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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of THE SECURITIES
EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) February 18, 1998
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GEOTEK COMMUNICATIONS, INC.
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(Exact name of registrant as specified in charter)
Delaware 0-17581 22-2358635
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(State or other juris- (Commission File Number) (IRS Employer Identi-
diction of incorporation) fication No.)
102 Chestnut Ridge Road, Montvale, New Jersey 07645
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(Address of principle executive offices) (Zip Code)
Registrant's telephone number, including area code 201-930-9305
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N/A
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(Former name or former address, if changed since last report.)
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Item 5. Other Events
On February 18, 1998 (the "Closing"), Geotek Communications, Inc. (the
"Company") consummated a series of transactions with a group of investors
(collectively, the "Investors") who held shares of the Company's Series O
Convertible Preferred Stock ("Series O Stock") and Series Q Convertible
Preferred Stock (the "Series Q Stock"). Pursuant to a Conversion and Exchange
Agreement, a copy of which is attached as Exhibit 10.1 hereto (i) Investors
converted approximately $11.8 million in face amount of Series O Stock and
Series Q Stock into shares of the Company's common stock, $.01 par value per
share ("Common Stock") at a conversion price of $1.00 per share; (ii) Investors
exchanged approximately $15.9 million in face amount of Series O Stock and
Series Q Stock for shares of a newly-created series of preferred stock
designated Series R Convertible Preferred Stock ("Series R Stock"), at a ratio
of 1.1111 shares of Series R Stock for each share of Series O Stock or Series Q
Stock and (iii) Investors exchanged approximately $6.5 million in face amount of
Series O Stock and Series Q Stock for shares of a newly-created series of
preferred stock designated Series S Convertible Preferred Stock ("Series S
Stock"), at a ratio of one share of Series S Stock for each share of Series O
Stock or Series Q Stock. Following completion of the transactions, the Investors
will continue to own, in the aggregate, approximately $1.8 million in face
amount of Series O Stock and Series Q Stock and there will be, approximately, an
additional $6.9 million in face amount of Series O Stock and Series Q Stock
outstanding held by other preferred stockholders who did not participate in this
transaction.
The terms of the Series R Stock are substantially similar to the terms
of the Series Q Stock, except that (i) the Series R Stock is convertible into
shares of Common Stock of the Company ("Common Stock"), at any time, at a fixed
conversion price of $2.00 per share, (ii) the Series R Stock automatically
converts into shares of Common Stock on February 18, 2003 at the then applicable
conversion price and (iii) the dividends payable to holders of the Series R
Stock at the rate of 10.0% per annum will be payable in shares of Common Stock.
In addition, the terms of the Series R Stock provide the Company with limited
rights to restrict conversions in connection with an underwritten public
offering of Common Stock.
The terms of the Series S Stock are substantially similar to the terms
of the Series Q Stock, except that (i) the Series S Stock is convertible into
shares of Common Stock of the Company ("Common Stock"), at any time, at a fixed
conversion price of $4.00 per share, provided that the conversion price will be
reduced to $3.00 per share if the average of the closing bid prices for the
Common Stock for the ten trading day period immediately preceding August 18,
1998 is less than $4.00 and, further, if the conversion price on February 18,
1999 is greater than 110% of the closing bid price of the Common Stock on such
date, the conversion price shall be 110% of the closing bid price on such date
(ii) the Series S Stock will automatically convert into shares of Common Stock
on February 18, 2003 at the then applicable conversion price and (iii) the
dividends payable to holders of the Series S Stock at the rate of 10.0% per
annum will be payable in shares of Common Stock.
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The holders of the shares of Common Stock issued at the Closing upon
conversion of shares of Series O Stock and Series Q Stock have agreed not to
sell more than one-third of such shares in each of the first three consecutive
thirty-day periods following the Closing. The shares of Series O Stock and
Series Q Stock which the Investors continue to own following the Closing become
convertible into shares of Common Stock in increments over the succeeding
six-month period.
The Company will file a registration statement (the "Registration
Statement") with the Securities and Exchange Commission no later than March 16,
1998 ( the "Registration Date"), covering the resale of the shares of Common
Stock issued and issuable upon conversion of the Series O Stock, the Series P
Stock, the Series Q Stock, Series R Stock and the Series S Stock. The Company
will pay a penalty of 1% of the market value of the Common Stock or the face
amount of the Series R Stock, Series S Stock and Series Q Stock, as the case may
be, if the Registration Statement is not filed on or prior to the Registration
Date and an additional 1% if the Registration Statement is not declared
effective on or prior to April 15, 1998. The Company will also pay an additional
penalty of 2% of the market value of the Common Stock or the face amount of the
Series R Stock, Series S Stock and Series Q Stock, as the case may be, for each
month (or partial month) the Registration Statement is not declared effective,
beginning April 1, 1998, provided no such payment will be required if the
Registration Statement is declared effective on or prior to April 15, 1998. The
Company may pay any such penalties in cash or in shares of Common Stock.
The exercise price of the warrants issued to the Investors in
connection the issuance of the Series O Stock and the Series Q Stock has been
amended to be $4.00 per share of Common Stock purchasable thereunder; provided
that the exercise price will be $3.00 per share of Common Stock purchasable
thereunder if the average of the closing bid prices for the Common Stock for the
ten trading day period immediately preceding August 18, 1998 is less than $4.00
and provided, further that if the exercise price on February 18, 1999 is greater
than 110% of the closing bid price of the Common Stock on such date, the
exercise price shall be 110% of the closing bid price of the Common Stock on
such date.
If the Company fails to (i) file the Registration Statement with the
SEC on or prior to the Registration Date and/or the Registration Statement is
not declared effective on or prior to that date which is 120 days after the date
of the Closing, (ii) receive at least $30 million in net proceeds that can be
applied in the first half of 1998 for general working capital purposes from the
sale of its European networks prior to March 15, 1998, (iii) receive at least
$25 million in proceeds from new financings prior to May 15, 1998 that can
immediately be applied for general working capital purposes or (iv) receive at
least $50 million (in the aggregate, including the proceeds referred to in
clause (iii) above) in proceeds from new financings prior to September 15, 1998
that can immediately be applied for general working capital purposes (each of
the financings referred to in
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clauses (iii) and (iv) shall be referred to as a "New Financing"), each holder
of Series R Stock and Series S Stock, as the case may be, has the right,
exercisable for thirty days after the happening of such event, to make an
election to have the conversion price of Series R Stock and Series S Stock, as
the case may be, and certain other terms revert to the applicable conversion
price and such other terms of the Series Q Stock for which such shares were
originally exchanged.
Holders of Series R Stock or Series S Stock also have the right,
exercisable for ten days after consummation of a New Financing to (i) exchange
shares of preferred stock held by such party for an equivalent amount of
securities issued in the New Financing and/or (ii) purchase securities on the
same terms and conditions as the New Financing in an amount equal to the face
amount of Series R Stock or Series S Stock, as the case may be, then held by
such holder.
The Company has also agreed that it will, no later than thirty days
after the date of the Closing, enter into agreements with the holders of its
Series P Convertible Preferred Stock ("Series P Stock") to either restructure
the Series P Stock on terms substantially similar to those provided for in the
Agreement or have such holders agree that they shall not convert any additional
shares of Series P Stock into shares of Common Stock prior to September 30,
1998.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(c) Exhibits
4.1 Certificate of Designation of Series R Convertible
Preferred Stock of Geotek Communications, Inc., dated
February 18, 1998 (excluding any exhibits and schedules
thereto).
4.2 Certificate of Correction Filed to Correct a Certain
Error in the Certificate of Designation of Series R
Convertible Preferred Stock of Geotek Communications, Inc.,
dated February 23, 1998 (excluding any exhibits and schedules
thereto).
4.3 Certificate of Designation of Series S Convertible
Preferred Stock of Geotek Communications, Inc., dated
February 18, 1998 (excluding any exhibits and schedules
thereto).
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10.1 Conversion and Exchange Agreement by and between
Geotek Communications, Inc. and certain other parties,
dated February 13, 1998 (excluding any
exhibits and schedules thereto).
10.2 Registration Rights Agreement by and between Geotek
Communications, Inc. and certain other parties,
dated February 18, 1998 (excluding any exhibits
and schedules thereto).
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
GEOTEK COMMUNICATIONS, INC.
Date: February 24, 1998 By: /s/ Robert Vecsler
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Name: Robert Vecsler
Title: Secretary and General Counsel
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EXHIBIT INDEX
Exhibit No.
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4.1 Certificate of Designation of Series R Convertible Preferred Stock
of Geotek Communications, Inc., dated February 18, 1998 (excluding
any exhibits and schedules thereto).
4.2 Certificate of Correction Filed to Correct a Certain Error in the
Certificate of Designation of Series R Convertible Preferred Stock
of Geotek Communications, Inc., dated February 23, 1998.
4.3 Certificate of Designation of Series S Convertible Preferred Stock
of Geotek Communications, Inc., dated February 18, 1998 (excluding
any exhibits and schedules thereto).
10.1 Conversion and Exchange Agreement by and between Geotek
Communications, Inc. and certain other parties, dated February 13,
1998 (excluding any exhibits and schedules thereto).
10.2 Registration Rights Agreement by and between Geotek Communications,
Inc. and certain other parties, dated February 18, 1998 (excluding
any exhibits and schedules thereto).
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CERTIFICATE OF DESIGNATION
of
SERIES R CONVERTIBLE PREFERRED STOCK
of
GEOTEK COMMUNICATIONS, INC.
(Pursuant to Section 151 of the
Delaware General Corporation Law)
Geotek Communications, Inc., a corporation organized and existing under
the General Corporation Law of the State of Delaware (the "Company"), hereby
certifies that the following resolutions were adopted by the Board of Directors
of the Company pursuant to authority of the Board of Directors as required by
Section 151 of the Delaware General Corporation Law:
RESOLVED, that pursuant to the authority granted to and vested in the
Board of Directors of this Company (the "Board of Directors" or the "Board") in
accordance with the provisions of its Restated Certificate of Incorporation, the
Board of Directors hereby creates a series of the Company's previously
authorized Preferred Stock, par value $.01 per share (the "Preferred Stock"),
and hereby states the designation and number of shares, and fixes the relative
rights, preferences, privileges, powers and restrictions thereof as follows:
Series R Convertible Preferred Stock:
1. Definitions. For purposes hereof the following definitions
shall apply:
"Approved Underwriter" shall mean Goldman Sachs &
Co.; Merrill Lynch & Co.; Morgan Stanley & Co. Incorporated; Lehman Brothers
Inc.; Smith Barney Inc.; Salomon Brothers Inc.; J.P. Morgan & Co.; PaineWebber
Incorporated; Donaldson, Lufkin & Jenrette; Bear, Stearns & Co., Inc.; First
Boston; Lazard Freres; or any successor to or affiliate of any of them.
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"Average Stock Price" shall mean, as to any date, a
price equal to the lowest daily volume-weighted average price of the Common
Stock on the principal securities exchange or interdealer quotation system on
which the Common Stock is traded during the four (4) trading days immediately
preceding such date, as calculated by Bloomberg Financial Markets through its
"Volume at Price" function (or a comparable reporting service of national
reputation selected by the Corporation and reasonably acceptable to holders of a
majority of the Shares of Preferred Stock then outstanding (the "Majority
Holders") if Bloomberg Financial Markets is not then reporting average prices of
such security) (collectively, "Bloomberg"), or if the foregoing does not apply,
the last reported sale price of such security in the over-the-counter market on
the electronic bulletin board for such security as reported by Bloomberg, or, if
no sale price is reported for such security by Bloomberg, the average of the bid
prices of all market makers for such security as reported in the "pink sheets"
by the National Quotation Bureau, Inc. If the Average Stock Price cannot be
calculated for such security on such date on any of the foregoing bases, the
Average Stock Price of such security on such date shall be the fair market value
as reasonably determined by an investment banking firm selected by the
Corporation and reasonably acceptable to the Majority Holders, with the costs of
such appraisal to be borne by the Corporation; provided, however, that no sales
transactions by a converting holder of the Series R Preferred Stock shall be
given effect in calculating such Average Stock Price insofar as it applies to
that holder.
"Board" shall mean the Board of Directors of the
Company.
"Closing Date" shall mean the date of original
issuance of the Series R Preferred Stock.
"Common Stock" shall mean the Common Stock, $.01 par
value per share, of the Company.
"Company" shall mean this corporation.
"Conversion and Exchange Agreement" shall mean that
certain Conversion and Exchange Agreement, dated as of February 13, 1998, by and
among the Company and the other signatories thereto.
"Conversion Date Market Price" shall mean, at any
Holder Conversion Date, (i) $2.00 or (ii) if a Holder of Series R Preferred
Stock shall make an election (as defined below) for the Series R Preferred Stock
held by such Holder only, the Average Stock Price, discounted by the percentage
set forth in the table below (the "Applicable Percentage") opposite the period
during which such Holder Conversion Date shall have occurred; provided that the
Applicable Percentage shall be adjusted from time to time, as provided in the
Registration Rights Agreement (as hereinafter defined).
Holder Conversion Date Applicable Percentage
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January 2, 1998 - March 31, 1998 5%
After March 31, 1998 10%
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"Conversion Default" shall have the meaning set forth
in Paragraph 9(b).
"Conversion Notice" shall have the meaning set forth
in Paragraph 6(d).
"Conversion Rate" shall have the meaning set forth in
Paragraph 6(c).
"Designated Price" shall mean $50,000 per share, as
adjusted pursuant to the terms hereof, plus all accrued and unpaid dividends.
"Dividend Stock Price" shall mean, as to any date,
the average of the Market Price for Shares of Common Stock for the thirty (30)
consecutive trading days commencing forty-five (45) trading days prior to the
applicable date.
"Election" shall have the meaning set forth in
Paragraph 7(g) hereof.
"Holder Conversion Date" shall have the meaning set
forth in Paragraph 6(d).
"Junior Stock" shall mean the Common Stock and,
unless the holders of Preferred Stock otherwise consent pursuant to Paragraph 5
hereof, all other shares of any other class or series of the Company's capital
stock hereafter issued, other than (a) the Series R Preferred Stock, (b)
Preferred Stock ranking pari passu to the Series R Preferred Stock (including,
without limitation, the Company's Series O Convertible Preferred Stock, Series P
Convertible Preferred Stock, and Series S Convertible Preferred Stock) as
permitted below or (c) Preferred Stock ranking senior to the Series R Preferred
Stock and authorized by the holders of the Series R Preferred Stock in
accordance with Section 5 hereof; provided, however, the Company may from time
to time, without the consent of the holders of the outstanding shares of the
Series R Preferred Stock, authorize, create or issue additional series of
Preferred Stock which rank pari passu to or do not have preference over the
Series R Preferred Stock in respect of dividends, redemption or distribution
upon liquidation.
"Market Price for Shares of Common Stock" shall mean
the price of one share of Common Stock determined as follows:
(i) If the Common Stock is listed on the Nasdaq
National Market, the daily closing price on the date of valuation;
(ii) If the Common Stock is listed on a national
securities exchange, the daily closing price on the date of valuation;
(iii) If neither (i) nor (ii) apply, but the Common
Stock is quoted on the Nasdaq Small Capital Market or the over-the-counter
market on the pink sheets or bulletin board, the daily closing price thereof on
the date of valuation; and
(iv) If neither clause (i), (ii) or (iii) above
applies, the market value as determined by a nationally recognized investment
banking firm or other nationally recognized financial advisor retained by the
Company for such purpose and reasonably acceptable to the
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holders of Series R Preferred Stock, taking into consideration, among other
factors, the earnings history, book value and prospects for the Company, and the
prices at which shares of Common Stock recently have been traded. Such
determination shall be conclusive and binding on all persons.
"Original Issuance Market Price" shall mean an amount
equal to the Market Price for Shares of Common Stock on the Closing Date.
"Preferred Stock" shall mean the authorized shares of
all series of the preferred stock of the Company.
"Redemption Price" shall have the meaning set forth
in Section 14(d).
"Registration Rights Agreement" shall mean that
certain Registration Rights Agreement, dated as of February 13, 1998, by and
among the Company and the other signatories thereto.
"Series R Preferred Stock" shall mean the Series R
Convertible Preferred Stock of the Company, $.01 par value per share.
"Trigger Price" shall mean $2.00 per share, as
adjusted after the original issuance date of the Series R Preferred Stock upon
any stock split, stock dividend, split up, recapitalization or other
reorganization with respect to the Common Stock.
"Underlying Stock" shall mean those shares of the
Company's Common Stock issuable upon (i) conversion of the Series R Preferred
Stock and (ii) exercise of any Warrants.
"Warrants" shall mean warrants issued by the Company
in connection with the issuance and redemption of the Series R Preferred Stock.
2. Designation and Number. The designation of the shares of Preferred
Stock authorized by these resolutions shall be "Series R Convertible Preferred
Stock" (the "Series R Preferred Stock"). The authorized number of shares
constituting the Series R Preferred Stock shall be three hundred fifty (350)
shares and each share of Series R Preferred Stock shall rank equally in all
respects.
3. Dividends. The Series R Preferred Stock shall accrue dividends at a
rate of ten percent (10%) per annum on the Designated Price. Dividends on the
Series R Preferred Stock shall accumulate and accrue from the date of its
original issue and shall accrue from day to day thereafter, whether or not
earned or declared. Dividends shall be payable, quarterly, in that number of
shares of Common Stock purchasable by the dollar amount of the dividend
described above, at the Dividend Stock Price as of the date such dividend is
paid. Dividends on the Series R Preferred Stock for any quarterly period shall
be declared by the Company and paid on the fifteenth (15th) day following the
end of such quarter. If the Company is prohibited from paying any dividends, or
otherwise fails to pay such dividends, for any quarterly period, the dividends
shall be deemed to have accrued on such Series R Preferred Stock, and shall be
capitalized to the
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Series R Preferred Stock as of the last day of the quarterly period, as if the
dividend rate had been 12% per annum for such quarterly period, and the
Designated Price for each share of Series R Preferred Stock shall be deemed to
have been increased by the amount of such capitalized dividends. For as long as
any Series R Preferred Stock is outstanding, the Company shall pay no dividends
on Junior Stock, other than in shares of Junior Stock, without having first
obtained the consent of the holder or holders of a majority of the Series R
Preferred Stock then outstanding.
4. Liquidation Rights of Series R Preferred Stock. In the event of any
liquidation, dissolution or winding up of the Company, whether voluntary or
involuntary, the holders of the Series R Preferred Stock then outstanding shall
be entitled to be paid out of the assets of the Company available for
distribution to its stockholders, whether such assets are capital, surplus, or
earnings, before any payment or declaration and setting apart for payment of any
amount shall be made in respect of any Junior Stock, an amount equal to the
Designated Price; provided, however, that upon the occurrence of any of the
events described in (i), (ii) and (iii) below, the holders of the Series R
Preferred Stock shall be entitled to an amount equal to the Redemption Price and
not to the Designated Price. If upon any liquidation, dissolution, or winding up
of the Company, whether voluntary or involuntary, the assets to be distributed
to the holders of the Series R Preferred Stock shall be insufficient to permit
the payment to such stockholders of the full preferential amounts aforesaid,
then all of the assets of the Company to be distributed shall be distributed
ratably to the holders of the Series R Preferred Stock and to any holders of any
series of Preferred Stock that ranks pari passu with the Series R Preferred
Stock, on the basis of the liquidation value of the shares of Preferred Stock
held. The Company shall promptly mail written notice of such liquidation,
dissolution or winding up (with a copy sent by facsimile), but in any event such
notice shall be given at least thirty (30) days prior to the effective date
stated therein, but in any event not prior to the public announcement thereof,
to each record holder of the Series R Preferred Stock. If the Company determines
to effect a liquidation, dissolution or winding up of the Company, then,
notwithstanding the limitations set forth in Paragraph 13 hereof, the Series R
Preferred Stock shall thereupon, at the option of a holder thereof, be
convertible in full, if so permitted by applicable law and if not otherwise in
violation of an agreement to which the Company is a party or of the Company's
Certificate of Incorporation or By-Laws. For purposes of this paragraph, (i) a
sale or other disposition of all or substantially all of the assets of the
Company, (ii) a consolidation or merger of the Company with or into any other
corporation or other entity or person (whether or not the Company is the
surviving corporation, but other than a merger or consolidation whereby the
stockholders of the Company immediately preceding the merger or consolidation
continue to own greater than fifty percent (50%) of the voting securities of the
entity surviving such merger or consolidation), (iii) any person or any "group"
(as such term is used in such Section 13(d) of the Securities Exchange Act of
1934, as amended) becomes the beneficial owner of in excess of fifty percent
(50%) of the voting power of the Company's (or any successor entity's) capital
stock (each of (i) through (iii), a "Disposition Transaction"), shall, at the
option of each holder of Series R Preferred Stock, be deemed to be a
liquidation, dissolution or winding up of the Company with respect to the shares
of Series R Preferred Stock held by such holder.
5. Voting Rights. The holders of the Series R Preferred Stock will not
have any voting rights except as set forth below or as otherwise from time to
time required by law.
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The affirmative approval (by vote or written consent as
permitted by applicable law) of the holders of at least 66 2/3% of the
outstanding shares of the Series R Preferred Stock, voting separately as a
class, will be required for (i) any amendment, alteration or repeal of the
Company's Certificate of Incorporation (including any Certificate of
Designation, Rights and Preferences for any other series of Preferred Stock) if
the amendment, alteration or repeal adversely affects the powers, preferences or
rights of the Series R Preferred Stock (including, without limitation, by
creating any class or series of equity securities having a preference over the
Series R Preferred Stock with respect to dividends, redemption, distribution
upon liquidation or in any other respect); or (ii) any amendment to or waiver of
the terms of the Series R Preferred Stock or this Certificate of Designation,
provided, however, that no such approval shall be required for the
authorization, creation or issuance of any shares of any additional series of
Preferred Stock ranking pari passu to or which do not have any preference over
the Series R Preferred Stock in respect of dividends, redemption or distribution
upon liquidation. No approval of the holders of Series R Preferred Stock shall
be required for the Company to effect a Disposition Transaction.
To the extent that under applicable law the approval of the
holders of the Series R Preferred Stock, voting separately as a class is
required to authorize a given action of the Company, the affirmative approval
(by vote or written consent as permitted by applicable law) of the holders of a
majority of the outstanding shares of the Series R Preferred Stock shall
constitute the approval of such action by the class. To the extent that under
applicable law the holders of the Series R Preferred Stock are entitled to vote
on a matter with holders of the Common Stock, voting together as one class, each
share of Series R Preferred Stock shall be entitled to that number of votes as
shall be equal to the number of shares of Underlying Stock into which such
shares could have been converted on the record date for any meeting of
stockholders or on the date of any written consent of stockholders, as
applicable. Holders of the Series R Preferred Stock shall be entitled to notice
of all shareholder meetings or written consents (whether or not they are
entitled to vote thereat), which notice will be provided pursuant to the
Company's by-laws and applicable statutes.
6. Conversion. The holders of Series R Preferred Stock shall have the
following conversion rights.
(a) Holder's Right to Convert. Subject to the restrictions set
forth in Paragraphs 13 and 14(e) of this Certificate, each share of Series R
Preferred Stock shall be convertible in whole or in part and from time to time,
at the option of the holder thereof, into fully paid and nonassessable shares of
Common Stock.
(b) Mandatory Conversion. Subject to the provisions of
Paragraph 13(d) hereof, on the fifth anniversary of its issuance (the "Mandatory
Conversion Date"), each and every share of Series R Preferred Stock shall be
converted into the number of fully paid and nonassessable shares of Common Stock
which may be purchased at the Conversion Date Market Price by dividing an amount
equal to the Designated Price by such price without any action required to be
taken by the holder thereof, and a Conversion Notice shall be deemed to be given
by the holder of each share of Series R Preferred Stock on that date; provided,
however, that no such mandatory conversion shall occur if, as of the Mandatory
Conversion Date, the Company is (i) insolvent, (ii)
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in bankruptcy proceedings or (iii) in material breach of any of the terms of
this Certificate or of the Conversion and Exchange Agreement or the Registration
Rights Agreement.
