of loyalty, for acts and omissions not in good
faith or which involve intentional misconduct or a knowing violation of the law,
for transactions from which a director derived an improper personal benefit or
for unlawful payment of dividends, stock purchases or redemptions pursuant to
Section 174 of the Delaware General Corporation Law. This provision offers
persons who serve on the Board of Directors of the Corporation protection
against awards of monetary damages for negligence in the performance of their
duties. It does not affect the availability of equitable remedies such as an
injunction or rescission based upon a director's breach of his duty of care. The
Corporation's By-Laws also provide that the Corporation will indemnify any
director or officer of the Corporation to the fullest extent authorized by
Delaware law.
RECOMMENDATION OF BOARD OF DIRECTORS
THE BOARD OF DIRECTORS OF THE CORPORATION UNANIMOUSLY RECOMMENDS THAT
HOLDERS OF COMMON STOCK AND PREFERRED STOCK VOTE FOR THE NOMINEES TO THE BOARD
OF DIRECTORS SET FORTH ABOVE. The directors and officers of the Corporation
intend to vote their shares in favor of the election of such nominees to the
Board of Directors.
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<PAGE>
PROPOSAL II
APPROVAL OF AN AMENDMENT TO THE CORPORATION'S
RESTATED CERTIFICATE OF INCORPORATION TO INCREASE THE NUMBER OF
AUTHORIZED SHARES OF COMMON STOCK TO 135,000,000 SHARES OF COMMON STOCK
The Board of Directors has unanimously adopted a resolution
approving a proposal to amend the first paragraph of Article IV of the
Corporation's Restated Certificate of Incorporation to increase the number of
shares of Common Stock which the Corporation is authorized to issue from
99,000,000 to 135,000,000. The Board of Directors determined that such an
amendment is advisable and directed that the proposed amendment be considered at
the Annual Meeting.
The full text of the first sentence of Article IV of the
Corporation's Restated Certificate of Incorporation, if amended as proposed,
will be as follows:
The total number of shares of stock which this Corporation
shall have authority to issue is 139,000,000 shares,
consisting of 135,000,000 shares of Common Stock having a par
value of $.01 per share, and 4,000,000 shares of Preferred
Stock having a par value of $.01 per share.
The amendment will not increase the number of shares of
Preferred Stock authorized. The relative rights and limitations of the Common
Stock and Preferred Stock would remain unchanged under the proposed amendment.
PURPOSES AND EFFECTS OF INCREASING THE NUMBER OF AUTHORIZED SHARES OF
COMMON STOCK
The proposed amendment would increase the number of shares of
Common Stock which the Corporation is authorized to issue from 99,000,000 to
135,000,000. The additional 36,000,000 shares, if and when issued, would have
the same rights and privileges as the shares of Common Stock presently issued
and outstanding. The holders of Common Stock are not entitled to preemptive
rights or cumulative voting.
On March 31, 1996, the Corporation had 56,799,314 shares of
Common Stock issued and outstanding. In addition, an aggregate of approximately
41,810,624 shares of Common Stock were reserved for issuance by the Corporation,
including shares reserved for issuance (i) upon exercise of options granted
under the Corporation's employee stock option plans, (ii) upon exercise of
warrants issued in connection with the acquisition of certain operating
subsidiaries of the Corporation and certain financing arrangements of the
Corporation, (iii) upon conversion of the issued and outstanding Preferred Stock
and convertible debt, and (iv) except as noted below, in connection with all
transactions the Corporation has consummated through the date hereof. However,
the Corporation has not reserved for issuance 11,646,026 shares of Common Stock
(the "Unreserved Shares") issuable with respect to the following transactions:
(1) An aggregate of 6,185,500 shares of Common Stock issuable
to Vanguard upon the exercise of certain out-of-the-money
options held by Vanguard (the "Vanguard Options") and issuable
pursuant to a certain Management Consulting Agreement dated as
of February 23, 1994 by and between Vanguard and the
Corporation (the "Management Shares"). Vanguard has agreed to
waive the Corporation's obligation to reserve the shares
issuable upon exercise of the Vanguard Options and issuable as
the Management Shares until the Annual Meeting or August 31,
1996. In the event the Corporation does not have sufficient
number of shares of Common Stock reserved for issuance to
Vanguard of all the Management Shares and the shares issuable
upon exercise of the Vanguard Options, the Corporation must
pay to Vanguard, as liquidated damages, the fair market value
of the Vanguard Options and the Management Shares as of
September 1, 1996. For a description of the terms and
conditions upon which the Vanguard Options and Management
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<PAGE>
Shares were, and, in the case of the Management Shares, will
be, issued, see "Executive Compensation - Compensation
Committee Interlocks and Insider Participation."
(2) 250,000 shares of Common Stock issuable to Mr. Churchill
upon exercise of certain employee benefit options held by him.
Mr. Churchill has agreed to waive the Corporation's obligation
to reserve such shares until such time as this Proposal is
approved by the stockholders of the Corporation and the
Corporation files a Certificate of Amendment to its Restated
Certificate of Incorporation with the Secretary of State of
Delaware. For a description of terms of the employee benefit
options, see "Executive Compensation - Employment Agreements
and Other Matters."
(3) 1,000,000 shares of Common Stock issuable to Mr. Eitan
upon exercise of certain employee benefit options held by him.
Mr. Eitan has agreed to waive the Corporation's obligation to
reserve shares until such time as this Proposal is approved by
the stockholders of the Corporation and the Corporation files
a Certificate of Amendment to its Restated Certificate of
Incorporation with the Secretary of State of Delaware. For a
description of the terms of the employee benefit options, see
"Executive Compensation - Employment Agreements and Other
Matters - Chief Executive Officer Compensation."
(4) 4,210,526 shares of Common Stock issuable to S-C Rig
pursuant to a warrant issued in connection with a $40,000,000
unsecured credit facility made available to the Corporation,
as discussed below. The exercisability of the warrant and the
Corporation's ability to borrow money under the credit
facility are subject to the approval of this proposal. For a
description of the warrant and the credit facility
transaction, see "Certain Relationships and Related
Transactions."
If all such options and warrants were exercised, all outstanding shares of
Preferred Stock and convertible debt were converted, and all the Unreserved
Shares issued, the Corporation would have an aggregate of approximately
110,255,964 shares of Common Stock issued and outstanding. However, as described
below, certain of the Corporation's convertible debt is convertible into Common
Stock at a price based upon the market price of the Common Stock at the time of
conversion. Although the Corporation believes it has reserved a sufficient
number of shares of Common Stock to provide for the conversion of this debt,
there is no limit as to the number of shares which ultimately may be issued upon
such conversion.
More specifically, on March 30, 1995, in connection with the
raising of additional working capital, the Corporation issued and sold an
aggregate of $36,000,000 in principal amount of 14 3/4% Senior Convertible Notes
(the "Senior Notes") and 700,000 warrants, each warrant exercisable to purchase
one share of Common Stock (the "Note Warrants"). During each four month period
beginning September 30, 1995, February 1, 1996 and June 1, 1996, up to
$12,000,000 of the Senior Notes (but not more than $250,000 on any one day) may
be converted, from time to time, by the holders thereof into a number of shares
of Common Stock at a conversion price equal to 87.5% of the fair market value of
the Common Stock (as determined under the operative documents) on the date
preceding the date of conversion. As of March 31, 1996, the holders of the
Senior Notes had converted $18,414,169 of principal under the Senior Notes into
2,639,348 shares of Common Stock. Based on a fair market value of $10.0625 (the
closing price of the Common Stock on April 15, 1996), the remaining principal
balance on the Senior Notes would be convertible into 1,997,323 shares of
Common Stock. As of March 31, 1996, the Corporation had reserved an aggregate
total of 3,655,200 shares of Common Stock in order to have sufficient number of
shares of Common Stock available for issuance upon conversion of the remaining
Senior Notes. To the extent that the fair market value or the average closing
price of the Common Stock on the date of conversion of the Senior Notes
decreases, the number of shares of Common Stock issuable upon conversion of the
Senior Notes will increase, and the Corporation may be required to issue more
shares of Common Stock upon conversion of the Senior Notes than it has reserved
for this purpose.
