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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )*
GEOTEK COMMUNICATIONS, INC.
- --------------------------------------------------------------------------------
(Name of Issuer)
Common Stock, par value $0.01 per share
- --------------------------------------------------------------------------------
(Title of Class of Securities)
373654102
- --------------------------------------------------------------------------------
(CUSIP Number)
Kristine E. Mrofka, Esq.
Hughes Electronics Corporation
1500 Hughes Way, Long Beach, CA 90810; M/S: HC/A01/4A467; (310) 525-5158
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
October 2, 1996
- --------------------------------------------------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G
to report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g),check the
following box [ ].
NOTE: Schedules filed in paper format shall include a signed original
and five copies of this schedule, including all exhibits. See Rule 13d-7(b) for
other parties to whom copies are to be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
(continued on following pages)
(Page 1 of 3 Pages)
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CUSIP No. 323654102 SCHEDULE 13D Page 2 of 3 Pages
--------------------- -------- --------
(1) Names of Reporting Persons
I.R.S. Identification Nos. of Above Persons (Entities only)
Hughes Electronics Corporation
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(2) Check the Appropriate Box if a Member of a Group* (a) [ ]
(b) [ ]
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(3) SEC Use Only
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(4) SOURCE OF FUNDS*
WC
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(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS
IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)
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(6) Citizenship or Place of Organization
Delaware
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(7) Sole Voting Power
Number of
Shares --------------------------------------------------------
Beneficially (8) Shared Voting Power
Owned by 56,944,444
Each --------------------------------------------------------
Reporting (9) Sole Dispositive Power
Person With
--------------------------------------------------------
(10) Shared Dispositive Power
56,944,444
--------------------------------------------------------
(11) Aggregate Amount Beneficially Owned by Each Reporting Person
56,944,444
---------------------------------------------------------------------
(12) Check Box if Aggregate Amount in Row (11) Excludes Certain
Shares (See Instructions) [ ]
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(13) Percent of Class Represented by Amount in Row (11)
32.3%
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(14) Type of Reporting Person (See Instructions)
CO
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CUSIP No. 323654102 SCHEDULE 13D Page 3 of 3 Pages
--------------------- -------- --------
(1) Names of Reporting Persons
I.R.S. Identification Nos. of Above Persons (Entities only)
General Motors Corporation
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(2) Check the Appropriate Box if a Member of a Group* (a) [ ]
(b) [ ]
---------------------------------------------------------------------
(3) SEC Use Only
---------------------------------------------------------------------
(4) SOURCE OF FUNDS*
WC
---------------------------------------------------------------------
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS
IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)
---------------------------------------------------------------------
(6) Citizenship or Place of Organization
Delaware
---------------------------------------------------------------------
(7) Sole Voting Power
Number of
Shares --------------------------------------------------------
Beneficially (8) Shared Voting Power
Owned by 56,944,444
Each --------------------------------------------------------
Reporting (9) Sole Dispositive Power
Person With
--------------------------------------------------------
(10) Shared Dispositive Power
56,944,444
--------------------------------------------------------
(11) Aggregate Amount Beneficially Owned by Each Reporting Person
56,944,444
---------------------------------------------------------------------
(12) Check Box if Aggregate Amount in Row (11) Excludes Certain
Shares (See Instructions) [ ]
---------------------------------------------------------------------
(13) Percent of Class Represented by Amount in Row (11)
32.3%
---------------------------------------------------------------------
(14) Type of Reporting Person (See Instructions)
CO
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Item 1. Security and Issuer
This statement is filed under Section 13(d) of the Securities
Exchange Act of 1934 ("Exchange Act") and relates to certain rights to acquire
shares of Common Stock, $0.01 par value ("Common Stock"), of Geotek
Communications, Inc., a Delaware corporation (the "Issuer"). The principal
executive offices of the Issuer are located at 102 Chestnut Ridge Road,
Montvale, New Jersey 07645.
Item 2. Identity and Background
This statement on Schedule 13D (the "Statement") is filed by
Hughes Electronics Corporation, a Delaware corporation ("HE") which, until
December 17, 1997 was known as Hughes Network Systems, Inc. ("HNS"), and HE's
immediate parent, General Motors Corporation ("GM") (together the "Reporting
Persons").
As part of the merger of Hughes Electronics Corporation ("Old
HE") defense assets with Raytheon Company, Old HE ceased to exist and HNS was
renamed Hughes Electronics Corporation ("HE"). Following the merger of GM/HE
Merger Sub, Inc. (formerly known as Hughes Electronics Corporation) with and
into GM and the subsequent transfer of all of the capital stock of HE to GM, HE
became a direct, wholly owned subsidiary of GM. The assets and operations of HNS
continue to reside in HE and, for purposes of this Statement, all references to
HE are intended to include HNS. The former name HNS is used where transactions
took place prior to the name change, in order to be consistent with the
exhibits, and it is intended that references to HNS should include its new
identity as HE.
HNS, which continues as an operating unit of HE, is engaged
principally in the business of manufacturing and services for wireless
telecommunications, including those handsets and base station equipment
manufactured for the Issuer and its subsidiaries.
HE, in addition, engages in the business of designing,
manufacturing and marketing advanced electronics systems for telecommunications
and, through its subsidiaries and affiliates, of manufacturing, owning and
operating commercial communications satellites. The address of its principal
business and principal office is 200 N. Sepulveda Boulevard, El Segundo,
California 90245.
GM is principally engaged in the automotive products industry
business, consisting of the design, manufacture, assembly and sale of
automobiles, trucks and related parts and accessories. It also has financing,
insurance, defense and automotive electronics operations. The address of its
principal business and principal office is 100 Renaissance Center, Detroit,
Michigan 48243.
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Schedules I and II, respectively, to the Statement list each
executive officer and director of HE and GM and the business address, present
principal occupation or employment and citizenship of each such executive
officer and director, as well as the name, principal business and address of any
corporation or other organization in which such employment is conducted.
During the last five years, none of the Reporting Persons nor, to
the best of the knowledge of the Reporting Persons, any of the other persons
named in this Item 2 has been convicted in a criminal proceeding (excluding
traffic violations or similar misdemeanors).
During the last five years, none of the Reporting Persons nor, to
the best of the knowledge of the Reporting Persons, any of the other persons
named in this Item 2 was a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of such proceeding
was or is subject to a judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject to, federal or
state securities laws or finding any violation with respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration
The Right to Convert and the Warrants as described in Items 4 and
6 were offered to HNS (now, HE) by Issuer as an inducement to make the loans and
extensions of credit described in this Statement and exhibits hereto. The monies
loaned to Issuer were part of HNS' regular operating funds and working capital.
Item 4. Purpose of the Transaction
As set forth in Item 6, the Right to Convert and the Warrants
were acquired in connection with loans and extensions of credit made to the
Issuer in the ordinary course of HNS/HE's business, solely for investment
purposes and with the intent to secure recoupment of the amounts lent to the
Issuer and its subsidiaries. If the Right is exercised, HE must forego its
rights to repayment of the principal of the Note.
Pursuant to the terms of a Loan Agreement dated December 21,
1995, HNS acquired a Right to Convert (the "Right"), up to and including the
entire principal amount outstanding under the Loan Agreement, to shares of
Issuer's Common Stock at a price based on detailed formulae in the Loan
Agreement ("Conversion Price") which would under most circumstances result in a
Conversion Price of 90% of the weighted average sales price of Issuer's Common
Stock as reported between one and ten days prior to any exercise on the primary
interdealer quotation system or national securities exchange on which Issuer's
Common Stock is listed. Thus, the actual number of shares of Common Stock which
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may be acquired through conversion is variable. Prior to October 1, 1998, and in
the absence of a Default as defined in the Loan Agreement, HNS may not convert
more than $500,000 principal amount of the loans on any business day. However,
upon the occurrence and during the continuation of a Default, up to the entire
amount of the Loans may be converted into shares of Common Stock with no
contractual restrictions on the ability to resell such shares obtained through
conversion. The Right was also contingent upon funding under the Loan Agreement,
which took place on October 2, 1996. The Right expires on the maturity date of
the Loan, which is October 2, 1998. As a result of changes in Issuer's quoted
stock price, as well as the floating Conversion Price, it is probable that the
Right, if fully exercised, would result in HE owning more than 10% of Issuer's
currently outstanding Common Stock.
In addition, the Reporting Persons acquired three (3) Warrants
covering up to an aggregate of 2,500,000 shares of Common Stock of the Issuer in
connection with an additional extension of vendor credit under a Vendor Credit
Facility and related agreements between HNS, Issuer and Issuer's subsidiaries.
The Warrants are exercisable as follows: one Warrant for one million (1,000,000)
shares of Common Stock exercisable at a price of $8.625 per share, one Warrant
for one million (1,000,000) shares of Common Stock exercisable at a price of
$10.7813 per share, and one Warrant for five hundred thousand (500,000) shares
of Common Stock exercisable at $12.9375 per share.
The percentage of Common Stock reported in this Schedule 13D as
being beneficially owned by the Reporting Persons is based upon 119,199,303
shares of outstanding Common Stock, representing the number of outstanding
shares of Common Stock identified in the Company's Quarterly Report on Form 10-Q
for the quarter ended March 31, 1998 (the "10-Q").
As of the date of this Statement, neither the Right nor the
Warrants have been exercised in whole or in part; however, the Reporting Persons
may exercise the Right and/or the Warrants to acquire Common Stock of the
Issuer, depending upon the Reporting Persons' evaluation of the Issuer's
business, prospects and financial condition, the market for the Common Stock of
the Issuer, other opportunities available to the Reporting Persons, general
economic conditions, money and stock market conditions, regulatory conditions
and other future developments. Currently, the exercise prices of the Warrants
are substantially in excess of the market value of the Issuer's Common Stock.
However, the Conversion Price of the Right, as noted above, is calculated at a
discount to the weighted average sales price of the Issuer's Common Stock.
Although the Reporting
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Persons have no current plans to exercise the Right or to dispose of Common
Stock, in the future, depending upon the factors set forth above, the Reporting
Persons may decide to exercise or not exercise the Right, or to hold or dispose
of all or part of the Common Stock of the Issuer acquired through any such
exercise. Although the Reporting Persons have no current plans to take any such
actions, in the event that the Right or the Warrants are exercised and Issuer's
Common Stock was thereby acquired, the Reporting Persons could formulate
proposals, and take action, as they may deem appropriate in the circumstances,
to cause any vacancies on the board of directors of the Issuer to be filled, or
otherwise to change the board of directors or management of the Issuer, to
effect a change in the capitalization of the Issuer or to effect an
extraordinary corporate transaction.
The Reporting Persons have no present plan or proposal which
relates to or would result in any of the outcomes covered in subsections (a)
through (j) of Item 4 of Schedule 13D.
The Reporting Persons reserve the right to formulate other plans
or proposals, and to take other action, with respect to the Issuer and their
ownership of the Issuer's securities as they may determine.
Item 5. Interest in Securities of the Issuer
(a) Other than the Right and the Warrants, neither HE nor its
subsidiaries or, to the best of the Reporting Persons' knowledge, affiliates
have interests in the Common Stock of the Issuer except as set forth in this
Statement. GM is the indirect beneficial owner of HE's interests in the Right
and the Warrants. If the Right were exercised for its full principal amount of
$24.5 million to acquire Common Stock of the Issuer over the course of 49 days
(based on the $500,000 maximum principal amount of the Right that may be
converted on any business day prior to October 1, 1998) at an assumed stock
price of $0.50 (the assumed stock price approximates the recent trading price of
the Shares, which price fluctuates on a daily basis and is only an estimate for
purposes of this filing), the Reporting Persons would beneficially own in excess
of 54.4 million Shares, or approximately 31.4% of Issuer's currently issued and
outstanding Common Stock. However, upon the occurrence and during the
continuation of a Default, up to the entire amount of the Loans may be converted
into shares of Common Stock with no contractual restrictions on the ability to
resell such shares obtained through conversion.
As of the date of this Statement, the Warrants are not presently
"in the money"; that is, Reporting Persons could acquire an equal amount of
Common Stock on the open market for substantially less than the exercise prices
under the Warrants. However, if the Reporting Persons exercised the Warrants in
full, such 2,500,000 shares represented by the Warrants represent 2.1% of
Issuer's Common Stock. Aggregated, the number of shares of underlying Common
Stock represented by the Right and the Warrants would equal approximately 32.3%,
assuming (for the purposes of this example only) that the open market price for
Issuer's Common Stock remained at $0.50 per share for the duration of the period
over which the Right was exercised.
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In addition, HE has received a pledge of all of the capital stock
of Issuer's subsidiary, Geotek License Holdings, Inc. ("Holdings") as partial
security for the loans made under the Loan Agreement and extensions of credit
under the Vendor Credit Facility, which capital stock is 100% owned by Issuer
and is not registered under the Securities Act of 1933 (the "33 Act") or the
Exchange Act.
(b) In the event of any exercise of the Right or the Warrants
and, subject to the effects of the Agreements discussed in Item 6 below, HE is
the entity having sole power to vote, direct the vote, dispose or direct the
disposition of any Common Stock, and GM is an indirect holder of such powers.
