==================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------
FORM 10-K/A
FOR ANNUAL AND TRANSITION REPORTS
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from ________________ to ________________
Commission file number 0-17581
GEOTEK COMMUNICATIONS, INC.
(Exact Name of Registrant as Specified in Its Charter)
Delaware 22-2358635
(State of Incorporation) (I.R.S. Employer Identification No.)
102 Chestnut Ridge Road, Montvale, New Jersey 07645
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (201) 930-9305
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $0.01 Par Value
(Title of class)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES _X_. NO ___.
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Registration S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or amendment
to this Form 10-K. [ ]
Based on the closing sale price for the Registrant's Common Stock as of
April 15, 1998, the aggregate market value of the voting stock held by
non-affiliates of the Registrant as of such date was approximately
$72,140,519.
As of April 15, 1998 the number of outstanding shares of the Registrant's
Common Stock was approximately 104,147,491.
<PAGE>
DOCUMENTS INCORPORATED BY REFERENCE
None.
===============================
The Registrant hereby amends Part III of its Annual Report on Form 10-K
for the year ended December 31, 1997 (the "Annual Report") as set forth in the
pages attached hereto. Capitalized terms used herein and not otherwise defined,
have the meanings ascribed to such terms in the Annual Report.
<PAGE>
GEOTEK COMMUNICATIONS, INC.
FORM 10-K/A
TABLE OF CONTENTS
PAGE
----
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT................1
Item 11. EXECUTIVE COMPENSATION............................................3
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT........................................................9
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS...................14
<PAGE>
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
As of the date hereof, the directors and executive officers of the Company
are:
Name Age Position
William Spier 63 Chairman of the Board and Director
Yaron I. Eitan 41 Chief Executive Officer and Director
Walter E. Auch 77 Director
George Calhoun 45 Senior Vice President of Strategic Marketing and
Director
Purnendu Chatterjee 48 Director
Winston J. Churchill 57 Director
Valerie E. DePiro 32 Vice President, Chief Accounting Officer and
Corporate Controller
Anne E. Eisele 43 Senior Vice President and Chief Financial
Officer
Haynes G. Griffin 51 Director
Richard Krants 54 Director
Richard T. Liebhaber 62 Director
Michael R. McCoy 45 Executive Vice President and Chief Operating
Officer
Zvi Peled 48 President and Chief Executive Officer, Geotek
Technologies, Inc.
Robert Vecsler 33 Senior Vice President of Business Affairs
General Counsel and Secretary
--------------------------------------------------------
Mr. Spier has served as a Director of the Company since 1990 and as the
Chairman of the Board of the Company since April 1998. Mr. Spier previously
served as the Chairman of the Board of the Company from August 1991 to May 1992.
Mr. Spier is currently a Director and the Acting Chief Executive Officer of
Integrated Technology USA, Inc., New York, NY (computer
peripheral/telecommunications devices), Director of Keystone Consolidated
Industries, Inc., Dallas, TX (wire and steel manufacturers),and Chairman of the
Board of Trident Rowan Group, Inc., Somerset, NJ (U.S. holding company). Mr.
Spier was the Chairman of the Board and Chief Executive Officer of DeSoto Inc.,
Joliet, IL (detergent and household cleaning products manufacturer), from May
1991 until September 1996 and was a Director of Video Lottery Technologies,
Inc., Bozeman, MT (video technology), from 1992 until March 1998, Holmes
Protection Group, Inc. from 1994 to September 1996, and EA Industries, Inc.,
West Long Branch, NJ (electronics contracting manufacturer) from 1995 to July
1997.
Mr. Eitan has served as Chief Executive Officer and a Director of the
Company since March 1989. Mr. Eitan also served as Chairman of the Board from
October 1996 until April 1998 and as President of the Company from March 1989
until October 1996. Mr. Eitan was also Chairman of the Board of Bogen
Communications International, Inc. ("Bogen") from August 1995 through October
1997. From April 1991 to August 1995, Mr. Eitan served as Chairman of the Board
of Bogen Corporation and Bogen Communications, Inc., both subsidiaries of Bogen.
Mr. Eitan has also been a Director of Geotek Technologies Israel Ltd.
("GTIL"), formerly PowerSpectrum Technology, Ltd., since June 1992 and GMSI,
Inc. since May 1993, each of which are subsidiaries of the Company. Mr. Eitan
also served as a Director of National Band Three Limited ("NB3"), formerly a
wholly-owned subsidiary of the Company, from July 1993 until December 1997.
Mr. Auch has been a Director of the Company since 1989. Mr. Auch was the
Chairman and Chief Executive Officer of the Chicago Board of Options Exchange,
Chicago, IL (securities exchange), from August 1979 until December 1996.
Presently, Mr. Auch is a Director of Smith Barney Trak Fund, New York, NY
(investment fund), Smith Barney Concert Fund, New York, NY (investment fund),
Banyan Funds, Chicago, IL (real estate company), Pimco Advisors, L.P., Stamford,
CT (asset management company), Brinson Funds, Chicago, IL (investment funds) and
Nicholas/Applegate, San Diego, CA (investment funds).
Mr. Calhoun was appointed a Director of the Company in July 1993, when he
became President of the Company's Wireless Communications Group. In October
1996, he was appointed the Vice Chairman of Strategy & Technology of the
Company, and in December 1997, he was appointed Senior Vice President of
Strategic Marketing. Mr. Calhoun joined the Company in June 1992 as President,
Chief Operating Officer and a director of PowerSpectrum, Inc., a wholly-owned
subsidiary of the Company which is now GTIL. He was also a Director of NB3 from
July 1993 until December 1997. Mr. Calhoun previously served in various
positions with InterDigital Communications Corporation (formerly International
Mobile Machines Corporation), a corporation co-founded by
1
<PAGE>
Mr. Calhoun and engaged in the development of digital radio technology, most
recently as General Manager of the Intellectual Property Licensing Division,
which position he held until June 1992.