(c) Conversion Price for Holder of Converted Shares. Each
share of the Series R Preferred Stock that is converted into shares of Common
Stock shall be convertible into the number of shares of Common Stock which may
be purchased by the Designated Price of such share of Series R Preferred Stock
at the Conversion Date Market Price. The number of shares of Common Stock into
which each share of Series R Preferred Stock may be converted pursuant to this
paragraph is hereafter referred to as the "Conversion Rate."
(d) Mechanics of Conversion. Unless conversion is mandatory in
accordance with Paragraph 6(b) hereof, in order to convert any or all shares of
Series R Preferred Stock into full shares of Common Stock, the holder shall
surrender the certificate or certificates therefor, duly endorsed, by either
overnight courier or two-day courier, to the principal office of the Company or
of any transfer agent for the Series R Preferred Stock, and shall give written
notice (the "Conversion Notice"), and, if an Election has been made by such
holder, such notice shall include the holder's summary of its trades on the
relevant date utilized to determine the Average Stock Price with respect to such
conversion, its calculation of the Conversion Rate and the number of shares of
Common Stock issuable upon such conversion, by facsimile (with the original of
such notice forwarded with the foregoing courier) to the Company at such office,
that he elects to convert the number of shares specified therein, which such
notice and election shall be irrevocable by the holder; provided, however, that
the Company shall not be obligated to issue certificates evidencing the shares
of the Common Stock issuable upon such conversion unless either the certificates
evidencing the shares of Series R Preferred Stock are delivered to the Company
or its transfer agent as provided above, or the holder notifies the Company that
such certificates have been lost, stolen or destroyed and promptly executes an
agreement reasonably satisfactory to the Company to indemnify the Company from
any loss incurred by it in connection with such certificates.
Immediately upon receipt of the Conversion Notice the
Company shall verify the holder's calculation of the Conversion Rate as
calculated by the holder or, if the Company disagrees with the holder's
calculation of the Conversion Rate, deliver by facsimile the Company's
calculation of the Conversion Rate. The Company shall use its best efforts to
issue and deliver as soon as possible, and in any event within two (2) business
days after delivery to the Company of certificates of the Series R Preferred
Stock to be converted or after receipt of such agreement and indemnification, to
such holder of Series R Preferred Stock at the address of the holder on the
stock books of the Company, or to its designee, a certificate or certificates
for the number of shares of Common Stock to which he shall be entitled as
aforesaid, together with a certificate or certificates for the number of Series
R Preferred Stock not submitted for conversion. The date on which the Conversion
Notice is given (the "Holder Conversion Date") shall be deemed to be the date
the Company received by facsimile the Conversion Notice, provided that the
original shares of Series R Preferred Stock to be converted, or the aforesaid
notice of lost, stolen or destroyed certificates, are received by the Company or
any transfer agent for the Series R Preferred Stock within five (5) business
days thereafter, and the person or persons entitled to receive the shares of
Common Stock issuable upon such conversion shall be treated for all purposes as
the record holder or holders of such shares of Common Stock on such date. If the
aforesaid notice of lost,
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stolen or destroyed certificates is not received by the Company or any transfer
agent for the Series R Preferred Stock within five (5) business days after the
Holder Conversion Date, the Conversion Notice shall become null and void. In
lieu of delivering physical certificates representing the Common Stock issuable
upon conversion, provided the Company's transfer agent is participating in the
Depository Trust Company ("DTC") Fast Automated Securities Transfer program,
upon request of the Subscriber and so long as the certificates therefor do not
bear a legend and the holder thereof is not obligated to return such certificate
for the placement of a legend thereon, the Company shall use its best efforts to
cause its transfer agent to electronically transmit the Common Stock issuable
upon conversion to the Subscriber by crediting the account of Holder's prime
broker or nominee with DTC through its Deposit Withdrawal Agent Commission
("DWAC") system.
(e) Issue and Franchise Taxes. The Company shall be, and the
holders of Series R Preferred Stock shall not be, liable for any and all issue
and franchise taxes payable in respect of issuance and delivery of Common Stock
as contemplated by this Certificate.
7. Adjustments; Reorganizations.
(a) Adjustments for Certain Issuances . If the Corporation
issues or sells any Common Stock or securities which are convertible into or
exchangeable for its Common Stock, or any warrants or other rights to subscribe
for or to purchase, or any options for the purchase of, its Common Stock or any
other convertible or exchangeable securities (other than in connection with (i)
the Series R Stock, (ii) the Series S Stock, (iii) any warrants issued in
connection therewith, (iv) any shares of Common Stock issued in connection with
the Conversion and Exchange Agreement, (v) a public offering, (vi) shares or
options issued or which may be issued pursuant to the Company's employee or
director option plans, (vii) shares issued upon exercise of options, warrants or
rights outstanding on the date of the Conversion and Exchange Agreement or upon
conversion, exercise or exchange of securities outstanding on the date of the
Conversion and Exchange Agreement and convertible into or exercisable or
exchangeable for other securities of the Corporation or (viii) a New Financing
(as defined in Section 7(g) below)) at an effective purchase price per share
less than the lesser of the Market Price for Shares of Common Stock at such time
and the Conversion Date Market Price at such time, then in each such case, the
Conversion Date Market Price shall be reduced effective concurrently with such
issue or sale to an amount determined by multiplying the Conversion Date Market
Price then in effect by a fraction (x) the numerator of which shall be the sum
of (i) the number of shares of Common Stock outstanding immediately prior to
such issue or sale, plus (ii) the number of shares of Common Stock which the
aggregate consideration received for such additional securities would purchase
at the lesser of the Market Price for Shares of Common Stock or the Conversion
Date Market Price, as the case may be, then in effect, plus (iii) the number of
shares of Common Stock issuable upon exercise, conversion or exchange of all the
Company's then outstanding convertible securities which are, as of the time of
the new issuance, convertible or exchangeable into Common Stock and (y) the
denominator of which shall be the sum of (i) the number of shares of Common
Stock outstanding after such issue or sale, plus (ii) the number of shares of
Common Stock issuable upon exercise, conversion or exchange of all the Company's
then outstanding convertible securities which are, as of the time of the new
issuance, convertible or exchangeable into Common Stock. Notwithstanding the
foregoing, the rights contained in this Section 7(b) shall not apply with
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respect to any shares for which an Election is made. For purposes of this
Section 7(a), the "aggregate consideration received" by the Corporation shall
equal the total amount, if any, received or receivable by the Company as
consideration for the issuance or sale of all such securities, plus the minimum
aggregate amount of additional consideration, if any, payable to the Corporation
upon the exercise, conversion or exchange thereof at the time such securities
become exercisable convertible or exchangeable.
(b) Adjustment for Stock Splits and Combinations; Adjustment
for Certain Dividends and Distributions; If the Company at any time or from time
to time after the Closing Date, during the period running from a Holder
Conversion Date up to and including the day on which the conversion has been
effected, effects a subdivision or combination of the outstanding Common Stock,
the shares of Common Stock issuable upon the conversion and the Conversion Date
Market Price in effect shall be proportionately adjusted to reflect the split or
reverse split, as the case may be. Any adjustment under this Paragraph 7(b)
shall become effective at the close of business on the date the subdivision or
combination becomes effective. If the Company at any time or from time to time
after the Closing Date, during the period running from a Holder Conversion Date
up to and including the day on which the conversion has been effected, makes, or
fixes a record date for the determination of holders of Common Stock entitled to
receive a dividend or other distribution payable in additional shares of Common
Stock, then, and in each such event, the dividend or distribution, as the case
may be, shall be made available to the holder effecting that conversion at the
time at which the conversion becomes effective.
(c) Adjustment for Other Dividends and Distributions. Subject
to the provisions contained in Paragraph 3 of this Certificate, in the event the
Company, at any time or from time to time after the Closing Date, makes or fixes
a record date for the determination of holders of Common Stock entitled to
receive an extraordinary dividend or other distribution payable in securities of
the Company other than shares of Common Stock, and not an episodic dividend or
distribution payable by the Company in the ordinary course, then and in each
such event provision shall be made so that the holders of Series R Preferred
Stock shall receive, upon conversion thereof pursuant to Paragraph 6 hereof, in
addition to the number of shares of Common Stock receivable thereon, the amount
of such other securities of the Company to which a holder on the relevant record
or payment date, as applicable, of the number of shares of Common Stock so
receivable upon conversion would have been entitled, plus any dividends or other
distributions which would have been received with respect to such securities had
such holder thereafter, during the period from the date of such event to and
including the Holder Conversion Date, retained such securities, subject to all
other adjustments called for during such period under this Section 7 with
respect to the rights of the holders of the Series R Preferred Stock.
(d) Adjustment for Reclassification, Exchange and
Substitution. In the event that at any time or from time to time after the
Closing Date, the Common Stock issuable upon the conversion of the Series R
Preferred Stock is changed into the same or a different number of shares of any
class or classes of stock, whether by recapitalization, reclassification or
otherwise (other than a subdivision or combination of shares or stock dividend
or reorganization provided for elsewhere in this Paragraph 7), then and in each
such event each holder of Series R Preferred Stock shall have the right
thereafter to convert such stock into the kind of stock receivable upon such
recapitalization, reclassification or other change by holders of shares of
Common Stock, all
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subject to further adjustment as provided herein. In such event, it shall be a
condition precedent to any such transactions that the formula set forth herein
for conversion shall be equitably adjusted in a manner reasonably acceptable to
the holders of Series R Preferred Stock to reflect such change in number of
shares or, if shares of a new class of stock are issued to reflect the market
price of the class of classes of stock (applying the same factors used in
determining the Market Price for Shares of Common Stock) issued in connection
with the above described transaction.
(e) Reorganization. If at any time or from time to time after
the Closing Date there is a capital reorganization of the Common Stock (other
than a recapitalization, subdivision, combination, reclassification, or exchange
of shares provided for elsewhere in this Paragraph 7), then as a part of such
reorganization, provision shall be made so that the holders of the Series R
Preferred Stock shall thereafter be entitled to receive upon conversion of the
Series R Preferred Stock the number of shares of stock or other securities or
property to which a holder of the number of shares of Common Stock deliverable
upon conversion would have been entitled on such capital reorganization. In any
such case, it shall be a condition precedent to any such transactions that
appropriate adjustment be made in the application of the provisions of this
Paragraph 7 with respect to the rights of the holders of the Series R Preferred
Stock after the reorganization to the end that the provisions of this Paragraph
7 (including adjustment of the number of shares issuable upon conversion of the
Series R Preferred Stock) shall be applicable after that event and be as nearly
equivalent as may be practicable, including, by way of illustration and not
limitation, by equitably adjusting in a manner reasonably acceptable to the
holders of the Series R Preferred Stock the formula set forth herein for
conversion to reflect the market price of the securities or property (applying
the same factors used in determining the Market Price for Shares of Common
Stock) issued in connection with the above described transaction.
(f) Other Equity Offerings. In the event that a holder of
Series R Preferred Stock makes an Election and thereafter the Company issues or
sells any shares of its securities which are convertible into or exchangeable
for its Common Stock or any convertible security, or any warrants or other
rights subscribed for or to purchase any options or the purchase of its Common
Stock or other securities (other than securities issued or which may be issued
in conjunction with a public offering or pursuant to the Company's employee or
director option plan or securities issued upon exercise, exchange or conversion
of securities convertible into or exercisable or exchangeable for other
securities of the Company, whether now or hereafter outstanding) (the "Equity
Securities") which provide for the issuance of shares of Common Stock upon
conversion or exchange of such security utilizing a conversion or exchange
discount per share which during any period is greater than the Applicable
Percentage applicable to the Series R Preferred Stock during such period, then,
for so long as any such Equity Securities remain outstanding, the Applicable
Percentage in respect of any conversion of Series R Preferred Stock during any
such period for such holder shall be equal to the discount applicable to the
Equity Securities during the relevant period.
(g) Election. If the Company fails to (i) file the
Registration Statement (as defined in the Registration Rights Agreement) with
the SEC on or prior to the Registration Date (as defined in the Registration
Rights Agreement) and/or the Registration Statement is not declared effective on
or prior to that date which is 120 days after the date of the Closing, (ii)
receive at least $30 million in net proceeds that can be applied in the first
half of 1998 for general working capital
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purposes from the sale of its European networks prior to March 15, 1998, (iii)
receive at least $25 million in proceeds from new financings prior to May 15,
1998 that can immediately be applied for general working capital purposes or
(iv) receive at least $50 million (in the aggregate, including the proceeds
referred to in clause (iii) above) in proceeds from new financings prior to
September 15, 1998 that can immediately be applied for general working capital
purposes (each of the financings referred to in clauses (iii) and (iv) shall be
referred to as a "New Financing"), each holder of Series R Stock shall have the
right, exercisable for thirty days after the happening of such event, by
providing the Company with written notice to make an election (the "Election").
8. Fractional Shares. No fractional shares of Common Stock or scrip
representing fractional shares of Common Stock shall be issuable hereunder. The
number of shares of Common Stock that are issuable upon any conversion shall be
rounded up or down to the nearest whole share.
9. Reservation of Stock Issuable Upon Conversion.
(a) Reservation Requirement. At all times while any shares of
Series R Preferred Stock are outstanding, the Company shall reserve and keep
available, free of preemptive rights, and subject to such legal limits and rules
of exchanges on which the Common Stock may be traded, no less than one hundred
five percent (105%) and, after an Election is made (as defined in the Series R
Certificate of Designation and the Series S Certificate of Designation, as the
case may be), no less than two hundred percent (200%) with respect to the shares
of Preferred Stock for which an Election has been made, of that number of shares
of Common Stock for which such outstanding shares of Series R Preferred Stock
are then convertible, as equitably adjusted pursuant to any stock splits, split
ups, recapitalization or reorganization of shares of Common Stock.
(b) Default; Cure. If the Company does not have a sufficient
number of shares of Common Stock authorized, reserved or otherwise available to
satisfy the Company's obligations to a holder of Series R Preferred Stock upon
receipt of a Conversion Notice and/or holders of Warrants upon exercise thereof,
or if the Company is otherwise prohibited by applicable law or by the rules or
regulations of any stock exchange, interdealer quotation system or other
self-regulatory organization with jurisdiction over the Company or its
securities from issuing all of the Common Stock which is to be issued upon
receipt of a Conversion Notice (each, a "Conversion Default"), each holder of
the Series R Preferred Stock shall have the right to require the Company, if the
Company is so permitted by applicable law and if not otherwise in violation of
any agreement to which the Company is a party as of the date hereof or of the
Company's Certificate of Incorporation or By-Laws, to redeem such holder's pro
rata portion of the Series R Preferred Stock which the Company is then able to
redeem, and to implement the cure procedures set forth in Paragraph 15(c)
hereof.
10. No Reissuance of Series R Preferred Stock. No share or shares of
Series R Preferred Stock acquired by the Company by reason of redemption,
purchase, conversion or otherwise shall be reissued as Series R Preferred Stock,
and all such shares shall be retired and shall return to the status of
authorized, unissued and retired and undesignated shares of Preferred Stock. No
shares of Series R Preferred Stock shall be authorized or issued after the date
of the initial issuance of shares of Series R Preferred Stock pursuant to the
Conversion and Exchange Agreement without
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the consent of at least 66 2/3% in interest of the holders of Series R Preferred
Stock outstanding immediately prior thereto.
11. No Impairment. The Company shall not intentionally take any action
which would impair the rights and privileges of the shares of Series R Preferred
Stock set forth herein.
12. Holder's Rights if Shares are Delisted or if Trading in Common
Stock is Suspended. In the event that at any time on or after the date hereof
and prior to the fifth anniversary of the Closing Date, trading in the shares of
the Company's Common Stock is suspended on the principal market or exchange for
such shares (which market or exchange shall be either the Nasdaq National
Market, the American Stock Exchange or the New York Stock Exchange), for a
period of ten (10) consecutive trading days, other than as a result of the
suspension of trading in securities in general, or if such shares are delisted,
then, at the holder's option, the Company, if so permitted by applicable law and
if not otherwise in violation of an agreement to which the Company is a party or
of the Company's Certificate of Incorporation or By-Laws, shall redeem such
holder's shares of Series R Preferred Stock at the Redemption Price determined
as set forth in Paragraph 14(b) hereof.
13. Limitations on Holder's Right to Convert.
(a) Minimum Conversion. Holders of Series R Preferred Stock
may in no event convert less than one (1) share of Preferred Stock pursuant to a
single Conversion Notice; provided, however, that during a Conversion
Restriction Period no such minimum shall apply; provided, however, a Holder
shall be permitted to convert a fraction of a share of Series R Preferred Stock
if such Holder converts at least one share of Series R Preferred Stock.
(b) Intentionally Omitted
(c) Market Stand-Off. Each holder of Series R Preferred Stock,
if so requested by the Company in connection with a firmly underwritten public
offering of Common Stock managed by an Approved Underwriter pursuant to an
effective registration statement, shall not convert any Series R Preferred Stock
for sixty (60) days commencing upon the date specified by the Company (the
"Stand-Off Period"), which shall not be earlier than the date the registration
statement is filed, but in no event sooner than five (5) trading days after such
holder's receipt of the Company's request; provided, however, that:
(i) the Company may only request, and the holders of Series R
Preferred Stock shall only be subject to, one (1) Stand-Off Period during the
twenty-four (24) month period immediately following the Closing Date and one (1)
Stand-Off Period thereafter (provided that, if the Stand-Off Period terminates
pursuant to clause (ii) below on any one occasion with respect to the
twenty-four (24) month period referred to above or on any separate occasion with
respect to the remaining period thereafter, the Company may request and the
holders will be subject to a Stand-Off Period on one additional occasion during
such period); provided, however, the Company and the Approved Underwriter must
reasonably believe that such public offering is likely to provide the Company
with and the preliminary prospects relating to such public offering must show
gross proceeds of not less than $50,000,000 (the "Offering Size Condition");
provided,
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further, however, that the Offering Size Condition shall not apply to a holder
who makes an Election;
(ii) the Market Stand-Off shall immediately terminate if the
registration statement for the underwritten public offering is not declared
effective on or before the forty-fifth (45th) business day after the Company's
requested commencement date of the Stand-Off Period; and
(iii) the Mandatory Conversion Date shall be automatically
extended by the aggregate number of days for which the restrictions imposed by
the Stand-Off Period shall be effective.
(d) Notwithstanding anything to the contrary contained herein, each
Conversion Notice shall contain a representation that, after giving effect to
the shares of the Company's Common Stock to be issued pursuant to such
Conversion Notice, the total number of shares of the Company's Common Stock
deemed beneficially owned by the holder thereof, together with all shares of the
Company's Common Stock deemed beneficially owned by such holder's "affiliates"
as defined in Rule 144 promulgated under the Securities Act of 1933, as amended,
(exclusive of shares issuable upon conversion of the unconverted portion of the
Shares of Series R Preferred Stock or the unexercised or unconverted portion of
any other securities of the Company subject to a limitation on conversion or
exercise analogous to the limitations contained herein) will not result in
beneficial ownership by the holder and its affiliates of more than 4.9% of the
outstanding shares of Common Stock. For purposes of this subparagraph,
beneficial ownership shall be determined in accordance with Section 13(d) of the
Securities Exchange Act of 1934, as amended, and Regulation 13 D-G thereunder,
except as otherwise provided above. Any Conversion Notice which does not contain
such a representation shall be ineffective. The restriction contained in this
Section 13(d) may be waived by each holder, with respect to such holder only,
upon sixty-one (61) days advanced written notice to the Company.
14. Optional Redemption.
(a) If a holder of Series R Preferred Stock makes an Election, on one
occasion prior to that date which is six (6) months after the Closing Date (the
"Six Month Anniversary"), so long as the Underlying Stock is subject to an
effective registration statement and the Company's Common Stock is listed on the
Nasdaq National Market, the American Stock Exchange or the New York Stock
Exchange, the Company may, at its option, redeem at least fifty percent (50%) of
the Series R Preferred Stock then outstanding with respect to which Elections
have been made, on a pro rata basis among the holders thereof. In addition to
the right provided in the preceding sentence, if a holder of Series R Preferred
Stock makes an Election, and at any time prior to the Six Month Anniversary that
the Underlying Stock is subject to an effective registration statement and the
Company's Common Stock is listed on the Nasdaq National Market, the American
Stock Exchange or the New York Stock Exchange, the Company may, at its option,
redeem all, but not less than all, of the Series R Preferred Stock then
outstanding. Any and all shares of the Series R Preferred Stock redeemed by the
Company pursuant to this Section 14(a) shall be redeemed at a price equal to
110% of the Designated Price payable in cash and, in connection with such
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redemption, the Company shall issue Warrants, in substantially the form attached
hereto as Exhibit A, for the purchase of an aggregate of 1,833 shares of Common
Stock for each share of Series R Preferred Stock redeemed (subject to adjustment
for any stock splits, split ups, stock dividends, recapitalization or other
reorganizations occurring after the Closing Date in accordance with the
mechanisms set forth in Section 5 (a), (b), (d) or (e) of the form of Warrant
attached hereto as Exhibit A). Such Warrants shall be exercisable for shares of
Common Stock at an exercise price per share equal to 115% of the Market Price
for Shares of Common Stock as of the date of redemption under this Paragraph
14(a).
(b) If a holder of Series R Preferred Stock makes an Election, the
Company may also at its option redeem all, but not less than all, of the Series
R Preferred Stock then outstanding with respect to which Elections have been
made (i) at any time prior to that date which is two (2) years after the Closing
Date (the "Second Anniversary") if the Market Price for Shares of Common Stock
is below the Trigger Price or (ii) on the Second Anniversary, at a redemption
price equal to 110% of the Designated Price for the shares of Series R Preferred
Stock and in connection with such redemption the Company shall issue Warrants,
in substantially the form attached hereto as Exhibit A, exercisable for 2,500
shares of Common Stock for each share of Series R Preferred Stock redeemed
(subject to adjustment for any stock splits, split ups, stock dividends,
recapitalization or other reorganizations occurring after the Closing Date in
accordance with the mechanisms set forth in Section 5 (a), (b), (d) or (e) of
the form of Warrant attached hereto as Exhibit A), at an exercise price equal to
130% of the Market Price for Shares of Common Stock as of the date of redemption
under this Paragraph 14(b). In addition to the right provided in the preceding
sentence, if the Company's option to redeem not less than fifty percent (50%) of
the Series R Preferred Stock pursuant to paragraph (a) above has not been
exercised, on one occasion prior to the Six Month Anniversary, so long as the
Underlying Stock is subject to an effective registration statement and the
Company's Common Stock is listed on the Nasdaq National Market, the American
Stock Exchange or the New York Stock Exchange, the Company may, at its option,
redeem at least fifty percent (50%) of the Series R Preferred Stock then
outstanding with respect to which Elections have been made, on a pro rata basis
among the holders thereof, at the price provided for in the preceding sentence.
(c) In the case of a redemption of Series R Preferred Stock as a result
of a Disposition Transaction, the Series R Preferred Stock shall be redeemed at
a price equal to 110% of the Designated Price.
(d) The redemption price for any redemption of the Series R Preferred
Stock as set forth in paragraph (a), (b) or (c) above shall be referred to
herein as the "Redemption Price."
(e) Upon and following receipt of notice from the Company of an
optional redemption of any or all of the shares of Series R Preferred Stock then
outstanding in respect of which an Election has been made, each holder thereof
may convert only that number of shares of Series R Preferred Stock as is
necessary to cover hedges or short positions in the Company's Common Stock taken
by that holder prior to the receipt of such notice.