In addition, on December 21, 1995, Geotek Financing
Corporation ("GFC"), a newly incorporated wholly owned subsidiary of the
Corporation, entered into a loan agreement with Hughes Network Systems, Inc.
("HNS"). Pursuant to such agreement, HNS has agreed to provide GFC with up to
$24.5 million of financing, in the
-9-
<PAGE>
form of a convertible note bearing interest at a rate of 12% per annum (the "HNS
Note"), for use in connection with the purchase of additional 900 MHZ licenses
to be utilized in the commercial implementation of GEONET (the "HNS Licenses").
The HNS Note matures two years from the date of the initial drawdown. The HNS
Note is secured by a pledge of the stock of the subsidiary holding the HNS
Licenses and a guarantee by the Corporation. The HNS Note is convertible, at the
option of HNS, into shares of Common Stock during the eighteen month period
beginning six months after the initial drawdown at an exercise price equal to
the lesser of 90% of the market price per share of Common Stock at the time of
conversion or $9.75 per share. Based on a fair market value of $10.0625 (the
closing price of the Common Stock on April 15, 1996), the full principal amount
on the HNS Note would be convertible into 2,705,314 shares of Common Stock. As
of March 31, 1996, the Corporation has reserved an aggregate total of 3,888,889
shares of Common Stock in order to have sufficient number of shares of Common
Stock available for issuance upon conversion of the HNS Note. To the extent that
the market price of the Common Stock on the date of conversion of the HNS Note
decreases, the number of shares of Common Stock issuable upon conversion of the
HNS Note will increase, and the Corporation may be required to issue more shares
of Common Stock upon conversion of the HNS Note than it has reserved for this
purpose.
The Board of Directors recommends the proposed increase in the
authorized number of shares of Common Stock to ensure that an adequate supply of
authorized and unissued shares are available for (i) additional issuances under
the Corporation's employee benefit plans, (ii) the raising of additional capital
for the operations of the Corporation, or (iii) the financing of the acquisition
of other businesses. Except as described above, there are currently no plans or
arrangements relating to the issuance of any of the additional shares of Common
Stock proposed to be authorized and such shares would be available for issuance
without further action by stockholders, unless required by the Corporation's
Restated Certificate of Incorporation, its By-Laws or by applicable law.
The increase in the number of authorized shares of Common
Stock has not been proposed for any anti-takeover-related purpose and the Board
of Directors and management of the Corporation have no knowledge of any current
effort to obtain control of the Corporation or accumulate large amounts of its
Common Stock. However, the availability of additional shares of Common Stock
could make any attempt to gain control of the Corporation or of the Board of
Directors more difficult. Shares of authorized but unissued Common Stock could
be issued in an effort to dilute the stock ownership and voting power of any
person or entity desiring to acquire control of the Corporation, which might
have the effect of discouraging or making less likely such a change of control.
Such shares could also be issued to other persons or entities who support the
Board of Directors in opposing a takeover attempt that the Board of Directors
has deemed not to be in the best interests of the Corporation and its
stockholders.
In evaluating the proposed amendment, stockholders should
consider the effect of certain other provisions of the Corporation's Restated
Certificate of Incorporation and By-Laws which may have anti-takeover
consequences. These provisions include (a) the authorization of 4,000,000 shares
of Preferred Stock, the terms of which may be fixed by the Board of Directors
without further action by stockholders, (b) a provision that standing Directors
may be removed only by a majority vote of stockholders entitled to vote, (c) a
limitation on the ability of stockholders to call special stockholder meetings,
and (d) a provision that vacancies in, and newly created directorships resulting
from an increase in the authorized number of directors on, the Board of
Directors may be filled by a majority of the remaining Directors.
EFFECTIVE DATE OF PROPOSED AMENDMENT AND RECOMMENDATION OF THE BOARD
If the proposed amendment to Article IV of the Restated
Certificate of Incorporation of the Corporation is adopted by the required vote
of the Corporation's stockholders, such amendment will become effective upon the
filing by the Corporation of a Certificate of Amendment to the Corporation's
Restated Certificate of Incorporation with the Secretary of the State of
Delaware, which is expected to be accomplished as soon as practicable after
stockholder approval is obtained. THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
A VOTE FOR THE PROPOSED AMENDMENT. The directors and officers of the Corporation
intend to vote their shares in favor of this Proposal.
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<PAGE>
PROPOSAL III
RATIFICATION OF THE
SELECTION OF COOPERS & LYBRAND L.L.P.
AS THE CORPORATION'S INDEPENDENT AUDITORS
The Board of Directors of the Corporation has selected Coopers &
Lybrand L.L.P. as independent auditors to examine and verify the accounts of the
Corporation for the 1996 fiscal year, and to report thereon to the Board of
Directors and the stockholders. This selection has been submitted for
ratification or rejection at the Annual Meeting.
The Corporation's financial statements for the year ended December 31,
1995 were audited by Coopers & Lybrand L.L.P., independent public accountants.
Coopers & Lybrand L.L.P. has no interest or relationship with the
Corporation except in the capacity of independent auditors, nor has that firm
had any other interest or relationship with the Corporation in the past.
Representatives of Coopers & Lybrand L.L.P. are expected to be present
at the Annual Meeting. Such representatives will have the opportunity at the
Annual Meeting to make a statement, if they so desire, and will be available to
respond to appropriate stockholder questions.
RECOMMENDATION OF BOARD OF DIRECTORS
THE BOARD OF DIRECTORS OF THE CORPORATION UNANIMOUSLY RECOMMENDS THAT
HOLDERS OF COMMON STOCK AND PREFERRED STOCK VOTE FOR THIS PROPOSAL. The
directors and officers of the Corporation intend to vote their shares in favor
of this Proposal.
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<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth all cash and non-cash compensation for
each of the last three fiscal years awarded to or earned by the Chief Executive
Officer of the Corporation and the other executive officers required to be
reported pursuant to Item 402(a)(3) of Regulation S-K promulgated under the
Exchange Act for all services performed by such executive officers for the
Corporation or its affiliates, whether paid by the Corporation, its affiliates
or a third party. Except as set forth herein, none of the named executive
officers received during the last three fiscal years any perquisites or other
personal benefits, securities or property which had an aggregate value of
greater than the lower of $50,000 or 10% of the total salary and bonus reported
for such executive officer.
<TABLE>
<CAPTION>
Long Term
Annual Compensation Compensation
------------------- ------------
Securities
Name & Principal Underlying All Other
Position Year Salary Bonus Options(1) Compensation
-------- ---- ------ ----- ---------- ------------
<S> <C> <C> <C> <C> <C>
Yaron I. Eitan 1995 $249,982 $200,000(2) 10,000 $47,482(3)
President and Chief 1994 $224,025 $125,000 960,000 $36,919(3)
Executive Officer 1993 224,642 225,000 10,000 39,240(3)
George Calhoun 1995 $175,000 $30,000 10,000 -
President-Wireless 1994 173,543 35,000 10,000 -
Technology Division 1993 149,994 50,000 10,000 -
Yoram Bibring 1995 $154,897 $35,000 15,000 $10,656(4)
Executive Vice President 1994 131,910 35,000 - 8,557(4)
Chief Operating Officer 1993 119,260 50,000 65,000 9,333(4)
William Opet (5) 1995 $155,418 $35,000 10,000 $5,250
Senior Vice President 1994 105,380 35,000 105,000 -
Business Development 1993 - - - -
Andrew Robb (6) 1995 $160,503 $28,536 - $24,284(7)
Managing Director of 1994 156,065 28,143 65,000 8,926
European Operations 1993 65,493 - 35,000 5,887
</TABLE>
- --------------------------
(1) In addition to the options reported hereunder, in 1993 Mr. Eitan, Mr.
Calhoun and Mr. Bibring received options to purchase 207,295, 246,780
and 49,356 shares of Common Stock, respectively, in connection with the
merger of PowerSpectrum into a wholly-owned subsidiary of the
Corporation in 1992. These options were granted pursuant to the Plan of
Merger in exchange for PowerSpectrum options which had been previously
awarded to these executive officers.