To the best of the knowledge of the Reporting Persons, as of the
date of this filing, none of the persons (other than the Reporting Persons)
named in Item 2 beneficially owned, or had the right to acquire, shares of
Common Stock of the Issuer, except as set forth in Item 5(c) below.
The Reporting Persons are not a part of a group as defined by
Section 13(d)(3) of the Exchange Act.
The Reporting Persons expressly disclaim any beneficial interest
in the shares of Common Stock of the Issuer held by any entities other than the
Reporting Persons, and the filing of this Statement by the Reporting Persons
shall not be construed as an admission by the Reporting Persons that any of them
is, for purposes of Section 13(d) of the Exchange Act, the beneficial owner of
any of the shares of Common Stock held by any third party.
(c) The Reporting Persons have neither acquired nor disposed
of Common Stock of the Issuer in the sixty days preceding the filing of this
Statement, nor have Reporting Persons exercised either the Right or the Warrant
at any time since their respective acquisition.
To the best of the knowledge of the Reporting Persons, there have
not been any transactions in the Common Stock of Issuer effected by or for the
account of any executive officer or director of the Reporting Persons during the
past sixty days.
The Reporting Persons understand that certain executives and
officers of HE/HNS and GM have acquired an aggregate of 12,400 shares of Common
Stock of the Issuer. There is no agreement, arrangement or understanding between
such persons and the Reporting Persons with respect to any securities of the
Issuer.
To the best of the knowledge of the Reporting Persons, all such
transactions were effected as part of open market transactions for investment
purposes.
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The Reporting Persons specifically disclaim and have no
beneficial interest in the shares of Common Stock of the Issuer owned by the
executives and officers of HE/HNS and GM.
(d) The Reporting Persons do not know of any other person
having the right to receive or the power to direct the receipt of dividends
from, or the proceeds from the sale of, the Right, the Warrants or underlying
shares of Common Stock of the Issuer which the Reporting Persons have a right to
acquire.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships with
respect to Securities of the Issuer
The following descriptions are summaries only, and are qualified
in their entirety by reference to the agreements attached as exhibits hereto
and/or incorporated herein by reference.
Loan Agreement
As more fully described in the document, the Issuer, the Issuer's
subsidiary Geotek Financing Corporation ("Financing"), and HNS (prior to its
change of name to HE) are parties to a Loan Agreement dated December 31, 1995 as
amended by Amendment No. 1 dated September 27, 1996 (the "Loan Agreement")
wherein HE agreed to lend an amount up to $24,500,000 to Issuer's subsidiary,
Financing to enable Issuer's wholly owned subsidiary, Geotek License Holdings,
Inc. ("Holdings") to purchase certain 900 MHz Licenses as auctioned by the
Federal Communications Commission ("FCC"). Borrowings under the Loan Agreement
bear interest at the rate of 12% per annum, payable quarterly, or 18% per annum
from and after the occurrence of a default. Repayment of amounts drawn under the
Loan Agreement is guarantied by Issuer and secured by certain collateral,
including among other things, the 900 MHz licenses acquired by Holdings or any
subsidiary of Issuer, a collateral pledge of Issuer's 100% interest in the
capital stock of Holdings and certain promissory notes executed intercompany to
the Issuer. The Loan Agreement contains customary conditions and covenants,
including restrictions on the payment of dividends, creation of liens and
transactions with affiliates.
Also embodied in the Loan Agreement is the Right to Convert up to
100% of the amount outstanding under the Loan Agreement to shares of Common
Stock of the Issuer (the "Right"). The Right was structured to arise following
the initial funding under the Loan Agreement which occurred October 2, 1996; the
Right expires on the maturity date of the loans made under the Loan Agreement,
or October 2, 1998. The price HE as Lender is to pay upon conversion, in whole
or in part, of amounts outstanding under the Loan Agreement is variable, based
on detailed formulae
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in the Loan Agreement ("Conversion Price") which would generally result in a
Conversion Price of 90% of the weighted average sales price of Issuer's Common
Stock as reported between one and ten days prior to any exercise on the primary
interdealer quotation system or national securities exchange on which Issuer's
Common Stock is listed. Thus, the actual number of shares of Common Stock which
may be acquired through conversion is variable. The Issuer also agreed to give
HE certain registration rights in connection with the underlying Common Stock.
The Issuer offered the Right as a further inducement to make the loans under the
Loan Agreement; however to date, no exercise of the Right has occurred. The Loan
Agreement is fully funded at $24.5 Million.
Amended and Restated Borrower Pledge Agreement
Initially entered into December 21, 1995 in connection with the
Loan Agreement, the Amended and Restated Borrower Pledge Agreement dated
September 27, 1996 ("Pledge Agreement") is the Agreement whereby both the Loan
Agreement "Lender" and the "Lender" under the Vendor Credit Financing Agreement
described below ("Credit Facility") (in both instances "Lender" is the former
HNS) obtained a security interest in 100% of the capital stock of Issuer's
wholly owned subsidiary, Holdings, which capital stock is not registered under
the 33 Act or the Exchange Act ("Pledged Shares"). Issuer offered the Pledge
Agreement as additional collateral for borrowings under the Loan Agreement and
Credit Facility and as an inducement to HNS (HE) to make the loans and extend
credit. The Pledge Agreement contains standard terms for a grant of a first
perfected security interest in the Pledged Shares, and in the absence of a
Default (as respectively defined in the Loan Agreement and the Credit Facility),
Financing as Pledgor continues to exercise any and all voting and other
consensual rights pertaining to the Pledged Shares, provided that Pledgor is
required to abstain or refrain from exercising any such right if action would
have a material adverse effect on the value of the Pledged Collateral as defined
in the Pledge Agreement or if action would be inconsistent with the terms of the
Loan Agreement or Credit Facility. Upon default, HE has certain registration
rights to enable it to realize the full value of the collateral.
Vendor Credit Financing Agreement
Issuer as Guarantor and Financing as Borrower entered into a
Vendor Credit Financing Agreement with HNS as Lender (prior to its change of
name to HE) on September 27, 1996 ("Credit Facility") to enable Issuer and its
subsidiaries to purchase Base Station Equipment for use in Issuer's business
from HNS under the terms of a Manufacturing Agreement for Geotek Base Station
Equipment dated as of September 27, 1996 between the same parties, for an amount
up to $100 Million subject to certain conditions precedent.
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In addition to a first priority security interest or lien in
equipment sold by HE to Issuer, repayment under the Credit Facility is secured
by the same collateral as that securing performance under the Loan Agreement,
and in addition, HE received three (3) warrants to purchase Common Stock of the
Issuer, one warrant each as follows: one warrant for one million (1,000,000)
shares of Common Stock exercisable at a price of $8.625 per share, one warrant
for one million (1,000,000) shares of Common Stock exercisable at a price of
$10.7813 per share, and one warrant for five hundred thousand (500,000) shares
of Common Stock exercisable at a price of $12.9375 per share (together, the
"Warrants").
The Warrants became exercisable on September 27, 1997 and the
right of exercise expires September 26, 2003. Further, as defined in each
respective Warrant, each of the Warrants is subject to Issuer's demand for
Mandatory Exercise from and after September 27, 2000 and adjustments in price
and number of shares subject to the Warrant as provided in Sections 1.5 and 6 of
each respective Warrant. The Warrants are subject to rights of registration in
favor of the Holder.
To the extent that Issuer has other warrants outstanding in
addition to the Warrants, the Reporting Persons have no arrangements, agreements
or understandings with any warrant holders or to the best of Reporting Persons'
knowledge, any relationship with or to any other holder of warrants of the
Issuer.
Registration Rights Agreement
The Registration Rights Agreement dated September 27, 1996 among
Issuer, Financing and HNS (hereafter "HE") was executed in connection with the
Credit Facility as a further inducement to HE as Lender, to make Advances
thereunder and to provide HE with rights to have any Notes of Issuer under the
Credit Facility registered under the 33 Act and the Exchange Act by up to two
Registrations as defined in more detail in the Registration Rights Agreement.
The rights of registration are subject to a number of restrictions, including
HE's agreement not to effect any public sale of Notes in the event of an
offering of similar debt securities by the Issuer.
The Issuer has assumed the obligation to pay certain expenses
incident to registration of the Notes as securities. Additionally, Issuer and HE
have provided for a cross-indemnity with respect to information provided by each
party for use in any registration statement or prospectus.
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Item 7. Material to be Filed as Exhibits
Exhibit I: Joint Filing Agreement dated June 17, 1998.
Exhibit II: Loan Agreement dated December 21, 1995.
Exhibit III: Amendment No. 1 to Loan Agreement dated September 27, 1996.
Exhibit IV: Vendor Credit Financing Agreement dated September 27, 1996.
Exhibit V: Amended and Restated Borrower Pledge Agreement dated
September 27, 1996.
Exhibit VI: Form of Warrant to Purchase Common Stock.
Exhibit VII: Registration Rights Agreement dated September 27, 1996.
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Signature
After reasonable inquiry and to the best of its knowledge and
belief, the undersigned certifies that the information set forth in this
Statement is true, complete and correct.
HUGHES ELECTRONICS CORPORATION
By: /s/ Pradman P. Kaul
---------------------------
Name: Pradman P. Kaul
Title: Vice President
Dated: June 17, 1998.
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Signature
After reasonable inquiry and to the best of its knowledge and
belief, the undersigned certifies that the information set forth in this
Statement is true, complete and correct.
GENERAL MOTORS CORPORATION
By: /s/ Martin I. Darvick
---------------------------
Name: Martin I. Darvick
Title: Assistant Secretary
Dated: June 17, 1998.
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SCHEDULE I
HUGHES ELECTRONICS CORPORATION ("HE")
EXECUTIVE OFFICERS AND DIRECTORS
To the best of the knowledge of Reporting Persons, each of the
executive officers and directors listed below is a United States citizen, with
the exception of Eckhard Pfeiffer, a director of HE, who is a citizen of
Germany.
Unless otherwise specified, the business address of each person
listed below is 200 N. Sepulveda Boulevard, El Segundo, California 90245.
<TABLE>
<CAPTION>
Principal Occupation or
Name and Address Position with HE Employment
---------------- ---------------- ----------
<S> <C> <C>
Roxanne S. Austin Senior Vice President and HE Senior Vice President
Chief Financial Officer and Chief Financial Officer
Gareth C. C. Chang Senior Vice President HE Senior Vice President
Steven D. Dorfman Vice Chairman and Director HE Vice Chairman and
Director
Charles T. Fisher, III Director GM Director; Retired
General Motors Corp. Chairman and President,
100 Renaissance Center NBD Bankcorp, Inc.
Detroit, MI 48243
Sanda A. Harrison Senior Vice President HE Senior Vice President
J. Michael Losh Director GM Executive Vice
General Motors Corp. President and Chief
100 Renaissance Center Financial Officer
Detroit, MI 48243
Charles H. Noski President and Director President of HE
Harry J. Pearce Director GM Vice Chairman and
General Motors Corp. Director
100 Renaissance Center
Detroit, MI 48243
Eckhard Pfeiffer Director President and Chief
Compaq Computer Corp. Executive Officer, Compaq
20555 S.H. 249 Computer Corp.; GM Director
Houston, TX 77070
Jack A. Shaw Senior Vice President HE Senior Vice President;
Hughes Network Systems Chairman and CEO of Hughes
11717 Exploration Lane Network Systems, a unit of
Germantown, MD 20876 HE
</TABLE>
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<TABLE>
<CAPTION>
Principal Occupation or
Name and Address Position with HE Employment
---------------- ---------------- ----------
<S> <C> <C>
Michael T. Smith Chairman of the Board, Chairman of the Board,
Chief Executive Officer and Chief Executive Officer
Director and Director of HE
John F. Smith, Jr. Director Chairman, Chief Executive
General Motors Corp. Officer, President and
100 Renaissance Center Director of GM
Detroit, MI 48243
Marcy J.K. Tiffany Vice President and General HE Vice President and
Counsel General Counsel
Thomas H. Wyman Director GM Director; Former
The Landings Chairman, President and
1 Adams Point Chief Executive Officer of
Savannah, GA 31411 CBS, Inc.; Former Senior
Advisor, SBC Warburg Inc.;
Former Chairman, S. G.
Warburg & Co.
</TABLE>
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SCHEDULE II
GENERAL MOTORS CORPORATION ("GM")
EXECUTIVE OFFICERS AND DIRECTORS
To the best of the knowledge of Reporting Persons, each of the
executive officers and directors listed below is a United States citizen, with
the exception of Percy Barnevik, a director of GM, who is a citizen of Sweden,
and Eckhard Pfeiffer, a director of GM, who is a citizen of Germany.
Unless otherwise specified, the business address of each person
listed below is 100 Renaissance Center, Detroit, Michigan 48243.
<TABLE>
<CAPTION>
Principal Occupation or
Name and Address Position with GM Employment
---------------- ---------------- ----------
<S> <C> <C>
Percy Barnevik Director Chairman, ABB Asea Brown
ABB Asea Brown Boveri Ltd. Boveri, Ltd.