15. Mechanics of Redemption.
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(a) Upon any redemption of Series R Preferred Stock, written notice
shall be given to the Company or the holders of the Series R Preferred Stock, as
applicable, for shares to be purchased or redeemed at least twenty (20) business
days prior to the date fixed for redemption. The notice shall be addressed to
the Company if applicable, or to each such holder at the address of such holder
appearing on the books of the Company, or given by such holder to the Company
for the purpose of notice, or, if no such address appears or is so given, at the
last known address of such holder. Such notice shall specify the date fixed for
redemption, shall state that shares of Series R Preferred Stock outstanding are
to be redeemed and the number of shares of Series R Preferred Stock to be so
redeemed, and shall call upon the holder to surrender on said date, at the place
designated in the notice, the certificate or certificates representing the
shares to be redeemed (in the case of redemptions pursuant to Section 14(d)
hereof) on the date fixed for redemption stated in such notice. The Company
shall only deliver notice of a redemption to the holders of Series R Preferred
Stock if the Company, acting in good faith, reasonably believes that it will
have an amount of funds equal to the aggregate Redemption Price payable in
connection with such a redemption available for the payment of such aggregate
Redemption Price on the date fixed for such redemption. Unless such person shall
elect to convert some or all of the same into Common Stock in accordance with
Section 6 hereof, each holder of shares of Series R Preferred Stock called for
such redemption shall surrender the certificate or certificates evidencing such
shares at the place designated in such notice and shall thereupon be entitled to
receive payment of the Redemption Price on the date fixed for redemption with
respect to all unconverted shares.
(b) If, on or prior to any date fixed for redemption, the Company
deposits, with any bank or trust company in the State of New Jersey or in the
State of New York, as a trust fund, a sum (and duly executed warrants)
sufficient to redeem all shares of Series R Preferred Stock called for
redemption which have not theretofore been surrendered for conversion, with
irrevocable instructions and authority to the bank or trust company to pay and
deliver, on or after the date fixed for redemption, the Redemption Price of the
shares to their respective holders upon the surrender of their share
certificates, then from and after the date of redemption the shares to be
redeemed shall be redeemed and dividends and other distributions on those shares
shall cease to accrue after the date such shares were called for redemption. The
deposit shall constitute full payment for the shares of Series R Preferred Stock
to their holders and from and after the date of the deposit the shares of Series
R Preferred Stock shall no longer be outstanding, and the holders thereof shall
cease to be shareholders with respect to such shares, and shall have no rights
with respect thereto except the right to receive from the bank or trust company
payment of the Redemption Price of the shares without interest upon surrender of
their certificates therefor and the right to receive from the Company any
accrued dividends thereon through the date such shares were called for
redemption. Any interest accrued on any fund so deposited shall be the property
of, and paid to, the Company.
(c) The Company may cure the Conversion Default by either (i) promptly,
and in no event later than ten (10) business days after the Conversion Default
occurs, obtaining those consents of shareholders, note holders and others, if
any, as shall be required in order to effect the balance of the conversion or
redemption, as the case may be; or (ii) redeem not later than twenty (20)
business days after the Conversion Default, the excess shares of Series R
Preferred Stock and/or Warrants by paying the holders (A) cash per share in an
amount equal to one hundred ten percent (110%) of the Market Price for Shares of
Common Stock as of the Holder Conversion
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Date, on an as converted basis and (B) Warrants in substantially the form
attached hereto as Exhibit A, for the purchase of an aggregate of 2,500 shares
of Common Stock for each share of Series R Preferred Stock redeemed (subject to
adjustment for any stock splits, split ups, stock dividends, recapitalization or
other reorganizations occurring after the Closing Date in accordance with the
mechanisms set forth in Section 5 (a), (b), (d) or (e) of the form of Warrant
attached hereto as Exhibit A) at an exercise price per share equal to 130% of
the Market Price for shares of Common Stock as of the date of redemption; or
(iii) the Company may, not later than twenty (20) business days after the
Conversion Default, issue to the relevant holders of excess shares of Series R
Preferred Stock and/or Warrants such other securities of the Company, in
exchange therefor, in such quantities, at such prices and subject to such terms
and conditions as may be necessary in order to generate a value per share, in
respect of the excess shares of Series R Preferred Stock and/or Warrants, as the
case may be, before taxes equal to (A) one hundred ten percent (110%) of the
Market Price for Shares of Common Stock as of the Holder Conversion Date, on an
as converted basis and (B) Warrants in substantially the form attached hereto as
Exhibit A, for the purchase of an aggregate of 2,500 shares of Common Stock for
each share of Series R Preferred Stock redeemed (subject to adjustment for any
stock splits, split ups, stock dividends, recapitalization or other
reorganizations occurring after the Closing Date in accordance with the
mechanisms set forth in Section 5 (a), (b), (d) or (e) of the form of Warrant
attached hereto as Exhibit A) at an exercise price per share equal to 130% of
the Market Price for shares of Common Stock as of the date of redemption. That
value shall be established by taking the average of the valuations of those
securities provided by three of the Approved Underwriters, one of whom shall
have been selected by the relevant holder, one of whom shall have been selected
by the Company and the third of whom will be selected by the first two Approved
Underwriters.
(d) Upon any redemption of Series R Preferred Stock in accordance with
the foregoing, all of such shares of Series R Preferred Stock shall be canceled
and shall revert to the status of authorized and unissued shares of Preferred
Stock.
16. Transfer Restrictions. Shares of Series R Preferred Stock may not be
sold or otherwise transferred to a competitor of the Company engaged in, or to
the knowledge of the holder thereof, planning to engage in the business of
providing wireless voice or data communications services to mobile customers or
of providing equipment in connection therewith.
17. Withholding Taxes. Notwithstanding anything herein, the Company may
condition the making of any distribution (as such term is defined under
applicable tax law) in respect of any share of Series R Preferred Stock on the
holder of such share of Series R Preferred Stock depositing with the Company an
amount of cash sufficient to enable the Company to satisfy its withholding tax
obligations (the "Withholding Tax") with respect to such distribution. For the
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avoidance of doubt, the Company shall not be required to redeem any Series R
Preferred Stock, and no dividends shall be capitalized as part of the Designated
Price of any share of Series R Preferred Stock, as a result of the Company's
failure to make a distribution because of a holder's failure to deliver the
proper Withholding Tax with respect to any distribution.
18. Consent for Distributions and Redemptions. For so long as the
Subscribers and their Permitted Assignees (as such terms are defined in that
certain Subscription Agreement dated as of June 14, 1996 by and among the
Company, Renaissance Fund LDC ("Renaissance") and the other signatories thereto)
own shares of the Company's Series N Cumulative Convertible Preferred Stock (the
"Series N Preferred Stock") having an aggregate stated value of at least
$25,000,000, the Company must obtain Renaissance's consent prior to the
declaration or payment of any dividend on the Series R Preferred Stock, or any
redemption of Series R Preferred Stock for, cash or securities of the Company
which rank senior to or on parity with the Series N Preferred Stock.
Notwithstanding anything in this Certificate to the contrary, the Company shall
not redeem any Series R Preferred Stock for cash upon the occurrence of a
Disposition Transaction, a Conversion Default or the occurrence of an event
described in Section 12 of this Certificate prior to any required purchase or
payment of the Company's 15% Senior Secured Discount Notes due 2005 (the "1995
Notes") pursuant to Section 4.11 or Article Six of the Indenture dated as of
June 30 1995 governing such 1995 Notes.
IN WITNESS WHEREOF the undersigned have executed this Certificate of
Designation of Preferences at the City of Montvale, State of New Jersey, on this
___ day of February, 1998.
/s/ Yaron Eitan /s/ Robert Vecsler
- -------------------------- --------------------------------
Chairman Secretary
The undersigned declare under the penalty of perjury that the matters set
forth in the foregoing Certificate are true of their own knowledge. Executed at
Montvale, New Jersey, on the ___ day of February, 1998.
/s/ Yaron Eitan /s/ Robert Vecsler
- -------------------------- --------------------------------
Chairman Secretary
17
<PAGE>
CERTIFICATE OF CORRECTION
FILED TO CORRECT A CERTAIN ERROR
IN THE
CERTIFICATE OF DESIGNATION
OF SERIES R CONVERTIBLE
PREFERRED STOCK
OF
GEOTEK COMMUNICATIONS, INC.
FILED IN THE OFFICE OF THE SECRETARY OF
STATE OF DELAWARE ON FEBRUARY 18, 1998
GEOTEK COMMUNICATIONS, INC., a corporation organized and
existing under and by virtue of the General Corporation Law of the State of
Delaware, DOES HEREBY CERTIFY:
1. The name of the corporation is GEOTEK COMMUNICATIONS, INC.
2. That a Certificate of Designation of Series R Convertible
Preferred Stock was filed by the Secretary of State of Delaware on February 18,
1998, and that said Certificate requires correction as permitted by Section
103(f) of the General Corporation Law of the State of Delaware.
3. The inaccuracy or defect of said Certificate to be
corrected is that text was erroneously inserted in Section 2 of the Certificate
of Designation of Series R Convertible Preferred Stock of Geotek Communications,
Inc. and that said Section 2 is hereby corrected to read, in its entirety, as
follows:
2. Designation and Number. The designation of the
shares of Preferred Stock authorized by these resolutions
shall be "Series R Convertible Preferred Stock" (the "Series R
Preferred Stock"). The authorized number of shares
constituting the Series R Preferred Stock shall be four
hundred (400) shares and each share of Series R Preferred
Stock shall rank equally in all respects.
<PAGE>
IN WITNESS WHEREOF, said GEOTEK COMMUNICATIONS, INC. has
caused this Certificate to be signed by Robert Vecsler, its General Counsel and
Secretary on this 23rd day of February, 1998.
GEOTEK COMMUNICATIONS, INC.
By: /s/ Robert Vecsler
------------------------------
-2-
<PAGE>
CERTIFICATE OF DESIGNATION
of
SERIES S CONVERTIBLE PREFERRED STOCK
of
GEOTEK COMMUNICATIONS, INC.
(Pursuant to Section 151 of the
Delaware General Corporation Law)
Geotek Communications, Inc., a corporation organized and existing under the
General Corporation Law of the State of Delaware (the "Company"), hereby
certifies that the following resolutions were adopted by the Board of Directors
of the Company pursuant to authority of the Board of Directors as required by
Section 151 of the Delaware General Corporation Law:
RESOLVED, that pursuant to the authority granted to and vested in the Board
of Directors of this Company (the "Board of Directors" or the "Board") in
accordance with the provisions of its Restated Certificate of Incorporation, the
Board of Directors hereby creates a series of the Company's previously
authorized Preferred Stock, par value $.01 per share (the "Preferred Stock"),
and hereby states the designation and number of shares, and fixes the relative
rights, preferences, privileges, powers and restrictions thereof as follows:
Series S Convertible Preferred Stock:
1. Definitions. For purposes hereof the following definitions
shall apply:
"Approved Underwriter" shall mean Goldman Sachs & Co.;
Merrill Lynch & Co.; Morgan Stanley & Co. Incorporated; Lehman Brothers Inc.;
Smith Barney Inc.; Salomon Brothers Inc.; J.P. Morgan & Co.; PaineWebber
Incorporated; Donaldson, Lufkin & Jenrette; Bear, Stearns & Co., Inc.; First
Boston; Lazard Freres; or any successor to or affiliate of any of them.
<PAGE>
"Average Stock Price" shall mean, as to any date, a price
equal to the lowest daily volume-weighted average price of the Common Stock on
the principal securities exchange or interdealer quotation system on which the
Common Stock is traded during the four (4) trading days immediately preceding
such date, as calculated by Bloomberg Financial Markets through its "Volume at
Price" function (or a comparable reporting service of national reputation
selected by the Corporation and reasonably acceptable to holders of a majority
of the Shares of Preferred Stock then outstanding (the "Majority Holders") if
Bloomberg Financial Markets is not then reporting average prices of such
security) (collectively, "Bloomberg"), or if the foregoing does not apply, the
last reported sale price of such security in the over-the-counter market on the
electronic bulletin board for such security as reported by Bloomberg, or, if no
sale price is reported for such security by Bloomberg, the average of the bid
prices of all market makers for such security as reported in the "pink sheets"
by the National Quotation Bureau, Inc. If the Average Stock Price cannot be
calculated for such security on such date on any of the foregoing bases, the
Average Stock Price of such security on such date shall be the fair market value
as reasonably determined by an investment banking firm selected by the
Corporation and reasonably acceptable to the Majority Holders, with the costs of
such appraisal to be borne by the Corporation. ; provided, however, that no
sales transactions by a converting holder of the Series S Preferred Stock shall
be given effect in calculating such Average Stock Price insofar as it applies to
that holder.
"Board" shall mean the Board of Directors of the Company.
"Closing Date" shall mean the date of original issuance of
the Series S Preferred Stock.
"Common Stock" shall mean the Common Stock, $.01 par value
per share, of the Company.
"Company" shall mean this corporation.
"Conversion and Exchange Agreement" shall mean that
certain Conversion and Exchange Agreement, dated as of February 13, 1998, by and
among the Company and the other signatories thereto.
"Conversion Date Market Price" shall mean, at any Holder
Conversion Date, (i) $4.00; provided, however, if the average closing bid price
of the Common Stock for the ten trading day period immediately preceding August
18, 1998 is less than $4.00, then the Conversion Date Market Price shall be
$3.00, and provided, further, that if the Conversion Date Market Price on
February 18, 1999 is greater than 110% of the closing bid price of the Common
Stock on February 18, 1999 (or the next succeeding trading day), then the
Conversion Date Market Price shall be 110% of the closing bid price of the
Common Stock on February 18, 1999 (or the next succeeding trading day) or (ii)
if a Holder of Series S Stock shall make an Election (as defined below) for the
Series S Preferred Stock held by such Holder only, the Average Stock Price,
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<PAGE>
discounted by the percentage set forth in the table below (the "Applicable
Percentage") opposite the period during which such Holder Conversion Date shall
have occurred; provided that the Applicable Percentage shall be adjusted from
time to time, as provided in the Registration Rights Agreement (as hereinafter
defined).
Holder Conversion Date Applicable Percentage
---------------------- ---------------------
January 2, 1998 - March 31, 1998 5%
After March 31, 1998 10%
"Conversion Default" shall have the meaning set forth in
Paragraph 9(b).
"Conversion Notice" shall have the meaning set forth in
Paragraph 6(d).
"Conversion Rate" shall have the meaning set forth in
Paragraph 6(c).
"Designated Price" shall mean $50,000 per share, as
adjusted pursuant to the terms hereof, plus all accrued and unpaid dividends.
"Dividend Stock Price" shall mean, as to any date, the
average of the Market Price for Shares of Common Stock for the thirty (30)
consecutive trading days commencing forty-five (45) trading days prior to the
applicable date.
"Election" shall have the meaning set forth in Paragraph
7(g) hereof.
"Holder Conversion Date" shall have the meaning set forth
in Paragraph 6(d).
"Junior Stock" shall mean the Common Stock and, unless the
holders of Preferred Stock otherwise consent pursuant to Paragraph 5 hereof, all
other shares of any other class or series of the Company's capital stock
hereafter issued, other than (a) the Series S Preferred Stock, (b) Preferred
Stock ranking pari passu to the Series S Preferred Stock as permitted below
(including, without limitation, the Company's Series O Convertible Preferred
Stock, Series P Convertible Preferred Stock and Series R Convertible Preferred
Stock) or (c) Preferred Stock ranking senior to the Series S Preferred Stock and
authorized by the holders of the Series S Preferred Stock in accordance with
Section 5 hereof; provided, however, the Company may from time to time, without
the consent of the holders of the outstanding shares of the Series S Preferred
Stock, authorize, create or issue additional series of Preferred Stock which
rank pari passu to or do not have preference over the Series S Preferred Stock
in respect of dividends, redemption or distribution upon liquidation.
3
<PAGE>
"Market Price for Shares of Common Stock" shall mean the
price of one share of Common Stock determined as follows:
(i) If the Common Stock is listed on the Nasdaq
National Market, the daily closing price on the date of valuation;
(ii) If the Common Stock is listed on a national
securities exchange, the daily closing price on the date of valuation;
(iii) If neither (i) nor (ii) apply, but the Common
Stock is quoted on the Nasdaq Small Capital Market or the over-the-counter
market on the pink sheets or bulletin board, the daily closing price thereof on
the date of valuation; and
(iv) If neither clause (i), (ii) or (iii) above
applies, the market value as determined by a nationally recognized investment
banking firm or other nationally recognized financial advisor retained by the
Company for such purpose and reasonably acceptable to the holders of Series S
Preferred Stock, taking into consideration, among other factors, the earnings
history, book value and prospects for the Company, and the prices at which
shares of Common Stock recently have been traded. Such determination shall be
conclusive and binding on all persons.
"Original Issuance Market Price" shall mean an amount
equal to the Market Price for Shares of Common Stock on the Closing Date.
"Preferred Stock" shall mean the authorized shares of all
series of the preferred stock of the Company.
"Redemption Price" shall have the meaning set forth in
Section 14(d).
"Registration Rights Agreement" shall mean that certain
Registration Rights Agreement, dated as of February 13, 1998, by and among the
Company and the other signatories thereto.
"Series S Preferred Stock" shall mean the Series S
Convertible Preferred Stock of the Company, $.01 par value per share.
"Trigger Price" shall mean $4.50 per share, as adjusted
after the original issuance date of the Series S Preferred Stock upon any stock
split, stock dividend, split up, recapitalization or other reorganization with
respect to the Common Stock.
"Underlying Stock" shall mean those shares of the
Company's Common Stock issuable upon (i) conversion of the Series S Preferred
Stock and (ii) exercise of any Warrants.
4
<PAGE>
"Warrants" shall mean warrants issued by the Company in
connection with the issuance and redemption of the Series S Preferred Stock.
2. Designation and Number. The designation of the shares of Preferred Stock
authorized by these resolutions shall be "Series S Convertible Preferred Stock"
(the "Series S Preferred Stock"). The authorized number of shares constituting
the Series S Preferred Stock shall be one hundred forty (140) shares and each
share of Series S Preferred Stock shall rank equally in all respects.
3. Dividends. The Series S Preferred Stock shall accrue dividends at a rate
of ten percent (10%) per annum on the Designated Price. Dividends on the Series
S Preferred Stock shall accumulate and accrue from the date of its original
issue and shall accrue from day to day thereafter, whether or not earned or
declared. Dividends shall be payable quarterly, in that number of shares of
Common Stock purchasable by the dollar amount of the dividend described above,
at the Dividend Stock Price as of the date such dividend is paid. Dividends on
the Series S Preferred Stock for any quarterly period shall be declared by the
Company and paid on the fifteenth (15th) day following the end of such quarter.
If the Company is prohibited from paying any dividends, or otherwise fails to
pay such dividends, for any quarterly period, the dividends shall be deemed to
have accrued on such Series S Preferred Stock, and shall be capitalized to the
Series S Preferred Stock as of the last day of the quarterly period, as if the
dividend rate had been 12% per annum for such quarterly period, and the
Designated Price for each share of Series S Preferred Stock shall be deemed to
have been increased by the amount of such capitalized dividends. For as long as
any Series S Preferred Stock is outstanding, the Company shall pay no dividends
on Junior Stock, other than in shares of Junior Stock, without having first
obtained the consent of the holder or holders of a majority of the Series S
Preferred Stock then outstanding.
4. Liquidation Rights of Series S Preferred Stock. In the event of any
liquidation, dissolution or winding up of the Company, whether voluntary or
involuntary, the holders of the Series S Preferred Stock then outstanding shall
be entitled to be paid out of the assets of the Company available for
distribution to its stockholders, whether such assets are capital, surplus, or
earnings, before any payment or declaration and setting apart for payment of any
amount shall be made in respect of any Junior Stock, an amount equal to the
Designated Price; provided, however, that upon the occurrence of any of the
events described in (i), (ii) and (iii) below, the holders of the Series S
Preferred Stock shall be entitled to an amount equal to the Redemption Price and
not to the Designated Price. If upon any liquidation, dissolution, or winding up
of the Company, whether voluntary or involuntary, the assets to be distributed
to the holders of the Series S Preferred Stock shall be insufficient to permit
the payment to such stockholders of the full preferential amounts aforesaid,
then all of the assets of the Company to be distributed shall be distributed
ratably to the holders of the Series S Preferred Stock and to any holders of any
series of Preferred Stock that ranks pari passu with the Series S Preferred
Stock, on the basis of the liquidation value of the shares of Preferred Stock
held. The Company shall promptly mail written notice of such liquidation,
dissolution or winding up (with a copy sent by facsimile), but in any event such
notice shall be given at least thirty (30) days prior to the effective date
stated
5
<PAGE>
therein, but in any event not prior to the public announcement thereof, to each
record holder of the Series S Preferred Stock. If the Company determines to
effect a liquidation, dissolution or winding up of the Company, then,
notwithstanding the limitations set forth in Paragraph 13 hereof, the Series S
Preferred Stock shall thereupon, at the option of a holder thereof, be
convertible in full, if so permitted by applicable law and if not otherwise in
violation of an agreement to which the Company is a party or of the Company's
Certificate of Incorporation or By-Laws. For purposes of this paragraph, (i) a
sale or other disposition of all or substantially all of the assets of the
Company, (ii) a consolidation or merger of the Company with or into any other
corporation or other entity or person (whether or not the Company is the
surviving corporation, but other than a merger or consolidation whereby the
stockholders of the Company immediately preceding the merger or consolidation
continue to own greater than fifty percent (50%) of the voting securities of the
entity surviving such merger or consolidation), (iii) any person or any "group"
(as such term is used in such Section 13(d) of the Securities Exchange Act of
1934, as amended) becomes the beneficial owner of in excess of fifty percent
(50%) of the voting power of the Company's (or any successor entity's) capital
stock (each of (i) through (iii), a "Disposition Transaction"), shall, at the
option of each holder of Series S Preferred Stock, be deemed to be a
liquidation, dissolution or winding up of the Company with respect to the shares
of Series S Preferred Stock held by such holder.
5. Voting Rights. The holders of the Series S Preferred Stock will not have
any voting rights except as set forth below or as otherwise from time to time
required by law.
The affirmative approval (by vote or written consent as permitted
by applicable law) of the holders of at least 66 2/3% of the outstanding shares
of the Series S Preferred Stock, voting separately as a class, will be required
for (i) any amendment, alteration or repeal of the Company's Certificate of
Incorporation (including any Certificate of Designation, Rights and Preferences
for any other series of Preferred Stock) if the amendment, alteration or repeal
adversely affects the powers, preferences or rights of the Series S Preferred
Stock (including, without limitation, by creating any class or series of equity
securities having a preference over the Series S Preferred Stock with respect to
dividends, redemption, distribution upon liquidation or in any other respect);
or (ii) any amendment to or waiver of the terms of the Series S Preferred Stock
or this Certificate of Designation, provided, however, that no such approval
shall be required for the authorization, creation or issuance of any shares of
any additional series of Preferred Stock ranking pari passu to or which do not
have any preference over the Series S Preferred Stock in respect of dividends,
redemption or distribution upon liquidation. No approval of the holders of
Series S Preferred Stock shall be required for the Company to effect a
Disposition Transaction.
To the extent that under applicable law the approval of the
holders of the Series S Preferred Stock, voting separately as a class is
required to authorize a given action of the Company, the affirmative approval
(by vote or written consent as permitted by applicable law) of the holders of a
majority of the outstanding shares of the Series S Preferred Stock shall
constitute the approval of such action by the class. To the extent that under
applicable law the holders of the Series S Preferred Stock are entitled to vote
on a matter with holders of the
6
<PAGE>
Common Stock, voting together as one class, each share of Series S Preferred
Stock shall be entitled to that number of votes as shall be equal to the number
of shares of Underlying Stock into which such shares could have been converted
on the record date for any meeting of stockholders or on the date of any written
consent of stockholders, as applicable. Holders of the Series S Preferred Stock
shall be entitled to notice of all shareholder meetings or written consents
(whether or not they are entitled to vote thereat), which notice will be
provided pursuant to the Company's by-laws and applicable statutes.
6. Conversion. The holders of Series S Preferred Stock shall have the
following conversion rights.
(a) Holder's Right to Convert. Subject to the restrictions set
forth in Paragraphs 13 and 14(e) of this Certificate, each share of Series S
Preferred Stock shall be convertible in whole or in part and from time to time,
at the option of the holder thereof, into fully paid and nonassessable shares of
Common Stock.
(b) Mandatory Conversion. Subject to the provisions of Paragraph
13(d) hereof, on the fifth anniversary of its issuance (the "Mandatory
Conversion Date"), each and every share of Series S Preferred Stock shall be
converted into the number of fully paid and nonassessable shares of Common Stock
which may be purchased at the Conversion Date Market Price by dividing an amount
equal to the Designated Price by such price without any action required to be
taken by the holder thereof, and a Conversion Notice shall be deemed to be given
by the holder of each share of Series S Preferred Stock on that date; provided,
however, that no such mandatory conversion shall occur if, as of the Mandatory
Conversion Date, the Company is (i) insolvent, (ii) in bankruptcy proceedings or
(iii) in material breach of any of the terms of this Certificate or of the
Conversion and Exchange Agreement or the Registration Rights Agreement.