(2) $100,000 of this bonus consists of the forgiveness of indebtedness
payable by Mr. Eitan to the Corporation. See "Executive Compensation -
Compensation Committee Interlocks and Insider Participation."
(3) Consists primarily of life insurance premiums and disability insurance
premiums paid by the Corporation for Mr. Eitan aggregating $28,960 and
$3,977, respectively in 1995, $28,960 and $3,699 in 1994, and $31,292
and $3,451 in 1993; contributions by the Corporation to the
Corporation's 401(k) plan on behalf to Mr. Eitan of $9,240 in 1995,
$4,260 in 1994 and $4,497 in 1993.
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<PAGE>
(4) Consists primarily of life insurance premiums and disability insurance
premiums paid by the Corporation for Mr. Bibring aggregating $6,500 and
$2,211, respectively, in 1995, $6,500 and $2,057 in 1994, and $7,417
and $1,916 in 1993.
(5) Mr. Opet joined the Corporation in April 1994.
(6) Mr. Robb joined the Corporation in July 1993.
(7) Consists primarily of contributions by the Corporation to Mr. Robb's
retirement fund.
OPTIONS AND STOCK APPRECIATION RIGHTS
The following tables contain information concerning option grants to,
and option exercises by, the executive officers named in the Summary
Compensation Table during fiscal 1995 and the value of the options held by such
persons at the end of fiscal 1995. No Stock Appreciation Rights were granted or
exercised during fiscal 1995.
<TABLE>
<CAPTION>
Potential Realizable Value at
Number % of Total Assumed Rates of Stock
of Securities Options Appreciation for Option Term(1)
Underlying Granted Exercise or -------------------------------
Options to Employees Base Price
Name Granted (#) In Fiscal Year ($/Sh) (2) Expiration Date 5%($) 10%($)
---- ----------- -------------- ---------- --------------- ----- ------
<S> <C> <C> <C> <C> <C> <C>
Yaron I. Eitan 10,000(3) 0.5% $8.88 Sept. 13, 2005 $55,850 $141,500
George Calhoun 10,000(3) 0.5% $8.88 Sept. 13, 2005 $55,850 $141,500
Yoram Bibring 15,000(4) 0.7% $8.00 Sept 1, 2005 $75,450 $191,250
William Opet 10,000(5) 0.5% $9.13 April 11, 2005 $57,400 $145,500
Andrew Robb - - - - - -
- --------------------------
</TABLE>
(1) In accordance with the rules of the Commission, "Potential Realizable
Value" has been calculated assuming an aggregate ten-year appreciation
of the fair market value of the Corporation's Common Stock on the date
of grant, at annual compounded rates of 5% and 10%, respectively.
(2) The exercise price of each option reported hereunder was equal to or
greater than the fair market value of the Corporation's Common Stock on
the date such option was granted.
(3) These options were immediately exercisable when granted.
(4) These options become exercisable with respect to 3,000 shares in
September 1996, 3,000 shares in September 1997 and 9,000 shares in
September 1998.
(5) These options become exercisable with respect to 2,000 shares in April
1996, 2,000 shares in April 1997, and 6,000 shares in April 1998.
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<PAGE>
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION VALUES
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money
Options at FY-End(#) Options at FY-End ($)
Shares
Acquired Value
Name on Exercised(#) Realized Exercisable Unexercisable Exercisable Unexercisable
---- --------------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Yaron Eitan 100,000 512,500 1,222,295 750,000 3,925,762 0
George Calhoun 125,000 662,250 251,780 0 1,264,700 0
Yoram Bibring 99,356 584,890 63,344 36,666 102,459 7,604
William Opet - - 35,000 80,000 0 0
Andrew Robb - - 27,000 73,000 4,375 6,563
</TABLE>
- --------------------------
(1) Value based on market value of the Corporation's Common Stock on
December 31, 1995, or $6.315 per share, minus the exercise price.
EMPLOYMENT AGREEMENTS AND OTHER MATTERS
In March 1995, the Corporation and Mr. Churchill entered into an
agreement pursuant to which Mr. Churchill agreed to serve as the Chairman of the
Board of the Corporation through March 31, 1998. Under the agreement, Mr.
Churchill is paid compensation of $50,000 per year and is eligible to receive
bonuses at the discretion of the Compensation Committee. In addition, Mr.
Churchill, was granted options to purchase 250,000 shares of Common Stock at
prices ranging from $8.00 to $14.00 per share. The options became exercisable
with respect to 83,333 shares upon issuance, with respect to 83,333 shares on
March 31, 1996, and become exercisable with respect to 83,333 shares on March
31, 1997.
In March, the Corporation entered into an agreement with Mr. Eitan
pursuant to which he agreed to serve as the President and Chief Executive
Officer of the Corporation through March 31, 1998. Under the agreement, Mr.
Eitan will be paid a base salary of $250,000 during the first year thereof,
$275,000 per year during the second year thereof and $320,000 per year during
the third year thereof. Mr. Eitan is entitled to receive such additional bonuses
as shall be determined by the Compensation Committee in its sole discretion. Mr.
Eitan was also granted options to purchase an aggregate of 750,000 shares of the
corporation's common stock at prices ranging from $8 to $14 per share. These
options vest over a three year period, with an exercise price for a substantial
portion of the options at a price well above the market price of the Common
Stock on the date of grant. Mr. Eitan is also entitled to receive an annual cash
bonus in an amount equal to three percent of the Corporation's consolidated
pre-tax income for each fiscal year in which such agreement is in effect, as
reported in the Corporation's financial statements audited by the Corporation's
independent accountants. Mr. Eitan is eligible to receive such additional
bonuses (including stock grant awards and options) as is determined by the
Committee, whose determination was not required to be based on specific
performance goals. The Compensation Committee of the Board of Directors awarded
Mr. Eitan a bonus of $200,000 for the fiscal year ended December 31, 1995, which
included forgiveness of $100,000 indebtedness payable by Mr. Eitan to the
Corporation. See "Executive Compensation - Committee Interlocks and Insider
Participation."
Pursuant to Mr. Eitan's agreement, the Corporation provides Mr. Eitan
with health, accident and individual disability insurance as well as a life
insurance policy with benefits aggregating $1,500,000, with the beneficiaries
thereunder to be named by him. Mr. Eitan is also to be reimbursed for
out-of-pocket expenses incurred in connection with the performance of his
duties. Mr. Eitan also receives the use of an automobile supplied by the
Corporation, of value and quality acceptable to him. The Corporation is
responsible for all expenses and maintenance costs attributed thereto as well as
for the costs of insuring such vehicle. There is no specific limit in Mr.
Eitan's agreement as to the amount to be expended by the Corporation for the use
and maintenance of such automobile.
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<PAGE>
Mr. Eitan is bound by his employment agreement to treat confidentially
all proprietary information learned by him during the course of his employment
with the Corporation for the term of the agreement and for three years
thereafter. Mr. Eitan has also agreed to refrain from competing, in any state of
the United States or in Israel, with the Corporation or any of its subsidiaries
during the term of the agreement and for a period of three years thereafter. He
has also agreed to refrain from soliciting the Corporation's employees or
officers following the termination of his employment.
The Corporation has also agreed to use its best efforts to have Mr.
Eitan elected as a member of the Board of Directors of the Corporation during
the term of his employment agreement.
George Calhoun serves as the President of the Corporation's Wireless
Technologies Division. Mr. Calhoun is presently paid a base salary at the rate
of $175,000 per year, subject to annual adjustments. Mr. Calhoun is entitled to
receive all employee benefits offered to senior executives and key management
employees, including without limitation, disability insurance, hospitalization
insurance, major medical insurance, medical reimbursement, survivor income, life
insurance and any other benefit plan or arrangement. Mr. Calhoun is entitled to
be reimbursed for all out-of-pocket expenses reasonably and necessarily incurred
in the performance of his duties. Mr. Calhoun also receives the use of an
automobile and an allowance to cover all expenses and maintenance costs
attributed thereto, as well as the cost of insuring such vehicle.