Affolternstrasse 44
Box 8131
CH-8050 Zurich
Switzerland
J. T. Battenberg III Executive Vice President GM Executive Vice
General Motors Corp. and President of Delphi President and President of
5725 Delphi Drive Automotive Systems Delphi Automotive Systems
Troy, MI 48098-2815
John H. Bryan Director Chairman and Chief
Sara Lee Corporation Executive Officer, Sara
Three First National Plaza Lee Corporation
46th Floor
Chicago, IL 60602
Thomas E. Everhart Director Pro-Vice-Chancellor,
University of Cambridge University of Cambridge
The Old Schools
Trinity Lane
Cambridge CB2-1TN England
Charles T. Fisher, III Director Retired Chairman and
President, NBD Bankcorp,
Inc.
</TABLE>
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<TABLE>
<CAPTION>
Principal Occupation or
Name and Address Position with GM Employment
---------------- ---------------- ----------
<S> <C> <C>
George M.C. Fisher Director Chairman and Chief Executive
Eastman Kodak Company Officer, Eastman Kodak
343 State Street Company
Rochester, NY 14650
Thomas A. Gottschalk Senior Vice President and GM Senior Vice President and
General Motors Corp. General Counsel General Counsel
3031 W. Grand Boulevard
Detroit, MI 48202
Louis R. Hughes Executive Vice President GM Executive Vice President
General Motors International and President of and President of
Operations International Operations International Operations
Postfach
CH-8152 Glattbrugg
Switzerland
Richard G. LeFauve Senior Vice President and GM Senior Vice President and
President of General President of General Motors
Motors University University
J. Michael Losh Executive Vice President GM Executive Vice President
and Chief Financial and Chief Financial Officer
Officer
Karen Katen Director Executive Vice President,
Pfizer Pharmaceuticals Group Pfizer Pharmaceuticals;
Pfizer, Inc. President, US Pharmaceuticals
235 East 42nd Street
New York, NY 10017-5755
J. Willard Marriott, Jr. Director Chairman and Chief Executive
Marriott International Inc. Officer, Marriott
One Marriott Drive International Inc.
Washington, DC 20058
Ann D. McLaughlin Director Chairman, The Aspen
The Aspen Institute Institute; President,
1333 New Hampshire Ave. NW Federal City Council
Suite 1070
Washington, DC 20036
Harry J. Pearce Vice Chairman and Director GM Vice Chairman and Director
Eckhard Pfeiffer Director President and Chief
Compaq Computer Corp. Executive Officer, Compaq
20555 S.H. 249 Computer Corporation
Houston, TX 77070
</TABLE>
18
<PAGE> 19
<TABLE>
<CAPTION>
Principal Occupation or
Name and Address Position with GM Employment
---------------- ---------------- ----------
<S> <C> <C>
John G. Smale Director Chairman, GM Executive
The Proctor & Gamble Company Committee; Retired Chairman,
P.O. Box 599 The Proctor & Gamble Company
Cincinnati, Ohio 45201
John F. Smith, Jr. Chairman of the Board, Chairman of the Board, Chief
Chief Executive Officer, Executive Officer, President
President and Director and Director of GM
Louis W. Sullivan, M.D. Director President, Morehouse School
Morehouse School of Medicine of Medicine
720 Westview Drive S.W.
Atlanta, GA 30310
G. Richard Wagoner Executive Vice President GM Executive Vice President
and President of North and President of North
American Operations American Operations
Dennis Weatherstone Director Retired Chairman and current
J.P. Morgan & Co. Inc. director, J.P. Morgan & Co.,
60 Wall Street, 21st Fl. Inc.
New York, NY 10260
Thomas H. Wyman Director Former Chairman, President
The Landings and Chief Executive Officer
1 Adams Point of CBS, Inc.; Former Senior
Savannah, GA 31411 Advisor, SBC Warburg Inc.;
Former Chairman, S. G.
Warburg & Co.
</TABLE>
19
<PAGE> 1
EXHIBIT I
JOINT FILING AGREEMENT
In accordance with Rule 13d-1(f) promulgated under the Securities
Exchange Act of 1934, as amended, the undersigned hereby agree to the joint
filing with all other Reporting Persons (as such term is defined in the Schedule
13D referred to below) on behalf of each of them of a statement on Schedule 13D
(including amendments thereto) with respect to the common stock, $.01 par value
(the "Common Stock"), of Geotek Communications, Inc., a Delaware corporation,
and that this Agreement may be included as an Exhibit to such joint filing. This
Agreement may be executed in any number of counterparts, all of which taken
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the undersigned hereby execute this Agreement
as of the 17th day of June, 1998.
GENERAL MOTORS CORPORATION
By: /s/ Martin I. Darvick
----------------------------
Name: Martin I. Darvick
Title: Assistant Secretary
HUGHES ELECTRONICS CORPORATION
By: /s/ Pradman P. Kaul
----------------------------
Name: Pradman P. Kaul
Title: Vice President
<PAGE> 1
EXHIBIT II
[EXECUTION COPY]
LOAN AGREEMENT
THIS LOAN AGREEMENT (this "Agreement") is made as of the 21st day
of December, 1995, by and among GEOTEK FINANCING CORPORATION, a Delaware
corporation (the "Borrower"), GEOTEK COMMUNICATIONS, INC., a Delaware
corporation and the corporate parent of the Borrower ("Geotek" or the
"Guarantor") and HUGHES NETWORK SYSTEMS, INC., a Delaware corporation (the
"Lender"). The parties hereto agree as follows:
ARTICLE I
DEFINITIONS
As used in this Agreement:
"Acquired 900 MHz License Purchase Price" means, with respect to
any Acquired 900 MHz License (and related Third-Party 900 MHz License Assets, if
applicable), the full purchase price (whether in cash, stock or other form of
consideration) paid (or to be paid) by Holdings for such Acquired 900 MHz
License (and related Third-Party 900 MHz License Assets, if applicable). To the
extent that any portion of any Acquired 900 MHz License Purchase Price includes
consideration other than cash or stock, the value of such consideration shall be
determined in good faith by the Board of Directors of Geotek.
"Acquired 900 MHz Licenses" means the Auction 900 MHz Licenses
and the Third-Party 900 MHz Licenses.
"Affiliate" means any Person directly or indirectly controlling,
controlled by or under direct or indirect common control with Geotek or any of
its Subsidiaries. A Person shall be deemed to control another Person if the
controlling Person owns 10% or more of any class of voting securities of the
controlled Person or possesses, directly or indirectly, the power to direct or
cause the direction of the management or policies of the controlled Person,
whether through ownership of stock, by contract or otherwise.
"Agreement Accounting Principles" means GAAP in effect at the
time of the preparation of the financial statements referred to in Section 4.4,
applied in a manner consistent with that used in preparing such statements.
"Article" means an article of this Agreement unless another
document is specifically referenced.
"Auction 900 MHz Licenses" means the 900 MHz Licenses to be
purchased by Holdings from the FCC with the proceeds of the Loans.
<PAGE> 2
"Business Day" means a day on which banks are open for business
in New York, New York and Baltimore, Maryland.
"Capital Stock" means, with respect to any Person, any and all
shares, interests, participations, rights in or other equivalents (however
designated) of such Person's capital stock, and any rights (other than debt
securities convertible into capital stock), warrants or options exchangeable for
or convertible into such capital stock.
"Capitalized Lease" of a Person means any lease of property by
such Person as lessee which would be capitalized on a balance sheet of such
Person prepared in accordance with Agreement Accounting Principles.
"Capitalized Lease Obligations" of a Person means the amount of
the obligations of such Person under Capitalized Leases which would be shown as
a liability on a balance sheet of such Person, prepared in accordance with
Agreement Accounting Principles.
"Collateral" means those assets of the Borrower in which the
Lender has been granted a security interest pursuant to the Pledge Agreement to
secure payment of the Obligations.
"Commission" means the United States Securities and Exchange
Commission.
"Common Stock" means, with respect to any person, any and all
shares, interests or other participations in, and other equivalents (however
designated and whether voting or nonvoting) of, such person's common stock,
whether outstanding on the date hereof or issued after the date hereof, and
includes, without limitation, all series and classes of such common stock, in
each case, to the extent that such series or class of common stock does not rank
prior, as to the payment of dividends or as to the distribution of assets upon
any voluntary or involuntary liquidation, dissolution or winding up of such
Person, to shares of Capital Stock of any other class of such Person.
"Controlled Group" means all members of a controlled group of
corporations and all trades or businesses (whether or not incorporated) under
common control which, together with Geotek or any Subsidiary, are treated as a
single employer under Section 414(b) or 414(c) of the Internal Revenue Code of
1986, as amended from time to time.
"Default" means an event described in Article VII.
"Disclosure Letter" means the letter delivered by the Obligors to
the Lender pursuant to Article IV hereof, which letter shall describe, on a
Section-by-
2
<PAGE> 3
Section basis, any exceptions to the representations and warranties set forth in
such Article, and which letter is expressly made a part hereof as if contained
herein.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time.
"Federal Bankruptcy Code" means Title 11, United States Code, as
amended from time to time.
"FCC" means the Federal Communications Commission or any other
regulatory body which succeeds to the functions of the Federal Communications
Commission.
"FCC License" means any license, permit or authorization issued
by the FCC.
"Funding Cutoff Date" means June 30, 1996.
"Funding Date" means the Initial Funding Date and each Subsequent
Funding Date.
"GAAP" means generally accepted accounting principles.
"Guaranty" of a Person means any agreement by which such Person
assumes, guarantees, endorses, contingently agrees to purchase or provide funds
for the payment of, or otherwise becomes liable upon, the obligation of any
other Person, or agrees to maintain the net worth or working capital or other
financial condition of any other Person or otherwise assures any creditor of
such other Person against loss, including, without limitation, any comfort
letter, operating agreement or take-or-pay contract and shall include, without
limitation, the contingent liability of such Person in connection with any
application for a Letter of Credit. When used as a verb, the words "guaranty"
and "guarantee" shall have correlative meanings.
"Holder" means the Lender and any other holder of Registrable
Securities to whom the Lender has properly transferred Registrable Securities in
accordance with the terms hereof.
"Holdings" means Geotek License Holdings, Inc., a Delaware
corporation and a wholly-owned subsidiary of the Borrower.
3
<PAGE> 4
"Holdings Note" means a promissory note in substantially the form
of Exhibit C hereto, duly executed and delivered to the Borrower by Holdings in
the face principal amount of $24,500,000.
"Indebtedness" of a Person means such Person's (i) obligations
for borrowed money, (ii) obligations representing the deferred purchase price of
property (other than accounts payable arising in the ordinary course of such
Person's business on terms customary in the trade), (iii) obligations, whether
or not assumed, secured by Liens on property now or hereafter owned or acquired
by such Person, (iv) obligations which are evidenced by notes, acceptances or
other similar instruments (including interest rate protection and other
derivative agreements), (v) Capitalized Lease Obligations and (vi) obligations
for which such Person is obligated pursuant to a Guaranty.
"Indenture" means that certain Indenture, dated as of June 30,
1995, between Geotek, as Issuer, and IBJ Schroder Bank & Trust Company, as
Trustee, relating to Geotek's 15% Senior Secured Discount Notes due 2005.
"Initial Funding Date" means the Business Day on which the Lender
makes the first Loan to the Borrower hereunder, which date shall not be prior to
January 2, 1996, and, subject to the satisfaction of the conditions set forth in
Article III hereof, shall be selected by the Borrower.
"Initial Loan" means the Loan to be made to the Borrower on the
Initial Funding Date.
"Investment" of a Person means any loan, advance, extension of
credit (excluding accounts receivable arising in the ordinary course of
business), deposit account (other than deposit accounts used for the payment of
obligations in the ordinary course of business otherwise permitted hereunder) or
contribution of capital by such Person to any other Person or any investment in,
or purchase or other acquisition of, the stock, notes, debentures or other
securities of any other Person made by such Person, excluding trade credit in
the ordinary course of business and investments paid for solely in nonredeemable
Capital Stock of such Person.
"Letter of Credit" of a Person means a letter of credit or
similar instrument which is issued upon the application of such Person, upon
which such Person is an account party or for which such Person is in any way
liable.
"Lien" of a Person means any security interest, mortgage, pledge,
hypothecation, assignment, lien (statutory or other), claim, charge,
encumbrance, title retention agreement, lessor's interest under a Capitalized
Lease or analogous instrument, in, of or on any property of such Person.
4
<PAGE> 5
"Loan Amount" shall mean the principal amount of any Loan made
hereunder.
"Loans" means the loans made by the Lender to the Borrower
hereunder and "Loan" means any of them.
"Loan Documents" means this Agreement, the Note, the Pledge
Agreement and any other document or agreement executed and delivered in
connection herewith.
"Material Adverse Effect" means (a) a material adverse effect
upon the business, operations, properties, assets, condition (financial or
otherwise) or prospects of either of the Obligors and their respective
Subsidiaries, taken as a whole or (b) the impairment in any material respect of
the ability of any of the Obligors to perform their respective obligations under
any Loan Document or of the Lender to enforce or collect any of the Obligations.
"Multiemployer Plan" means a Plan that is a "multiemployer plan"
as defined in Section 4001(a)(3) of ERISA to Geotek or any member of the
Controlled Group is obligated to make contributions.