(c) Conversion Price for Holder of Converted Shares. Each share of
the Series S Preferred Stock that is converted into shares of Common Stock shall
be convertible into the number of shares of Common Stock which may be purchased
by the Designated Price of such share of Series S Preferred Stock at the
Conversion Date Market Price. The number of shares of Common Stock into which
each share of Series S Preferred Stock may be converted pursuant to this
paragraph is hereafter referred to as the "Conversion Rate."
(d) Mechanics of Conversion. Unless conversion is mandatory in
accordance with Paragraph 6(b) hereof, in order to convert any or all shares of
Series S Preferred Stock into full shares of Common Stock, the holder shall
surrender the certificate or certificates therefor, duly endorsed, by either
overnight courier or two-day courier, to the principal office of the Company or
of any transfer agent for the Series S Preferred Stock, and shall give written
notice (the "Conversion Notice"), and, if an Election has been made by such
holder, such notice shall include the holder's summary of its trades on the
relevant date utilized to determine the Average Stock Price with respect to such
conversion, its calculation of the Conversion Rate and the number of shares of
Common Stock issuable upon such conversion by facsimile (with the original of
such
7
<PAGE>
notice forwarded with the foregoing courier) to the Company at such office, that
he elects to convert the number of shares specified therein, which such notice
and election shall be irrevocable by the holder; provided, however, that the
Company shall not be obligated to issue certificates evidencing the shares of
the Common Stock issuable upon such conversion unless either the certificates
evidencing the shares of Series S Preferred Stock are delivered to the Company
or its transfer agent as provided above, or the holder notifies the Company that
such certificates have been lost, stolen or destroyed and promptly executes an
agreement reasonably satisfactory to the Company to indemnify the Company from
any loss incurred by it in connection with such certificates.
Immediately upon receipt of the Conversion Notice the
Company shall verify the holder's calculation of the Conversion Rate as
calculated by the holder or, if the Company disagrees with the holder's
calculation of the Conversion Rate, deliver by facsimile the Company's
calculation of the Conversion Rate. The Company shall use its best efforts to
issue and deliver as soon as possible, and in any event within two (2) business
days after delivery to the Company of certificates of the Series S Preferred
Stock to be converted or after receipt of such agreement and indemnification, to
such holder of Series S Preferred Stock at the address of the holder on the
stock books of the Company, or to its designee, a certificate or certificates
for the number of shares of Common Stock to which he shall be entitled as
aforesaid, together with a certificate or certificates for the number of Series
S Preferred Stock not submitted for conversion. The date on which the Conversion
Notice is given (the "Holder Conversion Date") shall be deemed to be the date
the Company received by facsimile the Conversion Notice, provided that the
original shares of Series S Preferred Stock to be converted, or the aforesaid
notice of lost, stolen or destroyed certificates, are received by the Company or
any transfer agent for the Series S Preferred Stock within five (5) business
days thereafter, and the person or persons entitled to receive the shares of
Common Stock issuable upon such conversion shall be treated for all purposes as
the record holder or holders of such shares of Common Stock on such date. If the
aforesaid notice of lost, stolen or destroyed certificates is not received by
the Company or any transfer agent for the Series S Preferred Stock within five
(5) business days after the Holder Conversion Date, the Conversion Notice shall
become null and void. In lieu of delivering physical certificates representing
the Common Stock issuable upon conversion, provided the Company's transfer agent
is participating in the Depository Trust Company ("DTC") Fast Automated
Securities Transfer program, upon request of the Subscriber and so long as the
certificates therefor do not bear a legend and the holder thereof is not
obligated to return such certificate for the placement of a legend thereon, the
Company shall use its best efforts to cause its transfer agent to electronically
transmit the Common Stock issuable upon conversion to the Subscriber by
crediting the account of Holder's prime broker or nominee with DTC through its
Deposit Withdrawal Agent Commission ("DWAC") system.
(e) Issue and Franchise Taxes. The Company shall be, and the
holders of Series S Preferred Stock shall not be, liable for any and all issue
and franchise taxes payable in respect of issuance and delivery of Common Stock
as contemplated by this Certificate.
8
<PAGE>
7. Adjustments; Reorganizations.
(a) Adjustment for Stock Splits and Combinations. If the Company
at any time or from time to time after the Closing Date, during the period
running from a Holder Conversion Date up to and including the day on which the
conversion has been effected, effects a subdivision or combination of the
outstanding Common Stock, the shares of Common Stock issuable upon the
conversion and the Conversion Date Market Price in effect shall be
proportionately adjusted to reflect the split or reverse split, as the case may
be. Any adjustment under this Paragraph 7(a) shall become effective at the close
of business on the date the subdivision or combination becomes effective.
(b) Adjustment for Certain Dividends and Distributions. If the
Company at any time or from time to time after the Closing Date, during the
period running from a Holder Conversion Date up to and including the day on
which the conversion has been effected, makes, or fixes a record date for the
determination of holders of Common Stock entitled to receive a dividend or other
distribution payable in additional shares of Common Stock, then, and in each
such event, the dividend or distribution, as the case may be, shall be made
available to the holder effecting that conversion at the time at which the
conversion becomes effective.
(c) Adjustment for Other Dividends and Distributions. Subject to
the provisions contained in Paragraph 3 of this Certificate, in the event the
Company, at any time or from time to time after the Closing Date, makes or fixes
a record date for the determination of holders of Common Stock entitled to
receive an extraordinary dividend or other distribution payable in securities of
the Company other than shares of Common Stock, and not an episodic dividend or
distribution payable by the Company in the ordinary course, then and in each
such event provision shall be made so that the holders of Series S Preferred
Stock shall receive, upon conversion thereof pursuant to Paragraph 6 hereof, in
addition to the number of shares of Common Stock receivable thereon, the amount
of such other securities of the Company to which a holder on the relevant record
or payment date, as applicable, of the number of shares of Common Stock so
receivable upon conversion would have been entitled, plus any dividends or other
distributions which would have been received with respect to such securities had
such holder thereafter, during the period from the date of such event to and
including the Holder Conversion Date, retained such securities, subject to all
other adjustments called for during such period under this Section 7 with
respect to the rights of the holders of the Series S Preferred Stock.
(d) Adjustment for Reclassification, Exchange and Substitution. In
the event that at any time or from time to time after the Closing Date, the
Common Stock issuable upon the conversion of the Series S Preferred Stock is
changed into the same or a different number of shares of any class or classes of
stock, whether by recapitalization, reclassification or otherwise (other than a
subdivision or combination of shares or stock dividend or reorganization
provided for elsewhere in this Paragraph 7), then and in each such event each
holder of Series S Preferred Stock shall have the right thereafter to convert
such stock into the kind of stock receivable upon such recapitalization,
reclassification or other change by holders of shares of Common Stock, all
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<PAGE>
subject to further adjustment as provided herein. In such event, it shall be a
condition precedent to any such transactions that the formula set forth herein
for conversion shall be equitably adjusted in a manner reasonably acceptable to
the holders of Series S Preferred Stock to reflect such change in number of
shares or, if shares of a new class of stock are issued to reflect the market
price of the class of classes of stock (applying the same factors used in
determining the Market Price for Shares of Common Stock) issued in connection
with the above described transaction.
(e) Reorganization. If at any time or from time to time after the
Closing Date there is a capital reorganization of the Common Stock (other than a
recapitalization, subdivision, combination, reclassification, or exchange of
shares provided for elsewhere in this Paragraph 7), then as a part of such
reorganization, provision shall be made so that the holders of the Series S
Preferred Stock shall thereafter be entitled to receive upon conversion of the
Series S Preferred Stock the number of shares of stock or other securities or
property to which a holder of the number of shares of Common Stock deliverable
upon conversion would have been entitled on such capital reorganization. In any
such case, it shall be a condition precedent to any such transactions that
appropriate adjustment be made in the application of the provisions of this
Paragraph 7 with respect to the rights of the holders of the Series S Preferred
Stock after the reorganization to the end that the provisions of this Paragraph
7 (including adjustment of the number of shares issuable upon conversion of the
Series S Preferred Stock) shall be applicable after that event and be as nearly
equivalent as may be practicable, including, by way of illustration and not
limitation, by equitably adjusting in a manner reasonably acceptable to the
holders of the Series S Preferred Stock the formula set forth herein for
conversion to reflect the market price of the securities or property (applying
the same factors used in determining the Market Price for Shares of Common
Stock) issued in connection with the above described transaction.
(f) Other Equity Offerings. In the event that the Company issues
or sells any shares of its securities which are convertible into or exchangeable
for its Common Stock or any convertible security, or any warrants or other
rights subscribed for or to purchase any options or the purchase of its Common
Stock or other securities (other than securities issued or which may be issued
in conjunction with a public offering or pursuant to the Company's employee or
director option plan or securities issued upon exercise, exchange or conversion
of securities convertible into or exercisable or exchangeable for other
securities of the Company, whether now or hereafter outstanding) (the "Equity
Securities") which provide for the issuance of shares of Common Stock upon
conversion or exchange of such security utilizing a conversion or exchange
discount per share which during any period is greater than the Applicable
Percentage applicable to the Series S Preferred Stock during such period, then,
for so long as any such Equity Securities remain outstanding, the Applicable
Percentage in respect of any conversion of Series S Preferred Stock during any
such period shall be equal to the discount applicable to the Equity Securities
during the relevant period.
(g) Election. If the Company fails to (i) file the Registration
Statement (as defined in the Registration Rights Agreement) with the SEC on or
prior to the Registration Date (as defined in the Registration Rights Agreement)
and/or the Registration Statement is not declared
10
<PAGE>
effective on or prior to that date which is 120 days after the date of the
Closing, (ii) receive at least $30 million in net proceeds that can be applied
in the first half of 1998 for general working capital purposes from the sale of
its European networks prior to March 15, 1998, (iii) receive at least $25
million in proceeds from new financings prior to May 15, 1998 that can
immediately be applied for general working capital purposes or (iv) receive at
least $50 million (in the aggregate, including the proceeds referred to in
clause (iii) above) in proceeds from new financings prior to September 15, 1998
that can immediately be applied for general working capital purposes, each
holder of Series S Stock shall have the right, exercisable for thirty days after
the happening of such event, by providing the Company with written notice to
make an election (the "Election").
8. Fractional Shares. No fractional shares of Common Stock or scrip
representing fractional shares of Common Stock shall be issuable hereunder. The
number of shares of Common Stock that are issuable upon any conversion shall be
rounded up or down to the nearest whole share.
9. Reservation of Stock Issuable Upon Conversion.
(a) Reservation Requirement. At all times while any shares of
Series S Preferred Stock are outstanding, the Company shall reserve and keep
available, free of preemptive rights, and subject to such legal limits and rules
of exchanges on which the Common Stock may be traded, no less than one hundred
five percent (105%) and, after an Election is made (as defined in the Series R
Certificate of Designation and the Series S Certificate of Designation, as the
case may be), no less than two hundred percent (200%) with respect to the shares
of Preferred Stock for which an Election has been made, of that number of shares
of Common Stock for which such outstanding shares of Series S Preferred Stock
are then convertible, as equitably adjusted pursuant to any stock splits, split
ups, recapitalization or reorganization of shares of Common Stock.
(b) Default; Cure. If the Company does not have a sufficient
number of shares of Common Stock authorized, reserved or otherwise available to
satisfy the Company's obligations to a holder of Series S Preferred Stock upon
receipt of a Conversion Notice and/or holders of Warrants upon exercise thereof,
or if the Company is otherwise prohibited by applicable law or by the rules or
regulations of any stock exchange, interdealer quotation system or other
self-regulatory organization with jurisdiction over the Company or its
securities from issuing all of the Common Stock which is to be issued upon
receipt of a Conversion Notice (each, a "Conversion Default"), each holder of
the Series S Preferred Stock shall have the right to require the Company, if the
Company is so permitted by applicable law and if not otherwise in violation of
any agreement to which the Company is a party as of the date hereof or of the
Company's Certificate of Incorporation or By-Laws, to redeem such holder's pro
rata portion of the Series S Preferred Stock which the Company is then able to
redeem, and to implement the cure procedures set forth in Paragraph 15(c)
hereof.
10. No Reissuance of Series S Preferred Stock. No share or shares of Series
S Preferred Stock acquired by the Company by reason of redemption, purchase,
conversion or otherwise shall
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be reissued as Series S Preferred Stock, and all such shares shall be retired
and shall return to the status of authorized, unissued and retired and
undesignated shares of Preferred Stock. No shares of Series S Preferred Stock
shall be authorized or issued after the date of the initial issuance of shares
of Series S Preferred Stock pursuant to the Conversion and Exchange Agreement
without the consent of at least 66 2/3% in interest of the holders of Series S
Preferred Stock outstanding immediately prior thereto.
11. No Impairment. The Company shall not intentionally take any action
which would impair the rights and privileges of the shares of Series S Preferred
Stock set forth herein.
12. Holder's Rights if Shares are Delisted or if Trading in Common Stock is
Suspended. In the event that at any time on or after the date hereof and prior
to the fifth anniversary of the Closing Date, trading in the shares of the
Company's Common Stock is suspended on the principal market or exchange for such
shares (which market or exchange shall be either the Nasdaq National Market, the
American Stock Exchange or the New York Stock Exchange), for a period of ten
(10) consecutive trading days, other than as a result of the suspension of
trading in securities in general, or if such shares are delisted, then, at the
holder's option, the Company, if so permitted by applicable law and if not
otherwise in violation of an agreement to which the Company is a party or of the
Company's Certificate of Incorporation or By-Laws, shall redeem such holder's
shares of Series S Preferred Stock at the Redemption Price determined as set
forth in Paragraph 14(b) hereof.
13. Limitations on Holder's Right to Convert.
(a) Minimum Conversion. Holders of Series S Preferred Stock may in
no event convert less than one (1) share of Preferred Stock pursuant to a single
Conversion Notice; provided, however, that during a Conversion Restriction
Period no such minimum shall apply; provided, however, a Holder shall be
permitted to convert a fraction of a share of Series S Preferred Stock if such
Holder converts at least one share of Series S Preferred Stock.
(b) Conversion Restriction Period. In the event that the Market
Price for Shares of Common Stock is equal to or less than the Trigger Price for
five (5) consecutive trading days, the Company may, at its option, at any time
while the Market Price for Shares of Common Stock is at or remains below the
Trigger Price, commence a conversion restriction period (a "Conversion
Restriction Period") by providing to the holders of Series S Preferred Stock
written notice thereof (the "Restriction Notice"). A Conversion Restriction
Period shall begin, with regards to each holder of Series S Preferred Stock, on
the fifth (5th) trading day after such holder receives the Restriction Notice
and shall terminate on the earliest of (i) the sixtieth (60th) calendar day
after such date, (ii) the fifth (5th) consecutive trading day during the
Conversion Restriction Period for which the Market Price for Shares of Common
Stock exceeds the Trigger Price and (iii) the Company's election, by notice to
the holder, to terminate such Conversion Restriction Period; provided, however,
that in no event shall the aggregate number of calendar days subject to all
Conversion Restriction Periods exceed sixty (60).
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Holders of Series S Preferred Stock may not exercise the
right to convert such Preferred Stock during the first ten (10) trading days of
any single Conversion Restriction Period. Thereafter, the aggregate Designated
Price of all shares of Series S Preferred Stock which may be converted on any
Holder Conversion Date during any Conversion Restriction Period shall not exceed
$50,000. If less than all shares of Series S Preferred Stock attempted to be
converted on any Holder Conversion Date may be converted due to operation of the
immediately preceding sentence, the shares of Series S Preferred Stock to be
converted shall be converted pro rata from all shares of Series S Preferred
Stock properly tendered for conversion pursuant to Paragraph 6 of this
Certificate.
(c) Market Stand-Off. Each holder of Series S Preferred Stock, if
so requested by the Company in connection with a firmly underwritten public
offering of Common Stock managed by an Approved Underwriter pursuant to an
effective registration statement, shall not convert any Series S Preferred Stock
for sixty (60) days commencing upon the date specified by the Company (the
"Stand-Off Period"), but in no event sooner than five (5) trading days after
such holder's receipt of the Company's request; provided, however, that:
(i) the Company may only request, and the holders of
Series S Preferred Stock shall only be subject to, one (1) Stand-Off Period
during the twenty-four (24) month period immediately following the Closing Date
and one (1) Stand-Off Period thereafter (provided that, if the Stand-Off Period
terminates pursuant to clause (ii) below on any one occasion with respect to the
twenty-four (24) month period referred to above or on any separate occasion with
respect to the remaining period thereafter, the Company may request and the
holders will be subject to a Stand-Off Period on one additional occasion during
such period);
(ii) the Market Stand-Off shall immediately terminate if
the registration statement for the underwritten public offering is not declared
effective on or before the forty-fifth (45th) business day after the Company's
requested commencement date of the Stand-Off Period; and
(iii) the Mandatory Conversion Date shall be automatically
extended by the aggregate number of days for which the restrictions imposed by
the Stand-Off Period shall be effective.
(d) Notwithstanding anything to the contrary contained herein,
each Conversion Notice shall contain a representation that, after giving effect
to the shares of the Company's Common Stock to be issued pursuant to such
Conversion Notice, the total number of shares of the Company's Common Stock
deemed beneficially owned by the holder thereof, together with all shares of the
Company's Common Stock deemed beneficially owned by such holder's "affiliates"
as defined in Rule 144 promulgated under the Securities Act of 1933, as amended,
(exclusive of shares issuable upon conversion of the unconverted portion of the
Shares of Series S Preferred Stock or the unexercised or unconverted portion of
any other securities of the Company subject to a limitation on conversion or
exercise analogous to the limitations contained herein) will not
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<PAGE>
result in beneficial ownership by the holder and its affiliates of more than
4.9% of the outstanding shares of Common Stock. For purposes of this
subparagraph, beneficial ownership shall be determined in accordance with
Section 13(d) of the Securities Exchange Act of 1934, as amended, and Regulation
13 D-G thereunder, except as otherwise provided above. Any Conversion Notice
which does not contain such a representation shall be ineffective. The
restriction contained in this Section 13(d) may be waived by each holder, with
respect to such holder only, upon sixty-one (61) days advanced written notice to
the Company.
(e) Cap Amount. Unless permitted by the applicable rules and
regulations of the principal securities market on which the Common Stock is
listed or traded, in no event shall the total number of shares of Common Stock
issued upon conversion of the Series S Preferred Stock exceed the maximum number
of shares of Common Stock that the Company can so issue pursuant to the rules of
the Nasdaq SmallCap or National Market ("Nasdaq") (or any successor rule) (the
"Cap Amount"). In the event the Company is prohibited from issuing shares of
Common Stock as a result of the operation of this subparagraph (ii), the Company
shall comply with Section (g) below).
(f) Obligation to Cure. If at any time the then unissued portion
of Holder's Cap Amount is less than 135% of the number of shares then issuable
upon conversion of Series S Preferred Stock (a "Trading Market Trigger Event"),
the Company shall immediately notify the Holders of such occurrence and shall
take immediate action (including, if necessary, seeking the approval of its
shareholders to authorize the issuance of the full number of shares of Common
Stock which would be issuable upon the conversion of Series S Preferred Stock
but for the Cap Amount) to eliminate any prohibitions under applicable law or
the rules or regulations of any stock exchange, interdealer quotation system or
other self-regulatory organization with jurisdiction over the Company or any of
its securities on the Company's ability to issue Common Stock in excess of the
Cap Amount. In the event the Company fails to eliminate all such prohibitions
within ninety (90) days after the Trading Market Trigger Event, Holder shall
thereafter have the option, exercisable in whole or in part at any time and from
time to time by delivery of a notice of redemption (a "Redemption Notice") to
the Company, to require the Company to pay for cash, at the Redemption Price (as
defined below), a portion of the then unissued portion of the Holder's Cap
Amount such that, after giving effect to such prepayment, Holder's allocated
portion of the Cap Amount exceeds 135% of the total number of Ordinary Shares
issuable to Holder upon conversion of such Holder's Series S Preferred Stock on
the date of the default. Additionally, if at any time and from time to time the
then unissued portion of Holder's Cap Amount is less than the number of shares
of Common Stock then issuable upon conversion of such Holder's Series S
Preferred Stock, Holder shall thereafter have the option, exercisable in whole
or in part at any time and from time to time by delivery of a Redemption Notice
to the Company, to require the Company to pay for cash, at the Redemption
Amount, a portion of the then unissued portion of such Holder's Cap Amount (and
accrued and unpaid dividends thereon) such that, after giving effect to such
prepayment, Holder's allocated portion of the Cap Amount equals the total number
of shares of Common Stock issuable to Holder upon conversion of such Holder's
Series S Preferred Stock on the date of such Redemption Notice.
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<PAGE>
14. Optional Redemption.
(a) On one occasion prior to that date which is six (6) months
after the Closing Date (the "Six Month Anniversary"), so long as the Underlying
Stock is subject to an effective registration statement and the Company's Common
Stock is listed on the Nasdaq National Market, the American Stock Exchange or
the New York Stock Exchange, the Company may, at its option, redeem at least
fifty percent (50%) of the Series S Preferred Stock then outstanding, on a pro
rata basis among the holders thereof. In addition to the right provided in the
preceding sentence, at any time prior to the Six Month Anniversary that the
Underlying Stock is subject to an effective registration statement and the
Company's Common Stock is listed on the Nasdaq National Market, the American
Stock Exchange or the New York Stock Exchange, the Company may, at its option,
redeem all, but not less than all, of the Series S Preferred Stock then
outstanding. Any and all shares of the Series S Preferred Stock redeemed by the
Company pursuant to this Section 14(a) shall be redeemed at a price equal to
110% of the Designated Price payable in cash and, in connection with such
redemption, the Company shall issue Warrants, in substantially the form attached
hereto as Exhibit A, for the purchase of an aggregate of 1,833 shares of Common
Stock for each share of Series S Preferred Stock redeemed (subject to adjustment
for any stock splits, split ups, stock dividends, recapitalization or other
reorganizations occurring after the Closing Date in accordance with the
mechanisms set forth in Section 5 (a), (b), (d) or (e) of the form of Warrant
attached hereto as Exhibit A). Such Warrants shall be exercisable for shares of
Common Stock at an exercise price per share equal to 115% of the Market Price
for Shares of Common Stock as of the date of redemption under this Paragraph
14(a).
(b) The Company may also at its option redeem all, but not less
than all, of the Series S Preferred Stock then outstanding (i) at any time prior
to that date which is two (2) years after the Closing Date (the "Second
Anniversary") if the Market Price for Shares of Common Stock is below the
Trigger Price or (ii) on the Second Anniversary, at a redemption price equal to
110% of the Designated Price for the shares of Series S Preferred Stock and in
connection with such redemption the Company shall issue Warrants, in
substantially the form attached hereto as Exhibit A, exercisable for 2,500
shares of Common Stock for each share of Series S Preferred Stock redeemed
(subject to adjustment for any stock splits, split ups, stock dividends,
recapitalization or other reorganizations occurring after the Closing Date in
accordance with the mechanisms set forth in Section 5 (a), (b), (d) or (e) of
the form of Warrant attached hereto as Exhibit A), at an exercise price equal to
130% of the Market Price for Shares of Common Stock as of the date of redemption
under this Paragraph 14(b). In addition to the right provided in the preceding
sentence, if the Company's option to redeem not less than fifty percent (50%) of
the Series S Preferred Stock pursuant to paragraph (a) above has not been
exercised, on one occasion prior to the Six Month Anniversary, so long as the
Underlying Stock is subject to an effective registration statement and the
Company's Common Stock is listed on the Nasdaq National Market, the American
Stock Exchange or the New York Stock Exchange, the Company may, at its option,
redeem at least fifty percent (50%) of the Series S Preferred stock then
outstanding, on a pro rata basis among the holders thereof, at the price
provided for in the preceding sentence.