Dr. Chatterjee has been a Director of the Company since 1993. Dr
Chatterjee is a Director and President of S-C Rig Co., New York, NY (general
partner of S-C Rig, a Delaware limited partnership, the sole business of which
is to make investments) and an investor in public and private companies. Dr.
Chatterjee has been associated with the George Soros organization for more than
ten years. Dr. Chatterjee is presently a director of R&B Falcon Corporation,
Houston, TX (oil and gas) and Indigo, Nevada (digital offset printing).
Mr. Churchill has served as a Director and the Chairman of the Executive
Committee since 1991. From 1991 until October 1996, Mr. Churchill served as the
Chairman of the Board. Mr. Churchill is a principal of CIP Capital Management,
Inc., Wayne, PA, a private investment firm formed in 1989. Mr. Churchill
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. Mr. Churchill is a Director of
Central Sprinkler Corp., Lansdale, PA (sprinkler systems) since 1984 and of
IBAH, Inc., Blue Bell, PA (biotechnology company) since 1990. Mr. Churchill also
served as a director of Tescorp, Inc., Austin, Texas (cable television) from
1995 until 1997.
Ms. DePiro has served as Vice President, Chief Accounting Officer and
Corporate Controller since September 1997. Ms. DePiro joined the Company in 1995
and served as Director of Financial Reporting and Analysis from October 1995 to
September 1997. Ms. DePiro is a Certified Public Accountant and from 1989 to
1995 was in the audit practice with Coopers & Lybrand, L.L.P.
Ms. Eisele was appointed Senior Vice President, Chief Financial Officer in
February 1998. Prior to joining the Company, Ms. Eisele was President, Chief
Financial Officer and Chief Operating Officer of DeSoto, Inc. (a manufacturer
and marketer of consumer and industrial products). From 1984 through 1996, Ms.
Eisele served in various management positions at DeSoto, Inc. From April 1994
through September 1996, Ms. Eisele served as a director of DeSoto, Inc.
Mr. Griffin has been a Director of the Company since 1994. Mr. Griffin has
been the Chairman, Co-Chief Executive Officer and Director of Vanguard Cellular
Systems, Inc. ("Vanguard"), Greensboro, NC (cellular telecommunications
carrier), since 1996. Mr. Griffin was President and Chief Executive Officer of
Vanguard from 1984 to 1996. In 1993, Mr. Griffin was appointed to the United
States Advisory Council on the National Information Infrastructure. Presently,
Mr. Griffin is a Director of Lexington Global Asset Managers, Inc., Saddle
Brook, NJ (diversified financial services holding company) and InterAct Systems,
Incorporated, Norwalk, CT (interactive multimedia company specializing in
in-store electronic marketing) and Chairman of the Board of Directors of
International Wireless Communications Holdings, Inc., San Mateo, CA (interactive
wireless communications).
Mr. Krants has served as a Director of the Company since 1994. Mr. Krants
has been the President and Chief Executive Officer of Spectrum Initiatives,
Inc., Great River, New York (frequency consulting business) since July 1994.
From October 1990 until January 1994, Mr. Krants was the President and Chief
Executive Officer of Metro Net, Plainview, NY. Mr. Krants was the Vice President
of Famous Make Communications, Inc., Plainview, NY (communications equipment),
from December 1979 to October 1993.
Mr. Liebhaber has been a Director of the Company since 1995. Mr. Liebhaber
is currently a Director of Quest Communications, St. Petersburg, Florida
(telecommunications), Alcatel, Richardson, TX (manufacturing communications) and
Objective Communications, Inc. From 1986 until June 1995, Mr. Liebhaber was an
Executive Vice President of MCI and, from June 1992 to June 1995, served as a
Director of MCI.
Mr. McCoy was appointed Executive Vice President and Chief Operating
Officer of the Company in December 1997. Mr. McCoy previously served as
President and Chief Executive Officer of Geotek's U.S. Network from February
1997 until December 1997. Mr. McCoy served as Senior Vice President and Chief
Financial Officer of the Company from September 1995 through February 1997. From
November 1994 through September 1995, Mr. McCoy was the Company's Vice President
of the North East Region. Prior to joining the Company, from September 1992
through November 1994, Mr. McCoy was President of Greenlake Associates, Inc. a
high technology consulting company. From November 1988 through September 1992,
Mr. McCoy was a member of the Office of the Chairman and Senior Vice President
of Business Development for LCI International, Inc., a facilities based long
distance telecommunications company.
Mr. Peled serves as President and Chief Executive Officer of Geotek
Technologies, Inc., a wholly owned subsidiary
2
<PAGE>
that develops and manufactures FHMA(R) technology. Before joining Geotek in July
1997, Mr. Peled served as President and Chief Executive Officer of Bogen
Communications International, Inc. and from 1975 until July, 1996, Mr. Peled
worked for Elbit, a diversified electronics company where he rose through
successive positions of responsibility from electronic system engineer to
Divisional General Manager.
On January 13, 1998, the Israeli Purchase Tax and Value Added Tax
Authority filed a criminal complaint against Elbit and Mr. Peled, in his
capacity as General Manager. The complaint is based on falsification of records
pertaining to Elbit's purchase tax obligations.
Mr. Vecsler has served as Senior Vice President of Business Affairs since
June 1997 and General Counsel and Secretary of the Company since March 1996.
From May 1995 through March 1996, he served as Corporate Counsel for the
Company. Prior to joining the Company, from August 1994 until April 1995, Mr.
Vecsler served as Assistant General Counsel at Enviro Source, Inc. From April
1993 until July 1994, he served as Counsel to Fletcher Asset Management, Inc.
Mr. Vecsler practiced law at Kelly, Drye & Warren from September 1988 until
March 1993.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act")
("Section 16") requires the Company's officers and directors and persons who own
more than ten percent of a registered class of the Company's equity securities
(collectively, the "Reporting Persons") to file reports of ownership and changes
in ownership with the Commission and to furnish the Company with copies of these
reports.
Based on the Company's review of the copies of these reports received by
it, the Company believes that all Section 16 filings required to be made by the
Reporting Persons for the period January 1, 1997 through December 31, 1997 were
made on a timely basis.