"900 MHz Licenses" means FCC Licenses to construct and operate
900 MHz Specialized Mobile Radio systems.
"NASD" means the National Association of Securities Dealers, Inc.
"Note" means a promissory note in substantially the form of
Exhibit A hereto, duly executed and delivered to the Lender by the Borrower in
the face principal amount of $24,500,000, including any amendment, modification,
renewal or replacement of such promissory note.
"Obligations" means all unpaid principal of and accrued and
unpaid interest on the Note, all accrued and unpaid fees and expenses and all
other obligations (monetary and other) of the Obligors to the Lender arising
under the Loan Documents, including, without limitation, any indemnity
obligations under Annex B to this Agreement.
"Obligors" means, collectively, the Borrower and Geotek, and
their respective successors and assigns, and "Obligor" means either of the
foregoing.
"PBGC" means the Pension Benefit Guaranty Corporation and its
successors and assigns.
"Permitted Liens" means the following types of Liens:
5
<PAGE> 6
(a) Liens for taxes, assessments or governmental charges or
claims either (i) not delinquent or (ii) contested in good faith by
appropriate proceedings and as to which the Borrower or any of its
Subsidiaries shall have set aside on its books such reserves as may be
required pursuant to GAAP;
(b) judgment Liens not giving rise to a Default if such reserve
or other appropriate provision, if any, as shall be required by GAAP
shall have been made in respect thereof and any appropriate legal
proceedings which may have been duly initiated for the review of such
judgment shall not have been finally terminated or the period within
which such proceedings may be initiated shall not have expired; and
(c) Liens created under the Pledge Agreement.
"Person" means any corporation, natural person, firm, joint
venture, partnership, trust, unincorporated organization, enterprise, limited
liability company or other entity, government or any department or agency of any
government.
"Plan" means an employee pension benefit plan which is covered by
Title IV of ERISA or subject to the minimum funding standards under Section 412
of the Internal Revenue Code as to which Geotek or any Subsidiary may have any
liability.
"Pledge Agreement" means a Pledge Agreement, dated as of the date
hereof, between the Borrower and the Lender, substantially in the form attached
hereto as Exhibit B.
"Registrable Securities" means the Common Stock of Geotek issued
or issuable upon conversion of the Loans. As to any particular Registrable
Securities, once issued such securities shall cease to be Registrable Securities
when (A) a registration statement with respect to the sale of such securities
shall have become effective under the Securities Act and such securities shall
have been disposed of in accordance with such registration statement, (B) they
shall have been distributed to the public pursuant to Rule 144 (or any successor
provision) under the Securities Act, (C) they shall have been otherwise
transferred, new certificates for them not bearing a legend restricting further
transfer shall have been delivered by Geotek and subsequent disposition of them
shall not require registration or qualification of them under the Securities Act
or any similar state law then in force, (D) they shall have ceased to be
outstanding, or (E) they are otherwise no longer Transfer Restricted Securities.
"Registration Expenses" means all expenses incident to Geotek's
performance of or compliance with Annex B hereof, including, without limitation,
all registration and filing fees, all fees and expenses of complying with
securities or blue sky laws, fees and other expenses associated with filings
with the NASD, all
6
<PAGE> 7
printing expenses, the fees and disbursements of counsel for Geotek and of its
independent public accountants, the expenses of any special audits made by such
accountants required by or incident to such performance and compliance, but not
including (a) fees and disbursements of counsel retained by the Holders, or (b)
underwriting discounts and commissions payable with respect to the Holders'
Registrable Securities.
"Regulation G" means Regulation G of the Board of Governors of
the Federal Reserve System from time to time in effect and shall include any
successor or other regulation or official interpretation of said Board of
Governors relating to the extension of credit by Persons other than banks,
brokers or dealers for the purpose of purchasing or carrying margin stock.
"Rentals" of a Person means the aggregate amounts payable by such
Person under any lease of real or personal property having an original term
(including any required renewals or any renewals at the option of the lessor or
lessee) of one year or more but does not include any amounts payable under
Capitalized Leases of such Person.
"Reportable Event" means a reportable event as defined in Section
4043 of ERISA and the regulations issued under such Section, with respect to a
Plan, excluding, however, such events as to which the PBGC by regulation waived
the requirement of Section 4043(a) of ERISA that it be notified within 30 days
of the occurrence of such event, provided that a failure to meet the minimum
funding standard of Section 412 of the Internal Revenue Code and of Section 302
of ERISA shall be a reportable event regardless of the issuance of any waiver in
accordance with Section 412(d) of the Internal Revenue Code.
"Section" means a numbered section of this Agreement, unless
another document is specifically referenced.
"Securities Act" means the Securities Act of 1933, as amended
from time to time.
"Single Employer Plan" means a Plan maintained by Geotek or any
member of the Controlled Group for employees of Geotek or any member of the
Controlled Group.
"Subsequent Funding Date" means each date on which the Lender
makes a Loan to the Borrower hereunder, after the Initial Funding Date.
"Subsidiary" means any corporation more than 50% of the
outstanding voting securities of which shall at the time be owned or controlled,
directly or indirectly, by Geotek or by one or more Subsidiaries or by Geotek
and one or more Subsidiaries, or any similar business organization which is so
owned or controlled.
7
<PAGE> 8
"Third-Party 900 MHz License Assets" means assets relating to or
used in the operation of Specialized Mobile Radio systems under Third-Party 900
MHz Licenses to be acquired by Holdings with the proceeds of the Loans in
connection with the acquisition of such Third-Party 900 MHz Licenses.
"Third-Party 900 MHz Licenses" means 900 MHz Licenses (or 100% of
the equity interests in Persons whose sole assets are unencumbered 900 MHz
Licenses and related Third-Party 900 MHz License Assets (all of which shall be
free and clear of Liens)) for the Detroit and Los Angeles metropolitan markets
or for any of the thirty-seven (37) other metropolitan markets previously
publicly disclosed by Geotek as being markets in which Geotek or its
Subsidiaries currently holds 900 MHz Licenses, to be purchased by Holdings from
certain third parties (other than the FCC) with the proceeds of the Loans.
"Total Acquired 900 MHz License Purchase Price" means the
aggregate Acquired 900 MHz License Purchase Price paid (or to be paid) by
Holdings for all Acquired 900 MHz Licenses (and related Third-Party 900 MHz
License Assets, if any).
"Trading Day" means, with respect to a securities exchange or
automated quotation system, a day on which such exchange or system is open for
trading.
"Transfer Restricted Securities" means the Common Stock of Geotek
issuable upon conversion of the Loans, until such Common Stock (i) has been
effectively registered under the Securities Act and disposed of in accordance
with the registration statement covering it, (ii) is distributed to the public
pursuant to Rule 144, (iii) may be sold or transferred pursuant to Rule 144(k)
(or any similar provisions then in force) under the Securities Act or otherwise
or (iv) may be sold freely in full in any one three month period before Rule
144(k) is available.
"Unfunded Liabilities" means, on any date of determination, (a)
in the case of Single Employer Plans, all "unfunded benefit liabilities" as
defined in Section 4001(a)(18) of ERISA, and (b) in the case of Multiemployer
Plans, the liability of Geotek and its Subsidiaries if they were to incur a
complete or partial withdrawal from any Multiemployer Plan.
"Unmatured Default" means an event which, but for the lapse of
time or the giving of notice, or both, would constitute a Default.
"Wholly-Owned Subsidiary" means any Subsidiary all of the
outstanding voting securities of which shall at the time be owned or controlled,
directly or indirectly, by Geotek or one or more Wholly-Owned Subsidiaries, or
by Geotek and one or more Wholly-Owned Subsidiaries, or any similar business
organization which is so owned or controlled.
8
<PAGE> 9
The foregoing definitions shall be equally applicable to both the
singular and plural forms of the defined terms.
ARTICLE II
THE LOANS
2.1. The Loans. Subject to the terms and conditions hereinafter
set forth, commencing on the Initial Funding Date, the Lender agrees to make one
or more (but not more than one on any day) Loans to the Borrower in the
aggregate principal amount of the lesser of (i) eighty percent (80%) of the
Total Acquired 900 MHz License Purchase Price and (ii) $24,500,000; provided
that at no time shall the aggregate amount of the principal amount of all Loans
outstanding be greater than eighty percent (80%) of the aggregate Acquired 900
MHz License Purchase Price of all Acquired 900 MHz Licenses (and related
Third-Party 900 MHz License Assets, if any) purchased by Holdings with the
proceeds of such Loans. The Loans shall be evidenced by the Note and secured by
the Collateral. The unpaid principal balance and any accrued but unpaid interest
owing on all Loans shall be payable in full on the second anniversary of the
Initial Funding Date (the "Maturity Date"). The Lender's obligation to make
Loans hereunder shall terminate on the Funding Cutoff Date.
2.2. Interest. Prior to the occurrence of a Default, the Loans
shall bear interest, payable quarterly in arrears on (a) the last day of each
calendar quarter hereafter commencing on the later of (i) March 31, 1996 and
(ii) the last day of the first calendar quarter ending after the Initial Funding
Date, and (b) on the Maturity Date, at a fixed rate per annum equal to twelve
percent (12%). From and after the occurrence of a Default, the Loans shall bear
interest, payable on demand, at a fixed rate per annum equal to eighteen percent
(18%). All interest shall be computed for actual days elapsed on the basis of a
360-day year. In computing interest on any Loan, the Funding Date of such Loan
shall be included and the date of payment shall be excluded so long as such
payment is received by the Lender at or before 12:00 p.m. (New York time) on the
date when due.
2.3. Interest Laws. Notwithstanding any provision to the contrary
contained in this Agreement or the other Loan Documents, the Borrower shall not
be required to pay, and the Lender shall not be permitted to collect, any amount
of interest in excess of the maximum amount of interest permitted by law
("Excess Interest"). If any Excess Interest is provided for or determined by a
court of competent jurisdiction to have been provided for in this Agreement or
in any of the other Loan Documents, then in such event: (1) the provisions of
this subsection shall govern and control; (2) the Borrower shall not be
obligated to pay any Excess Interest; (3) any Excess Interest that the Lender
may have received hereunder shall be, at the Lender's option, (a) applied as a
credit against the outstanding principal balance of the Obligations or accrued
and unpaid interest (not to exceed the maximum amount permitted by law), (b)
refunded to the payor thereof, or (c) any
9
<PAGE> 10
combination of the foregoing; (4) the interest rate(s) provided for herein shall
be automatically reduced to the maximum lawful rate allowed from time to time
under applicable law (the "Maximum Rate"), and this Agreement and the other Loan
Documents shall be deemed to have been, and shall be, reformed and modified to
reflect such reduction; and (5) the Borrower shall not have any action against
the Lender for any damages arising out of the payment or collection of any
Excess Interest. Notwithstanding the foregoing, if for any period of time
interest on any Obligations is calculated at the Maximum Rate rather than the
applicable rate under this Agreement, and thereafter such applicable rate
becomes less than the Maximum Rate, the rate of interest payable on such
Obligations shall remain at the Maximum Rate until the Lender shall have
received the amount of interest which the Lender would have received during such
period on such Obligations had the rate of interest not been limited to the
Maximum Rate during such period.
2.4. Method of Funding Loan. (a) If the proceeds of a Loan are to
be used concurrently with the making of such Loan to purchase any Auction 900
MHz Licenses, then not later than 12:00 noon (New York time) on the applicable
Funding Date, the Lender shall make available the applicable Loan Amount in
funds immediately available by wire-transferring such funds to the Borrower,
which shall promptly remit such funds to the FCC (or to Holdings for prompt
remittance to the FCC).
(b) If the proceeds of a Loan are to be used concurrently
with the making of such Loan to purchase any Third-Party 900 MHz Licenses and
related Third-Party 900 MHz License Assets, then not later than 12:00 noon (New
York time) on the applicable Funding Date, the Lender shall make available the
applicable Loan Amount in funds immediately available by wire-transferring such
funds to the Borrower, which shall promptly remit such funds to the seller of
such Licenses and Assets (or to Holdings for prompt remittance to such seller).
(c) If the proceeds of a Loan are to be used subsequent to
the applicable Funding Date to purchase any Acquired 900 MHz Licenses and, if
applicable, any related Third-Party 900 MHz License Assets, then not later than
12:00 noon (New York time) on the applicable Funding Date, the Lender shall make
available the applicable Loan Amount in funds immediately available by wire-
transferring such funds to an escrow account to be established by the Lender and
the Borrower with an escrow agent and subject to an escrow agreement reasonably
acceptable to the Lender and the Borrower (the "Escrow Account"). The Loan
Amount shall not be released from the Escrow Account until the Lender and the
Borrower certify to the Escrow Agent in writing that no Default or Unmatured
Default is then continuing and that such Loan Amount will be used concurrently
with its release from escrow to purchase one or more Acquired 900 MHz Licenses
and, if applicable, related Third-Party 900 MHz License Assets and such funds
shall be distributed by the Escrow Agent directly to the FCC or other
third-party seller, as applicable. Any funds remaining in the Escrow Account on
10
<PAGE> 11
the Maturity Date (or upon the occurrence of any Default), shall be immediately
returned to the Lender.