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<PAGE>
(c) In the case of a redemption of Series S Preferred Stock as a
result of a Disposition Transaction, the Series S Preferred Stock shall be
redeemed at a price equal to 110% of the Designated Price.
(d) The redemption price for any redemption of the Series S
Preferred Stock as set forth in paragraph (a), (b) or (c) above shall be
referred to herein as the "Redemption Price."
(e) Upon and following receipt of notice from the Company of an
optional redemption of any or all of the shares of Series S Preferred Stock then
outstanding, each holder thereof may convert only that number of shares of
Series S Preferred Stock as is necessary to cover hedges or short positions in
the Company's Common Stock taken by that holder prior to the receipt of such
notice.
15. Mechanics of Redemption.
(a) Upon any redemption of Series S Preferred Stock, written
notice shall be given to the Company or the holders of the Series S Preferred
Stock, as applicable, for shares to be purchased or redeemed at least twenty
(20) business days prior to the date fixed for redemption. The notice shall be
addressed to the Company if applicable, or to each such holder at the address of
such holder appearing on the books of the Company, or given by such holder to
the Company for the purpose of notice, or, if no such address appears or is so
given, at the last known address of such holder. Such notice shall specify the
date fixed for redemption, shall state that shares of Series S Preferred Stock
outstanding are to be redeemed and the number of shares of Series S Preferred
Stock to be so redeemed, and shall call upon the holder to surrender on said
date, at the place designated in the notice, the certificate or certificates
representing the shares to be redeemed (in the case of redemptions pursuant to
Section 14(d) hereof) on the date fixed for redemption stated in such notice.
The Company shall only deliver notice of a redemption to the holders of Series S
Preferred Stock if the Company, acting in good faith, reasonably believes that
it will have an amount of funds equal to the aggregate Redemption Price payable
in connection with such a redemption available for the payment of such aggregate
Redemption Price on the date fixed for such redemption. Unless such person shall
elect to convert some or all of the same into Common Stock in accordance with
Section 6 hereof, each holder of shares of Series S Preferred Stock called for
such redemption shall surrender the certificate or certificates evidencing such
shares at the place designated in such notice and shall thereupon be entitled to
receive payment of the Redemption Price on the date fixed for redemption with
respect to all unconverted shares.
(b) If, on or prior to any date fixed for redemption, the Company
deposits, with any bank or trust company in the State of New Jersey or in the
State of New York, as a trust fund, a sum (and duly executed warrants)
sufficient to redeem all shares of Series S Preferred Stock called for
redemption which have not theretofore been surrendered for conversion, with
irrevocable instructions and authority to the bank or trust company to pay and
deliver, on or after the date fixed for redemption, the Redemption Price of the
shares to their respective holders upon the surrender of their share
certificates, then from and after the date of redemption the shares to be
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<PAGE>
redeemed shall be redeemed and dividends and other distributions on those shares
shall cease to accrue after the date such shares were called for redemption. The
deposit shall constitute full payment for the shares of Series S Preferred Stock
to their holders and from and after the date of the deposit the shares of Series
S Preferred Stock shall no longer be outstanding, and the holders thereof shall
cease to be shareholders with respect to such shares, and shall have no rights
with respect thereto except the right to receive from the bank or trust company
payment of the Redemption Price of the shares without interest upon surrender of
their certificates therefor and the right to receive from the Company any
accrued dividends thereon through the date such shares were called for
redemption. Any interest accrued on any fund so deposited shall be the property
of, and paid to, the Company.
(c) The Company may cure the Conversion Default by either (i)
promptly, and in no event later than ten (10) business days after the Conversion
Default occurs, obtaining those consents of shareholders, note holders and
others, if any, as shall be required in order to effect the balance of the
conversion or redemption, as the case may be; or (ii) redeem not later than
twenty (20) business days after the Conversion Default, the excess shares of
Series S Preferred Stock and/or Warrants by paying the holders (A) cash per
share in an amount equal to one hundred ten percent (110%) of the Market Price
for Shares of Common Stock as of the Holder Conversion Date, on an as converted
basis and (B) Warrants in substantially the form attached hereto as Exhibit A,
for the purchase of an aggregate of 2,500 shares of Common Stock for each share
of Series S Preferred Stock redeemed (subject to adjustment for any stock
splits, split ups, stock dividends, recapitalization or other reorganizations
occurring after the Closing Date in accordance with the mechanisms set forth in
Section 5 (a), (b), (d) or (e) of the form of Warrant attached hereto as Exhibit
A) at an exercise price per share equal to 130% of the Market Price for shares
of Common Stock as of the date of redemption; or (iii) the Company may, not
later than twenty (20) business days after the Conversion Default, issue to the
relevant holders of excess shares of Series S Preferred Stock and/or Warrants
such other securities of the Company, in exchange therefor, in such quantities,
at such prices and subject to such terms and conditions as may be necessary in
order to generate a value per share, in respect of the excess shares of Series S
Preferred Stock and/or Warrants, as the case may be, before taxes equal to (A)
one hundred ten percent (110%) of the Market Price for Shares of Common Stock as
of the Holder Conversion Date, on an as converted basis and (B) Warrants in
substantially the form attached hereto as Exhibit A, for the purchase of an
aggregate of 2,500 shares of Common Stock for each share of Series S Preferred
Stock redeemed (subject to adjustment for any stock splits, split ups, stock
dividends, recapitalization or other reorganizations occurring after the Closing
Date in accordance with the mechanisms set forth in Section 5 (a), (b), (d) or
(e) of the form of Warrant attached hereto as Exhibit A) at an exercise price
per share equal to 130% of the Market Price for shares of Common Stock as of the
date of redemption. That value shall be established by taking the average of the
valuations of those securities provided by three of the Approved Underwriters,
one of whom shall have been selected by the relevant holder, one of whom shall
have been selected by the Company and the third of whom will be selected by the
first two Approved Underwriters.
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<PAGE>
(d) Upon any redemption of Series S Preferred Stock in accordance
with the foregoing, all of such shares of Series S Preferred Stock shall be
canceled and shall revert to the status of authorized and unissued shares of
Preferred Stock.
16. Transfer Restrictions. Shares of Series S Preferred Stock may not be
sold or otherwise transferred to a competitor of the Company engaged in, or to
the knowledge of the holder thereof, planning to engage in the business of
providing wireless voice or data communications services to mobile customers or
of providing equipment in connection therewith.
17. Withholding Taxes. Notwithstanding anything herein, the Company may
condition the making of any distribution (as such term is defined under
applicable tax law) in respect of any share of Series S Preferred Stock on the
holder of such share of Series S Preferred Stock depositing with the Company an
amount of cash sufficient to enable the Company to satisfy its withholding tax
obligations (the "Withholding Tax") with respect to such distribution. For the
avoidance of doubt, the Company shall not be required to redeem any Series S
Preferred Stock, and no dividends shall be capitalized as part of the Designated
Price of any share of Series S Preferred Stock, as a result of the Company's
failure to make a distribution because of a holder's failure to deliver the
proper Withholding Tax with respect to any distribution.
18. Consent for Distributions and Redemptions. For so long as the
Subscribers and their Permitted Assignees (as such terms are defined in that
certain Subscription Agreement dated as of June 14, 1996 by and among the
Company, Renaissance Fund LDC ("Renaissance") and the other signatories thereto)
own shares of the Company's Series N Cumulative Convertible Preferred Stock (the
"Series N Preferred Stock") having an aggregate stated value of at least
$25,000,000, the Company must obtain Renaissance's consent prior to the
declaration or payment of any dividend on the Series S Preferred Stock, or any
redemption of Series S Preferred Stock for, cash or securities of the Company
which rank senior to or on parity with the Series N Preferred Stock.
Notwithstanding anything in this Certificate to the contrary, the Company shall
not redeem any Series S Preferred Stock for cash upon the occurrence of a
Disposition Transaction, a Conversion Default or the occurrence of an event
described in Section 12 of this Certificate prior to any required purchase or
payment of the Company's 15% Senior Secured Discount Notes due 2005 (the "1995
Notes") pursuant to Section 4.11 or Article Six of the Indenture dated as of
June 30 1995 governing such 1995 Notes.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF the undersigned have executed this Certificate of
Designation of Preferences at the City of Montvale, State of New Jersey, on this
___ day of February, 1998.
/s/ Yaron Eitan /s/ Robert Vecsler
- ---------------------- -----------------------
Chairman Secretary
The undersigned declare under the penalty of perjury that the matters set
forth in the foregoing Certificate are true of their own knowledge. Executed at
Montvale, New Jersey, on the ___ day of February, 1998.
/s/ Yaron Eitan /s/ Robert Vecsler
- ---------------------- -----------------------
Chairman Secretary
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CONVERSION AND EXCHANGE AGREEMENT
This Conversion and Exchange Agreement (the "Agreement"), dated as of February
13, 1998, has been executed by each of the undersigned investors whose name and
signature appear on the signature page hereof (each individually, an "Investor"
and collectively, the "Investors").
BACKGROUND
A. As of the date hereof, each of the Investors owns the number of
shares of Series O Convertible Preferred Stock, $.01 par value per share (the
"Series O Stock") of Geotek Communications, Inc., a Delaware corporation (the
"Company") and Series Q Convertible Preferred Stock, $.01 par value per share
(the "Series Q Stock") as is set forth opposite such Investor's name on Exhibit
A hereto.
B. The Company has agreed and each of the Investors, severally and not
jointly, has agreed that each Investor will (i) convert shares of Series O Stock
and/or Series Q Stock which they own into shares of Common Stock, $.01 par value
per share, of the Company ("Common Stock"), (ii) exchange shares of Series O
Stock and/or Series Q Stock for shares of a newly created series of preferred
stock of the Company designated "Series R Preferred Stock" (the "Series R
Stock"), (iii) exchange shares of Series O Stock and/or Series Q Stock for
shares of a newly created series of preferred stock of the Company designated
"Series S Preferred Stock" (the "Series S Stock" and collectively with the
Series R Stock, the "Preferred Stock") and/or (iv) retain shares of Series O
Stock and Series Q Stock; all in the amounts set forth in Exhibit A hereto and
on the terms and conditions set forth herein. The rights and preferences of the
Series R Stock and the Series S Stock, including the terms on which the Series R
Stock and Series S Stock may be converted into Common Stock, are set forth in
the Certificates of Designation attached hereto as Exhibit B (the "Series R
Certificate of Designation") and Exhibit C (the "Series S Certificate of
Designation"), respectively, each of which shall have been executed,
acknowledged, filed, recorded and become effective in accordance with the
General Corporation Law of the State of Delaware prior to the Closing (as
defined below).
C. The solicitation of this Agreement and, if accepted by the Company,
the issuance of Preferred Stock is being made in reliance upon the provisions of
Regulation D ("Regulation D") promulgated by the Securities and Exchange
Commission ("SEC") under the United States Securities Act of 1933, as amended
(the "Securities Act"), or under the provisions of Section 4(2) of the
Securities Act. The Preferred Stock and the Common Stock issuable upon
conversion or exercise thereof are sometimes collectively referred to
<PAGE>
in this Agreement as the "Securities." The Common Stock issuable upon conversion
of the Preferred Stock is sometimes referred to as the "Underlying Stock."
In consideration of the mutual promises, representations, warranties
and conditions set forth herein, and intending to be legally bound hereby, the
Company and the Investors agree as follows:
1. Agreement; the Investors
1.1 Agreement. Each Investor, severally and not jointly, hereby agrees
that at the Closing (as defined below) it will (i) convert shares of
Series O Stock and/or Series Q Stock which they own into shares of
Common Stock, (ii) exchange shares of Series O Stock and/or Series Q
Stock for shares of Series R Stock, at a rate of 1.1111 shares of
Series R Stock for each one share of Series O Stock or Series Q Stock,
(iii) exchange shares of Series O Stock and/or Series Q Stock for
shares of Series S Stock, at a rate of one share of Series S Stock for
each share of Series O Stock or Series Q Stock and/or (iv) retain
shares of Series O Stock and Series Q Stock; all in the amounts set
forth in Exhibit A hereto and on the terms and conditions set forth
herein. The closing of the transactions contemplated hereby (the
"Closing") shall occur on February __, 1998 or such other date as the
Company and the Investors shall agree (the "Closing Date") and shall
occur when all of the conditions to the Company's and the Investors'
obligations under Sections 1.3 and 1.4, respectively, have been
satisfied or waived by the appropriate party.
1.2 Nature of the Investor. Each Investor is obtaining the Preferred
Stock for its own account and each Investor severally represents and
warrants that it is an "Accredited Investor" as that term is defined in
Rule 501 of Regulation D.
1.3 Conditions Precedent to the Obligation of the Company to Issue the
Preferred Stock. The obligation hereunder of the Company to issue the
Preferred Stock to each Investor and otherwise to consummate the
transactions contemplated hereby is subject to the satisfaction, at or
before the Closing, of each of the conditions set forth below. These
conditions are for the Company's sole benefit and may be waived by the
Company at any time in its sole discretion by delivering prior written
notice of any such waiver to each Investor.
(a) Accuracy of the Investor's Representations and Warranties. The
representations and warranties of such Investor shall be true
and correct as of the date when made and as of the Closing
Date as though made at each such time.
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(b) Performance by the Investor. Such Investor shall have
performed, satisfied and complied in all respects with all
covenants, agreements and conditions required by this
Agreement to be performed, satisfied or complied with by such
Investor at or prior to the Closing.
(c) No Injunction. No statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by any court or governmental authority
of competent jurisdiction or any stock exchange, interdealer
quotation system or other self-regulatory organization with
jurisdiction over the Company or its securities which
prohibits or adversely affects any of the transactions
contemplated by this Agreement, nor shall any proceeding have
been commenced which may have the effect of prohibiting or
adversely affecting any of the transactions contemplated by
this Agreement.
(d) Side Letter Agreement. The Company and each such Investor
which is receiving shares of Series S Stock shall have entered
into a letter agreement in substantially the form attached
hereto as Exhibit D concerning block trade sales, short sale
transactions and certain other matters (the "Side Letter
Agreement").
(e) Release. Each Investor shall have executed and delivered to
the Company a Release in the form attached hereto as
Exhibit E.
(f) Delivery of Securities. Each Investor shall have delivered to
the Company certificates representing the shares of Series O
Stock and/or Series Q Stock which are being exchanged for
shares of Series R Stock and/or Series S Stock.
1.4 Conditions Precedent to the Obligation of the Investor. The
obligation of each Investor to consummate the transactions contemplated
hereby is subject to the satisfaction, at or before the Closing, of
each of the conditions set forth below. These conditions are for each
Investor's sole benefit and may be waived by such Investor at any time
in its sole discretion by delivering prior written notice to the
Company and each other Investor.
(a) Accuracy of the Company's Representations and Warranties. The
representations and warranties of the Company shall be true
and correct as of the date when made and as of the Closing
Date as though made at each such time.
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<PAGE>
(b) Performance by the Company. The Company shall have performed,
satisfied and complied in all respects with all covenants,
agreements and conditions required by this Agreement to be
performed, satisfied or complied with by the Company at or
prior to the Closing.
(c) No Injunction. No statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by any court or governmental authority
of competent jurisdiction which prohibits or adversely affects
any of the transactions contemplated by this Agreement, nor
shall any proceeding have been commenced which may have the
effect of prohibiting or adversely affecting any of the
transactions contemplated by this Agreement.
(d) Adverse Changes. Since September 30, 1997, no event which had
or is likely to have a Material Adverse Effect (as defined in
Section 3.5 below) on the Company has occurred.
(e) No Suspension of Trading in or Delisting of Common Stock.
Trading in the Common Stock shall not have been suspended by
the SEC or the Nasdaq National Market ("Nasdaq" or the
"Exchange") and the Common Stock shall not have been delisted
from the Exchange.
(f) Legal Opinion. The Company shall have delivered to such
Investor the opinion of Klehr, Harrison, Harvey, Branzburg &
Ellers LLP, independent counsel to the Company, in
substantially the form attached hereto as Exhibit F.
(g) Officer's Certificate. The Company shall have delivered to
such Investor a certificate in form and substance reasonably
satisfactory to such Investor, executed by an executive
officer of the Company, to the effect that all the conditions
to the Closing shall have been satisfied as of the Closing
Date.
(h) Filing of the Certificate of Designation. Each of the Series R
Certificate of Designation and the Series S Certificate of
Designation, conforming to the terms of this Agreement, shall
have been duly filed with the Secretary of State of the State
of Delaware and certified copies thereof shall have been
delivered to such Investor.
(i) Release. The Company shall have executed and delivered to such
Investor a Release in the form attached hereto as Exhibit E.
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(j) Delivery of Securities. The Company shall have delivered to
such Investor duly executed stock certificates representing
the Preferred Stock issuable to such Investor.
(k) Registration Rights Agreement. The Company and each of the
Investor s shall have executed and delivered the Registration
Rights Agreement (the "Registration Rights Agreement") in the
form attached hereto as Exhibit G.
1.5 Conversion of Series O Stock and Series Q Stock into Common Stock. All
shares of Series O Stock and Series Q Stock which Investors have agreed
to convert into shares of Common Stock at the Closing (the "Closing
Conversion Shares") shall be converted in accordance with the terms of
the Certificate of Designation creating the Series O Stock (the "Series
O Certificate") or Certificate of Designation creating the Series Q
Stock (the "Series Q Certificate"), as the case may be, except that for
purposes of such conversion the "Conversion Date Market Price" (as
defined in each of the Series O Certificate and the Series Q
Certificate) shall be $1.00. Each of the Investors converting shares of
Series O Stock and/or Series Q Stock into shares of Common Stock at the
Closing shall execute and deliver at the Closing a conversion notice
evidencing such a transaction. The Investors acknowledge and agree
that, notwithstanding any rights which they may have to the contrary,
no Investor may sell or transfer in excess of one-third of the number
of Closing Conversion Shares which they receive at the Closing in each
of the first three consecutive 30-day periods following the Closing
Date.
1.6 Remaining Shares of Series O Stock and Series Q Stock. Except as
specifically provided to the contrary in this Section 1.6, shares of
Series O Stock and Series Q Stock which any Investor owns following the
Closing shall be governed by the existing terms thereof. Each of Themis
Partners, L.P., Samyang Merchant Bank, Heracles Fund, Leonardo, L.P.,
AG Super Fund, L.P., Michaelangelo, L.P., Angelo, Gordon & Co., L.P.,
Raphael L.P., Ramius Fund LTD, AG Super Fund International Partners,
L.P. and GAM Arbitrage Investments, Inc. agree that, notwithstanding
any rights such party may have to the contrary, no shares of Series O
Stock or Series Q Stock which such party owns following the Closing may
be converted into shares of Common Stock until on or after June 25,
1998. Each of the Company and Halifax Fund L.P., Palladin Partners I,
L.P., Gleneagles Fund, LTD, Colonial Penn Insurance Company, Colonial
Penn Life Insurance Company and CIBC Wood Gundy Securities Corp. agree
that all shares of Series O Stock and Series Q Stock which such parties
own as of the Closing Date shall be exercisable as of such date into
shares of Common Stock, notwithstanding any restrictions on the
convertibility of such shares which would otherwise be applicable as of
such date.
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2. Representations and Warranties of Investor
Each Investor severally represents and warrants to the Company as to
the matters set forth below. The representations of each Investor under this
Section 2 are made exclusively by and only with respect to such Investor and no
Investor shall be liable or responsible for the breach of any representation or
warranty made by any other Investor.
2.1 No Government Recommendation or Approval. The Investor understands that
no United States federal or state agency or similar agency of any other
country, has passed upon or made any recommendation or endorsement of
the Company or the issuance of the Securities.
2.2 Intent. The Investor is obtaining the Securities for its own account
and not with a view towards distribution in violation of securities
laws, and the Investor has no present arrangement (whether or not
legally binding) at any time to sell the Securities to or through any
person or entity; provided, however, that by making the representations
herein, the Investor does not agree to hold the Securities for any
minimum or other specific term and reserves the right to dispose of the
Securities at any time in accordance with federal and state securities
laws applicable to such disposition. The Investor has been advised of
or is aware of the provisions of Rule 144 promulgated under the
Securities Act.
2.3 Sophisticated Investor. The Investor is a sophisticated investor (as
described in Rule 506(b)(2)(ii) of Regulation D) and an accredited
investor (as defined in Rule 501 of Regulation D), and has such
experience in business and financial matters that it is capable of
evaluating the merits and risks of an investment in the Securities. The
Investor acknowledges that the Securities are speculative and involve a
high degree of risk. The Investor understands that there is no
established market for the Preferred Stock and that no public market
therefor is foreseen.
2.4 Independent Investigation. The Investor, in making its decision to
obtain the Securities obtained hereunder, has relied upon an
independent investigation made by it and/or its representatives and has
not relied on any information or representations made by third parties
or on any oral or written representations or assurances from the
Company or any representative or agent of the Company, other than as
set forth in this Agreement, in the public filings of the Company and
in the documents described below. Prior to the date hereof, the
Investor has been furnished with and has reviewed the Company's Annual
Report on Form 10-K for the period ended December 31, 1996 (the "1996
Form 10-K") sent to the Company's shareholders and all documents filed
by the Company with the SEC since December 31, 1996, pursuant to
sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of
1934, as amended (the "Exchange Act") (excluding
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preliminary proxy statement filings) (such documents are collectively
referred to in this Agreement as the "Exchange Act Reports"),
including, without limitation, the Company's Quarterly Reports on Form
10-Q for the periods ended March 31, 1997, June 30, 1997 and September
30, 1997 as filed with the SEC on May 15, 1997, August 14, 1997 and
November 14, 1997, respectively, the Company's Current Reports on Form
8-K for events dated December 31, 1996, January 23, 1997, April 22,
1997, July 7, 1997, December 18, 1997, December 19, 1997 and January
26, 1997, as filed with the SEC on January 9, 1997, February 5, 1997,
April 30, 1997, July 8, 1997, December 23, 1997, December 24, 1997 (as
amended on Form 8-K/A filed on January 21, 1998) and January 30, 1998,
respectively, and the Company's Definitive Proxy Statement dated May
30, 1997 and Amendment to Proxy Statement dated July 7, 1997, as filed
with the SEC on May 29, 1997 and July 7, 1997, respectively, and a copy
of the Company's Registration Statement on Form S-3 declared effective
by the SEC on February 12, 1997. The Investor has had a reasonable
opportunity to ask questions of and receive answers from the Company
concerning the Company and the transactions contemplated hereby.
2.5 Authority. This Agreement has been duly authorized and validly executed
and delivered by the Investor and is a valid and binding agreement
enforceable against the Investor in accordance with its terms, subject
to general principles of equity and to bankruptcy or other laws
affecting the enforcement of creditors' rights generally.
2.6 Intentionally Omitted
2.7 No Broker. The Investor has taken no action which would give rise to
any claim by any person for brokerage commission, finder's fees or
similar payments by the Company relating to this Agreement or the
transactions contemplated hereby.
2.8 Not an Affiliate. The Investor is not an officer, director or
"affiliate" (as that term is defined in Rule 405 of the Securities Act)
of the Company.
2.9 Reliance on Representations and Warranties. The Investor understands
that the Securities are being issued to it in reliance on specific
provisions of United States federal and state securities laws and that
the Company is relying upon the truth and accuracy of the
representations, warranties, agreements, acknowledgments and
understandings of the Investor set forth in this Agreement in order to
determine the applicability of such provisions.
2.10 Limitations on Investor's Right to Convert and Exercise.
Notwithstanding anything to the contrary contained herein, each notice
of conversion of Preferred Stock (a "Conversion Notice") shall contain
or be accompanied by a representation
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by the Investor that, after giving effect to the shares of the
Company's Common Stock to be issued pursuant to such Conversion Notice
or Exercise Notice, the total number of shares of the Company's Common
Stock deemed beneficially owned by the Investor, together with all
shares of the Company's Common Stock deemed beneficially owned by the
Investor's "affiliates" as defined in Rule 144 of the Securities Act
and excluding any shares of the Series Q Preferred Stock held by such
holder and its affiliates will not exceed 4.9% of the total issued and
outstanding shares of the Company's Common Stock and such other matters
as are set forth in Section 13(d) of the Certificate of Designation.