In 1994, the Corporation entered into one year employment agreements
with each of Yoram Bibring and William Opet. The term of each of these
agreements automatically extends for additional one year periods and will
continue to be so automatically extended unless the Corporation or the
respective executive officer provides the other sixty days' advance notice of
its or his desire to terminate the employment relationship. Pursuant to the
agreements, the Corporation is obligated to pay each of these executives a base
salary at least equal to the base salary such executive received during 1994.
The actual compensation payable to each of these executives shall be determined
by the Compensation Committee. These executives are also eligible to receive
annual bonuses in amounts determined by the Compensation Committee based upon
such executive's performance and the operating results and financial condition
of the Corporation. In addition, the executives are entitled to participate in
all employee benefit plans and arrangements which are generally available to the
Corporation's executive officers.
The Corporation may terminate the employment agreement with either of
Messrs. Bibring or Opet for "cause" (as defined in the respective employment
agreements) or in the event of the death or incapacity of such executive. In the
event the Corporation terminates Mr. Bibring or Opet for another reason, such
executive will generally be entitled to six months salary. Upon certain "changes
of control" (as defined in the respective employment agreements) of the
Corporation, Mr. Bibring will be entitled to an amount equal to six times his
average monthly compensation for the twelve month period preceding the change of
control plus an amount sufficient to reimburse him for tax liabilities incurred
as a result of such change of control payments. In addition, all stock options
granted to Mr. Bibring and Mr. Opet will vest upon certain changes of control.
COMPENSATION OF DIRECTORS
All directors other than Mr. Churchill receive only options as
compensation for acting as directors of the Corporation. During 1995, each
director (including Messrs. Churchill, Calhoun, Crane and Eitan) of the
Corporation received 10,000 options with an exercise price equal to the fair
market value of the Common Stock on the date of grant. Directors are reimbursed
for expenses related to their attendance at Board of Directors meetings. All
options granted to directors expire ten years from the date of grant.
NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH IN ANY OF THE
CORPORATION'S PREVIOUS FILINGS UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
THE EXCHANGE ACT THAT MIGHT INCORPORATE FUTURE FILINGS INCLUDING THIS PROXY
STATEMENT IN WHOLE OR IN PART, THE FOLLOWING PERFORMANCE GRAPH AND THE COMMITTEE
REPORT ON EXECUTIVE COMPENSATION SHALL NOT BE INCORPORATED BY REFERENCE INTO ANY
SUCH FILINGS.
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<PAGE>
COMPARATIVE STOCK PERFORMANCE
The graph below compares the cumulative total stockholder return on the
Corporation's Common Stock since December 31, 1990 with the cumulative total
return on the S&P 500 Index and a peer group of eight companies which are
identified in footnote (1) below and are engaged in the manufacture of
television, radio and communications equipment (the "Peer Group") over the same
period (assuming the investment of $100 in the Corporation's Common Stock, the
S&P 500 Index and the Peer Group on December 31, 1990, and reinvestment of all
dividends). The cumulative total return for the Peer Group has been weighted
according to the respective Peer Group member's stock market capitalization at
the beginning of each period for which a return is indicated. The cumulative
total stockholder return represents the value that such investments would have
had on December 31, 1995. Total return calculations for the S&P 500 Index and
for the Peer Group were performed by Standard & Poor's Compustat Services, Inc.
(Plot points for line graph)
<TABLE>
<CAPTION>
S&P 500 Geotek
Index Communications Peer Group
------- -------------- ----------
<S> <C> <C> <C>
Dec 90 100 100 100
Dec 91 130.47 116.67 115.96
Dec 92 140.41 279.13 113.73
Dec 93 154.56 1,050.00 214.60
Dec 94 156.60 575.00 127.46
Dec 95 215.45 420.80 151.35
</TABLE>
(1) The Peer Group consists of the following publicly traded companies
which are engaged in providing wireless communications and/or paging
services and set forth in parenthesis after the name of each company is
the return year during which such company is first included in the Peer
Group: Dialpage Inc. (1993), Metricom Inc. (1993), Nextel Communications
(1993), Onecomm Corp. (1994), Pittencrieff Communications (1994),
Qualcomm Inc. (1992), Racotek Inc. (1994) and Vanguard Cellular Systems,
Inc. (1990).
COMMITTEE REPORT ON EXECUTIVE COMPENSATION
OVERVIEW AND PHILOSOPHY
During 1995, the Compensation Committee of the Board of Directors was
composed of Messrs. Auch, Churchill, Griffin and Eitan. The Compensation
Committee is responsible for developing and making recommendations to the Board
with respect to the Corporation's executive compensation policies. In addition,
the Compensation Committee, pursuant to authority delegated by the Board,
determines on an annual basis the compensation to be paid to the Chief Executive
Officer and each of the other executive officers of the Corporation. Decisions
with respect to awards of stock options to executive officers under the
Corporation's stock option plans are made by the 16b-3 Committee. The members of
the 16b-3 Committee for 1995 were Messrs. Auch and Griffin. The Compensation
Committee and the 16b-3 Committee are referred to collectively as the
"Committees."
The Corporation's Executive Compensation Program is based on guiding
principles designed to align executive compensation with the values and
objectives, business strategy, management initiatives, and the business and
financial performance of the Corporation. In applying these principles the
Committees have established a program to:
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<PAGE>
o Attract and retain key executives critical to the long-term
success of the Corporation and each of its business groups.
o Reward executives for long-term strategic management and the
enhancement of stockholder value.
o Integrate compensation programs with both the Corporation's annual
and long-term strategic planning and measuring processes.
o Support a performance-oriented environment that rewards
achievement with respect to the Corporation's goals and also as
compared to others in the industry.
Since 1992, the Corporation has devoted substantial financial and
management resources to the development of an integrated, digital wireless
communications network and recently has begun the roll-out of this network in
major markets throughout the United States. Much of the Corporation's current
wireless communications operations are in an early stage, require significant
capital expenditures and have generated relatively small revenues to date. As a
consequence of the stage of the Corporation's wireless communications
operations, many traditional corporate performance measures are not
representative of the contributions made to the Corporation by individual
executive officers of the Corporation. Thus, in making compensation decisions,
the Committees focus on the individual contributions of executive officers to
the Corporation's strategic goals, including, but not limited to, the formation
of strategic alliances, the raising of capital, the acquisition of operating
subsidiaries and the execution by such officers of the Corporation's business
plan. The Committees use their discretion to set executive compensation where,
in their judgment, external, internal or an individual's circumstances warrant
it.
The Committees also periodically review the compensation policies of
other similarly situated companies, as set forth in the proxy statements of such
companies, to determine whether the Corporation's compensation decisions are
competitive within the telecommunications and electronics industries, as well as
with a broader group of companies of comparable size and complexity. This
comparison group includes the companies included in the Peer Group. The
Committees focus on companies engaged in these industries because these are the
areas where the Corporation has recently devoted, and expects to continue to
devote, a substantial portion of its efforts and resources.
EXECUTIVE OFFICER COMPENSATION PROGRAM
The Corporation's executive officer compensation program is comprised
of base salary, long-term incentive compensation in the form of stock options
and various benefits, including medical and pension plans generally available to
employees of the Corporation.
Base Salary and Bonus. Base salary levels for the Corporation's
executive officers are competitively set relative to companies in the
telecommunications and electronics industries and other comparable companies. In
determining salaries, the Compensation Committee also takes into account
individual experience and performance and specific issues particular to the
Corporation. The Compensation Committee generally sets base salary for executive
officers at the median to low end of the range at which comparable companies
compensate their executive officers. The Compensation Committee believes that
executive officers should receive a substantial portion of their compensation in
the form of discretionary bonuses and stock options as these types of
compensation awards provide a better incentive to executive officers to achieve
long-term value for the Corporation and its stockholders. The Committees believe
they have achieved a proper balance between providing enough immediate cash
compensation to retain and attract top quality managers and providing long term
incentives, in the form of stock options and cash bonuses, to promote long-term
growth for the Corporation's stockholders.
Stock Option Plan. The Corporation's 1989 Option Plan is the
Corporation's long-term incentive plan for executive officers and key managers.
The objectives of the program are to align executive and stockholder long-term
interests by creating a strong and direct link between executive pay and the
Corporation's performance and to enable executives to develop and maintain a
significant, long-term stock ownership position in the Corporation's Common
Stock.