2.5. Method of Payment. All payments of principal, interest and
expenses hereunder shall be made by wire transfer in immediately available funds
to the Lender at the First National Bank of Maryland, Baltimore MD 21203, ABA#
052000113, Account No. 401-5029-0 (for the account of Hughes Network Systems,
Inc.) by noon (New York time) on the date when due. If any payment of principal
of or interest on the Loan shall become due on a day which is not a Business
Day, such payment shall be made on the next succeeding Business Day and, in the
case of a principal payment, such extension of time shall be included in
computing interest in connection with such payment.
2.6. Schedule to Note. The Borrower hereby authorizes the Lender
to endorse on the Schedule annexed to the Note the principal amount of all Loans
made by the Lender to the Borrower as well as all reductions to the aggregate
principal amount of the Loans related to the conversion of such principal amount
to shares of Common Stock of Geotek as provided in Article IX hereof; provided,
that the failure to make any such notations on such Schedule (or any error in
such notation) shall not limit or otherwise affect the obligations of the
Borrower under this Agreement or the Note.
2.7. No Prepayment. The Borrower may not prepay the Loans, in
whole or in part, prior to the Maturity Date; provided that this shall not limit
or affect the rights of the Lender under Article VIII.
ARTICLE III
CONDITIONS PRECEDENT
3.1. Conditions to Initial Loan. The Obligation of the Lender to
make the Initial Loan hereunder is subject to the satisfaction of the following
conditions:
(i) On the date of execution of this Agreement, the Lender shall
have received:
(a) an original of this Agreement (including all Exhibits
and Annexes thereto), the Disclosure Letter and the Pledge Agreement,
duly-executed by each party hereto and thereto;
(b) 100% of the outstanding Capital Stock of Holdings,
together with stock powers duly executed in blank, in each case pursuant
to the Pledge Agreement;
(c) an incumbency certificate of each Obligor and of
Holdings, executed by the Secretary or an Assistant Secretary thereof,
which shall
11
<PAGE> 12
identify by name and title and bear the signature of the officers of
such Obligor authorized to sign the Loan Documents and (in the case of
the Borrower) to make borrowings hereunder, upon which certificate the
Lender shall be entitled to rely until informed of any change in writing
by such Obligor;
(d) a copy of the Certificate of Incorporation of each of
the Obligors and of Holdings, together with all amendments thereto,
certified by the appropriate governmental officer in its jurisdiction of
incorporation;
(e) a copy of the By-Laws of each of the Obligors and of
Holdings, together with all amendments thereto, certified by the
Secretary or an Assistant Secretary of such Obligor;
(f) a copy, certified by the Secretary or an Assistant
Secretary of such Obligor or Holdings (as applicable), of each Obligor's
and Holding's resolutions (and resolutions of other bodies, if any are
deemed necessary by counsel for the Lender) authorizing the execution,
delivery and performance of the Loan Documents to be executed by it and
the transactions contemplated thereby; and
(ii) On the Initial Funding Date the Lender shall have received:
(a) the Note; and
(b) the Holdings Note, duly endorsed in blank.
(c) certificates of good standing for each of the Obligors
certified by the appropriate governmental officer in its jurisdiction of
incorporation and in the State of New Jersey;
(d) a written opinion of counsel to the Obligors and
Holdings, dated as of the Initial Funding Date, addressed to the Lender,
with respect to matters customary in transactions of the type
contemplated by this Agreement, in form and substance reasonably
satisfactory to the Lender and its counsel.
3.2. Conditions to Each Loan. The Obligation of the Lender to
make each Loan hereunder is subject to the satisfaction of the following
conditions:
(i) No less than three (3) Business Days prior to the applicable
Funding Date, the Borrower shall have furnished the Lender with a
written certificate signed by the Chief Financial Officer of the
Borrower,
(a) selecting the proposed Funding Date and the Loan
Amount, which selections shall be irrevocable;
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(b) specifying the Acquired 900 MHZ Licenses and, if
applicable, related Third-Party 900 MHz License Assets to be
purchased with the proceeds of the Loan and the Acquired 900 MHz
License Purchase Price applicable to such licenses and assets;
(c) if the Acquired 900 MHz Licenses to be acquired with
the proceeds of the Loan are Auction 900 MHz Licenses, attaching
evidence satisfactory to the Lender that either (1) such Auction
900 MHz Licenses will be issued by the FCC in the name of
Holdings immediately upon payment of the purchase price therefor
or (2) certifying that Geotek was the high bidder in the auction
for such licenses and has an obligation to pay a specified
purchase price therefor at a future date;
(d) if the Acquired 900 MHz Licenses to be acquired are
Third-Party 900 MHz Licenses, attaching either (1) evidence
satisfactory to the Lender that such Third-Party 900 MHz License
(and any related Third-Party 900 MHz License Assets) will be sold
and legally transferred to Holdings immediately upon payment of
the purchase price therefor or (2) a certified copy of the
duly-executed contract governing the purchase of such licenses
and assets and providing a good faith estimate of the closing
date for such purchase; and
(e) providing the Lender with appropriate wire-transfer
instructions.
(ii) on the applicable Funding Date the Borrower shall have
delivered to the Lender a certificate signed by the Chief Financial Officer of
the Borrower,
(a) certifying that no Default or Unmatured Default shall
have occurred and be continuing on such date after giving effect
to the making of the Loan by the Lender and that each of the
representations and warranties contained in Article IV is true
and correct as of such Funding Date; and
(b) certifying that each of the conditions set forth in
this Article III has been satisfied.
(iii) On the applicable Funding Date the Lender shall have a
valid and perfected first priority security interest (subject to Permitted
Liens) in all of the Collateral owned by the Borrower on the Funding Date.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Each of the Obligors represents and warrants to the Lender that,
except as otherwise set forth in the Disclosure Letter:
4.1. Corporate Existence and Standing. Each of Geotek and its
Subsidiaries is a corporation duly incorporated, validly existing and in good
standing under the laws of its jurisdiction of incorporation and has all
requisite authority to conduct its business in each jurisdiction in which its
business is conducted, except where the failure to so qualify would not have a
Material Adverse Effect.
4.2. Authorization and Validity. Each of the Obligors has the
corporate power and authority to execute and deliver the Loan Documents to which
it is a party and to perform its obligations thereunder. The execution and
delivery by the Obligors of the Loan Documents to which each is a party and the
performance of their obligations thereunder have been duly authorized by proper
corporate proceedings, and the Loan Documents constitute legal, valid and
binding obligations of such Obligors enforceable against such Obligors in
accordance with their terms, except as enforceability thereof may be limited by
bankruptcy, insolvency or similar laws affecting the enforcement of creditors'
rights generally.
4.3. Compliance with Laws and Contracts. Neither the execution
and delivery by each Obligor of the Loan Documents to which it is a party, nor
the consummation of the transactions therein contemplated, nor compliance with
the provisions thereof, will violate any law, rule, regulation, order, writ,
judgment, injunction, decree or award binding on Geotek or any of its
Subsidiaries or Geotek's or any such Subsidiary's articles or certificate of
incorporation or by-laws or the provisions of any indenture, instrument or
agreement to which Geotek or any such Subsidiary is a party or is subject, or by
which it, or its property, is bound, or conflict with or constitute a default
thereunder, or result in the creation or imposition of any Lien in, of or on the
property of Geotek or any such Subsidiary pursuant to the terms of any such
indenture, instrument or agreement, except where such violation, conflict,
default or Lien would not have a Material Adverse Effect. No order, consent,
approval, license, authorization, or validation of, or filing, recording or
registration with, or exemption by, any governmental or public body or
authority, or any subdivision thereof, is required to authorize, or is required
in connection with the execution, delivery and performance of, or the legality,
validity, binding effect or enforceability of, any of the Loan Documents
(except, with respect to enforceability of the remedies provided for in the
Pledge Agreement, the requirement to obtain FCC approval before effecting any
transfer of any FCC License).
4.4. Financial Statements. The September 30, 1995 consolidated
financial statements of Geotek and its Subsidiaries heretofore delivered to the
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Lender were prepared in accordance with GAAP in effect on the date such
statements were prepared and consistent with prior periods and fairly present
the consolidated financial condition and operations of Geotek and its
Subsidiaries at such date and the consolidated results of their operations for
the period then ended.
4.5. Material Adverse Change. No material adverse change in the
business, condition (financial or otherwise), prospects or results of operations
of Geotek and its Subsidiaries (on a consolidated basis) has occurred since the
date of the financial statements referred to in Section 4.4.
4.6. Taxes. Geotek and its Subsidiaries have filed all United
States federal tax returns and all other tax returns which are required to be
filed prior to the date hereof and have paid all taxes due pursuant to said
returns or pursuant to any assessment received by Geotek or any such Subsidiary
(except such taxes, if any, as are being contested in good faith and as to which
adequate reserves have been provided), except, with respect only to Subsidiaries
of Geotek other than the Borrower and its Subsidiaries, where the failure to so
file or pay would not have a Material Adverse Effect. No tax liens have been
filed, and no claims are being asserted with respect to any such taxes, except,
with respect only to Subsidiaries of Geotek other than the Borrower and its
Subsidiaries, where such tax liens or claims would not have a Material Adverse
Effect. The charges, accruals and reserves on the books of Geotek and its
Subsidiaries in respect of any taxes or other governmental charges are adequate,
except, with respect only to Subsidiaries of Geotek other than the Borrower and
its Subsidiaries, where the failure to maintain adequate charges, accruals or
reserves would not have a Material Adverse Effect.
4.7. Litigation. There is no litigation or proceeding pending or,
to the knowledge of any of their officers, threatened against or affecting
Geotek or any of its Subsidiaries which might have a Material Adverse Effect.
4.8. ERISA. The Unfunded Liabilities of all Plans do not in the
aggregate exceed $100,000. Each Plan complies in all material respects with all
applicable requirements of law and regulations, and the minimum funding
requirements with respect to all Plans have been met, no Reportable Event has
occurred with respect to any Plan, no Lien in favor of the PBGC with respect to
any Plan has arisen or been recorded, neither Geotek nor any of its Subsidiaries
has withdrawn from any Plan or initiated steps to do so, and no steps have been
taken to terminate any Plan.
4.9. Accuracy of Information. No information, schedule, exhibit
or report furnished by Geotek to the Lender in connection with the negotiation
of the Loan Documents contained any material misstatement of fact or omitted to
state a material fact or any fact necessary to make the statements contained
therein not misleading.
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4.10. Material Agreements. None of Geotek, the Borrower or any of
the Borrower's Subsidiaries is a party to any agreement or instrument or subject
to any charter or other corporate restriction materially and adversely affecting
its business, properties or assets, operations or condition (financial or
otherwise). None of the Subsidiaries of Geotek, other than the Borrower and its
Subsidiaries, are party to any agreement or instrument or subject to any charter
or corporate restriction which, individually or when taken together with all
other such agreements, instruments or restrictions of all such Subsidiaries,
could have a Material Adverse Effect. Neither Geotek nor any of its Subsidiaries
is in default in the performance, observance or fulfillment of any of the
obligations, covenants or conditions contained in (i) any agreement to which it
is a party, which default might have a Material Adverse Effect or (ii) any
agreement or instrument evidencing or governing Indebtedness of Geotek. The
Obligors have made available to the Lender copies of each agreement of Geotek
which (a) evidences Indebtedness of Geotek or (b) if Geotek were to default in
its obligations thereunder, might have a Material Adverse Effect.
4.11. Subordinated Indebtedness. The Obligations are not
subordinate to any Indebtedness of the Obligors. The Borrower's Obligations are
senior to all other Indebtedness of the Borrower. The Holdings Note is senior to
Holding's Guaranty of the notes issued under the Indenture.
4.12. 900 MHz Licenses. Geotek and any of its Subsidiaries which
hold or will hold 900 MHz Licenses (including Holdings) are fully qualified to
hold 900 MHz Licenses.
ARTICLE V
COVENANTS
During the term of this Agreement, unless the Lender shall
otherwise consent in writing:
5.1. Reporting. Geotek will furnish to the Lender
(a) Copies of all reports, certificates, documents and
other information required to be delivered to the trustee under the
Indenture pursuant to Sections 4.06 and 4.07 thereof (as in effect on
the date hereof and whether or not the Indenture is then in effect). The
copies of any such reports, certificates or documents that are addressed
to such trustee shall be addressed to the Lender.
(b) Within 45 days after the close of each fiscal quarter
of the Borrower, a compliance certificate signed by the chief financial
officer of the Borrower stating that no Default or Unmatured Default
exists, or if any Default or Unmatured Default exists, stating the
nature and status thereof.
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(c) Within 270 days after the close of each fiscal year, a
statement of the Unfunded Liabilities of each Plan, certified as correct
by an actuary enrolled under ERISA.
(d) As soon as possible and in any event within 10 days
after Geotek knows that any Reportable Event has occurred with respect
to any Plan or any Lien has been asserted by the PBGC or has arisen with
respect to any Plan, a statement, signed by the chief financial officer
of Geotek, describing said Reportable Event or Lien and the action which
Geotek proposes to take with respect thereto.