3
<PAGE>
Item 11. 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 Company 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 Company or its
affiliates, whether paid by the Company, 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>
Annual Compensation Long Term Compensation (1)
------------------- --------------------------
- ---------------------------------------------------------------------------------------------------------------------------
Name & Pricipal Fiscal All Other Securities All Other
Position Year Salary Bonus Compensation Underlying Options Compensation
- -------- ---- ------ ----- ------------ ------------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Yaron I. Eitan 1997 $293,173 $ 0 $266,417(2) 10,000 $ 476(2)
Chairman and Chief 1996 268,269 125,000 122,706(2) 10,000 43,056(2)
Executive Officer 1995 249,982 100,000 109,925(2) 10,000 32,937(2)
Michael R. McCoy 1997 $239,712 $ 87,500 $ 55,592(3) 170,000 --
Executive Vice President 1996 159,519 35,000 66,242(3) 20,000 --
and Chief Operating 1995 132,488 30,000 8,806(3) 30,000 --
Officer
George Calhoun 1997 $199,039 $ 31,200 $ 5,212(4) 110,000 --
Senior Vice President 1996 175,000 35,000 27,998(4) 10,000 --
1995 175,000 30,000 -- 10,000 --
Yoram Bibring 1997 $182,308 $ 0 $ 27,881(5) 21,000 $ 209(5)
President and Chief 1996 170,461 35,000 32,974(5) 60,000 6,500(5)
Executive Officer - 1995 154,897 35,000 1,945(5) 15,000 8,711(5)
Geotek International
Networks
William Opet 1997 $172,885 $ 0 $ 6,651(6) 10,000 --
President and Chief 1996 160,000 30,000 6,534(6) -- --
Executive Officer - 1995 155,418 35,000 5,250(6) 10,000 --
Geotek Data, Inc.
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
- ----------
(1) Pursuant to SEC rules, columns (f) and (h) have been omitted because none
of the named executive officers received such form of compensation for the
periods reported.
(2) Consists primarily of life insurance premiums and disability insurance
premiums paid by the Company for Mr. Eitan aggregating $476 and $0,
respectively, in 1997; $43,056 and $0, respectively, in 1996; and $28,960
and $3,977, respectively, in 1995; contributions by the Company to the
Company's 401(k) plan on behalf of Mr. Eitan of $4,750 in 1997, $4,750 in
1996 and $4,620 in 1995; $109,616 unused vacation time paid in 1997;
forgiveness of indebtedness payable by Mr. Eitan to the Company of
$100,000 in 1997, $91,405 in 1996 and $100,000 in 1995; and a $20,000
payment by the Company to Mr. Eitan in 1996 in consideration for Mr.
Eitan's agreement not to exercise certain options to purchase Common Stock
of the Company until additional shares of Common Stock are authorized by
the Company's stockholders. See "Executive Compensation - Compensation
Committee Interlocks and Insider Participation."
4
<PAGE>
(3) Consists primarily of relocation expense of $54,879 in 1997; living
allowance and relocation expense reimbursement of $22,400 and $43,411,
respectively, in 1996; and living allowance of $5,200 in 1995.
(4) Consists primarily of $5,212 and $2,998 of car allowance in 1997 and 1996
and the forgiveness of indebtedness payable by Mr. Calhoun to the Company
of $25,000 in 1996.
(5) Consists primarily of the forgiveness of indebtedness payable by Mr.
Bibring to the Company of $100,000 in 1997 and life insurance premiums and
disability insurance premiums paid by the Company for Mr. Bibring
aggregating $209 and $0, respectively, in 1997, $6,500 and $0,
respectively, in 1996, and $6,500 and $2,211, respectively, in 1995;
relocation expense of $20,294 in 1997; and $30,288 of unused earned
vacation time paid to Mr. Bibring in 1995.
(6) Consists primarily of amounts related to car allowance.
Options
The following tables contain information concerning option grants to,
option exercises by and repricing of options granted to, the executive officers
named in the Summary Compensation Table during fiscal 1997 and the value of the
options held by such persons at the end of fiscal 1997.
<TABLE>
<CAPTION>
Potential Realizable Value at
Number % of Total Assumed Rates of Stock
of Securities Options Appreciation for Option
Underlying Granted Exercise or Term(1)
Options to Employees Base Price Expiration
Name Granted (#) In Fiscal Year ($/Sh) (2) Date 5%($) 10%($)
---- ----------- -------------- ---------- ---- ----- ------
<S> <C> <C> <C> <C> <C> <C>
Yaron I. Eitan 10,000 0.5% $4.56 09/16/2007 $28,718 $72,740
Michael McCoy 50,000 2.5% $4.19 10/16/2007 $116,279 $309,248
40,000 2.0% $4.19 01/16/2007 $96,590 $240,354
80,000 4.1% $4.19 02/14/2007 $195,943 $489,059
George Calhoun 100,000 5.1% $4.19 01/16/2007 $241,476 $600,885
10,000 0.5% $4.56 09/16/2007 $28,718 $72,740
Yoram Bibring 21,000 1.1% $7.00 01/16/2007 $79,317 $212,113
William Opet 10,000 0.5% $4.19 01/16/2007 $24,148 $60,088
</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 Company'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 Company's Common Stock on the
date such option was granted.