2.11 Transfer or Resale. The Investor understands that (i) except as
provided in the Registration Rights Agreement, the Securities have not
been and are not being registered under the Securities Act or any state
securities laws, and may not be transferred unless (a) subsequently
registered thereunder or (b) the Investor shall have delivered to the
Company an opinion of counsel (which opinion and counsel shall be
reasonably acceptable to the Company) to the effect that the Securities
to be sold or transferred may be sold or transferred pursuant to an
exemption from such registration; (ii) any sale of such Securities made
in reliance on Rule 144 promulgated under the Securities Act may be
made only in accordance with the terms of said Rule and further, if
said Rule is not applicable, any resale of such Securities under
circumstances in which the seller (or the person through whom the sale
is made) may be deemed to be an underwriter (as that term is defined in
the Securities Act) may require compliance with some other exemption
under the Securities Act or the rules and regulations of the SEC
thereunder; and (iii) neither the Company nor any other person is under
any obligation to register such Securities under the Securities Act or
any state securities laws or to comply with the terms and conditions of
any exemption thereunder (in each case, other than pursuant to the
Registration Rights Agreement).
2.12 Legends. The Investor understands that the Preferred Shares and, until
such time as the Underlying Stock has been registered under the
Securities Act (as contemplated by the Registration Rights Agreement)
or otherwise may be sold by the Investor pursuant to Rule 144 under the
Securities Act (or any successor rule thereto) without any restriction
as to the number of securities acquired hereunder that can then be
immediately sold, the certificates for the Underlying Stock, may bear a
restrictive legend in substantially the following form (and a
stop-transfer order may be placed against transfer of the certificates
for such Securities):
"The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended. The
securities have been acquired for investment and may not be
sold, transferred or assigned in the absence of an effective
registration
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<PAGE>
statement for the securities under said Act, or an opinion of
counsel, in form, substance and scope reasonably acceptable to
the Company, that registration is not required under said
Act."
The legend set forth above shall be removed and the Company shall issue
a certificate without such legend to the holder of any of the
Securities upon which it is stamped, if, unless otherwise required by
state securities laws, (a) such Security is registered for sale under
the Securities Act or (b) such holder provides the Company with an
opinion of counsel, in form, substance and scope reasonably acceptable
to the Company, to the effect that a public sale or transfer of such
Security may be made without registration under the Securities Act or
(c) such holder provides the Company with reasonable assurances that
such Security can be sold pursuant to Rule 144 under the Securities Act
(or a successor rule thereto) without any restriction as to the number
of Securities acquired as of a particular date that can then be
immediately sold. The Investor agrees to sell all Securities, including
those represented by a certificate(s) from which the legend has been
removed, in compliance with applicable securities law. In the event the
above legend is removed from any Security, the Company may, upon
reasonable advance notice to the Investor, require that the above
legend be placed on any Security that cannot then be sold pursuant to
an effective registration statement or Rule 144 under the Securities
Act (or any successor rule thereto) without any restriction as to the
number of securities acquired hereunder that can then be immediately
sold.
3. Representations and Warranties of the Company
The Company represents and warrants to the Investors that:
3.1 Company Status. The Company has registered its Common Stock pursuant to
Section 12(b) or 12(g) of the Exchange Act, is in full compliance with
all reporting requirements of the Exchange Act, and the Company has
maintained all requirements for the continued listing of its Common
Stock, and such Common Stock is currently listed on the Exchange, which
Exchange is the principal market for the Company's Common Stock.
3.2 Current Public Information. The Exchange Act Reports are the only
filings made by the Company since December 31, 1996 pursuant to
Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act.
3.3 No General Solicitation in Regard to this Transaction. Neither the
Company nor any of its affiliates nor any distributor or any person
acting on its or their behalf has conducted any general solicitation
(as that term is used in Regulation D) with respect to any of the
Securities, nor have they made any offers or sales of any
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security or solicited any offers to buy any security under
circumstances that would require the registration of the Securities
under the Securities Act.
3.4 Capitalization; Valid Issuance of Preferred Stock and Common Stock. The
Company has an authorized capitalization set forth on Schedule 3.4.
Except as set forth on Schedule 3.4, no shares of Preferred Stock or
options, warrants or other securities convertible or exercisable into
Common Stock have been issued or are outstanding. The Company has
issued and outstanding that number of shares of Common Stock and
preferred stock of various series, as set forth on Schedule 3.4, and
all such shares have been duly and validly authorized and issued, are
fully paid and non-assessable; prior to the Closing Date, the
authorized capitalization shall include the Securities; upon issuance
of the Securities, the Securities will be duly and validly issued,
fully paid and non-assessable; the Underlying Stock, when issued and
delivered in accordance with the terms of the Series R Certificate of
Designation or the Series S Certificate of Designation, as the case may
be, will be duly and validly issued, fully paid and non-assessable;
and, except as set forth on Schedule 3.4 hereto, the holders of
outstanding capital stock of the Company are not and shall not be
entitled to preemptive or other rights afforded by the Company to
subscribe for the Securities. As of the Closing Date, the Company shall
have duly filed the Series R Certificate of Designation and the Series
S Certificate of Designation, and all of the rights, preferences and
privileges of the Preferred Stock shall be as set forth in the Series R
Certificate of Designation or the Series S Certificate of Designation,
as the case may be, a copy of which, certified by the Secretary of
State of the State of Delaware, shall be delivered to the Investor on
or before the Closing Date. There are no owners of shares of Series O
Stock or Series Q Stock other than the Investors and Elliot Associates,
L.P.
3.5 Organization and Qualification. The Company is a corporation duly
incorporated and existing in good standing under the laws of the State
of Delaware and has the requisite corporate power to own its properties
and to carry on its business as now being conducted. The Company does
not have any subsidiaries, except as set forth on Schedule 3.5. The
Company is duly qualified to do business as a foreign corporation and
is in good standing in every jurisdiction in which the nature of the
business conducted or property owned by it makes such qualification
necessary other than those in which the failure so to qualify would not
have a Material Adverse Effect. "Material Adverse Effect" means any
material adverse effect on the business, operations, properties,
prospects of the entity taken as a whole, or the consolidated financial
condition of the entity with respect to which such term is used, or
with respect to any other entity controlling or controlled by such
entity, and/or any condition or situation which would prohibit or
otherwise interfere with the ability of the entity with respect to
which said term is used to enter into or perform its obligations under
this Agreement, the Series R Certificate of
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Designation, the Series S Certificate of Designation or the
Registration Rights Agreement.
3.6 Authorization; Enforcement. (i) The Company has the requisite corporate
power and authority to enter into and perform this Agreement and to
issue the Securities subject to the limitations and conditions
contained in and otherwise in accordance with the terms hereof and of
the Series R Certificate of Designation, the Series S Certificate of
Designation and the Side Letter, (ii) the execution and delivery of
this Agreement by the Company and the consummation by it of the
transactions contemplated hereby including, without limitation, the
issuance of the Underlying Stock have been duly authorized by all
necessary corporate action, and no further consent or authorization of
the Company or its Board of Directors or stockholders is required
(except such stockholder approvals as may be required under Rule
4460(i) promulgated by the National Association of Securities Dealers,
Inc. if an Election with respect to the Series R Stock and/or the
Series S Stock has been made), (iii) this Agreement has been duly
executed and delivered by the Company, and (iv) this Agreement
constitutes the valid and binding obligations of the Company
enforceable against the Company in accordance with their terms, except
(x) as such enforceability may be limited by applicable bankruptcy,
insolvency, or similar laws relating to, or affecting generally the
enforcement of, creditors' rights and remedies or by other equitable
principles of general application and (y) as rights to indemnity or
contribution may be limited by federal and state securities laws and
public policy considerations.
3.7. Corporate Documents. The Company has furnished or made available to the
Investor true and correct copies of the Company's Certificate of
Incorporation as in effect on the date hereof (the "Certificate"), and
the Company's By-Laws, as in effect on the date hereof (the "By-Laws").
3.8 No Conflicts. The execution, delivery and performance of this Agreement
and the consummation by the Company of the transactions contemplated
hereby including, without limitation, the issuance of any of the
Securities do not and will not (i) result in a violation of the
Certificate or By-Laws (except such stockholder approvals as may be
required under Rule 4460(i) promulgated by the National Association of
Securities Dealers, Inc. if an Election with respect to the Series R
Stock and/or the Series S Stock has been made) or (ii) conflict with,
or constitute a default (or an event which, with notice or lapse of
time or both, would become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation of, any
agreement, indenture or instrument to which the Company or any of its
subsidiaries is a party, or result in a violation of any federal state,
local or foreign law, rule, regulation, order, judgment or decree
(including Federal and state securities laws and regulations)
applicable to the
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Company or any of its subsidiaries or by which any property or asset of
the Company or any of its subsidiaries is bound or affected (except for
such conflicts, defaults, terminations, amendments, accelerations,
cancellations and violations as would not, individually or in the
aggregate, have a Material Adverse Effect); provided that, for purposes
of such representation as to Federal, state, local or foreign law, rule
or regulation, no representation is made herein with respect to any of
the same applicable solely to the Investor and not to the Company. The
business of the Company is not being conducted in violation of any law,
ordinance or regulations of any governmental entity, except for
possible violations which either singly or in the aggregate do not and
will not have a Material Adverse Effect. The Company is not required
under Federal, state or local law, rule or regulation in the United
States to obtain any consent which has not been obtained, or
authorization or order of, or make any filing or registration with, any
court or governmental agency in order for it to execute, deliver or
perform any of its obligations under this Agreement or issue and sell
the Securities in accordance with the terms hereof and thereof (other
than any SEC, Nasdaq or state securities filings in connection herewith
which may be required to be made by the Company subsequent to the
Closing, and any registration statement which may be filed pursuant
hereto); provided that, for purposes of the representation made in this
sentence, the Company is assuming and relying upon the accuracy of the
relevant representations and agreements of the Investors and/or its
principals herein.
3.9 Exchange Act Reports. The Company has delivered or made available to
the Investors true and complete copies of the Exchange Act Reports
(including, without limitation, proxy information and solicitation
materials). The Company has not provided to the Investors any
information which, according to applicable law, rule or regulation,
should have been disclosed publicly prior to the date hereof by the
Company but which has not been so disclosed; nor has the Company
provided to the Investors, as an inducement to enter into this
Agreement or otherwise, any information which has not been publicly
announced or disclosed to the Company's stockholders generally. As of
their respective dates, the Exchange Act Reports complied in all
material respects with the requirements of the Exchange Act and rules
and regulations of the SEC promulgated thereunder and other federal,
state and local laws, rules and regulations applicable to such Exchange
Act Reports, and none of the Exchange Art Reports contained any untrue
statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were
made, not misleading. The financial statements of the Company included
in the Exchange Act Reports comply as to form in all material respects
with applicable accounting requirements and the published rules and
regulations of the SEC or other applicable rules and regulations with
respect thereto. Such financial statements have been prepared in
accordance
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with generally accepted accounting principles applied on a consistent
basis during the periods involved (except (i) as may be otherwise
indicated in such financial statements or the notes thereto or (ii) in
the case of unaudited interim statements, to the extent they may not
include footnotes or may be condensed or summary statements) and fairly
present in all material respects the financial position of the Company
as of the dates thereof and the results of operations and cash flows
for the periods then ended (subject, in the case of unaudited
statements, to normal year-end audit adjustments).
3.10 No Material Adverse Change. Since September 30, 1997, the end of the
period for which the most recent Quarterly Report of the Company on
Form 10-Q was filed with the SEC, a copy of which is included in the
Exchange Act Reports, no Material Adverse Effect has occurred or exists
with respect to the Company or its subsidiaries.
3.11 No Undisclosed Liabilities. Except as set forth on Schedule 3.11
hereto, the Company and its subsidiaries have no liabilities or
obligations not disclosed in the Exchange Act Reports, other than those
incurred in the ordinary course of the Company's or its subsidiaries'
respective businesses since September 30, 1997 and which, individually
or in the aggregate, do not or would not have a Material Adverse Effect
on the Company and its subsidiaries taken as a whole.
3.12 No Undisclosed Events or Circumstances. No event or circumstance has
occurred or exists with respect to the Company or its subsidiaries or
their respective businesses, properties, prospects, operations or
financial condition, which, under applicable law, rule or regulation,
requires public disclosure or announcement by the Company, but which
has not been so publicly announced or disclosed. The Company has not
provided the Investor any information which, according to applicable
law, rules or regulations should have been disclosed publicly by the
Company, but which has not been so disclosed, other than with respect
to the existence of this Agreement and the transactions contemplated by
this Agreement.
3.13 No Integrated Offering. Neither the Company, nor any of its affiliates,
nor any person acting on its or their behalf has, directly or
indirectly, made any offers or sales of any security or solicited any
offers to buy any security, under circumstances that would require
registration of the Securities under the Securities Act.
3.14 Broker. The Company has taken no action which would give rise to any
claim by any person for brokerage commission, finder's fees or similar
payments by the Investors relating to this Agreement or the
transactions contemplated hereby.
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3.15 Acknowledgment of Dilution. The number of shares of Underlying Stock
issuable upon conversion of the Series S Stock will increase in the
event the current trading price of the Common Stock fails to
significantly increase. The Company acknowledges that its obligation to
issue Underlying Stock upon conversion of the Preferred Stock in
accordance with the Series R Certificate of Designation and Series S
Certificate of Designation is absolute and unconditional, regardless of
the dilution that such issuance may have on the ownership interests of
other stockholders, but is nevertheless subject to the terms and
conditions of general application imposed upon the Company by
governmental decrees and by the Exchange.
4. Covenants of the Company
4.1 Intentionally Omitted
4.2 Reservation of Common Stock. At all times while any shares of Series R
Stock or Series S Stock are outstanding, the Company shall reserve and
keep available, free of preemptive rights and subject to such legal
limits and rules of exchanges on which the Common Stock may be traded,
no less than one hundred five percent (105%) and, after an Election is
made (as defined in the Series R Certificate of Designation and the
Series S Certificate of Designation, as the case may be), no less than
two hundred percent (200%) with respect to the shares of Preferred
Stock for which an Election has been made, of that number of shares of
the Company's Common Stock for which such outstanding shares of
Preferred Stock are then convertible, each amount as equitably adjusted
pursuant to any stock splits, split ups, recapitalization or
reorganization of shares of Common Stock. At all times while any shares
of Series O Stock or Series Q Stock are outstanding, the Company shall
reserve and keep available, free of preemptive rights and subject to
such legal limits and rules of exchanges on which the Common Stock may
be traded, no less than two hundred percent (200%) of that number of
shares of the Company's Common Stock for which such outstanding shares
of Preferred Stock are then convertible, each amount as equitably
adjusted pursuant to any stock splits, split ups, recapitalization or
reorganization of shares of Common Stock. The Company shall notify the
Investors as soon as practicable if there is a decrease in the number
of outstanding shares of Common Stock of the Company.
4.3 Listing of Underlying Stock. The Company hereby agrees, promptly
following the Closing of the transaction contemplated by this
Agreement, to take such action to cause the Underlying Stock to be
listed on the Exchange as promptly as possible but no later than ninety
(90) days following the Closing. The Company further agrees that, if
the Company applies to have the Common Stock traded on any
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principal stock exchange, it will include in such application the
Underlying Stock and will take such other action as is necessary or
desirable to cause the Underlying Stock to be listed on such exchange
as promptly as possible.
4.4 Exchange Act. For so long as the Company is in existence and Preferred
Stock remains outstanding, the Company will cause its Common Stock to
continue to be registered under Section 12(g) or 12(b) of the Exchange
Act, will comply in all respects with its reporting and filing
obligations under said Act and will not take any action or file any
document (whether or not permitted by said Act or the rules thereunder)
to terminate or suspend such registration or to terminate or suspend
its reporting and filing obligations under said Act. The Company will
take all action necessary to continue the listing and trading of its
Common Stock on the Exchange and will comply in all respects with the
Company's reporting, filing and other obligations under the by-laws or
rules of the Exchange; provided, however, that the Company may
terminate such listing at any time so long as the Company's Common
Stock is then listed on either the American Stock Exchange or the New
York Stock Exchange. The Company shall file with the SEC a Form 8-K
disclosing this Agreement and the transactions contemplated hereby no
later than three business (3) days after the date of the Closing and
shall publicly announce, by way of press release, this Agreement and
the transactions contemplated hereby, no later than 24 hours after the
Closing.
4.5 Corporate Existence. The Company will take all steps necessary to
preserve and continue the corporate existence of the Company; provided,
however, that this sentence shall not limit the Company's ability to
engage in any bona fide corporate transaction or reorganization
otherwise consistent with this Agreement.
4.6 Warrants. The exercise price of the warrants issued to the Investors
(and their affiliates) in connection with the issuance of the Series O
Stock and the Series Q Stock shall be amended to be $4.00 per share of
Common Stock purchasable thereunder (subject to adjustment as provided
in such warrants); provided that such exercise price shall be $3.00 per
share of Common Stock purchasable thereunder (subject to adjustment as
provided in such warrants) if the average of the closing bid prices (as
reported by Bloomberg) for the Common Stock for the ten consecutive
trading days immediately preceding that date which is 180 days after
the date of the Closing is less than $4.00; and provided, further that
if such exercise price on that date which is one year from the date of
the Closing is greater than 110% of the closing bid price of the Common
Stock (as reported by Bloomberg) on such date, such exercise price
thereafter shall be 110% of the closing bid price of the Common Stock
on such date (subject to adjustment as provided in such warrants).
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4.7 Option to Rescind Restructuring If the Company fails to (i) file the
Registration Statement with the SEC on or prior to the Registration
Date and/or the Registration Statement (each, as defined in the
Registration Rights Agreement) is not declared effective on or prior to
that date which is 120 days after the date of the Closing, (ii) receive
at least $30 million in net proceeds that can be applied in the first
half of 1998 for general working capital purposes from the sale of its
European networks prior to March 15, 1998, (iii) receive at least $25
million in proceeds from new financings prior to May 15, 1998 that can
immediately be applied for general working capital purposes or (iv)
receive at least $50 million (in the aggregate, including the proceeds
referred to in clause (iii) above) in proceeds from new financings
prior to September 15, 1998 that can immediately be applied for general
working capital purposes (each of the financings referred to in clauses
(iii) and (iv) shall be referred to as a "New Financing"), each holder
of Series R Stock and Series S Stock, as the case may be, shall have
the right, exercisable for thirty days after the happening of such
event, to make an election (an "Election") as provided in the Series R
Certificate of Designation and Series S Certificate of Designation.
4.8 New Financings. All equity New Financings shall be junior or pari passu
to the Series R Stock and Series S Stock. Any Investor who at such time
is a holder of Series R Stock or Series S Stock (or the holder of
securities received in a prior exchange pursuant to clause (i)
below)shall have the right, exercisable for ten days after consummation
of a New Financing, to (i) exchange shares of preferred stock of the
Company held by such party, other than shares of preferred stock for
which an Election has been made, for an equivalent amount of securities
issued in the New Financing and/or (ii) purchase securities on the same
terms and conditions as the New Financing in an amount equal to the
face amount of Series R Stock or Series S Stock (or other security
received in a prior exchange pursuant to clause (i) above), as the case
may be, then held by such holder, other than such shares for which an
Election has been made.
4.9 Series P Preferred Stock. The Company shall no later than thirty days
after the date of the Closing, enter into agreements with the holders
of the Series P Stock to (i) either restructure the Series P Stock on
substantially similar terms as the terms provided for herein or have
such holders agree that they shall not convert any additional shares of
Series P Stock into shares of Common Stock prior to September 30, 1998,
and (ii) have the holders of shares of Common Stock received upon the
recent conversion of $7.5 million in face amount of Series P Stock into
shares of Common Stock agree to waive their present registration and
resale rights and have the resale of such shares registered on the
Registration Statement.
-16-
<PAGE>
4.10 Rule 144. The Company shall not, directly or indirectly, dispute or
otherwise interfere with any claim by a holder of Series R Stock or
Series S Stock that such holder's holding period of such security for
purposes of Rule 144 under the Securities Act ("Rule 144") relates back
(i.e. tacks) to the holding period for the Series O Stock and Series Q
Stock; provided, however, nothing contained herein shall obligate the
Company or its counsel to take a position that is inconsistent with the
state of the law at such time. The Company acknowledges and agrees that
as of the date hereof under Rule 144 and no-action letters issued by
the SEC, such talking is permitted.
5. [SECTION INTENTIONALLY LEFT BLANK]
6. Governing Law
This Agreement shall be governed by and construed in accordance with
the laws of the State of New York without regard to principles of
conflicts of law or choice of law, except for matters arising under the
Securities Act or the Exchange Act, which matters shall be construed
and interpreted in accordance with such Acts. The Company hereby agrees
that all actions or proceedings arising directly or indirectly from or
in connection with this Agreement shall, at the Investor's sole option,
be litigated only in the Supreme Court of the State of New York or the
United States District Court for the Southern District of New York
located in New York County, New York. The Company consents to the
jurisdiction and venue of the foregoing courts and consents that any
process or notice of motion or other application to either of said
courts or a judge thereof may be served inside or outside the State of
New York or the Southern District of New York by registered mail,
return receipt requested, directed to the Company at its address set
forth in this Agreement (and service so made shall be deemed complete
five (5) days after the same has been posted as aforesaid) or by
personal service or in such other manner as may be permissible under
the rules of said court.
7. Assignment; Entire Agreement; Amendment; Consents; Expenses
(a) Neither this Agreement nor any obligations of the Company
hereunder may be assigned by the Company to any other person
or entity. The provisions of this Agreement shall inure to the
benefit of, and be enforceable by, any transferee of any of
the Securities with respect to the Securities held by such
person.
(b) This Agreement, the Series R Certificate of Designation, the
Series S Certificate of Designation, the Registration Rights
Agreement, the Side Letter Agreement and the other documents
delivered pursuant hereto
-17-
<PAGE>
constitute the full and entire understanding and agreement
between the parties with regard to the subjects hereof and
thereof and supersedes all prior agreements and no party shall
be liable or bound to any other party in any manner by any
warranties, representations or covenants except as
specifically set forth in this Agreement or therein. Except as
expressly provided in this Agreement, neither this Agreement
nor any term hereof may be waived, discharged or terminated
other than by a written instrument signed by the party against
whom enforcement of any such amendment, waiver, discharge or
termination is sought. This Agreement and any provision hereof
may only be amended by an instrument in writing signed by the
Company and the holders of two-thirds of the shares of
Preferred Stock outstanding at the time.
(c) By executing and delivering this Agreement, the parties hereto
consent and agree to all of the transactions contemplated
hereby. The Investors acknowledge and agree that except as
provided for specifically herein, the execution and delivery
of this Agreement and the consummation of the transactions
contemplated hereby shall not create or trigger any additional
rights which any Investor may have pursuant to any agreements
entered into with the Company or attendant to any securities
of the Company, including, without limitation, the right to
have the purchase price of any warrants held by such Investor
adjusted.
(d) The Company agrees to reimburse the Investors for all
reasonable legal expenses incurred by such Investors in
connection with the execution and delivery of this Agreement
and that certain letter agreement dated January 26, 1998 among
the Company and the Investors.
8. Publicity
The Company agrees that it will not disclose, and will not include in
any public announcement, the name of any Investor without such
Investor's consent, unless and until such disclosure is required by law
or applicable regulation, and then only to the extent of such
requirement.
9. Notices, Etc.; Expenses; Indemnity
(a) Any notice, demand or request required or permitted to be
given by either the Company or the Investors pursuant to the
terms of this Agreement shall be in writing and shall be
deemed given when delivered personally or by facsimile, with a
hard copy to follow by two day courier addressed to a Investor
at the addresses of such Investor set forth on the signature
page
-18-
<PAGE>
hereof, to the Company at 102 Chestnut Ridge Road, Montvale,
New Jersey 07645, Attention: President, or such other address
as a party may request by notifying the other applicable
party(s) in writing. Copies of all notices to a Investor shall
be sent to such Investor's designee or representative (if
any).