(e) No later than the first Business Day of each month
between the date hereof and the Funding Cutoff Date (the "Reporting
Period"), a written statement, based on the Borrower's good faith
estimate, of the total dollar amount of Loans that the Borrower
anticipates borrowing hereunder during each remaining month of the
Reporting Period. At any time that the Borrower shall discover that its
most recent statement made pursuant hereto is no longer accurate, the
Borrower shall provide the Lender with an amended statement of the
Borrower's revised estimate.
(f) Such other information as the Lender may from time to
time reasonably request.
5.2. Use of Proceeds. (a) The proceeds of the Loans (the "Loan
Proceeds") shall be re-loaned directly to Holdings, which loans will be
evidenced by the Holdings Note. The Borrower will cause Holdings to use the Loan
Proceeds solely as payment for the acquisition of Acquired 900 MHz Licenses (and
other 900 MHz Licenses (and related assets) acquired with the prior written
consent of the Lender, which consent may be withheld in the Lender's sole
discretion) and related Third-Party 900 MHZ License Assets. Geotek will not, nor
will it permit any of its Subsidiaries to, use any of the Loan Proceeds to
purchase or carry any "Margin Stock" (as defined in Regulation G).
(b) Subject to the limitations on Loans set forth in Section 2.1
hereof, to the extent proceeds of the Loans are available therefor, the Borrower
will cause Holdings to use the proceeds of the Loans for the purchase of any
Acquired 900 MHz Licenses (and related 900 MHz License Assets) before using any
unaffiliated third-party funds for such purchase. Notwithstanding the foregoing,
nothing in this Section 5.2(b) shall be deemed to give the Lender any right to
cause the Borrower to request the making of Loans after the Funding Cutoff Date.
5.3. Notice of Default. Geotek will, and will cause each of its
Subsidiaries to, give prompt notice in writing to the Lender of the occurrence
of any Default or Unmatured Default and of any other development, financial or
otherwise, which might have a Material Adverse Effect.
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5.4. Conduct of Business. Geotek will, and will cause each of its
Subsidiaries to, carry on and conduct its business in substantially the same
manner and in substantially the same fields of enterprise as it is presently
conducted and to do all things necessary to remain duly incorporated, validly
existing and in good standing as a domestic corporation in its jurisdiction of
incorporation and maintain all requisite authority to conduct its business in
each jurisdiction in which its business is conducted, except where the failure
to do so would not have a Material Adverse Effect. The Borrower will engage in
no business or transaction other than the holding of the capital stock of
Holdings and certain other Subsidiaries formed to hold certain assets to be used
directly for the provision of Specialized Mobile Radio services utilizing the
Acquired 900 MHz Licenses. The Borrower will ensure that Holdings engages in no
business or transaction other than the purchase and ownership of the Acquired
900 MHz Licenses (and other 900 MHz Licenses and related assets as permitted
under Section 5.2 hereof) and related Third-Party 900 MHz License Assets, if
any, and the entering into of license agreements with respect to such Acquired
900 MHz Licenses with other Subsidiaries of Geotek for such Subsidiaries' use in
providing Specialized Mobile Radio services (pursuant to a license agreement)
which does not otherwise cause a Default under this Agreement and which, by its
terms, provides that it is cancelable in full at the sole discretion of Holdings
upon a foreclosure by the Lender upon the Capital Stock of Holdings pledged to
the Lender pursuant to the Pledge Agreement or any other transfer of such
Capital Stock to the Lender or its designee). At least five (5) Business Days
prior to entering into any such license agreement, Geotek will cause Holdings to
deliver a copy thereof to the Lender.
5.5. Taxes. Geotek will, and will cause each of its Subsidiaries
to, pay when due all taxes, assessments and governmental charges and levies upon
it or its income, profits or property, except those which are being contested in
good faith by appropriate proceedings and with respect to which adequate
reserves have been set aside.
5.6. Insurance. Geotek will, and will cause each of its
Subsidiaries to, maintain with financially sound and reputable insurance
companies insurance on all their property in such amounts and covering such
risks as is consistent with sound business practice, and Geotek will furnish to
the Lender upon request full information as to the insurance carried.
5.7. Compliance with Laws. Geotek will, and will cause each of
its Subsidiaries to, comply with (i) all laws, rules, regulations, orders,
writs, judgments, injunctions, decrees or awards to which it may be subject and
(ii) the terms of all FCC Licenses held by it, including any obligation to
construct facilities and place them in operation with a minimum number of sites
and/or customers by a specified date, except where the failure to do so would
not have a Material Adverse Effect.
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5.8. Maintenance of Properties. Geotek will, and will cause each
of its Subsidiaries to, do all things necessary to maintain, preserve, protect
and keep its properties in good repair, working order and condition, and make
all necessary and proper repairs, renewals and replacements so that its business
carried on in connection therewith may be properly conducted at all times,
except where the failure to do so would not have a Material Adverse Effect.
5.9. Inspection. Geotek will, and will cause each of its
Subsidiaries to, permit the Lender, by its representatives and agents, to
inspect any of the properties, licenses, corporate books and financial records
of Geotek and each such Subsidiary, to examine and make copies of the books of
accounts and other financial records of Geotek and each Subsidiary, and to
discuss the affairs, finances and accounts of Geotek and each Subsidiary with,
and to be advised as to the same by, their respective officers at such
reasonable times and intervals as the Lender may designate.
5.10. Restricted Payments. The Borrower will not, nor will it
permit any of its Subsidiaries to, (i) declare or pay any dividends on its
capital stock (other than dividends payable in its own capital stock) or redeem,
repurchase or otherwise acquire or retire any of its capital stock at any time
outstanding, except that any of the Borrower's Subsidiaries may declare and pay
dividends to the Borrower or to a Wholly-Owned Subsidiary of the Borrower or
(ii) directly or indirectly voluntarily prepay, defease or in substance defease,
purchase, redeem, retire or otherwise acquire, any Indebtedness.
5.11. Indebtedness. The Borrower will not, nor will it permit any
of its Subsidiaries to incur any Indebtedness other than the Loans (in the case
of the Borrower), the Holdings Note (in the case of Holdings) and the Guarantees
by the Borrower and Holdings required to be provided under the Indenture as in
effect on the date hereof.
5.12. Merger. The Borrower will not, nor will it permit any of
its Subsidiaries to, merge or consolidate with or into any other Person.
5.13. Sale of Assets. Subject to the proviso in the second
sentence of this Section 5.13, the Borrower will not, nor will it permit any of
its Subsidiaries to, lease, sell or otherwise dispose of all, or a substantial
portion of, its property, assets or business to any other Person except for
sales of inventory in the ordinary course of business. None of the Obligors will
sell, assign or convey any interest in any of the Collateral; provided that
Holdings may (a) enter into license agreements with respect to one or more of
the Acquired 900 MHz Licenses as provided herein and (b) with the prior written
consent of the Lender, which consent will not be unreasonably withheld, exchange
one or more of the Acquired 900 MHz Licenses (each, an "Old 900 MHZ License")
for other 900 MHz Licenses (each a "New 900 MHz License") which (i) meet all the
criteria set forth herein for Acquired 900 MHz Licenses (including geographic
restrictions) and (ii) after giving effect to such
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exchange, do not cause the Obligors or Holdings to be in default of any of their
obligations under the Loan Documents (including, without limitation, the other
provisions of this Article 5 and the loan-to-value limitations set forth in
Section 2.1).
5.14. Sale and Leaseback. The Borrower will not, nor will it
permit any of its Subsidiaries to, sell or transfer any property in order to
concurrently or subsequently lease as lessee such or similar property.
5.15. Investments and Acquisitions. The Borrower will not, nor
will it permit any of its Subsidiaries to, make or suffer to exist any
Investments (including without limitation, loans and advances to, and other
Investments in, Subsidiaries), or commitments therefor, or to create any new
Subsidiary or to become or remain a partner in any partnership or joint venture,
or to acquire any going business or all or substantially all of the assets of
any Person or any division or business of a Person, whether through purchase of
assets, merger or otherwise, except existing Investments in Subsidiaries in
existence on the date hereof and the purchases of Acquired 900 MHz Licenses (and
other 900 MHz Licenses) and related Third-Party 900 MHz License Assets
contemplated hereby.
5.16. Guarantees. The Borrower will not, nor will it permit any
of its Subsidiaries to, make or suffer to exist any Guaranty (including, without
limitation, any Guaranty of the obligations of a Subsidiary of Geotek), other
than the Guarantees by the Borrower and Holdings required to be provided under
the Indenture as in effect on the date hereof.
5.17. Liens. The Borrower will not, nor will it permit any of its
Subsidiaries to, create, incur, or suffer to exist any Lien in, of or on the
property of the Borrower or any of its Subsidiaries (including, without
limitation, the Acquired 900 MHz Licenses), except Permitted Liens.
5.18. Fixed Asset Expenditures. The Borrower will not, nor will
it permit any of its Subsidiaries to, acquire any assets, other than the
acquisition by the Borrower of the Holdings Note and the acquisition by Holdings
of the Acquired 900 MHz Licenses (and related Third-Party 900 MHz License
Assets) and other acquisitions expressly permitted pursuant to Section 5.2
hereof.
5.19. Rentals. The Borrower will not, nor will it permit Holdings
to, create, incur or suffer to exist any obligations for Rentals.
5.20. Letters of Credit. The Borrower will not, nor will it
permit any of its Subsidiaries to, apply for or become liable with respect to
any Letter of Credit.
5.21. Affiliates. The Borrower will not, nor will it permit
Holdings to, enter into any transaction with any Affiliate, except as expressly
set forth in this
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Agreement (including, without limitation, the entering into of license
agreements with respect to one or more of the Acquired 900 MHz Licenses as
provided herein).
5.22. Preservation of Licenses. The Borrower will not, and will
not permit any of its Subsidiaries to, allow any FCC License held by it to lapse
or be revoked or suspended.
5.23. Ownership of Borrower and Holdings. The Borrower shall at
all times be a Wholly-Owned Subsidiary of Geotek and Holdings shall at all times
be a Wholly-Owned Subsidiary of the Borrower.
5.24. Compliance with Indenture. Geotek shall, and shall cause
each of its Subsidiaries to, comply with all covenants, restrictions and other
agreements applicable to them in the Indenture as in effect on the date hereof
(without giving effect to any amendments, waivers or other modifications thereof
or supplements thereto, unless otherwise consented to in writing by the Lender,
such consent not to be unreasonably withheld).
5.25. Auction 900 MHz Licenses. Promptly after the closing of the
current FCC auction of 900 MHz Licenses and Geotek learning of the 900 MHz
Licenses in respect of which it was the highest bidder, Geotek will so inform
the Lender.
5.26. Ownership of Acquired 900 MHz Licenses. All Acquired 900
MHz Licenses shall be issued in the name of, or transferred to, Holdings and not
transferred by Holdings to any other Person (except the entering into of license
agreements with respect to one or more of the Acquired 900 MHz Licenses as
provided herein).
5.27. Right to Cause Refinancing of Loans. In the event that at
any time on or after the date of execution of this Agreement and prior to
February 28, 1996, Geotek or any of its Subsidiaries shall enter into any
borrowing arrangement pursuant to which the person providing the funds (or its
Affiliates) obtains the right to purchase equity of Geotek (a "Subject Credit"),
the Lender, at its sole option, shall be entitled to cause Geotek (or the
Borrower) to refinance the Loans in an amount up to $24,500,000 plus, upon
agreement of Geotek and the Lender, an amount of reasonable fees and expenses
incurred by Geotek in connection with the refinancing) on the terms of the
Subject Credit. The Borrower will inform the Lender within one (1) Business Day
after Geotek or any of its Subsidiaries enters into any such Subject Credit. Any
amount of Loans not so refinanced shall remain outstanding subject to the terms
and conditions of this Agreement and the other Loan Documents.
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ARTICLE VI
GUARANTY
6.1. The Guaranty. The Guarantor hereby absolutely,
unconditionally and irrevocably guarantees to the Lender and its successors and
assigns the full and punctual payment and performance (whether at stated
maturity, upon acceleration or otherwise) of the Obligations, including all
reasonable costs of collection and enforcement thereof (including, without
limitation, all fees and disbursements of counsel) and interest thereon which
would be owing by the Borrower but for the effect of the Bankruptcy Code, 11
U.S.C. Section 101 et seq. (collectively, the "Guaranteed Obligations"). The
Guarantor understands, agrees and confirms that the Lender may enforce this
Guaranty up to the full amount guaranteed by the Guarantor hereunder without
proceeding against the Borrower or any other obligor, against the Collateral or
against any other guarantor under any other guarantee covering the Guaranteed
Obligations. All payments made by the Guarantor under this Guaranty shall be
paid at the place and in the manner specified in Section 2.5 of this Agreement.