5
<PAGE>
10-Year Option/SAR Repricings
<TABLE>
<CAPTION>
Number of Length of
Securities Un- Market Original
derlying Op- Price of Exercise Option Term
tions/ Stock at Price at Remaining at
SARs Time of Time of New Date of
Repriced or Repricing or Repricing or Exercise Repricing or
Name Date Amended Amendment Amendment Price Amendment
---- ---- ------- --------- --------- ----- ---------
<S> <C> <C> <C> <C> <C> <C>
Yaron Eitan -- 0 -- -- -- --
Michael McCoy 09/04/97 30,000 $4.19 $8.63 $4.19 7 years 2 months
09/04/97 30,000 $4.19 $9.00 $4.19 7 years 9 months
09/04/97 20,000 $4.19 $13.00 $4.19 8 years 9 months
09/04/97 40,000 $4.19 $7.00 $4.19 9 years 4 months
09/04/97 80,000 $4.19 $7.00 $4.19 9 years 5 months
George Calhoun 09/04/97 10,000 $4.19 $8.50 $4.19 6 years 0 months
09/04/97 10,000 $4.19 $10.50 $4.19 7 years 0 months
09/04/97 10,000 $4.19 $8.88 $4.19 8 years 0 months
09/04/97 10,000 $4.19 $9.50 $4.19 9 years 0 months
09/04/97 100,000 $4.19 $7.00 $4.19 9 years 4 months
Yoram Bibring -- 0 -- -- -- --
09/04/97 15,000 $4.19 $14.00 $4.19 7 years 1 month
09/04/97 15,000 $4.19 $12.00 $4.19 7 years 1 month
09/04/97 15,000 $4.19 $16.00 $4.19 7 years 1 month
09/04/97 10,000 $4.19 $9.13 $4.19 7 years 7 months
09/04/97 10,000 $4.19 $7.00 $4.19 9 years 4 months
</TABLE>
Aggregate Option Exercises in Last Fiscal Year and FY-End Option Values
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money
Options at FY-End(#) Options at FY-End ($)(1)
Shares
Acquired Value
Name on Exercise(#) Realized Exercisable Unexercisable Exercisable Unexercisable
---- -------------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Yaron Eitan 23,000 $80,845 1,452,629 516,666 $207,657 --
Michael McCoy -- -- -- 250,000 -- --
George Calhoun 19,000 $77,785 177,780 100,000 $117,557 --
Yoram Bibring -- -- -- 78,000 -- --
William Opet -- -- -- 125,000 -- --
</TABLE>
- ----------
(1) Value based on market value of the Company's Common Stock on December 31,
1997, or $1.53 per share, minus the exercise price.
6
<PAGE>
Employment Agreements and Other Matters
In September 1997, the Company offered a voluntary option repricing plan
to its employees and directors under which the strike price of outstanding
option grants would be reduced to $4.19. If the repricing was elected, any
options vested would be required to revest annually in equal installments over a
two year period commencing on the repricing date except director options which
revest automatically on the repricing date. The vesting period for unvested
options, scheduled to vest in the subsequent 24 months, was extended to six
months. If an employee terminates prior to revesting, all terms, including
price, revert back to the original terms.
In March 1995, the Company and Mr. Churchill entered into an agreement
pursuant to which Mr. Churchill agreed to serve as the Chairman of the Board of
the Company and Chairman of the Executive Committee through March 31, 1998. In
October 1996, this agreement was amended to provide that Mr. Churchill would
continue to serve as the Chairman of the Executive Committee, but not as the
Chairman of the Board of Directors. Under the agreement, Mr. Churchill is paid
annual compensation of $50,000 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, an additional 83,333 shares on March 31, 1996 and
an additional 83,333 shares on March 31, 1997.
In March 1995, the Company entered into an agreement with Mr. Eitan
pursuant to which he agreed to serve as the President and Chief Executive
Officer of the Company through March 31, 1998. In October 1996, Mr. Eitan
assumed the role of Chairman of the Board while continuing to serve as Chief
Executive Officer. In March 1998, the Company entered into a new three-year
employment agreement with Mr. Eitan. Under the new agreement, Mr. Eitan is paid
an annual base salary of $325,000. Mr. Eitan was also granted options to
purchase 750,000 shares of the Company's Common Stock at exercise prices ranging
from $3.00 to $5.00 per share. These options vest over a three-year period. In
addition, all options previously granted to Mr. Eitan prior to the date of
execution of the new employment agreement were repriced at an exercise price of
$4.375 per share. The vesting schedule and term of such options were not
modified. In addition, Mr. Eitan is eligible to receive option grants at the
discretion of the Compensation Committee. The Compensation Committee of the
Board of Directors, in lieu of awarding a bonus for the fiscal year ended
December 31, 1997, forgave $100,000 of Mr. Eitan's indebtedness to the Company.
See "Executive Compensation - Committee Interlocks and Insider Participation."
Pursuant to Mr. Eitan's agreement, the Company 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 also is reimbursed for out-of-pocket expenses
incurred in connection with the performance of his duties. Mr. Eitan is also
entitled to the use of an automobile and the payment of all expenses and
maintenance costs attributed thereto as well as for the costs of insuring such
vehicle. The Company has also agreed to use its best efforts to have Mr. Eitan
elected as a member of the Board of Directors of the Company during the term of
his employment agreement.
In the event Mr. Eitan is discharged by the Company without Cause (as
defined in the employment agreement), Mr. Eitan shall be entitled to (i) an
amount equal to the lesser of aggregate base salary payable during the remainder
of the term or $487,500, payable in quarterly installments; (ii) the immediate
vesting of all stock options; and (iii) one year of group health, accident,
disability and life insurance as in effect on the date of discharge. In April
1998, the Company announced that its Board of Directors has elected William
Spier to replace Mr. Eitan as the Company's Chairman. The Company also announced
that its Board of Directors has formed a search committee to find a successor to
Mr. Eitan as the Company's Chief Executive Officer.