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<PAGE>
The Corporation's 1989 Option Plan authorizes the Board of Directors or
a designated committee thereof to award stock options to key executives. The
16b-3 Committee is responsible for the grant of stock options to the
Corporation's executive officers. Stock options are granted at varying intervals
at an option price equal to or greater than the fair market value of the
Corporation's Common Stock on the date of grant, generally vest over a three or
five-year period and have a ten-year term. Current options held by the executive
officers are considered in determining the amount of awards to such executive
officers. Because the Committees believe that the award of stock options is the
best incentive for executive officers to promote long-term growth for the
Corporation's stockholders, the Committees attempt to make the grant of stock
options a substantial part of the executive officers' compensation. As a result,
the number of options granted to the Corporation's executive officers tend to be
in the median to high range of option grants to executive officers of comparable
companies. The Committees believe these relatively high option grants allow the
Corporation to attract and retain quality managers while paying relatively lower
cash compensation.
Benefits. The Corporation provides medical and pension benefits to its
executive officers that are generally available to the Corporation's employees.
The amount of perquisites, as determined in accordance with the rules of the
Commission relating to executive compensation, did not exceed 10% of salary for
the 1995 fiscal year. The Compensation Committee does not consider benefits and
perquisites to be a significant portion of the Corporation's executive officer
compensation.
Section 162(m) of the IRC. In general, Section 162(m) of the IRC limits
the ability of public corporations to deduct remuneration in excess of certain
thresholds paid to certain executive officers. The Committees continuously
monitor and review the compensation of the Corporation's highest paid executive
officers to ensure that the Corporation's deduction for remuneration is not
subject to the limitations imposed by Section 162(m) of the IRC. For example,
remuneration to executive officers in the form of stock options is intended to
qualify as performance-based compensation within the meaning of Section 162(m)
of the IRC and, thus, would not be subject to deduction limitations imposed
thereunder.
CHIEF EXECUTIVE OFFICER COMPENSATION
Mr. Eitan was appointed to the position of Chief Executive Officer in
1989. During 1995, Mr. Eitan served as the President and Chief Executive Officer
of the Corporation pursuant to an employment agreement which expired on March
31, 1995 and a new agreement which will expire on March 31, 1998. Under these
agreements, Mr. Eitan was paid a base salary of $225,000 per year through March
31, 1996 and, beginning April 1, 1996, will be paid a base salary of $250,000.
Mr. Eitan was entitled to receive an annual cash bonus in the amount equal to
three percent of the Corporation's consolidated pre-tax income for each fiscal
year in which such agreement was in effect, as reported in the Corporation's
financial statements audited by the Corporation's independent accountants. No
bonus was payable to Mr. Eitan during 1995 pursuant to this formula. Mr. Eitan
was also eligible to receive such additional bonuses (including stock grant
awards and options) as determined by the Committees based upon the factors
enumerated above. Mr. Eitan does not participate in the decision making of the
Compensation Committee with regard to any discretionary bonuses which may be
awarded to him. During 1995, Mr. Eitan received a discretionary bonus equal to
$200,000, a portion of which was paid in the form of the forgiveness of $100,000
indebtedness owed by Mr. Eitan to the Corporation. See "Executive Compensation -
Committee Interlocks the Insider Participation." In addition, in connection
with the waiver by Mr. Eitan of certain rights contained in a prior employment
agreement, Mr. Eitan received options to purchase 250,000 shares of Common
Stock. Finally, Mr. Eitan was granted options to purchase an additional 10,000
shares of Common Stock as compensation for his service on the Corporation's
Board of Directors. This award was the same as that made to all other directors
of the Corporation.
In recognition of Mr. Eitan's efforts and achievements and in order to
induce Mr. Eitan to continue in the employ of the Corporation, Mr. Eitan was
granted options to purchase an aggregate of 750,000 shares of Common Stock which
vest over a three year period as follows: in December 1995, options to purchase
225,000 shares of Common Stock at a price of $8.00 per share became exercisable;
in December 1996, options to purchase 250,000 shares of Common Stock at a price
of $10.00 per share became exercisable; and in December 1997, the remaining
options to purchase 275,000 shares of Common Stock at $14.00 per share will
become exercisable. These options are designed to provide Mr. Eitan with an
additional incentive to increase the return to the Corporation's stockholders
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<PAGE>
and to align Mr. Eitan's interest to those of the Corporation's stockholders.
The Committees believe that the cash compensation payable and the option awards
to Mr. Eitan are consistent with its policies to pay relatively lower levels of
cash compensation and use stock options as an incentive to the Corporation's
executive officers, the value of which are aligned with the value generated for
the Corporation's stockholders.
The Committees feel that the size of Mr. Eitan's bonus and the option
grants to Mr. Eitan are appropriate in light of Mr. Eitan's leadership role in:
(i) the development and implementation of the Corporation's wireless
communications strategy, including the commencement of operations in
Philadelphia (1995), and Washington, D.C., Baltimore and New York (early 1996);
(ii) the raising of capital during the last several years through, among other
things, the offer and sale of Preferred Stock and debt securities; and (iii) the
acquisition and oversight of significant equity interests in several new
operating subsidiaries during the last several years, including but not limited
to, Speech Design GmbH, GMSI, NB3, Cumulous Communications Company, Preussag
Bundelfunk GmbH and DBF Bundelfunk GmbH & Co. Betriebs KG. The Committees
attribute much of the Corporation's success to the efforts of Yaron Eitan.
Walter E. Auch
Haynes G. Griffin
Members of the Compensation Committee and the 16b-3 Committee
Winston Churchill
Yaron Eitan
Members of the Compensation Committee
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee consists of Messrs. Auch, Churchill, Griffin
and Eitan. Mr. Churchill is the Corporation's Chairman and Mr. Eitan is the
Corporation's President and Chief Executive Officer. The 16b-3 Committee
consists of Messrs. Auch and Griffin.
In October 1992, Yaron Eitan purchased from the Corporation 100,000
shares of Common Stock and 100,000 warrants to purchase Common Stock, at an
exercise price of $3.10 per share, for an aggregate purchase price of $185,000.
Of such purchase price, $30,000 was paid in cash and the remainder was loaned by
the Corporation to Mr. Eitan at an interest rate of prime plus 1%, to be paid
within 12 months of the date of purchase (which date was subsequently extended).
The Corporation forgave the repayment of a portion of this loan in 1995 and
forgave the repayment of the balance of this loan in early 1996. The largest
aggregate amount outstanding on this loan during 1995 was $155,000 and the
balance of this loan on December 31, 1995 was $55,000.
On February 23, 1994, pursuant to a Stock Purchase Agreement (the
"Purchase Agreement") between the Corporation and Vanguard (for which Mr.
Griffin serves as President) dated December 29, 1993, the Corporation sold 2.5
million shares of Common Stock to Vanguard for a total of $30 million. Vanguard
was also granted the right to invest up to an additional $167 million in a
series of related non-transferable options (together, the "Vanguard Options") to
purchase additional shares of Common Stock at prices ranging from $15.00 to
$18.00 per share over an approximately 48-month period following the initial
investment. In connection with this transaction, the Corporation also entered
into a five-year management consulting agreement with Vanguard, pursuant to
which Vanguard provides operational and marketing support to the Corporation for
an aggregate of 300,000 shares of Common Stock per annum (the "Management
Shares"). Through February 1996, the Corporation had issued 600,000 shares of
Common Stock to Vanguard pursuant to this agreement. Such agreement will
terminate, and the compensation paid thereunder shall cease, upon Vanguard's
failure to exercise any of the Options.
In September 1995, Vanguard purchased 531,462.5 shares of Series L
Stock for an aggregate purchase price of $5 million. These shares were purchased
at the same price that Toronto Dominion Investments, Inc. ("TDI"), an entity not
affiliated with the Corporation or Vanguard, also purchased 531,462.5 shares of
Series L Stock. Each share of Series L Stock is convertible into one share of
Common Stock. Each share of Series L Stock also entitles the holder thereof to
certain voting rights, including the right to vote on all matters voted on by
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<PAGE>
holders of Common Stock as if such Series L Stock had already been converted.