6.2. Guaranty Unconditional. The obligations of the Guarantor
hereunder shall be unconditional and absolute and, without limiting the
generality of the foregoing, shall not be released, discharged or otherwise
affected by:
(a) any extension, renewal, settlement, compromise, waiver
or release in respect of any obligation of any Obligor under any of the
Loan Documents, by operation of law or otherwise;
(b) any modification or amendment of or supplement to this
Agreement, the Note or any of the other Loan Documents, including,
without limitation, any increase in the principal amount of the Loans;
(c) any release, non-perfection or invalidity of any
direct or indirect security herefor or for, or any other guarantee of,
any of the Guaranteed Obligations;
(d) any change in the corporate existence, structure or
ownership of any of the Obligors, or any insolvency, bankruptcy,
reorganization or other similar proceeding affecting any of the Obligors
or any of their assets or any resulting release or discharge of any
obligation of any Obligor contained in this Agreement or the Note;
(e) the existence of any claim, set-off or other rights
which the Guarantor may have at any time against any Obligor or any
other Person, whether in connection herewith or with any unrelated
transactions, provided that nothing herein shall prevent the assertion
of any such claim by separate suit or compulsory counterclaim;
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(f) any invalidity or unenforceability relating to or
against any Obligor for any reason of any of the Loan Documents, or any
provision of applicable law or regulation purporting to prohibit the
payment by the Borrower of the principal of or interest on the Loans or
any other amount payable by it under the Loan Documents; or
(g) any other act or omission to act or delay of any kind
by any Obligor or any other Person or any other circumstance whatsoever
which might, but for the provisions of this paragraph, constitute a
legal or equitable discharge of the Guarantor's obligations hereunder.
In addition, the obligations of the Guarantor hereunder are joint and several
with the obligations of each other guarantor or obligor in respect of the
Guaranteed Obligations.
6.3. Discharge Only Upon Payment In Full; Reinstatement In
Certain Circumstances. The Guarantor's obligations hereunder shall remain in
full force and effect until the Guaranteed Obligations shall have been paid in
full. If at any time any payment of any of the Guaranteed Obligations is
rescinded or must be otherwise restored or returned upon the insolvency,
bankruptcy or reorganization of the Borrower or otherwise, the Guarantor's
obligations hereunder with respect to such payment shall be reinstated at such
time as though such payment had been due but not made at such time.
6.4. Waivers by the Guarantor. The Guarantor irrevocably waives
acceptance hereof, presentment, demand, protest and any notice not provided for
herein, as well as any requirement that at any time any action be taken by any
Person against the Borrower or any other Person.
6.5. Subrogation. The Guarantor shall not exercise any rights
which it may have acquired by way of subrogation under this Guaranty, by any
payment made hereunder or otherwise, nor shall the Guarantor seek any
reimbursement from the Borrower in respect of payments made by the Guarantor
hereunder, unless and until all of the Guaranteed Obligations shall have been
paid to the Lender and discharged, in full, and if any payment shall be made to
the Guarantor on account of such subrogation, contribution or reimbursement
rights at any time when the Guaranteed Obligations shall not have been paid and
discharged, in full, each and every amount so paid shall forthwith be paid to
the Lender to be credited and applied against the Guaranteed Obligations,
whether matured or unmatured.
6.6. Stay of Acceleration. In the event that acceleration of the
time for payment of any of the Guaranteed Obligations is stayed upon insolvency,
bankruptcy or reorganization of the Borrower, all such amounts otherwise subject
to acceleration under the terms of this Agreement and the Note shall nonetheless
be payable by the Guarantor forthwith on demand by the Lender.
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ARTICLE VII
DEFAULTS
The occurrence of any one or more of the following events shall
constitute a Default:
7.1. Any representation or warranty made or deemed made by or on
behalf of either of the Obligors to the Lender under or in connection with this
Agreement, the Note, any other Loan Document or any certificate or information
delivered in connection herewith or therewith shall be materially false as of
the date on which made.
7.2. (a) Nonpayment of principal of the Note when due, or (b)
nonpayment of interest upon the Note or of any other Obligations under any of
the Loan Documents within five (5) days of notice from the Lender of such
nonpayment or, with respect to nonpayment of interest, if shorter, within eight
(8) days of when due.
7.3. The breach by either Obligor of any of the terms or
provisions of Article 5 and, where such breach is reasonably capable of cure and
provided such breach has not otherwise caused a Material Adverse Effect, the
failure of either Obligor to cure such breach within ten (10) days of becoming
aware thereof.
7.4. The breach by either Obligor (other than a breach which
constitutes a Default under Section 7.1, 7.2 or 7.3) of any of the terms or
provisions of this Agreement or the Note which is not remedied within ten (10)
days after written notice from the Lender.
7.5. Failure of Geotek or any of its Subsidiaries to pay any
Indebtedness in excess of $2,000,000 when due; or the default by Geotek or any
of its Subsidiaries in the performance of any term, provision or condition
contained in any agreement under which any Indebtedness in excess of $3,500,000
was created or is governed, the effect of which is to cause, or to permit the
holder or holders of such Indebtedness to cause, such Indebtedness to become due
prior to its stated maturity; or any Indebtedness in excess of $3,500,000 shall
be declared to be due and payable or required to be prepaid (other than by a
regularly scheduled payment) prior to the stated maturity thereof.
7.6. Geotek, the Borrower or any of the Borrower's Subsidiaries
shall (a) have an order for relief entered with respect to it under the Federal
Bankruptcy Code, (b) not pay, or admit in writing its inability to pay, its
debts generally as they become due, (c) make an assignment for the benefit of
creditors, (d) apply for, seek, consent to, or acquiesce in, the appointment of
a receiver, custodian, trustee, examiner, liquidator or similar official for it
or any substantial part of its property, (e) institute any proceeding seeking an
order for relief under the Federal
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Bankruptcy Code or seeking to adjudicate it a bankrupt or insolvent, or seeking
dissolution, winding up, liquidation, reorganization, arrangement, adjustment or
composition of it or its debts under any law relating to bankruptcy, insolvency
or reorganization or relief of debtors or fail to file an answer or other
pleading denying the material allegations of any such proceeding filed against
it, (f) take any corporate action to authorize or effect any of the foregoing
actions set forth in this Section 7.6, or (g) fail to contest in good faith any
appointment or proceeding described in Section 7.7.
7.7. Without the application, approval or consent of Geotek, the
Borrower or any of the Borrower's Subsidiaries, a receiver, trustee, examiner,
liquidator or similar official shall be appointed for Geotek, the Borrower or
any of the Borrower's Subsidiaries or any substantial part of their respective
properties, or a proceeding described in Section 7.6(e) shall be instituted
against Geotek, the Borrower or any of the Borrower's Subsidiaries and such
appointment continues undischarged or such proceeding continues undismissed or
unstayed for a period of 60 consecutive days.
7.8. Any court, government or governmental agency shall condemn,
seize or otherwise appropriate, or take custody or control of all or any
substantial portion of the property of Geotek, the Borrower or any of the
Borrower's Subsidiaries.
7.9. Geotek, the Borrower or any of the Borrower's Subsidiaries
shall fail within 30 days to pay, bond or otherwise discharge any judgment or
order for the payment of money in excess of $1,000,000 which is not stayed on
appeal or otherwise being appropriately contested in good faith.
7.10. The Unfunded Liabilities of all Plans shall exceed in the
aggregate $1,000,000, any Lien in favor of the PBGC with respect to any Plan
shall arise or be recorded, or any Reportable Event shall occur in connection
with any Plan.
7.11. Any Lien, levy or assessment is filed or recorded with
respect to or otherwise imposed upon all or any part of the Collateral by the
United States or any department or instrumentality thereof or by any state,
county, municipality or other governmental agency (other than Permitted Liens)
and such lien, levy or assessment is not stayed, vacated, paid or discharged
within ten (10) days.
7.12. Geotek, the Borrower or any of the Borrower's Subsidiaries
is enjoined, restrained or in any way prevented by the order of any court or any
administrative or regulatory agency from conducting all or any material part of
its business and such order continues for more than thirty (30) days.
7.13. Any of the Loan Documents for any reason, other than a
partial or full release in accordance with the terms thereof, ceases to be in
full force and
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effect or is declared to be null and void, or either Obligor denies that it has
any further liability under any Loan Documents to which it is party, or gives
notice to such effect.
7.14. Any material damage to, or loss, theft or destruction of,
any Collateral, whether or not insured, or any strike, lockout, labor dispute,
embargo, condemnation, act of God or public enemy, or other casualty which
causes, for more than fifteen (15) consecutive days, the cessation or
substantial curtailment of revenue producing activities at any facility of
Geotek or any of its Subsidiaries if any such event or circumstance could have a
Material Adverse Effect.
7.15. The loss, suspension, revocation or amendment of, or
failure to renew, any FCC License now held or hereafter acquired by Geotek or
any of its Subsidiaries, if such loss, suspension, revocation, amendment or
failure to renew could have a Material Adverse Effect. For purposes of this
Section 7.15, the loss, suspension, revocation or failure to renew of any
Auction 900 MHz License or (once acquired by Holdings) any Third-Party 900 MHz
License, is deemed to have a Material Adverse Effect.
7.16. The FCC schedules or conducts a hearing with respect to, or
commences an action or proceeding seeking the termination, suspension,
revocation or material adverse amendment of, any FCC License now held or
hereafter acquired by Geotek or any of its Subsidiaries (other than a hearing
with respect to a pending competing application) and (i) the Lender reasonably
believes that the result thereof would be the termination, revocation,
suspension or material adverse amendment of such License and (ii) in the case of
any Subsidiary of Geotek other than the Borrower or any of the Borrower's
Subsidiaries, such termination, revocation, suspension or material adverse
amendment would have a Material Adverse Effect.
7.17. Geotek or any of its Subsidiaries defaults in the payment
of any other written obligation to the Lender in excess of $2,000,000,
including, without limitation, with respect to any extension of trade credit by
the Lender; provided that such default shall not be a Default if it is the
subject of a good-faith dispute for no longer than ninety (90) days.
7.18. The Lender does not have or ceases to have a valid and
perfected first priority security interest in the Collateral (subject to
Permitted Liens), in each case, for any reason other than the failure of the
Lender to take any action within its control.
7.19 Any judgment, order or ruling is entered, or partial or full
resolution is reached, with respect to any litigation or proceeding listed in
the Disclosure Letter (or any Schedule thereto), which judgment, order, ruling
or resolution could have a Material Adverse Effect.
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ARTICLE VIII
ACCELERATION, WAIVERS, AMENDMENT AND REMEDIES
8.1. Acceleration. If any Default described in Section 7.6 or 7.7
occurs, the Obligations shall immediately become due and payable without any
election or action on the part of the Lender. If any other Default occurs, the
Lender may declare the Obligations to be due and payable, whereupon the
Obligations shall become immediately due and payable, without presentment,
demand, protest or notice of any kind, all of which the Obligors hereby
expressly waive.
8.2. Preservation of Rights. No delay or omission of the Lender
to exercise any right under the Loan Documents shall impair such right or be
construed to be a waiver of any Default or an acquiescence therein. Any single
or partial exercise of any such right shall not preclude other or further
exercise thereof or the exercise of any other right, and no waiver, amendment or
other variation of the terms, conditions or provisions of the Loan Documents
whatsoever shall be valid unless in writing signed by the Lender, and then only
to the extent in such writing specifically set forth. All remedies contained in
the Loan Documents or by law afforded shall be cumulative and all shall be
available to the Lender until the Obligations have been paid in full.
ARTICLE IX
CONVERSION
9.1 Conversion Privilege and Conversion Price. (a) Subject to and
upon compliance with the provisions of this Article, at the option of the
Lender, the outstanding principal amount of the Loans may be converted into
fully paid and nonassessable shares (calculated as to each conversion to the
nearest 1/100 of a share) of Common Stock of Geotek, at the Conversion Price,
determined as hereinafter provided, in effect at the time of conversion. Such
conversion right shall commence one hundred and eighty-one (181) days after the
Initial Funding Date and shall expire on the Maturity Date (the "Conversion
Period").
(b) The price per share (the "Conversion Price") at which
shares of Common Stock shall be delivered upon conversion shall be the lesser of
(i) ninety percent (90%) of the weighted average sales price of the Common Stock
of Geotek on the Trading Day next preceding the date of conversion (or over the
ten (10) Trading Days immediately preceding the date of conversion to the extent
(and only to the extent) the conversion relates to in excess of $300,000 of
Loans (to the extent of such excess) on the Trading Day next preceding the
Maturity Date) as reported by Bloomberg Financial Services or similar reporting
service and (ii) $9.75 (the "Maximum Conversion Price").
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9.2 Exercise of Conversion Privilege; Limitations on Exercise.
(a) During the Conversion Period, the entire outstanding
amount of the Loans shall be convertible into the Common Stock of Geotek as
provided herein; provided that no more than $150,000 of the Loans may be
converted into Common Stock of Geotek on any day, except that during the one
hundred twenty-one (121) Trading Days immediately preceding the Maturity Date,
up to $300,000 in principal amount of the Loans may be converted into Common
Stock of Geotek on any day.
(b) Notwithstanding the provisions of paragraph (a) above,
on the Trading Day next preceding the Maturity Date, the Lender may convert the
entire remaining principal balance of the Loans into shares of Common Stock of
Geotek; provided that the Lender agrees not to resell in excess of $300,000
worth of such Common Stock on any Trading Day.