In December 1997, the Company entered into an employment agreement with
Michael R. McCoy through December 31, 2000 pursuant to which he serves as
Executive Vice President and Chief Operating Officer of the Company. Mr. McCoy's
employment agreement provides for automatic one year extensions and will
continue to be so automatically extended for additional one year periods unless
the Company or Mr. McCoy provides the other party with ninety days' notice of
its or his intention to terminate the employment relationship. Mr. McCoy
received a signing bonus of $25,000 and is presently paid an annual base salary
of $275,000, subject to annual reviews and adjustments, and is eligible to
receive a discretionary annual bonus of up to $150,000 based upon his
performance and the financial position of the Company. Mr. McCoy's employment
agreement also provides for grants of options to purchase 350,000 shares of
Common Stock. In addition, Mr. McCoy is entitled to receive additional option
grants at the discretion of the Compensation Committee. Mr. McCoy 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. McCoy is entitled to be
reimbursed for all out-of-pocket expenses reasonably and necessarily incurred in
the performance of his duties. Mr. McCoy is also entitled to the use of an
automobile and an allowance to cover all expenses and maintenance costs
attributed thereto. Upon a Change of Control (as defined in his employment
agreement), Mr. McCoy is entitled to receive his salary and benefits through the
term of the agreement or for twelve months from the date of termination,
whichever is longer. Mr. McCoy is also entitled to immediate vesting of all
stock
7
<PAGE>
options which he holds in the event of a Change in Control. The Company may
terminate the employment agreement with Mr. McCoy for "cause" (as defined in his
employment agreement) or in the event of the death or incapacity of Mr. McCoy.
In the event the Company terminates Mr. McCoy for another reason, he will
generally be entitled to an amount equal to his salary and benefits through the
term of the agreement or for twelve months from the date of termination,
whichever is longer
In June 1992, the Company entered into an agreement with Mr. Calhoun who
serves as the Senior Vice President of Strategic Marketing of the Company. The
agreement has been extended through June 1998. Mr. Calhoun is presently paid a
base salary at the rate of $200,000 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. The Company may terminate the employment
agreement with Mr. Calhoun for "cause" (as defined in Mr. Calhoun's employment
agreement). In the event Mr. Calhoun becomes disabled and the employment
agreement terminates, Mr. Calhoun will be entitled to a payment equal to one
year of base salary and the immediate vesting of all stock options granted to
Mr. Calhoun. Upon certain "changes of control" (as defined in Mr. Calhoun's
employment agreement) of the Company, Mr. Calhoun will be entitled to an amount
equal to two years of his base salary and the immediate vesting of all options
granted to Mr. Calhoun.
In August, 1997, and in October 1997, the Company amended the June 1, 1994
employment agreement with Mr. Bibring. Pursuant to the amended agreement, the
Company was obligated to pay Mr. Bibring an annual salary at $125,000, which
includes a $24,000 housing allowance and a $5,000 allowance for health
insurance. Pursuant to the agreement, GTIL is obligated to pay Mr. Bibring an
annual salary of $80,000. Medical coverage will be terminated or replaced by the
Israeli equivalent. GTIL will also pay 5% of the assigned salary to the Israeli
401(k) equivalent.
In February 1998, the Company entered into an Employment Separation and
Release Agreement with Mr. Bibring. The agreement provides that effective March
1, 1998, Mr. Bibring's position as President of Geotek International Networks
and Executive Vice President for Geotek Technologies Israel (1992) Ltd.
terminated. Mr. Bibring is entitled to receive $68,860 payable in bi-weekly
payments for three months commencing March 1, 1998. Payments will be based on an
annual base salary at $175,000, payable bi-weekly, less taxes. Mr. Bibring will
continue to receive health benefits during this period. On or before April 30,
1998, the Company is required to reimburse Mr. Bibring for taxes due on a
$20,000 bonus payment. All remaining debts between the Company and Mr. Bibring
were forgiven upon termination. The Company will amend Mr. Bibring's option
agreements to reflect a revised exercise price, and the period which Mr. Bibring
may exercise such options will be three years from the date of termination of
employment.
In January 1998, the Company entered into an Employment Separation and
Release Agreement with Mr. Opet. The agreement provides that effective January
1, 1998, Mr. Opet's position as President and Chief Executive Officer of Geotek
Data Company shall be terminated. Mr. Opet shall continue to receive salary
compensation until Mr. Opet obtains a replacement position, but such
compensation shall not be payable for longer than nine months. Payments to Mr.
Opet shall be based on an annual salary of $173,400 payable bi-weekly, less
taxes. Mr. Opet will continue to receive health benefits as well as a car
allowance during this period. The Company shall amend Mr. Opet's option
agreements to reflect a revised exercise price, and the period during which Mr.
Opet may exercise such option shall be three years form the date of termination
of employment.
Messrs. Eitan, Calhoun, Bibring, McCoy and Opet are each bound by their
current or prior employment agreements to treat confidentially all proprietary
information learned by them during the course of their employment with the
Company for the term of each agreement and for three years thereafter. Each such
officer has also agreed to refrain from competing, in any state of the United
States (and in Israel with respect to Mr. Eitan), with the Company or any of its
subsidiaries during the term of his agreement and for a period of three years
thereafter. Each has also agreed to refrain from soliciting the Company's
employees or officers following the termination of his employment.
Compensation of Directors
All directors receive only options as compensation for acting as directors
of the Company. During 1997, Mr. Churchill received $50,000 in compensation for
serving as Chairman of the Board and Chairman of the Executive Committee. During
1997, each director (including Messrs. Calhoun, Churchill, and Eitan) of the
Company 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.
8
<PAGE>
Compensation Committee Interlocks and Insider Participation
The Compensation Committee consists of Messrs. Churchill, Griffin and
Eitan. Mr. Eitan is the Company's Chief Executive Officer. The 16b-3 Committee
consists of Messrs. Auch and Griffin.
On February 23, 1994, in connection with an investment in the Company by
Vanguard, for which Mr. Griffin serves as President, the Company entered into a
five-year management consulting agreement with Vanguard, pursuant to which
Vanguard provided operational and marketing support to the Company for an
aggregate of 300,000 shares of Common Stock per annum. The agreement was
terminated in September 1996 and, in February 1997, the Company issued 156,985
shares of Common Stock to Vanguard in satisfaction of its remaining obligations
under the Management Consulting Agreement.
Item 12. 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 Stock and Preferred Stock as of April 15, 1998, for
(a) directors, the nominee for director and executive officers of the Company,
(b) all directors and executive officers of the Company, as a group, and (c)
each person who is known by the Company to own beneficially 5% or more of the
Company's Common Stock. Certain of the information set forth below is derived,
without independent investigation on the part of the Company, from filings made
by such persons on Schedule 13D and Schedule 13G pursuant to Rule 13d-3. No
director, nominee for director or executive officer of the Company beneficially
owns any of the Company's Series K Stock, Series M Stock, Series O Stock, Series
Q Stock, Series R Stock or Series S 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.