(b) The Company shall indemnify each Investor against any loss,
cost or damages (including reasonable attorney's fees)
incurred as a result of the Company's breach of any
representation, warranty, covenant or agreement in this
Agreement, the Registration Rights Agreement, the Side Letter
Agreement and/or the Preferred Stock. Each Investor shall
severally indemnify the Company against any loss, cost or
damages (including reasonable attorney's fees) incurred by the
Company as a result of such Investor's breach of any
representation, warrant, covenant or agreement in this
Agreement, the Registration Rights Agreement, the Side Letter
Agreement and/or the Preferred Stock.
10. Counterparts
This Agreement may be executed in any number of counterparts each of
which shall be enforceable against the parties actually executing such
counterparts, and all of which together shall constitute one
instrument.
11. Survival; Severability; Specific Performance
The representations, warranties, covenants and agreements of the
parties hereto shall survive the Closing for a period of four (4)
years. In the event that any provision of this Agreement becomes or is
declared by a court of competent jurisdiction to be illegal,
unenforceable or void, this Agreement shall continue in full force and
effect without said provision. Notwithstanding anything in this
Agreement, the Registration Rights Agreement, the Series R Certificate
of Designation or the Series S Certificate of Designation to the
contrary, nothing shall limit a Investor's right to pursue any and all
available remedies, whether at law or at equity (including, without
limitation, specific performance), in connection therewith.
12. Title and Subtitles
The titles and subtitles used in this Agreement are used for
convenience only and are not to be considered in construing or
interpreting this Agreement.
13. Like Treatment of Holders
-19-
<PAGE>
Neither the Company nor any of its affiliates shall, directly or
indirectly, pay or cause to be paid any consideration, whether by way
of interest, fee, payment for the redemption or the conversion of the
Preferred Stock, or otherwise, to any holder of shares of Preferred
Stock, for or as an inducement to, or in connection with the
solicitation of, any consent, waiver or amendment of any terms or
provisions of the Series R Certificate of Designation, the Series S
Certificate of Designation, this Agreement, the Registration Rights
Agreement or the Side Letter Agreements, unless such consideration is
offered to all holders of shares of Preferred Stock and such
consideration is required to be paid to all holders of shares of
Preferred Stock who agree to such consent, waiver or amendment or
tender their Preferred Stock for redemption or conversion.
-20-
<PAGE>
GEOTEK COMMUNICATIONS, INC.
By: /s/ Yaron Eitan
---------------------------------
Yaron Eitan
Chairman and CEO
Investors:
Investor's Representative: Investor:
RGC International Investors, LDC
By: Rose Glen Capital Management,
L.P., as Investment Manager
By: RGC General Partner Corp.,
as general partner
By: /s/ Wayne D. Bloch
-------------------------------
Wayne D. Bloch, Managing Director
Address: c/o Rose Glen Capital
Management, L.P.
Three Bala Plaza (East) Place of Execution: Pennsylvania
Suite 200
Bala Cynwyd, PA 19004
Telephone: (610) 617-5900 Place of Organization or Citizenship:
Cayman Islands
Fax: (610) 617-0570 Place of Residency and/or Principal
Place of Business:
Cayman Islands
Telephone: (610) 617-5900
Fax: (610) 617-0570
Registration Instructions:
RGC International
Investors, LDC
<PAGE>
Investor's Representative: Investor:
Palladin Group, L.P. Halifax Fund, L.P.
Attn: Andrew Kaplan
By: The Palladin Group, its Investment Manager
By: Palladin Capital Management LLC, its General
Partner
By: /s/ Jeffrey Deavers
-------------------------------
Jeffrey Deavers, Authorized Representative
Address: 40 West 57th Street
Suite 1520 Place of Execution: New York
New York, NY 10019
Telephone: (212) 698-0515 Place of Organization or Citizenship:
Cayman Islands
Fax: (212) 698-0599
Place of Residency and/or Principal Place of
Business:
c/o Citco Fund Services, Ltd.
Corporate Center, West Bay Road
P.O. Box 31106
SMB
Registration Instructions: Halifax Fund, L.P.
<PAGE>
Investor's Representative: Investor:
Palladin Group, L.P. Colonial Penn Insurance Company
Attn: Andrew Kaplan
By: The Palladin Group, its Investment Manager
By: Palladin Capital Management LLC, its General
Partner
By: /s/ Jeffrey Deavers
---------------------------------------------
Jeffrey Deavers, Authorized Representative
Address: 40 West 57th Street
Suite 1520 Place of Execution: New York
New York, NY 10019
Telephone: (212) 698-0515 Place of Organization or Citizenship: New York
Fax: (212) 698-0599
Registration Instructions: Colonial Penn
Insurance Company
<PAGE>
Investor's Representative: Investor:
Palladin Group, L.P. Gleneagles Fund, LTD
Attn: Andrew Kaplan
By: The Palladin Group, its Investment Manager
By: Palladin Capital Management LLC, its General
Partner
By: /s/ Jeffrey Deavers
--------------------------------------------
Jeffrey Deavers, Authorized Representative
Address: 40 West 57th Street
Suite 1520 Place of Execution: New York
New York, NY 10019
Telephone: (212) 698-0515 Place of Organization or Citizenship:
Fax: (212) 698-0599 Cayman Islands
Place of Residency and/or Principal
Place of Business:
c/o Citco Fund Services, Ltd.
Corporate Center, West Bay Road
P.O. Box 31106
SMB
Registration Instructions: Gleneagles Fund, LTD
<PAGE>
Investor's Representative: Investor:
Palladin Group, L.P. Colonial Penn Life Insurance Company
Attn: Andrew Kaplan
By: The Palladin Group, its Investment Manager
By: Palladin Capital Management LLC, its General
Partner
By: /s/ Jeffrey Deavers
-------------------------------------------
Jeffrey Deavers, Authorized Representative
Address: 40 West 57th Street
Suite 1520 Place of Execution: New York
New York, NY 10019
Telephone: (212) 698-0515 Place of Organization or Citizenship: New York
Fax: (212) 698-0599
Registration Instructions: Colonial Penn Life
Insurance Company
<PAGE>
Investor's Representative: Investor:
Citadel Investment Group, L.L.C. Nelson Partners
Attn: Kenneth Simpler
By: /s/ Nitin Aggarwal
------------------------------------
Nitin Aggarwal, Officer
Address: 225 West Washington Street
9th Floor Place of Execution: Bermuda
Chicago, IL 60606
Telephone: (312) 696-2165 Place of Organization or Citizenship:
Bermuda
Place of Residency and/or Principal
Place of Business:
c/o Leeds Management Services
129 Front Street, 5th Floor
Hamilton, HM12 Bermuda
Telephone: (441) 295-8617
Fax: (441) 292-2239
Registration Instructions:
Nelson Partners
<PAGE>
Investor's Representative: Investor:
Citadel Investment Group, L.L.C. Olympus Securities, LTD.
Attn: Kenneth Simpler
By: /s/ Nitin Aggarwal
----------------------------------------
Nitin Aggarwal, Officer
Address: 225 West Washington Street
9th Floor Place of Execution: Bermuda
Chicago, IL 60606
Telephone: (312) 696-2165 Place of Organization or Citizenship: Bermuda
Place of Residency and/or Principal
Place of Business:
c/o Leeds Management Services
129 Front Street, 5th Floor
Hamilton, HM12 Bermuda
Attn: Anne Dupuy
Telephone: (441) 295-8617
Fax: (441) 292-2239
Registration Instructions:
Olympus Securities, LTD.
<PAGE>
Investor:
CIBC, Wood Gundy Securities Corp.
By: /s/ Walter F. McLallen
------------------------------------------
Walter F. McLallen, Managing Director
Place of Execution: New York
Place of Organization or Citizenship: New York
Place of Residency and/or Principal Place of Business:
425 Lexington Avenue, 3rd Floor
New York, NY 10017
Attn: Walter F. McLallen
Telephone: (212) 885-4696
Fax: (212) 885-4933
Registration Instructions: CIBC, Wood Gundy
Securities Corp.
<PAGE>
Investor's Representative: Investor:
Promethean Investment Group, L.L.C. Themis Partners L.P.
Attn: James F. O'Brien, Jr.
By: Promethean Investment Group, L.L.C.,
its General Partner
By: /s/ Brian S. Yeh
--------------------------------------
Brian S. Yeh, Managing Member
Address: 40 W. 57th Street
Suite 1520 Place of Execution: New York
New York, NY 10019
Telephone: (212) 698-0588 Place of Organization or Citizenship:
Fax: (212) 698-0505 New York
Place of Residency and/or Principal
Place of Business:
c/o Promethean Investment Group, L.L.C.
40 West 57th Street, Suite 1520
New York, NY 10019
Registration Instructions:
Themis Partners L.P.
<PAGE>
Investor's Representative: Investor:
Promethean Investment Group, L.L.C. Samyang Merchant Bank
Attn: James F. O'Brien, Jr.
By: Promethean Investment Group, L.L.C.,
its Investment Advisor
By: /s/ Brian S. Yeh
------------------------------------
Brian S. Yeh, Managing Member
Address: 40 W. 57th Street
Suite 1520 Place of Execution: New York
New York, NY 10019
Telephone: (212) 698-0588 Place of Organization or Citizenship:
Fax: (212) 698-0505 South Korea
Place of Residency and/or Principal
Place of Business:
c/o 6th Floor, Youngpoong Building
33, Seorin-dong, Chongro-Ku
Seoul, 110-110-Korea
Registration Instructions:
Samyang Merchant Bank
<PAGE>
Investor's Representative: Investor:
Promethean Investment Group, L.L.C. Heracles Fund
Attn: James F. O'Brien, Jr.
By: Promethean Investment Group, L.L.C.,
its Investment Advisor
By: /s/ Brian S. Yeh
---------------------------------------
Brian S. Yeh, Managing Member
Address: 40 W. 57th Street
Suite 1520 Place of Execution: New York
New York, NY 10019
Telephone: (212) 698-0588 Place of Organization or Citizenship:
Fax: (212) 698-0505 Cayman Islands
Place of Residency and/or Principal
Place of Business:
c/o Bank of Bermuda (Cayman) Limited
P.O. Box 513
Third Floor, British American Tower
Dr. Roy's Drive
Georgetown, Grand Cayman
Cayman Islands, BWI
Registration Instructions: Heracles Fund
<PAGE>
Investor's Representative: Investor:
Angelo, Gordon & Co., L.P. Leonardo, L.P.
Attn: Gary Wolf
By: Angelo, Gordon & Co., L.P.,
its General Partner
By: /s/ Michael L. Gordon
---------------------------------------
Michael L. Gordon, Chief Operating Officer
Address: 245 Park Avenue
26th Floor Place of Execution: New York
New York, NY 10167
Telephone: (212) 692-2058 Place of Organization or Citizenship:
Fax: (212) 867-6449 Cayman Islands
Place of Residency and/or Principal
Place of Business:
c/o Trident Trust Company Limited
Elizabethan Square
P.O. Box 847
Grand Cayman, Cayman Islands, B.W.I.
Registration Instructions: Leonardo, L.P.
<PAGE>
Investor's Representative: Investor:
Angelo, Gordon & Co., L.P. GAM Arbitrage Investments, Inc.
Attn: Gary Wolf
By: Angelo, Gordon & Co., L.P., its Investment
Advisor
By: /s/ Michael L. Gordon
------------------------------------------
Michael L. Gordon, Chief Operating Officer
Address: 245 Park Avenue
26th Floor Place of Execution: New York
New York, NY 10167
Telephone: (212) 692-2058 Place of Organization or Citizenship:
British Virgin Islands
Fax: (212) 867-6449
Place of Residency and/or Principal
Place of Business:
11 Athel Street
Douglas Isle of Man, British Isles
British Virgin Islands
Registration Instructions: GAM Arbitrage
Investments, Inc.
<PAGE>
Investor's Representative: Investor:
Angelo, Gordon & Co., L.P. AG Super Fund International Partners, L.P.
Attn: Gary Wolf
By: Angelo, Gordon & Co., L.P.,
its General Partner
By: /s/ Michael L. Gordon
-------------------------------------------
Michael L. Gordon, Chief Operating Officer
Address: 245 Park Avenue
26th Floor Place of Execution: New York
New York, NY 10167
Telephone: (212) 692-2058 Place of Organization or Citizenship:
Fax: (212) 867-6449 Cayman Islands
Place of Residency and/or Principal
Place of Business:
c/o Raphael Capital Management Partners, L.P.
Transnational House
P.O. Box 30749
Seven Mile Beach
Grand Cayman, Cayman Islands, B.W.I.
Registration Instructions:
AG Super Fund
International Partners, L.P.
<PAGE>
Investor's Representative: Investor:
Angelo, Gordon & Co., L.P. Ramius Fund, LTD.
Attn: Gary Wolf
By: AG Ramius Partners, L.L.C., its Investment
Advisor
By: /s/ Michael L. Gordon
-------------------------------------------
Michael L. Gordon, Managing Officer
Address: 245 Park Avenue
26th Floor Place of Execution: New York
New York, NY 10167
Telephone: (212) 692-2058 Place of Organization or Citizenship: Bermuda
Fax: (212) 867-6449
Place of Residency and/or Principal
Place of Business:
c/o Bank of Bermuda
Attn: Chandra Aramdjeroric
6 Front Street
Hamilton HM11 Bermuda
Registration Instructions: Ramius Fund, LTD.
<PAGE>
Investor's Representative: Investor:
Angelo, Gordon & Co., L.P. Raphael, L.P.
Attn: Michael L. Gordon
By: /s/ Michael L. Gordon
------------------------------------------
Michael L. Gordon, Chief Operating Officer
Address: 245 Park Avenue
26th Floor Place of Execution: New York
New York, NY 10167
Telephone: (212) 692-2058 Place of Organization or Citizenship:
Fax: (212) 867-6449 Cayman Islands
Place of Residency and/or Principal
Place of Business:
c/o Raphael Capital Management Partners, L.P.
Transnational House
P.O. Box 30749
Seven Mile Beach
Grand Cayman, Cayman Islands, B.W.I.
Registration Instructions: Raphael, L.P.
<PAGE>
Investor's Representative: Investor:
Angelo, Gordon & Co., L.P. AG SUPER FUND, L.P.
Attn: Michael L. Gordon By: Angelo, Gordon & Co., L.P.
Its: General Partner
By: /s/ Michael L. Gordon
-------------------------------------------
Name Michael L. Gordon, Chief Operating Officer
Address: 245 Park Avenue
26th Floor Place of Execution: New York
New York, NY 10167
Telephone: (212) 692-2058 Place of Organization or Citizenship:
Fax: (212) 867-6449 United States
Place of Residency and/or Principal
Place of Business:
c/o Angelo, Gordon & Co., L.P.
245 Park Avenue, 26th Floor
New York, NY 10167
Registration Instructions: AG SUPER FUND, L.P.
<PAGE>
Investor's Representative: Investor:
Angelo, Gordon & Co., L.P. MICHAELANGELO, L.P.
Attn: Michael L. Gordon By: Angelo, Gordon & Co., L.P.
Its: General Partner
By: /s/ Michael L. Gordon
------------------------------------------
Michael L. Gordon, Chief Operating Officer
Address: 245 Park Avenue
26th Floor Place of Execution: New York
New York, NY 10167
Telephone: (212) 692-2058 Place of Organization or Citizenship:
Fax: (212) 867-6449 United States
Place of Residency and/or Principal
Place of Business:
c/o Angelo Gordon & Co., L.P.
245 Park Avenue, 26th Floor
New York, NY 10167
Registration Instructions: Michaelangelo, L.P.
<PAGE>
Investor's Representative: Investor:
Angelo, Gordon & Co., L.P. ANGELO, GORDON & CO., L.P.
Attn: Michael L. Gordon
/s/ Michael L. Gordon By: /s/ Michael L. Gordon
- --------------------- ----------------------------------------
Michael L. Gordon, Chief Operating Officer
Address: 245 Park Avenue
26th Floor Place of Execution: New York
New York, NY 10167
Telephone: (212) 692-2058 Place of Organization or Citizenship:
Fax: (212) 867-6449 United States
Place of Residency and/or Principal
Place of Business:
c/o Angelo Gordon & Co., L.P.
245 Park Avenue, 26th Floor
New York, NY 10167
Registration Instructions: Angelo, Gordon
& Co., L.P.
<PAGE>
Investor's Representative: Investor:
PALLADIN PARTNERS I, L.P.
By: /s/ Andrew Kaplan
-------------------------------------
Place of Execution: New York
Place of Organization or Citizenship:
Place of Residency and/or Principal
Place of Business:
40 West 57th Street
New York, NY 10019
Registration Instructions: Palladin Partners I, L.P.
<PAGE>
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Registration Rights
Agreement"), entered into as of February 18, 1998, between each of the persons
whose name and signature appear on the signature page hereto (each a "Purchaser"
and collectively, the "Purchasers"), and Geotek Communications, Inc., a Delaware
corporation with its principal office at 20 Craig Road, Montvale, New Jersey
07645 (the "Company").
W I T N E S S E T H:
WHEREAS, the Purchasers have obtained pursuant to various Convertible
Securities Subscription Agreements and other agreements (collectively, the
"Agreement") shares of the Company's Series O Convertible Preferred Stock
("Series O Stock"), Series Q Convertible Preferred Stock ("Series Q Stock"),
Series R Convertible Preferred Stock ("Series R Stock") and/or Series S
Convertible Preferred Stock ("Series S Stock") and the Company also has
outstanding shares of its Series P Convertible Preferred Stock ("Series P Stock"
and together with the Series O Stock, Series Q Stock, Series R Stock and Series
S Stock, the "Preferred Stock");
WHEREAS, pursuant to the terms of the Certificates of Designation
establishing the rights of the Preferred Stock (collectively, the "Certificate
of Designation"), the Preferred Stock is convertible into shares of the
Company's Common Stock, par value $.01 per share (the "Shares");
WHEREAS, in connection with the purchase of the Preferred Shares, the
Company has issued to the Purchasers warrants to purchase Shares and the Company
is required to issue to holders of Preferred Stock certain other warrants for
the purchase of Shares upon the Company's redemption of Preferred Stock
(collectively, the Warrants).";
WHEREAS, pursuant to the terms of and in partial consideration for, the
Purchasers' agreement to enter into the Agreement, the Company has agreed to
provide the Purchasers with certain registration rights with respect to the
Shares;
NOW, THEREFORE, in consideration of the mutual promises,
representations, warranties, covenants and conditions set forth in the
Agreement, Certificate of Designation and this Registration Rights Agreement,
the Company and the Purchasers agree as follows:
1. Certain Definitions. As used in this Registration Rights Agreement,
the following terms shall have the following respective meanings:
(a) "SEC" shall mean the Securities and Exchange Commission or
any other federal agency at the time administering the Securities Act.
<PAGE>
(b) "Registrable Securities" shall mean: (i) Shares issued to
the Purchasers or their designees upon conversion of the Preferred Stock,
exercise of the Warrants or upon any stock split, stock dividend (pursuant to
the Certificate of Designation or otherwise), recapitalization or similar event
with respect to such Shares; (ii) any Shares issued to the Purchasers or any
Holder as dividends on the Preferred Stock; (iii) any securities issued or
issuable to the Purchasers or any Holder upon the conversion or exercise or
exchange of any Preferred Stock, Warrants or Shares and (iv) shares of Common
Stock issued pursuant to Section 5(a) hereof.
(c) The terms "register", "registered" and "registration"
shall refer to a registration effected by preparing and filing a registration
statement in compliance with the Securities Act and applicable rules and
regulations thereunder, and the declaration or ordering of the effectiveness of
such registration statement.
(d) "Registration Expenses" shall mean all expenses to be
incurred by the Company in connection with each Purchaser's exercise of its
registration rights under this Registration Rights Agreement, including, without
limitation, all registration and filing fees, printing expenses, fees and
disbursements of counsel for the Company and blue sky fees and expenses (but
excluding the compensation of regular employees of the Company, which shall be
paid in any event by the Company).
(e) "Selling Expenses" shall mean all underwriting discounts
and selling commissions, if any, applicable to the sale of Registrable
Securities and all fees and disbursements of counsel for the Holders.
(f) "Holder" and "Holders" shall include a Purchaser or the
Purchasers, respectively, and any transferee of Preferred Stock, Warrants,
Shares or Registrable Securities which have not been sold to the public to whom
the registration rights conferred by this Registration Rights Agreement have
been transferred in compliance with Section 12 of this Registration Rights
Agreement.
(g) "Registration Statement" shall have the meaning set forth
in Section 2(a) herein.
(h) "Regulation D" shall mean Regulation D as promulgated
pursuant to the Securities Act, and as subsequently amended.
(i) "Securities Act" shall mean the Securities Act of 1933, as
amended.
2. The Registration Requirements. The Company represents and warrants
that it is qualified and eligible to use the registration statement on Form S-3
under the Securities Act. The Company shall file such Registration Statement no
later than March 16, 1998 (the "Registration Date") and use its best efforts to
cause such Registration Statement to become effective as promptly as possible
thereafter. Such Registration Statement shall be filed on Form S-3 under the
Securities Act or, if Form S-3 is not then available, another appropriate form
covering the resale of
2
<PAGE>
the Shares issuable on conversion of the Preferred Stock and upon exercise of
the Warrants. In addition, the Company shall take all action necessary to
qualify the Shares under state "blue sky" laws as hereinafter provided. The
Company shall use its diligent best efforts to effect the registration
contemplated by the foregoing (including, without limitation, the execution of
an undertaking to file post-effective amendments, appropriate qualification
under applicable blue sky or other state securities laws and appropriate
compliance with applicable regulations issued under the Securities Act) and as
would permit or facilitate the sale and distribution of all the Registrable
Securities in all states reasonably requested by the Holders for purposes of
maximizing the proceeds realizable by the Holders from such sale and
distribution. The Company shall distribute copies of the Registration Statement
to the Holders promptly after the filing thereof and shall give the Holders no
less than ten days after receipt of such Registration Statement the opportunity
to provide comments thereto. Such best efforts by the Company shall include,
without limitation, the following:
(a) The Company shall file (i) a registration statement with
the SEC pursuant to Rule 415 under the Securities Act on Form S-3 under the
Securities Act and the Company shall use its best efforts to qualify for the use
of such Form (or in the event that the Company is ineligible to use such form,
such other form as the Company is eligible to use under the Securities Act)
covering the Registrable Securities to be registered (the "Registration
Statement"); (ii) such blue sky filings as shall be reasonably requested to
permit such sales; provided, however, that the Company shall not be required to
register the Registrable Securities in any jurisdiction that would subject it to
general service of process in any such jurisdiction where it is not then so
subject or subject the Company to any tax in any such jurisdiction where it is
not then so subject or to require the Company to qualify to do business in any
jurisdiction where it is not then so qualified; and (iii) any required filings
with the Nasdaq National Market ("Nasdaq") and any exchange where the Shares are
traded, all as soon as practicable after the date hereof. The Company shall use
its best efforts to have such Registration Statement and other filings declared
effective as soon thereafter as may be practicable.