The stated value of the Series L Stock is $9.408 per share, with a cumulative
annual preferred dividend of 7.5% of the stated value thereof, payable quarterly
through and including the date in which the Series L Stock is no longer issued
and outstanding. The dividends may be paid in shares of Series L Stock.
The Corporation may, at its option, call the Series L Stock for
mandatory conversion into Common Stock at any time after the average closing
price of the Common Stock is greater than $14.11 (subject to certain adjustments
for changes in the number of shares outstanding) for any forty-five trading days
within any period of sixty trading days. The redemption price will be payable in
cash or shares of Common Stock at the Corporation's option.
The Corporation also granted Vanguard certain registration rights with
respect to the shares of Common Stock issuable by the Corporation upon
conversion of the Series L Stock and any other shares of Common Stock acquired
by Vanguard. In addition, upon the occurrence of certain events of default, the
number of directors constituting the Board of Directors of the Corporation will
be automatically increased by two and the holders of the Series L Stock will
have the right to elect the two additional directors.
In connection with Vanguard's purchase of the Series L Stock, the
Corporation agreed to modify the terms of the Vanguard Options granted to
Vanguard under the Purchase Agreement. Pursuant to these modifications, the
total number of shares of Common Stock subject to the Vanguard Options were
decreased from ten million shares to seven million shares, with options to
purchase two million shares of Common Stock at $15.00 per share and $16.00 per
share expiring on September 1, 1996 and options to purchase three million shares
of Common Stock at $17.00 per share expiring on September 1, 1997. The term of
the $16.00 options may be extended in certain circumstances. In the event any
Vanguard Options expire unexercised, all remaining Vanguard Options will
automatically expire. In addition, Vanguard assigned one-half of the Vanguard
Options exercisable at $15.00 per share and one-seventh of each of the Vanguard
Options exercisable at $16.00 and $17.00 per share to TDI. All of the Vanguard
Options assigned to TDI operate independently of the Vanguard Options held by
Vanguard. Finally, Vanguard agreed to waive the Corporation's obligation to
reserve the shares issuable upon exercise of the Vanguard Options and the
Management Shares until the Annual Meeting or August 31, 1996 and, until
September 1, 1996, to vote all shares of Common Stock which it holds or may hold
in favor of any proposal made by the Corporation to its stockholders to increase
the number of shares of Common Stock the Corporation is authorized to issue. In
the event the Corporation does not have a sufficient number of shares of Common
Stock reserved for issuance to Vanguard of all the Management Shares and the
shares issuable upon exercise of the Vanguard Options, the Corporation must pay
to Vanguard, as liquidated damages, the fair market value of the Vanguard
Options and the Management Shares on September 1, 1996, as determined in
accordance with the waiver agreement.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding beneficial
ownership (as determined in accordance with Rule 13d-3 promulgated under the
Exchange Act) of the Common and Preferred Stock as of April 10, 1996, for (a)
directors and executive officers of the Corporation, (b) all directors and
executive officers of the Corporation, as a group, and (c) each person who is
known by the Corporation to own beneficially 5% or more of the Corporation's
Common Stock. No director or executive officer of the Corporation beneficially
owns any of the Corporation's Series K Stock or Series M Stock. Except as
otherwise noted, each person listed below has sole voting and dispositive power
with respect to the shares of Common Stock listed next to such person's name.
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<TABLE>
<CAPTION>
Total Number Percentage
of Shares of of Class of
Common Stock Common Stock
Directors, Nominees and Beneficially Beneficially
Executive Officers Common Series H Series I Series L Owned(1) Owned(2)
------------------ ------ -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Walter E. Auch (3) 23,394 0 0 0 108,394 *
Yoram Bibring(4) 153,356 0 0 0 213,356 *
George Calhoun(5) 280,161 0 0 0 531,941 *
Purnendu Chatterjee(6) 0 444,445 20 0 10,347,036 15.4%
Winston Churchill(7) 1,023,330 0 0 0 1,220,797 2.1%
Jonathan C. Crane 0 0 0 0 0 0
Yaron Eitan(8) 490,070 0 0 0 1,787,365 3.1%
Haynes G. Griffin(9) 3,100,000 0 0 531,463 8,937,177 14.3%
Richard Krants(10) 424,873 0 0 0 522,573 *
Richard T. Liebhaber(11) 5,000 0 0 0 28,333 *
William Opet(12) 0 0 0 0 55,000 *
Andrew Robb(12) 0 0 0 0 27,000 *
Haim Rosen(13) 1,200,000 0 0 0 1,230,000 2.2%
Kevin W. Sharer(12) 0 0 0 0 33,333 *
William Spier(14) 696,353 0 0 0 726,353 1.3%
All directors and executive 7,396,537 444,445 20 531,463 25,815,990 34.3%
officers as a group
(19 persons)(15)
Other Beneficial Owners
S-C Rig Investments-III(16) 0 444,445 20 0 10,127,036 15.1%
Vanguard Cellular Systems, Inc. 3,100,000 0 0 531,463 8,917,177 14.2%
(17)
</TABLE>
<TABLE>
<CAPTION>
Percentage Percentage Percentage
of Class of of Class of of Class of
Series H Series I Series L
Stock Stock Stock
Beneficially Beneficially Beneficially
Owned Owned Owned
----- ----- -----
<S> <C> <C> <C>
Walter E. Auch (3) 0 0 0
Yoram Bibring(4) 0 0 0
George Calhoun(5) 0 0 0
Purnendu Chatterjee(6) 100% 100% 0
Winston Churchill(7) 0 0 0
Jonathan C. Crane 0 0 0
Yaron Eitan(8) 0 0 0
Haynes G. Griffin(9) 0 0 50%
Richard Krants(10) 0 0 0
Richard T. Liebhaber(11) 0 0 0
William Opet(12) 0 0 0
Andrew Robb(12) 0 0 0
Haim Rosen(13) 0 0 0
Kevin W. Sharer(12) 0 0 0
William Spier(14) 0 0 0
All directors and executive 100% 100% 50%
officers as a group
(15 persons)(15)
Other Beneficial Owners
S-C Rig Investments-III(16) 100% 100% 0
Vanguard Cellular Systems, Inc. (17) 0 0 50%
</TABLE>
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- -----------------------
*Less than 1%
(1) The Series H 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). As of April 23, 1996, each share
of Series H Stock was convertible into ten shares of Common Stock. The
Series I 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). As of April 23, 1996, the Series I Stock
was convertible into 42,553 shares of Common Stock. The Series L Stock is,
under certain circumstances, convertible into Common Stock by dividing (x)
the sum of $9.408 per share stated value and any dividend arrearage by (y)
9.408 per share (as adjusted from time to time for certain events of
dilution). As of April 23, 1996, the each shares of Series L Stock was
convertible into one share of Common Stock. The number of shares indicated
in each column refers only to issued and outstanding shares of such class
or series.
(2) The percentage column represents the percentage of Common Stock
beneficially owned, calculated in accordance with the Exchange Act, whether
presently issued and outstanding or reserved for issuance pursuant to
conversion or exercise of acquisition rights.
(3) Mr. Auch holds 85,000 options which are currently exercisable.
(4) Mr. Bibring holds 60,000 options which are currently exercisable.
(5) Mr. Calhoun holds 251,780 options which are currently exercisable.
(6) Dr. Chatterjee is an affiliate of S-C Rig and, as such, may be deemed
to beneficially own those securities held by S-C Rig. S-C Rig is the record
owner of 444,445 shares of Series H Stock which are convertible into
4,444,450 shares of Common Stock, and 20 shares of Series I Stock which are
convertible into 851,060 shares of Common Stock, and a warrant to purchase
621,000 shares of Common Stock. In addition, in connection with the credit
facility transaction described below, S-C Rig was issued warrants to
purchase 4,210,526 shares of Common Stock. These warrants will not become
exercisable unless Proposal II is approved by the Corporation's
stockholders. The figures contained herein assume approval of Proposal II
and include the shares of Common Stock issuable upon exercise of these
warrants. Dr. Chatterjee is also deemed to beneficially own options to
purchase 200,000 shares of Common Stock held by one of his affiliates, XTec
International, Inc. ("XTec") See "Certain Relationships and Related
Transactions." Dr. Chatterjee also holds 20,000 options which are
immediately exercisable. Mr. Chatterjee's address is 888 7th Avenue, Suite
3300, New York, New York 10106.