9
<PAGE>
<TABLE>
<CAPTION>
Directors, Nominees
and Executive Officers Common Series H Series I Series L Series N Series P
---------------------- ------ -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Walter E. Auch (3) 31,894 0 0 0 0 0
Yoram Bibring(4) 53,556 0 0 0 0 0
George Calhoun(5) 191,611 0 0 0 0 0
Purnendu Chatterjee(6) 12,047,711 444,445 20 0 5,000 100
Winston Churchill(7) 1,334,288 0 0 0 0 0
Yaron Eitan(8) 497,970 0 0 0 0 0
Haynes G. Griffin(9) 3,256,986 0 0 531,643 0 0
Richard Krants(10) 380,573 0 0 0 0 0
Richard T. Liebhaber(11) 30,000 0 0 0 0 0
Michael McCoy(12) 0 0 0 0 0 0
William Spier(13) 838,853 0 0 0 0 0
William Opet 0 0 0 0 0 0
All directors and executive
officers as a group 18,672,942 444,445 20 531,643 5,000 100
(17 persons)(14)
Other Beneficial Owners
- -----------------------
Hughes Network Systems, Inc.(15) 0 0 0 0 0 0
Merrill Lynch & Co., Inc.(16) 1,169,300 0 0 0 0 0
S-C Rig Investments-III(17) 12,047,711 444,445 20 0 5,000 250
Vanguard Cellular Systems, Inc.(18) 3,256,986 0 0 531,463 0 0
</TABLE>
- ----------
*Less than 1%
10
<PAGE>
<TABLE>
<CAPTION>
Total
Number of Percentage Percentage Percentage Percentage
Shares of of Class of of Class Percentage of of Class of Percentage of of Class of
Common Common Series H Class of Series Series L Class of Series P
Stock Stock Stock I Stock Stock Series N Stock Stock
Directors, Nominees Beneficially Beneficially Beneficially Beneficially Beneficially Beneficially Beneficially
and Executive Officers Owned (1) Owned (2) Owned Owned Owned Owned Owned
- ---------------------- --------- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Walter E. Auch (3) 136,894 * 0 0 0 0 0
Yoram Bibring(4) 147,756 * 0 0 0 0 0
George Calhoun(5) 369,391 * 0 0 0 0 0
Purnendu Chatterjee(6) 29,793,467 23.06% 100% 100% 0 9.1% 100%
Winston Churchill(7) 1,489,551 1.33% 0 0 0 0 0
Yaron Eitan(8) 2,467,265 2.17% 0 0 0 0 0
Haynes G. Griffin(9) 3,828,449 3.42% 0 0 50% 0 0
Richard Krants(10) 420,573 * 0 0 0 0 0
Richard T. Liebhaber(11) 100,000 * 0 0 0 0 0
Michael McCoy(12) 0 * 0 0 0 0 0
William Spier(13) 888,853 * 0 0 0 0 0
William Opet 0 * 0 0 0 0 0
All directors and 39,776,699 30.00% 100% 100% 50% 9.1% 100%
executive officer
as a group (17
persons)(14)
Other Beneficial Owners
- -----------------------
Hughes Network 31,528,436 22.05% 0 0 0 0 0
Systems, Inc.(15)
Merrill Lynch 6,853,379 5.85% 0 0 0 0 0
& Co., Inc.(16)
S-C Rig 29,793,467 23.06% 100% 100% 0 9.1% 100%
Investments-III(17)
Vanguard Cellular 3,828,449 3.71% 0 0 50% 0 0
Systems, Inc.(18)
</TABLE>
- ----------
*Less than 1%
11
<PAGE>
(1) The Series H Stock is, under certain circumstances, convertible into
Common Stock by dividing (x) the sum of the $90.00 per share stated value
and any dividend arrearage by (y) $9.00 per share (as adjusted from time
to time for certain events of dilution). As of April 15, 1998, each share
of Series H Stock was convertible into 10 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 15, 1998, each share of
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 15, 1998, each share of
Series L Stock was convertible into one share of Common Stock. The Series
N Stock is, under certain circumstances, convertible into Common Stock by
dividing (x) the sum of the $1,000 per share stated value and any dividend
arrearage by (y) $11.00 per share (as adjusted from time to time for
certain events of dilution). As of April 15, 1998, each share of Series N
Stock was convertible into approximately 91 shares of Common Stock. The
Series P Stock is convertible into the number of shares of Common Stock as
is determined by dividing (i) the sum of the $50,000 stated value per
share of Series P Stock plus all unpaid dividends accrued and deemed to
have accrued, if any, with respect to such shares of Series P Stock
through the last dividend payment date by (ii) the lowest daily
volume-weighted average price of the Company's Common Stock during the
four (4) business days immediately preceding conversion multiplied by a
conversion discount of (i) 100% for conversions prior to June 29, 1997,
(ii) 95% for conversions after June 29, 1997 but prior to December 31,
1997, (iii) 90% for conversions after December 31, 1997 but prior to June
29, 1998, and (iv) 88% for conversions after June 29, 1998. The Series P
Stock becomes convertible into Common Stock in stages during the fifteen
(15) month period beginning April 1997 and remains convertible until
December 31, 2001. As of April 15, 1998, 100 shares of Series P Stock were
convertible into shares of Common Stock, with each such share of Series P
Stock convertible into approximately 59,242 shares of Common Stock
(assuming a conversion price of $0.8440 per share, the closing price of
the Common Stock on such date). 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 105,000 options which are currently exercisable.
(4) Mr. Bibring holds 94,200 options which are currently exercisable.