(b) The Company shall enter into such customary agreements
(including a customary underwriting agreement with the underwriter or
underwriters, if any) and take all such other reasonable actions, in connection
therewith in order to expedite or facilitate the disposition of such Registrable
Securities and in such connection whether or not the Registrable Securities are
to be sold in an underwritten offering, the Company shall:
(i) make such representations and warranties to the
Holders and the underwriter or underwriters, if any, in form and substance and
scope as are customarily made by issuers to underwriters in secondary
underwritten offerings;
(ii) cause to be delivered to the sellers of
Registrable Securities and the underwriter or underwriters, if any, opinions of
counsel to the Company, dated the date of delivery of any Registrable Securities
sold pursuant thereto, which counsel and opinions (in form, scope and substance)
shall be reasonably satisfactory to the managing underwriter or underwriters and
the appointed representative or counsel of the Holders, addressed to the Holders
and each underwriter:
3
<PAGE>
(A) in the case of an underwritten offering,
covering the matters customarily covered in opinions requested in secondary
underwritten offerings; or
(B) in the case of any offering that is not
underwritten, covering the effectiveness of the registration statement;
(iii) in the case of an underwritten offering, cause
to be delivered at the time of delivery of any Registrable Securities sold
pursuant thereto, letters from the Company's independent certified public
accountants addressed to the Holders and each underwriter stating that such
accountants are independent public accountants within the meaning of the
Securities Act and the applicable published rules and regulations thereunder,
and otherwise in customary form and covering such financial and accounting
matters as are customarily covered by letters of the independent certified
public accountants delivered in connection with secondary underwritten public
offerings;
(iv) if an underwriting agreement is entered into,
cause the same to set forth indemnification and contribution provisions and
procedures which are no less favorable to the Holders and the Company than those
contemplated by sections 8 and 9 hereof with respect to all parties to be
indemnified pursuant to such sections;
(v) deliver such documents and certificates as may be
reasonably requested by the Holders of the Registrable Securities being sold or
the managing underwriter or underwriters, if any, to evidence compliance with
clause (i) above and with any customary conditions contained in the underwriting
agreement, if any, or other agreement entered into by the Company;
the foregoing in this paragraph 2(b) shall be done at each closing under any
such underwriting or similar agreement or as and to the extent required
thereunder; provided, however, the foregoing in paragraph 2(b) shall not be
required on more than two (2) occasions;
(c) The Company shall make available for inspection, review
and comment by a representative or representatives of the Holders, any
underwriter participating in any disposition pursuant to a Registration
Statement, and any attorney or accountant retained by such Holders or
underwriter, any such registration statement or amendment or supplement or any
blue sky, Nasdaq or other filing, all financial and other records, pertinent
corporate documents and properties of the Company as they may reasonably request
for the purpose, and cause the Company's officers, directors and employees to
supply all information reasonably requested by any such representative,
underwriter, attorney or accountant in connection with such Registration
Statement.
3. Underwritten Distribution. If any Holder intends to distribute the
Registrable Securities covered by a Registration Statement by means of an
underwriting, such Holder shall so advise the Company and, within thirty (30)
days of the date thereof and without limiting the generality of other provisions
hereof, the Company will prepare and file such amendment or amendments to the
Registration Statement and make such other filings as may be necessary or
4
<PAGE>
appropriate to effect any such underwritten distribution. The managing
underwriter for any such distribution shall be an investment banking firm of
national reputation selected by the Holders participating in such distribution,
subject to the Company's consent, which shall not be unreasonably withheld.
4. Expenses of Registration. All Registration Expenses incurred in
connection with any registration, qualification or compliance pursuant to this
Registration Rights Agreement shall be borne by the Company, and all Selling
Expenses shall be borne by the Holders.
5. Registration Delay or Failure. The Company acknowledges that its
failure to register the Registrable Securities in accordance with the Agreement
and this Registration Rights Agreement will cause the Holders to suffer damages
in an amount that will be difficult to ascertain. Accordingly the parties agree
that it is appropriate to include herein a provision for liquidated damages and
to compensate the Holder fairly for the additional risk undertaken by the
Holders resulting from the Company's delay or failure to effect such
registration. The parties acknowledge and agree that the liquidated damages
provisions set forth in the Agreement represent the parties' good faith effort
to quantify such damages and, as such, agree that the form and amount of such
liquidated damages are reasonable and will not constitute a penalty; provided,
however, that nothing in this Section 6 shall limit the Holders' right to pursue
equitable relief, including without limitation, specific performance.
(a) If the Registration Statement covering the resale of the
Shares is not (i) filed by the Company with the SEC on or prior to the
Registration Date the Company shall pay to each Investor within five (5) days
after such date a penalty of 1% of the market value of the shares of Common
Stock issued to each such Investor upon conversion of shares of Series O Stock,
Series Q Stock, Series R Stock or Series S Stock which are owned as of such date
(assuming a market price of no less than $1.00) and 1% of the Designated Price
(as defined in the Series O Certificate, Series Q Certificate, Series R
Certificate of Designation, the Series S Certificate of Designation or the
Certificate of Designation creating the Series P Stock, as the case may be) of
the shares of Series O Stock, Series P Stock, Series Q Stock, Series R Stock
and/or Series S Stock owned by such Investor as of such date and/or (ii)
declared effective on or prior to April 15, 1998, the Company shall pay to each
Investor within five (5) days after such date a penalty of 1% of the market
value of the shares of Common Stock issued to each such Investor upon conversion
of shares of Series O Stock, Series Q Stock, Series R Stock or Series S Stock
which are owned as of such date (assuming a market price of no less than $1.00)
and 1% of the Designated Price (as defined in the Series O Certificate, Series Q
Certificate, Series R Certificate of Designation, the Series S Certificate of
Designation or the Certificate of Designation creating the Series P Stock, as
the case may be) of the shares of Series O Stock, Series P Stock, Series Q
Stock, Series R Stock and/or Series S Stock owned by such Investor as of such
date. In addition, the Company shall also pay a penalty of 2% of such market
value and/or Designated Price, as the case may be, on the fifth (5th) day after
the end of each month for each month (or partial month) beginning April 1, 1998,
thereafter that the Registration Statement has not been declared effective;
provided that no such payment shall be required pursuant to this sentence if the
Registration Statement is declared effective on or prior to April 15, 1998. The
Company may pay any penalty pursuant to this Section 5(a) in shares of
5
<PAGE>
Common Stock, valued for such purposes, at the average closing bid price of the
Common Stock for the fifteen trading days immediately preceding the date such
payment is due.
6. Registration Procedures. In the case of each registration effected
by the Company pursuant to this Registration Rights Agreement, the Company will
keep the Holders advised in writing as to initiation of each registration and as
to the completion thereof. At its expense, the Company will use its best efforts
to:
(a) Keep such registration effective for the period of sixty
(60) months or until all the Securities are sold or eligible for sale pursuant
to Rule 144(k) of the SEC or any successor or similar provision, whichever is
earlier.
(b) Furnish such number of prospectuses and other documents
incident thereto as any Holder from time to time may reasonably request.
(c) Notify the Holders of any event or circumstance the result
of which is that the Company's Registration Statement or prospectus included
therein contains an untrue statement of material fact or omits to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading and shall (i) in the case of any event or circumstance
not provided for in clause (ii) below, within thirty (30) business days of such
notification or (ii) in the case of any acquisition, merger or other similar
material transaction requiring additional disclosure to correct any such untrue
statement or omission, within sixty (60) days of such notification, amend or
supplement the Registration Statement or prospectus to correct such inaccuracy
or disclose such development; provided, however, that upon receipt of such
notice, each Holder shall immediately discontinue dispositions of Registrable
Securities thereunder until such Holder's receipt from the Company of a
supplemented or amended prospectus and, if so requested by the Company, each
Holder shall deliver to the Company all copies (other than permanent file copies
in such Holder's possession) of the prospectus covering the Registrable
Securities current at the time of receipt of such notice; and provided further,
that if the Registration Statement or prospectus is not amended or supplemented
so as to remedy any inaccuracy or disclose such development by the thirtieth
(30th) business day in the case of clause (i), or the sixtieth (60th) business
day in the case of clause (ii), in each case, after notice of inaccuracy is
given by the Company to the Holders, then the Company shall issue to a Holder
upon each subsequent conversion by such Holder of any Preferred Stock which was
convertible into Common Stock at any time from the applicable date upon which
such Registration Statement was required to be supplemented or amended (i.e.,
the thirtieth (30th) business day or sixtieth (60th) business day after
notification, as the case may be) (the "Required Registration Statement
Amendment Date") until such date as the Registration Statement is so amended
(the "Registration Statement Amendment Date"), such additional shares of Common
Stock as would have been issuable to such Holder upon such conversion had the
Applicable Percentage used in determining the Conversion Date Market Price for
such conversion been increased by the Amendment Penalty Discount in the case of
an event described in clause (i) or the Alternative Penalty Discount in the case
of an event described in clause (ii). As used herein, (x) the "Amendment Penalty
Discount" shall initially equal zero percent (0%) on a Required Registration
Amendment Date in the case of an event described in clause (i) and shall
increase by one percent
6
<PAGE>
(1%) for every fifth (5th) business day thereafter until the applicable
Registration Statement Amendment Date and (y) the Alternative Penalty Discount
shall initially equal two and one-half percent (2 1/2%) on a Required
Registration Statement Amendment Date with respect to an event described in
clause (ii) and shall increase by two and one-half percent (2 1/2%) on the
thirtieth (30th) business day thereafter if the applicable Registration
Statement Amendment Date has not then occurred and shall increase by two percent
(2%) for every thirtieth (30th) business day thereafter until the applicable
Registration Statement Amendment Date.
7. Indemnification.
(a) Company Indemnity. The Company will indemnify each Holder,
each of its officers, directors, partners, employees and agents and each person
controlling such Holder within the meaning of Section 15 of the Securities Act
and the rules and regulations thereunder with respect to which registration,
qualification or compliance has been effected pursuant to this Registration
Rights Agreement, and each underwriter, if any, and each person who controls,
within the meaning of Section 15 of the Securities Act and the rules and
regulations thereunder, any underwriter, against all claims, losses, damages and
liabilities (or actions in respect thereof) arising out of or based on any
untrue statement (or alleged untrue statement) of a material fact contained in
any prospectus, offering circular or other document (including any related
registration statement, notification or the like) incident to any such
registration, qualification or compliance, or based on any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, or any violation by the
Company of the Securities Act or any state securities law or in either case, any
rule or regulation thereunder applicable to the Company and relating to action
or inaction required of the Company in connection with any such registration,
qualification or compliance, and will reimburse such Holder, each of its
officers, directors, partners, employees and agents and each person controlling
such Holder, each such underwriter and each person who controls any such
underwriter, for any legal and any other expenses reasonably incurred in
connection with investigating and defending any such claim, loss, damage,
liability or action, provided that the Company will not be liable in any such
case to the extent that any such claim, loss, damage, liability or expense
arises out of or is based on any untrue statement or omission based upon written
information furnished to the Company by such Holder or the underwriter and
stated to be specifically for use therein. The indemnity agreement contained in
this Section 7(a) shall not apply to amounts paid in settlement of any such
loss, claim, damage, liability or action if such settlement is effected without
the consent of the Company (which consent will not be unreasonably withheld).
(b) Holder Indemnity. Each Holder will severally and not
jointly, if Registrable Securities held by it are included in the securities as
to which such registration, qualification or compliance is being effected,
indemnify the Company, each of its officers, directors, partners, employees and
agents and each underwriter, if any, of the Company's securities covered by such
a registration statement, each person who controls the Company or such
underwriter within the meaning of Section 15 of the Securities Act and the rules
and regulations thereunder, each other Holder (if any), and each of their
officers, directors and partners, and each person controlling such other Holder
against all claims, losses, damages and liabilities (or actions in respect
thereof) arising out of or based on any untrue statement (or alleged untrue
statement) of a material fact contained in
7
<PAGE>
any such registration statement, prospectus, offering circular or other
document, or any omission (or alleged omission) to state therein a material fact
required to be stated therein or necessary to make the statement therein not
misleading and will reimburse the Company and such other Holders and their
officers, directors, partners, employees, agents, underwriters or control
persons for any legal or any other expenses reasonably incurred in connection
with investigating or defending any such claim, loss, damage, liability or
action, in each case to the extent, but only to the extent, that such untrue
statement (or alleged untrue statement) or omission (or alleged omission) is
made in such registration statement, prospectus, offering circular or other
document in reliance upon and in conformity with written information furnished
to the Company by Holder and stated to be specifically for use therein;
provided, however, that the obligations of Holder shall not apply to amounts
paid in settlement of any such claims, losses, damages or liabilities if such
settlement is effected without the consent of such Holder (which consent shall
not be unreasonably withheld). Notwithstanding the foregoing, each Holder's
indemnification obligation hereunder shall be limited to the net proceeds
received by such Holder from sales of Registrable Securities.
(c) Procedure. Each party entitled to indemnification under
this Article (the "Indemnified Party") shall give notice to the party required
to provide indemnification (the "Indemnifying Party") promptly after such
Indemnified Party has actual knowledge of any claim as to which indemnity may be
sought, and shall permit the Indemnifying Party to assume the defense of any
such claim in any litigation resulting therefrom, provided that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or any
litigation resulting therefrom, shall be approved by the Indemnified Party
(whose approval shall not be unreasonably withheld), and the Indemnified Party
may participate in such defense at such party's expense, and provided further
that the failure of any Indemnified Party to give notice as provided herein
shall not relieve the Indemnifying Party of its obligations under this Article
except to the extent that the Indemnifying Party is actually prejudiced by such
failure to provide notice. No Indemnifying Party, in the defense of any such
claim or litigation, shall, except with the consent of each Indemnified Party,
consent to entry of any judgment or enter into any settlement which does not
include as an unconditional term thereof the giving by the claimant or plaintiff
to such Indemnified of a release from all liability in respect to such claim or
litigation. Each Indemnified Party shall furnish such information regarding
itself or the claim in question as an Indemnifying Party may reasonably request
in writing and as shall be reasonably required in connection with the defense of
such claim and litigation resulting therefrom.
8. Contribution. If the indemnification provided for in Section 7
herein is unavailable to the Indemnified Parties in respect of any losses,
claims, damages or liabilities referred to herein, then each such Indemnifying
Party, in lieu of indemnifying such Indemnified Party, shall contribute to the
amount paid or payable by such Indemnified party as a result of such losses,
claims, damages or liabilities (i) as between the Company and the applicable
Holder on the one hand and the underwriters on the other, in such proportion as
is appropriate to reflect the relative benefits received by the Company and such
Holder on the one hand or underwriters, as the case may be, on the other from
the offering of the Registrable Securities, or if such allocation is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only such relative benefits but also the relative fault of the Company on the
one hand and of such Holder or underwriters, as the case may be, on
8
<PAGE>
the other, in connection with the statements or omissions which resulted in such
losses, claims, damages or liabilities, as well as any other relevant equitable
considerations and (ii) as between the Company on the one hand and the
applicable Holder on the other, in such proportion as is appropriate to reflect
the relative fault of the Company and of such Holder in connection with such
statements or omissions.
The relative benefits received by the Company on the one hand and the
applicable Holder or the underwriters, as the case may be, on the other shall be
deemed to be in the same proportion as (x) the proceeds from the offering (net
of underwriting discounts and commissions but before deducting expenses)
received by the Company from the initial sale of the Preferred Stock by the
Company to such Holder pursuant to the Agreement and from the exercise of the
Warrants by such Holder bear to (y) the gain realized by such Holder or the
total underwriting discounts and commissions received by the underwriters as set
forth in the table on the cover page of the prospectus, as the case may be. The
relative fault of the Company on the one hand and of the applicable Holder or
underwriters, as the case may be, on the other shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or omission to state a material fact relates to information
supplied by the Company, by such Holder or by the underwriters.
In no event shall the obligation of any Indemnifying Party to
contribute under this Section 8 exceed the amount that such Indemnifying Party
would have been obligated to pay by way of indemnification if the
indemnification provided for under Section 7(a) or 7(b) hereof had been
available under the circumstances.
The Company and each Holder agree that it would not be just and
equitable if contribution pursuant to this Section 8 were determined by pro rata
allocation (even if the applicable Holder or the underwriters were treated as
one entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to in the immediately
preceding paragraphs. The amount paid or payable by an Indemnified Party as a
result of the losses, claims, damages and liabilities referred to in the
immediately preceding paragraphs shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses reasonably incurred by
such Indemnified Party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this section, no Holder or
underwriter shall be required to contribute any amount in excess of the amount
by which (i) in the case of the Holder, the net proceeds received by such Holder
from the sale of Registrable Securities or (ii) in the case of an underwriter,
the total price at which the Registrable Securities purchased by it and
distributed to the public were offered to the public exceeds, in any such case,
the amount of any damages that the Holder or underwriter has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
9. Survival. The Indemnity and contribution agreements contained in
Sections 7 and 8 and the representations and warranties of the Company referred
to in Section 2(b)(i) shall remain
9
<PAGE>
operative and in full force and effect regardless of (i) any termination of this
Agreement, (ii) any investigation made by or on behalf of any Indemnified Party
or by or on behalf of the Company and (iii) the consummation of the sale or
successive resales of the Registrable Securities.
10. Information from Holders. Each Holder shall furnish to the Company
such information regarding such Holder and the distribution proposed by such
Holder as the Company may reasonably request in writing and as shall be
reasonably required in connection with any registration, qualification or
compliance referred to in this Agreement.
11. Transfer or Assignment of Registration Rights. The rights granted
to the Purchasers by the Company under this Registration Rights Agreement to
cause the Company to register Registrable Securities, may be transferred or
assigned to a transferee or assignee, provided that the Company is given written
notice by the applicable Holder at the time of or within a reasonable time after
said transfer or assignment, stating the name and address of said transferee or
assignee and identifying the securities with respect to which such registration
rights are being transferred or assigned, and provided further that the
transferee or assignee of such rights is not deemed by the board of directors of
the Company, in its reasonable judgment, to be a competitor of the Company, and
provided further that the transferee or assignee of such rights agrees to be
bound by this Registration Rights Agreement.
12. Miscellaneous.
(a) Entire Agreement. This Registration Rights Agreement, the
Agreement and the documents referenced in the Agreement contain the entire
understanding and agreement of the parties. This Registration Rights Agreement
may not be modified or terminated except by a written agreement signed by the
Company and the holders of at least two-thirds of the shares of Preferred Stock
outstanding at the time.
(b) Notices. Any notice or other communication required or
permitted to be given hereunder shall be in writing and shall be effective (i)
upon hand delivery or delivery by telex (with correct answer back received),
telecopy or facsimile, at the address or number designated below (if delivered
on a business day during normal business hours where such notice is to be
received), or the first business day following such delivery (if delivered other
than on a business day during normal business hours where such notice is to be
received) or (ii) on the second business day following the date of mailing by
express courier service, fully prepaid, addressed to such address, or upon
actual receipt of such mailing, whichever shall first occur. The addresses for
such communications shall be:
10
<PAGE>
to the Company:
Geotek Communications, Inc.
20 Craig Road
Montvale, NJ 07645
Attention: General Counsel and Secretary
Fax: (201) 930-9614
with copies to:
Klehr, Harrison, Harvey, Branzburg & Ellers
1401 Walnut Street
Philadelphia, PA 19102
Attention: Leonard M. Klehr, Esq.
Fax: (215) 568-6603
to the Purchasers at the address set forth for each Purchaser
in the Agreement, with copies to such Purchaser's
representatives (if any) at the address for such
representative set forth in the Agreement.
The Company or any Purchaser may from time to time change its address for
notices under this Section 13(b) by giving at least 10 days' written notice of
such changed address to each of the Purchasers (with respect to the Company) or
the Company (with respect to the Purchasers).
(c) Gender of Terms. All terms used herein shall be deemed to
include the feminine and the neuter, and the singular and the plural as the
context requires.
(d) Governing Law; Consent to Jurisdiction. This Registration
Rights Agreement shall be governed by and construed in accordance with the laws
of the State of New York without regard to principles of conflicts of law or
choice of law, except for matters arising under the Securities Act or the
Exchange Act which matters shall be construed and interpreted in accordance with
such Acts. The Company hereby agrees that all actions or proceedings arising
directly or indirectly from or in connection with this Registration Rights
Agreement shall, at the Purchaser's sole option, be litigated only in the
Supreme Court of the State of New York or the United States District Court for
the Southern District of New York located in New York County, New York. The
Company consents to the jurisdiction and venue of the foregoing courts and
consents that any process or notice of motion or other application to either of
said courts or a judge thereof may be served inside or outside the State of New
York or the Southern District of New York by registered mail, return receipt
requested, directed to the Company at its address set forth in this Registration
Rights Agreement (and service so made shall be deemed complete five (5) days
after the same has been posted as aforesaid) or by personal service or in such
other manner as may be permissible under the rules of said court.
11
<PAGE>
(e) Titles. The titles used in this Registration Rights
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Registration Rights Agreement.
(f) Counterparts. This Registration Rights Agreement may be
executed in any number of counterparts each of which shall be enforceable
against the parties actually executing such counterparts, and all of which
together shall constitute one instrument.
12
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Registration
Rights Agreement to be duly executed as of the date first above written.
GEOTEK COMMUNICATIONS, INC.
By: /s/ Yaron Eitan
--------------------------------------------------
Yaron Eitan
Chairman and CEO
PURCHASERS:
RGC International Investors, LDC
By: Rose Glen Capital Management, L.P., as
Investment Manager
By: RGC General Partner Corp., as general partner
By: /s/ Wayne D. Bloch
--------------------------------------------------
Wayne D. Bloch, Managing Director
Halifax Fund, L.P.
By: The Palladin Group, its Investment Manager
By: Palladin Capital Management LLC, its General Partner
By: /s/ Andrew Kaplan
--------------------------------------------------
Andrew Kaplan, Authorized Representative
[SIGNATURES CONTINUED]
<PAGE>
Gleneagles Fund, Ltd.
By: The Palladin Group, its Investment Manager
By: Palladin Capital Management LLC, its General Partner
By: /s/ Andrew Kaplan
---------------------------------------------------
Andrew Kaplan, Authorized Representative
Colonial Penn Insurance Company
By: The Palladin Group, its Investment Manager
By: Palladin Capital Management LLC, its General Partner
By: /s/ Andrew Kaplan
---------------------------------------------------
Andrew Kaplan, Authorized Representative
Colonial Penn Life Insurance Company
By: The Palladin Group, its Investment Manager
By: Palladin Capital Management LLC, its General Partner
By: /s/ Andrew Kaplan
---------------------------------------------------
Andrew Kaplan, Authorized Representative
[SIGNATURES CONTINUED]
<PAGE>
Palladin Partners I, L.P.
By: /s/ Andrew Kaplan
---------------------------------------------------
Andrew Kaplan, Authorized Representative
[SIGNATURES CONTINUED]
<PAGE>
Nelson Partners
By: /s/ Nitin Aggarwal
-------------------------------------------------
Nitin Aggarwal, Officer
Olympus Securities, LTD.
By: /s/ Nitin Aggawnal
-------------------------------------------------
Nitin Aggarwal, Officer
CIBC, Wood Gundy Securities Corp.
By: /s/ Walter F. McLallen
-------------------------------------------------
Walter F. McLallen, Managing Director
Themis Partners L.P.
By: Promethean Investment Group, L.L.C., its General
Partner
By: /s/ James F. O'Brien, Jr.
-------------------------------------------------
James F. O'Brien, Jr., President
Samyang Merchant Bank
By: Promethean Investment Group, L.L.C., its Investment
Advisor
By: /s/ James F. O'Brien, Jr.
-------------------------------------------------
James F. O'Brien, Jr., President
[SIGNATURES CONTINUED]
<PAGE>
Heracles Fund
By: Promethean Investment Group, L.L.C., its Investment
Advisor
By: /s/ James F. O'Brien
----------------------------------------------------
James F. O'Brien, Jr., President
Leonardo, L.P.
By: Angelo, Gordon & Co., L.P., its General Partner
By: /s/ Michael L. Gordon
----------------------------------------------------
Michael L. Gordon, Chief Operating Officer
GAM Arbitrage Investments, Inc.
By: Angelo, Gordon & Co., L.P., its Investment Advisor
By: /s/ Michael L. Gordon
----------------------------------------------------
Michael L. Gordon, Chief Operating Officer
AG Super Fund International Partners, L.P.
By: Angelo, Gordon & Co., L.P., its General Partner
By: /s/ Michael L. Gordon
----------------------------------------------------
Michael L. Gordon, Chief Operating Officer
[SIGNATURES CONTINUED]
<PAGE>
Ramius Fund, Ltd.
By: AG Ramius Partners, L.L.C., its Investment Advisor
By: /s/ Michael L. Gordon
----------------------------------------------------
Michael L. Gordon, Managing Officer
Raphael, L.P.
By: /s/ Michael L. Gordon
----------------------------------------------------
Michael L. Gordon, Chief Operating Officer
AG Super Fund, L.P.
By: Angelo, Gordon & Co., L.P., its General Partner
By: /s/ Michael L. Gordon
----------------------------------------------------
Michael L. Gordon, Chief Operating Officer
Michaelangelo, L.P.
By: Angelo, Gordon & Co., L.P., its General Partner
By: /s/ Michael L. Gordon
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Michael L. Gordon, Chief Operating Officer
[SIGNATURES CONTINUED]
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Angelo, Gordon & Co., L.P.
By: /s/ Michael L. Gordon
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Michael L. Gordon, Chief Operating Officer