(7) Mr. Churchill is principal of CIP Capital Management, Inc., the general
partner of CIP Capital, L.P. ("CIP"), and, as such, may be deemed to
beneficially own those securities held by CIP. CIP is the record holder of
647,626 shares of Common Stock and 10,800 options. Mr. Churchill also holds
186,667 options which are currently exercisable. Does not include 155,134
shares of Common Stock held by a trust for the benefit of Mr. Churchill's
son, of which shares Mr. Churchill disclaims beneficial ownership.
(8) Mr. Eitan currently holds 1,297,295 options which are currently
exercisable.
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<PAGE>
(9) Mr. Griffin is President of Vanguard and, as such, may be deemed to
beneficially own these securities held by Vanguard. Vanguard is the record
owner of the 3,100,000 shares of Common Stock and 531,463 shares of Series
L Stock indicated. Vanguard also holds options to acquire up to an
additional 5,285,714 shares of Common Stock. See Note (17) below and
"Executive Compensation - Compensation Committee Interlocks and Insider
Participation." Mr. Griffin also holds 20,000 options which are currently
exercisable. Mr. Griffin's address is 2002 Pisgah Church Road, Suite 300,
Greensboro, North Carolina 27408.
(10) Mr. Krants holds 95,000 options which are currently exercisable and
2,700 shares held by Mr. Krants' children.
(11) Mr. Liebhaber holds 23,333 options which are currently exercisable.
(12) Consists of shares of Common Stock issuable upon options which are
currently exercisable.
(13) Mr. Rosen is Vice-President of Tadiran and, as such, may be deemed to
beneficially own those securities held by Tadiran. Tadiran is the record
owner of the 1,200,000 shares of Common Stock indicated. Mr. Rosen also
holds 30,000 options which are currently exercisable.
(14) Mr. Spier holds 30,000 options which are currently exercisable.
(15) Includes 18,545,953 shares of Common Stock issuable upon the
conversion of Series H Stock, Series I Stock and Series L Stock and the
exercise of currently exercisable warrants and options.
(16) S-C Rig holds 444,445 shares of Series H Stock and 20 shares of Series
I Stock, convertible in accordance with the Certificate of Designation of
such series into 4,444,450 shares of Common Stock and 851,060 shares of
Common Stock, respectively, and a warrant to purchase 621,000 shares of
Common Stock. In addition, in connection with the credit facility
transaction described below, S-C Rig was issued warrants to purchase
4,210,526 shares of Common Stock. These warrants will not become
exercisable unless Proposal II is approved by the Corporation's
stockholders. The figures contained herein assume approval of Proposal II
and include the shares of Common Stock issuable upon exercise of these
warrants. S-C Rig's address is 888 7th Avenue, New York, NY 10106.
(17) In addition to the shares of Common Stock and Series L Stock
indicated, Vanguard holds options to acquire up to an additional 5,285,714
shares of Common Stock. See "Executive Compensation - Compensation
Committee Interlocks and Insider Participation." Vanguard's address is 2002
Pisgah Church Road, Suite 300, Greensboro, NC 27408.
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<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Set forth below is a description concerning transactions which may not
otherwise be described herein by and between the Corporation and/or its
affiliates and other persons or entities affiliated with the Corporation or its
affiliates. The Corporation is of the view that each of such transactions was on
terms no less favorable to the Corporation than would otherwise have been
available to the Corporation in transactions with unaffiliated third parties, if
available at all.
S-C Rig/Chatterjee Group
On December 15, 1993, the Corporation sold 444,445 shares of Series H Stock
to S-C Rig, an entity affiliated with Messrs. George Soros and Purnendu
Chatterjee, a director of the Corporation, for an aggregate consideration of
$40,050,000. In connection with this transaction, the Corporation entered into a
consulting agreement with The Chatterjee Group, an affiliate of S-C Rig
("Chatterjee Group"), pursuant to which Chatterjee Group will provide certain
advisory services for a fee of $25,000 per month. The agreement terminates on
the earlier to occur of December 15, 2000 and such date that S-C Rig or one of
its affiliates no longer beneficially owns 50% of the shares of the Common Stock
into which the Series H Stock is convertible (calculated on a fully diluted
basis).
In addition, in August 1995, S-C Rig purchased $20.7 million principal
amount at maturity of the Corporation's 15% Senior Secured Discount Notes (the
"Discount Notes") and ten year warrants to purchase 621,000 shares of Common
Stock at $9.90 per share (the "S-C Rig Warrants"). The Discount Notes will
mature in July, 2005 and accrue interest until maturity at the rate of 15% per
annum. Interest on the Discount Notes becomes payable, in cash, beginning in
2001. The Discount Notes include covenants that place restrictions on the
Corporation, primarily relating to making certain investments and incurring
additional debt. Gross proceeds from the sale of the Discount Notes and the
S-C Rig Warrants was approximately $10 million.
On April 5, 1996, the Corporation and S-C Rig entered into an agreement
pursuant to which S-C Rig will make a $40.0 million unsecured senior credit
facility available to the Corporation. All borrowings under the credit facility
are required to be made prior to April 5, 1998, will accrue interest at a rate
of 10% per annum and will mature four years from the date of the final borrowing
thereunder. The Corporation will be obligated to pay S-C Rig a fee equal to 3%
of each borrowing under the credit facility at the time of such borrowing. In
connection with the establishment of the credit facility, the Corporation issued
to S-C Rig a five-year warrant to purchase 4.2 million shares of Common Stock
(subject to adjustment in certain circumstances) at an exercise price of $9.50
per share (subject to adjustment in certain circumstances). The Corporation will
not be permitted to borrow under the credit facility, and the warrant will not
become exercisable, unless the Corporation's stockholders approve Proposal II at
the Annual Meeting.
Metro Net
On January 27, 1994, pursuant to an Agreement and Plan of Merger (the
"Metro Net Agreement") with Metro Net and Metro Net's shareholders dated
December 9, 1993, the Corporation issued 3,112,500 shares of Common Stock to the
shareholders of Metro Net upon the merger of Metro Net into a newly formed
wholly-owned subsidiary of the Corporation (the "Merger"). Pursuant to the terms
of the Metro Net Agreement, Richard Krants, the President and Chief Executive
Officer of Metro Net prior to the transaction, was appointed to the
Corporation's Board of Directors at the effective time of the Merger. In
connection with this transaction, the Corporation entered into a consulting
agreement with Mr. Krants pursuant to which he agreed to provide consulting
services related to the management and construction of the Corporation's
Specialized Mobile Radio networks in exchange for annual consideration of
$75,000 and an option to purchase 75,000 shares of Common Stock at a price of
$9.50 per share vesting over three years. This consulting agreement will
terminate in December 1996.
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<PAGE>
XTec
During 1994, the Corporation entered into a joint venture with XTec, an
affiliate of Purnendo Chatterjee, to pursue the acquisition of trunked mobile
radio licenses in India. The Corporation and XTec each own 50% of this joint
venture. In the event the joint venture is granted a trunked mobile radio
license in India, the Corporation will grant XTec a five year option to purchase
an additional 250,000 shares of Common Stock at a price of $9.25 per share.
Richard Liebhaber
During 1995, the Corporation entered into a consulting agreement with
Richard Liebhaber, a director of the Corporation. Pursuant to this agreement,
Mr. Liebhaber provided and will continue to provide certain advisory services to
the Corporation. In exchange for these services, the Corporation granted to Mr.
Liebhaber options to purchase 40,000 shares of Common Stock at an exercise price
of $9.00 per share, which options vest over three years.
All financial terms of the transactions described above resulted from
negotiations between the parties. All future transactions between the
Corporation and affiliates of the Corporation will be on terms intended to be no
less favorable to the Corporation than could have been realized in an
arm's-length transaction with unaffiliated parties and will be approved by a
majority of the disinterested directors.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Exchange Act ("Section 16") requires the Corporation's
officers and directors and persons who own more than ten percent of a registered
class of the Corporation's equity securities (collectively, the "Reporting
Persons") to file reports of ownership and changes in ownership with the
Commission and to furnish the Corporation with copies of these reports.