(5) Mr. Calhoun holds 177,780 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 and certain of
its affiliates are the record owners of 444,445 shares of Series H Stock
which are convertible into 4,444,450 shares of Common Stock, 20 shares of
Series I Stock which are convertible into 851,060 shares of Common Stock,
5,000 shares of Series N Stock which are convertible into 454,545 shares
of common Stock, 100 shares of Series P Stock which are convertible into
5,924,171 shares of Common Stock (assuming a conversion price of $0.844
per share, the closing price of the Common Stock on April 15, 1998), and
warrants to purchase 5,831,526 shares of Common Stock. 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. Dr.
Chatterjee also holds 40,000 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
647,784 shares of Common Stock. Mr. Churchill also holds 50,000 options
which are currently exercisable. In September 1997, Mr. Churchill elected
to reprice 250,000 options he received in 1995 as Chairman of the Board
under the Company's voluntary repricing plan. Under the plan all options
were repriced to $4.19 and vested options result ratably over a two year
commencing with the repricing date. Does not include 135,134 shares of
Common Stock held by a trust for the benefit of Mr. Churchill's son, of
which shares Mr. Churchill disclaims beneficial ownership. In addition,
certain affiliates of Mr. Churchill own $1,000,000 principal amount of
Convertible Notes, which are convertible into shares of Common Stock at a
conversion price equal to $9.50 per share. As of April 15, 1998,
12
<PAGE>
the Convertible Notes and accrued and unpaid interest thereon were
convertible into 105.263 shares of Common Stock.
(8) Mr. Eitan currently holds 1,969,295 options which are currently
exercisable.
(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 3,256,986 shares of Common Stock and 531,463 shares of Series L
Stock, which are convertible into 531,463 shares of Common Stock. Mr.
Griffin also holds 40,000 options which are currently exercisable. Mr.
Griffin's address is 2002 Pisgah Church Road, Suite 300, Greensboro, North
Carolina 27455.
(10) Includes 40,000 options which are currently exercisable and 2,700 shares
held by Mr. Krants' children. In September 1997, Mr. Krants elected to
reprice 70,000 options, previously granted to him, under the Company's
voluntary repricing plan. Under the plan, all options were repriced to
$4.19 and any vested options will revest ratably over two years commencing
on the repricing date.
(11) Mr. Liebhaber holds 70,000 options which are currently exercisable.
(12) Mr. McCoy holds no options which are currently exercisable. In September
1997, Mr. McCoy elected to reprice 200,000 options, previously granted to
him, under the Company's voluntary repricing plan. Under the plan, all
options were repriced to $4.19 and any vested options will revest ratably
over two years commencing on the repricing date.
(13) Mr. Spier holds 50,000 options which are currently exercisable.
(14) Includes 12,205,693 shares of Common Stock issuable upon the conversion of
Series H Stock, Series I Stock, Series L Stock, Series N Stock, Series P
Stock (assuming the Series P Stock is converted at a conversion price of
$0.844 per share, the closing price of the Common Stock on April 15, 1998)
and the exercise of currently exercisable warrants and options.
(15) Consists of shares of Common Stock issuable upon conversion of the $24.5
million HNS Note (assuming the HNS Note is converted at a conversion price
of $0.844, the closing price of the Common Stock on April 15, 1998). See
"Certain Relationships and Related Transactions" and warrants to purchase
2,500,000 shares of Common Stock issued in connection with the vendor
credit agreement between HNS and the Company.
(16) Based on information contained in a Schedule 13G filed on February 4, 1998
on behalf of Merrill, Lynch & Co. Inc., Merrill Lynch Asset Management,
L.P., Merrill Lynch Global Allocation Fund, Inc., Merrill Lynch Group,
Inc. and Princeton Services, Inc. Includes warrants to purchase 3,052,500
shares of Common Stock. Merrill Lynch & Co.'s address is World Financial
Center, North Tower, 250 Vesey Street, New York, New York 10281.
(17) S-C Rig holds, or may be deemed to beneficially own, 444,445 shares of
Series H Stock, 20 shares of Series I Stock, 5,000 shares of Series N
Stock and 100 shares of Series P Stock, convertible in accordance with the
Certificate of Designation of each such series into 4,444,450 shares of
Common Stock, 851,060 shares of Common Stock, 454,545 shares of Common
Stock and, within sixty (60) days of April 15, 1998, 5,924,171 shares of
Common Stock, respectively, and warrants to purchase 5,831,526 shares of
Common Stock. Certain of the shares of Series N Stock and Series P Stock
are held of record by Winston Partners II, LDC, Winston Partners II, LLC
and Winston Partners L.P., affiliates of S-C Rig. S-C Rig also may be
deemed to beneficially own 240,000 options which are currently exercisable
and are held by affiliates of S-C Rig. S-C Rig's address is 888 7th
Avenue, New York, NY 10106.
(18) Vanguard is the record owner of 3,256,986 shares of Common Stock and
531,463 shares of Series L Stock, which are convertible into 531,463
shares of Common Stock. In addition, Vanguard may be deemed to
beneficially own 40,000 options which are currently exercisable and are
held by Mr. Griffin, Vanguard's President. Vanguard's address is 2002
Pisgah Church Road, Suite 300, Greensboro, NC 27455.
13
<PAGE>
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Indebtedness of Management
During March and April 1997, the Company loaned a total of $300,000 to
Yaron Eitan, Chief Executive Officer of the Company, for Mr. Eitan's personal
use. $100,000 of this indebtedness was forgiven by the Board of Directors of the
Company in March 1998. The largest aggregate amount outstanding during 1997 on
the funds loaned by the Company to Mr. Eitan, including accrued interest, was
$312,415. The amount outstanding as of March 31, 1998 was $216,713.
In April 1997, the Company loaned $70,000 to Yoram Bibring, who at that
time was the President of Geotek International Networks and Executive Vice
President of Geotek Technologies Incorporated, for Mr. Bibring's personal use.
The largest aggregate amount outstanding during 1997 on the loan to Mr. Bibring,
including accrued interest was $72,897. The entire amount of indebtedness due
from Mr. Bibring was forgiven by the Company in February 1998. See "Executive
Compensation -- Employment Agreements and Other Matters."