Based on the Corporation's review of the copies of these reports received
by it, and written representations received from Reporting Persons, the
Corporation believes that all filings required to be made by the Reporting
Persons for the period January 1, 1995 through December 31, 1995 were made on a
timely basis, except that one report, covering a grant of stock options that is
exempt from Section 16 liability, was inadvertently not filed by Yoram Bibring,
an officer of the Corporation.
STOCKHOLDER PROPOSALS
STOCKHOLDER PROPOSALS FOR THE 1997 ANNUAL MEETING
Any stockholder who intends to present a proposal for consideration at the
Corporation's 1997 Annual Meeting of Stockholders must, on or before December
31, 1996, submit a proposal to the Corporation and notify the Corporation that
the stockholder intends to appear personally at the Corporation's 1997 Annual
Meeting of Stockholders to present the proposal in order to have the Corporation
consider the inclusion of such proposal in the Corporation's 1997 proxy
statement and form of proxy relating to the 1997 Annual Meeting. Reference is
made to Rule 14a-8 under the Exchange Act for information concerning the content
and form of such proposal and the manner in which such proposal must be made.
NOMINATIONS OF PERSONS FOR ELECTION AS DIRECTORS AT THE 1997 ANNUAL MEETING
Nominations for election to the Board of Directors at the Corporation's
1997 Annual Meeting of Stockholders may be made only in writing by a stockholder
entitled to vote at the 1997 Annual Meeting of stockholders and must be
addressed to the Secretary, Geotek Communications, Inc., 20 Craig Road,
Montvale, New Jersey 07645. All nominations must be received by the Secretary on
or before December 31, 1996, and must be accompanied by the information
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<PAGE>
described in items (i) and (ii) above concerning nominations for election to the
Board of Directors at the 1997 Annual Meeting. See "Nominations of Persons for
Election as Directors at the Annual Meeting."
ANNUAL REPORT TO STOCKHOLDERS
A copy of the Company's Annual Report to Stockholders which contains copies
of the Company's audited financial statements is being sent to stockholders with
this Proxy Statement.
ANNUAL REPORT ON FORM 10-K
THE CORPORATION WILL FURNISH WITHOUT CHARGE TO ANY STOCKHOLDER, UPON THE
WRITTEN REQUEST OF SUCH PERSON, A COPY OF THE CORPORATION'S ANNUAL REPORT ON
FORM 10-K. REQUESTS FOR THIS REPORT SHOULD BE ADDRESSED TO ROBERT VECSLER,
SECRETARY OF GEOTEK COMMUNICATIONS, INC., 20 CRAIG ROAD, MONTVALE, NJ 07645.
OTHER MATTERS
Management does not know of any other matters to come before the Annual
Meeting. However, if any other matters properly come before the Annual Meeting,
it is the intention of the persons designated as proxies to vote in accordance
with their best judgment on such matters.
By Order of the Board of Directors,
ROBERT VECSLER
Secretary
IT IS IMPORTANT THAT, IF YOU ARE A HOLDER OF SHARES OF COMMON STOCK OR
PREFERRED STOCK, YOU RETURN YOUR SIGNED PROXY PROMPTLY, REGARDLESS OF THE NUMBER
OF SHARES YOU OWN. IF YOU ARE A HOLDER OF SHARES OF COMMON STOCK OR PREFERRED
STOCK, PLEASE COMPLETE, SIGN, DATE AND MAIL THE ENCLOSED PROXY PROMPTLY, WHETHER
OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING.
APRIL 29, 1996
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- --------------------------------------------------------------------------------
GEOTEK COMMUNICATIONS, INC.
FOR THE HOLDERS OF GEOTEK COMMON STOCK
PROXY SOLICITED BY THE BOARD OF DIRECTORS
1996 Annual Meeting of the Stockholders - June 3, 1996
The undersigned stockholder of GEOTEK COMMUNICATIONS, INC. (the
"Corporation"), revoking all previous proxies, hereby appoints Robert Vecsler
and Bettina Stone, and each of them acting individually, as proxies of the
undersigned, and authorizes either or both of them to vote all shares of the
Corporation's Common Stock held of record by the undersigned as of the close of
business on April 23, 1996 at the 1996 Annual Meeting of Stockholders of the
Corporation to be held on June 3, 1996, at _______ __.M., local time, at the
Marriott Marquis Hotel, 1535 Broadway, New York, New York, and at any
adjournment(s) or postponement(s) thereof (the "Annual Meeting"), according to
the votes the undersigned would be entitled to cast if then personally present.
This proxy, when properly executed, will be voted in the manner
directed herein by the undersigned stockholder. IF NO DIRECTION IS GIVEN, THIS
PROXY WILL BE VOTED "FOR" ALL NOMINEES FOR DIRECTOR LISTED IN PROPOSAL I, "FOR"
THE ITEM LISTED IN PROPOSAL II, "FOR" THE ITEM LISTED IN PROPOSAL III, AND "FOR"
THE FOURTH MATTER SET FORTH BELOW.
PROPOSAL I (Proposed by the Corporation. This Proposal is not related to or
conditioned on the approval of the other Proposals.)
1. |_| FOR all nominees for director named below.
|_| WITHHOLD AUTHORITY to vote.
|_| FOR all nominees for director named below, except WITHHOLD
AUTHORITY to vote for the nominee(s) whose name(s) is(are) lined through.
Nominees: WALTER E. AUCH, GEORGE CALHOUN, PURNENDU
CHATTERJEE, WINSTON J. CHURCHILL, JOHATHAN C. CRANE, YARON
EITAN, HAYNES G. GRIFFIN, RICHARD KRANTS, RICHARD
T. LIEBHABER, KEVIN W. SHARER AND WILLIAM SPIER will be
considered nominees for election at the Annual Meeting.
(CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE)
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<TABLE>
PROPOSAL II (Proposed by the Corporation. This Proposal is not related to or
conditioned on the approval of the other Proposals.)
<S> <C> <C> <C> <C> <C> <C>
2. The Amendment to the Corporation's Certificate of
Incorporation to increase the number of authorized shares of
Common Stock to 135,000,000 shares of Common Stock.
|_| FOR |_| AGAINST |_| ABSTAIN
PROPOSAL III (Proposed by the Corporation. This Proposal is not related to or
conditioned on the approval of the other Proposals.)
3. The ratification of Coopers & Lybrand L.L.P. as the
Corporation's independent accountants for the 1996 fiscal
year.
|_| FOR |_| AGAINST |_| ABSTAIN
4. The authority of the proxies, in their discretion, to vote on
such other business as may properly come before the Annual
Meeting, or any adjournment(s) thereof.
|_| FOR |_| AGAINST |_| ABSTAIN
</TABLE>
THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF NOTICE OF THE ANNUAL
MEETING AND THE PROXY STATEMENT FURNISHED IN CONNECTION THEREWITH. The
undersigned also hereby ratifies all that the said proxies do by virtue hereof
and hereby confirms that this proxy shall be valid and may be voted regardless
of whether the stockholder's name is signed as set forth below or a seal affixed
or the description, authority or capacity of the person signing is given or any
other defect of signature exists.
DATED:_________________________________ 1996
____________________________________(SEAL)
(Stockholder's Signature)
____________________________________(SEAL)
(Stockholder's Signature)
Please sign this proxy exactly as the name
appears in the address above. If shares are
registered in more than one name, all owners
should sign. If signing in a fiduciary or
representative capacity, such as
attorney-in-fact, executor, administrator,
trustee or guardian, please give full title
and attach evidence of authority. If signer
is a corporation, please sign the full
corporate name and an authorized officer
should sign such officer's his name and title
and affix the corporate seal, if any.
NOTE, PLEASE MARK, SIGN AND DATE THIS PROXY AND RETURN IT TO THE CORPORATION.
Please complete, sign and date this Proxy and return it promptly regardless of
whether you plan to attend the Annual Meeting.
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