In 1995 and 1996, the Company loaned a total of $137,000 to Michael McCoy,
the Executive Vice President and Chief Operating Officer of the Company, for Mr.
McCoy's personal use. The largest aggregate amount outstanding during 1997 on
the funds loaned by the Company to Mr. McCoy, including accrued interest was
$148,064. The amount outstanding as of March 31, 1998 was $150,027.
In April 1997, the Company loaned $132,779 to George Calhoun, the Senior
Vice President of Strategic Marketing for the Company, for Mr. Calhoun's
personal use. The largest aggregate amount outstanding during 1997 on funds
loaned by the Company to Mr. Calhoun, including $24,350 loaned to Mr. Calhoun in
November 1995 and accrued interest, was $167,133. The amount outstanding as of
March 31, 1998 was $169,384.
The annual rate of interest on all of the aforementioned loans is 5.73%
Set forth below is a description concerning transactions which may not
otherwise be described herein by and between the Company and/or its affiliates
and other persons or entities affiliated with the Company or its affiliates. The
Company is of the view that each of such transactions was on terms no less
favorable to the Company than would otherwise have been available to the Company
in transactions with unaffiliated third parties, if available at all.
S-C Rig/Chatterjee Group
On December 15, 1993, the Company 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 Company, for an aggregate consideration of $40.0 million. In
connection with this transaction, the Company entered into a consulting
agreement with The Chatterjee Group, an affiliate of S-C Rig (the "Chatterjee
Group"), pursuant to which the Chatterjee Group provides 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).
On April 5, 1996, the Company and S-C Rig entered into an agreement
pursuant to which S-C Rig made a $40.0 million unsecured senior credit facility
available to the Company. All borrowings under the credit facility were required
to be made prior to April 5, 1998, were to accrue interest at a rate of 10% per
annum and were to mature four years from the date of the final borrowing
thereunder. The Company is obligated to pay S-C Rig a fee equal to 3% of each
borrowing under the credit facility at the time of any such borrowing. In
connection with the establishment of the credit facility, the Company issued to
S-C Rig a five-year warrant to purchase 4,210,526 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). On April 22, 1997,
the Company and S-C Rig entered into an agreement to permit the Company to
borrow funds under this credit facility until April 4, 1999 and to allow the
Company five years from the date of its last such borrowing to repay the
principal amount owed with respect thereto, at an interest rate of eight percent
(8%) per annum. In addition, the Company agreed to extend, until April 2003, the
expiration date of the warrants and to reset the exercise price thereof to $6.00
per share. At December 31, 1997, $40 million was outstanding under this
facility.
14
<PAGE>
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 Company 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 Company (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 Company's
Board of Directors at the effective time of the Merger. In connection with this
transaction, the Company 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 Company'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.
In September 1997, Mr. Krants elected to reprice these options in accordance
with the Company's voluntary repricing plan. Under the plan the option price was
reduced to $4.19. Additionally, the options will revest ratably over the two
year period commencing with the repricing date. This consulting agreement was
renewed for one year in December 1997, and provides for annual consideration of
$75,000 payable to Mr. Krants.
HNS
In September 1996, the Company and GFC entered into a vendor credit
financing agreement (the "HNS Financing Agreement") and a manufacturing
agreement (the "HNS Manufacturing Agreement") with HNS pursuant to which HNS
agreed to manufacture certain of the components ("BSE") required for the
construction of the Company's 900 MHz FHMA network equipment and to provide up
to $100.0 million of financing to GFC for up to ninety percent (90%) of the
purchase price of such portion of the BSE which are scheduled for delivery to
the Company prior to June 30, 1999. Pursuant to the HNS Manufacturing Agreement,
GFC is obligated to purchase at least fifty percent (50%) of the Company's
domestic and international 900 MHz BSE requirements from HNS so long as GFC is
permitted to finance such purchases under the HNS Finance Agreement. All
borrowings under the HNS Financing Agreement accrue interest at a rate of eleven
percent (11%) per annum and are required to be repaid in ten (10) equal
semi-annual payments beginning in December 1999. During 1997, the Company drew
down $10.3 million of the $100.0 million of available financing. HNS will be
granted a security interest in the BSE manufactured by HNS under the HNS
Manufacturing Agreement and financed by HNS under the HNS Financing Agreement as
security for GFC's obligations under the HNS Finance Agreement. As further
security for GFC's obligations under the HNS Financing Agreement and the HNS
Loan Agreement, GFC has pledged to HNS a $24.5 million intercompany note of
Geotek License Holdings, Inc., a wholly-owned subsidiary of GFC and the capital
stock of such subsidiary. In addition, the Company has guaranteed GFC's
obligations under the HNS Financing Agreement.
In December 1995, the Company and HNS entered into an agreement whereby
HNS extended the Company a two year, $24.5 million line of credit for the
Company to acquire additional 900 MHz spectrum in the United States. In October
1996, the Company borrowed $24.5 million under the line of credit agreement.
Under the terms of the agreement, the two year loan bears interest at 12%,
payable quarterly, and is convertible by the holder, beginning 181 days after
drawdown, at the lower of 90% of the average sale price of the Company's common
stock for the 10 days preceding conversion or $9.75. As of April 15, 1998, the
HNS Note is convertible into 29,028,436 shares of Common Stock (assuming a
conversion price of $0.8440 per share, the closing price of the Common Stock on
such date). The original $24.5 million loan agreement was collateralized by the
pledge of the capital stock of the Company's subsidiary which holds the
Company's Major Trading Area ("MTA") licenses. In conjunction with the amendment
to the Indenture governing the Discount Notes, (see Debt Compliance Matters
below) the MTA licenses were reallocated between the subsidiary pledged to HNS
and the subsidiary pledged to the Discount Note Holders.
15
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
GEOTEK COMMUNICATIONS, INC.
By: /s/ Yaron I. Eitan
------------------------------------
Yaron I. Eitan, Chief Executive Officer
Date: April 30, 1998