(c) Notwithstanding the provisions of paragraph (a) above,
on any Trading Day during the Conversion Period the Lender shall have the right
to convert the entire remaining balance of the Loans into shares of Common Stock
of Geotek at the Maximum Conversion Price; provided that, with respect to any
such amount so converted on such day, the Lender agrees not to resell in excess
of $300,000 worth of such Common Stock on any Trading Day.
(d) Notwithstanding the foregoing, upon the occurrence and
during the continuance of a Default, up to the entire remaining amount of the
Loans may be converted by the Lender into shares of Common Stock of Geotek on
any day with no contractual restrictions on the ability of the Lender to resell
such Common Stock at any time; provided that, if the Lender chooses to so
convert the entire remaining amount of the Loans (or any Lesser amount in excess
of $300,000), the Borrower may, at its option, prior to the time set for such
conversion, prevent the Lender from so converting by paying the Lender in
immediately available funds (i) all outstanding principal and interest on the
Loans (and all other amounts then due under the Loan Agreement and the other
Loan Documents) and (ii) a dollar amount equal to the greater of (A) the number
of shares of Common Stock of Geotek which the Lender would otherwise be entitled
to receive upon such conversion but for the exercise by the Borrower of its
buyout option under this Section 9.2(d) multiplied by ten percent (10%) of the
weighted average sales price of shares of Common Stock of Geotek on the Trading
Day immediately preceding the date set for conversion and (B) the number of
shares of Common Stock of Geotek which the Lender would otherwise be entitled to
receive upon such conversion but for the exercise by the Borrower of its buyout
option under this Section 9.2(d) multiplied by the difference obtained by
subtracting the Maximum Conversion Price from the weighted average sales price
of shares of Common Stock of Geotek on the Trading Day immediately preceding the
date set
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for conversion. Such weighted average sales price shall be as reported by
Bloomberg Financial Services or similar reporting service. The amount payable
pursuant to clause (ii) of this Section 9.2(d) shall be payable, at the
Borrower's option, in cash or Common Stock of Geotek (at the per share valuation
described in such clause). Nothing in this paragraph (d) shall prevent the
Lender from converting any or all of the Loans pursuant to, and in the manner
provided for in, any other paragraph of this Section 9.2, even during the
continuance of a Default or from exercising any other remedies available to it
hereunder or under applicable law upon the occurrence and continuance of a
Default (including, without limitation, the right to accelerate the Loans and
foreclose upon the Collateral).
(e) The Lender shall exercise its conversion privilege on
any Trading Day during the Conversion Period (a "Conversion Date") by informing
Geotek and the Borrower in writing of the amount of Loans to be so converted
(the "Conversion Amount") and the Conversion Price. Conversion of such Loans
shall be deemed to have been effected on the Conversion Date and at such time
the rights of the Lender to receive principal payments or interest on the
Converted Amount shall cease and the person or persons in whose name or names
any certificate or certificates for shares of common stock shall be issuable
upon conversion of the Converted Amount (as designated by the Lender) shall be
deemed to have become the holder or holders of record of such shares. Geotek
shall, at the request of the Lender, either (i) cause a certificate or
certificates representing the converted shares of Common Stock of Geotek to be
issued and delivered to or at the direction of the Lender or (ii) cause the
issuance of the converted shares of Common Stock of Geotek in registered form
and the recording thereof in the book-entry system maintained by The Depositary
Trust Company, in either case within (3) three days of such request. If Geotek
breaches its obligation to deliver share certificates or cause book-entries
hereunder, such breach shall not be subject to any cure period otherwise
available under Article VII hereof and the Lender may, in addition to its other
remedies hereunder and at law, bring an action to enforce specific performance
of such obligation and, until such certificates are properly delivered or such
book-entries are properly made, as the case may be, the principal amount of the
Loans so converted shall be deemed reinstated with interest deemed to have been
accruing continuously notwithstanding such conversion.
(f) The Maximum Conversion Price shall be adjusted in
certain circumstances as provided in Annex A attached hereto and made a part
hereof.
(g) Until such time as the Lender has sold all shares of
Common Stock of Geotek which it has received or may receive pursuant to its
conversion rights hereunder, and subject to the other resale restrictions
contained in this Article IX, the Lender may not sell on any day more shares of
Geotek than it owns on such day (including shares in respect of which it has or
will properly exercise its
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conversion rights on such day). Nothing in this Section 9.2 shall restrict the
ability of the Lender to sell, assign or otherwise transfer the Note and its
rights and obligations under the other Loan Documents (including the right to
convert the Loans into shares of Common Stock of Geotek) in accordance with
Section 10.1 hereof.
9.3 Fractions of Shares. No fractional shares of Common Stock
shall be issued upon conversion of the Loans. Instead of any fractional share of
Common Stock which would otherwise by issuable upon conversion of any of the
Loans, Geotek shall pay a cash adjustment in respect of such fraction in an
amount equal to the same fraction of the closing price per share of the Common
Stock at the close of business on the day of conversion.
9.4 Notice of Certain Corporate Activities. In case:
(a) Geotek shall declare a dividend (or any other distribution)
on its Common Stock payable otherwise than exclusively in cash; or
(b) Geotek shall authorize the granting to all of the holders of
its Common Stock, pro rata, of rights or warrants to subscribe for or
purchase any shares of capital stock of any class or of any other rights
(excluding employee stock options); or
(c) of any reclassification of the Common Stock of Geotek (other
than a subdivision or combination of its outstanding shares of Common
Stock), or of any consolidation or merger to which Geotek is a party and
for which approval of any stockholders of Geotek is required, or of the
sale or transfer of all or substantially all of the assets of Geotek; or
(d) of the voluntary or involuntary dissolution, liquidation or
winding up of Geotek; or
(e) Geotek or any Subsidiary of Geotek shall commence a tender
offer for all or a portion of Geotek's outstanding shares of Common
Stock (or shall amend any such tender offer);
then Geotek shall notify the Lender in accordance with Section 11.1 hereof, at
least 20 days (or 10 days in any case specified in clause (a), (b) or (e) above)
prior to the applicable record, effective or expiration date hereinafter
specified, a notice stating (x) the date on which a record is to be taken for
the purpose of such dividend, distribution or granting of rights or warrants,
or, if a record is not to be taken, the date as of which the holders of Common
Stock of record to be entitled to such dividend, distribution, rights or
warrants are to be determined, or (y) the date on which such reclassification,
consolidation, merger, sale, transfer,
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dissolution, liquidation or winding up is expected to become effective, and the
date as of which it is expected that holders of Common Stock of record shall be
entitled to exchange their shares of Common Stock for securities, cash or other
property deliverable upon such reclassification, consolidation, merger, sale,
transfer, dissolution, liquidation or winding up, or (z) the date on which such
tender offer commenced, the date on which such tender offer is scheduled to
expire unless extended, the consideration offered and the other material terms
thereof (or the material terms of any amendment thereto).
9.5. Geotek to Reserve Common Stock. Geotek shall at all times
reserve and keep available, free from preemptive rights, out of its authorized
but unissued Common Stock, for the purpose of effecting the conversion of the
Loans, the full number of shares of Common Stock then issuable upon the
conversion of all outstanding Loans.
9.6. Taxes on Conversions. Geotek will pay any and all transfer
taxes that may be payable in respect of the issue or delivery of shares of
Common Stock on conversion of Loans pursuant hereto. Geotek shall not, however,
be required to pay any tax which may be payable in respect of any transfer
involved in the issue and delivery of shares of Common Stock in a name other
than that of the Lender, and no such issue or delivery shall be made unless and
until the Person requesting such issue has paid to Geotek the amount of any such
tax, or has established to the satisfaction of Geotek that such tax has been
paid.
9.7. Covenant as to Common Stock. Geotek covenants that all
shares of Common Stock which may be issued upon conversion of Loans will upon
issue be fully paid and nonassessable and, except as provided in Section 9.6,
Geotek will pay all transfer taxes, liens and charges with respect to the issue
thereof.
9.8. Provisions in Case of Consolidation, Merger or Sale of
Assets. In case of any consolidation of Geotek with, or merger of Geotek into,
any other Person, any merger of another Person into Geotek (other than a merger
which does not result in any reclassification, conversion, exchange or
cancellation of outstanding shares of Common Stock of Geotek) or any sale or
transfer of all or substantially all of the assets of Geotek, the Person formed
by such consolidation or resulting from such merger or which acquires such
assets, as the case may be, shall grant to the Lender the right thereafter,
during the Conversion Period, to convert the Loans only into the kind and amount
of securities, cash and other property receivable, if any, upon such
consolidation, merger, sale or transfer by the Lender of the number of shares of
Common Stock of Geotek into which the Loans might have been converted
immediately prior to such consolidation, merger, sale or transfer assuming the
Lender failed to exercise its rights of election, if any, as to
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the kind or amount of securities, cash and other property receivable upon such
consolidation, merger, sale or transfer. The Lender shall continue to enjoy
rights of adjustment with respect to the Maximum Conversion Price as nearly
equivalent as may be practicable to the adjustments provided for in Annex A. The
above provisions of this Section shall similarly apply to successive
consolidations, mergers, sales or transfers.
9.9. Registration Rights. The shares of Common Stock of Geotek
issued hereunder shall be entitled to the registration rights set forth in Annex
B attached hereto and made a part hereof.
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ARTICLE X
GENERAL PROVISIONS
10.1. Successors and Assigns. (a) The terms and provisions of the
Loan Documents shall be binding upon and inure to the benefit of the Obligors
and the Lender and their respective successors and assigns.
(b) Subject to the Securities Act and applicable state
securities laws, the Lender may sell, assign or otherwise transfer the Note,
subject to the terms thereof (and its rights and obligations under the other
Loan Documents), in whole or in part (but in parts representing no less than
$8,000,000 in principal amount), to any Person who is an "Accredited Investor"
(as defined in the Securities Act) other than (except after occurrence and
during the continuance of a Default, when no restrictions on sale, assignment or
transfer shall apply) a "hedge fund" or a competitor of Geotek engaged or, to
the knowledge of HNS, planning to engage in the business of providing wireless
voice or data communications services to mobile customers or of providing
equipment in connection therewith. Notwithstanding the foregoing, except upon
the prior occurrence and continuance of a Default, the Lender shall not sell,
assign or otherwise transfer any interest in the Note or the other Loan
Documents prior to March 31, 1996.
(c) In the event of any sale, assignment or other transfer
described in Section 10.1(b) (other than upon the occurrence and during the
continuance of a Default), the Lender will, at least five (5) Business Days
prior to such proposed sale, assignment or transfer, give written notice to the
Borrower of the Lender's intention to effect such transfer, setting forth the
manner and circumstances thereof and the proposed transferee and certifying that
the proposed transferee is an Accredited Investor and not a hedge fund or
competitor of Geotek as described above, which notice shall be accompanied by an
opinion of counsel reasonably satisfactory to the Borrower addressed to the
Borrower to the effect that such transfer may be effected without registration
under the Securities Act. No such transfer shall be permitted unless the
proposed transferee agrees in writing to be bound by the transfer restrictions
in this Section 10.1.
(d) The Obligors authorize the Lender to disclose to any
purchaser or prospective purchaser or other transferee of an interest in the
Loans any financial or other information pertaining to the Loans known to the
Lender and the Obligors agree to cooperate in providing such purchaser or
prospective purchaser with any publicly-filed or publicly-available information
about the Obligors or Holdings or their respective businesses.
(e) The Obligors may not assign or otherwise transfer any
of their rights or obligations under any of the Loan Documents.
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10.2. Survival of Representations. All representations and
warranties of the Obligors contained in any Loan Document shall survive delivery
of the Note and the making of the Loans herein contemplated.
10.3. Governmental Regulation. Anything contained in any Loan
Document to the contrary notwithstanding, the Lender shall not be obligated to
extend credit to the Borrower in violation of any limitation or prohibition
provided by any applicable statute or regulation.
10.4. Taxes. Any taxes (excluding income taxes) payable or ruled
payable by any federal or state authority in respect of the Loan Documents shall
be paid by the Obligors, together with interest and penalties, if any.
10.5. New York Law; Submission to Jurisdiction; Waiver of Jury
Trial; Service of Process. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH
AND GOVERNED BY THE INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS) OF THE STATE OF
NEW YORK. EACH PARTY HERETO HEREBY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF
THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND OF
ANY NEW YORK STATE COURT SITTING IN NEW YORK CITY FOR PURPOSES OF ALL LEGAL
PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE OTHER LOAN
DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. EACH PARTY HERETO
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH
IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING
BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A
COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. EACH PARTY HERETO HEREBY
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATING TO THE LOAN DOCUMENTS OR THE TRANSACTIONS
CONTEMPLATED HEREBY. EACH OBLIGOR AGREES THAT SERVICE OF PROCESS IN ANY SUCH
ACTION OR PROCEEDING MAY BE EFFECTED BY MAILING A COPY THEREOF BY REGISTERED OR
CERTIFIED MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM OF MAIL), POSTAGE PREPAID, TO
THE APPLICABLE OBLIGOR AT ITS ADDRESS SET FORTH ON THE SIGNATURE PAGES TO THIS
AGREEMENT OR AT SUCH OTHER ADDRESS OF WHICH THE LENDER SHALL HAVE BEEN NOTIFIED
PURSUANT TO SECTION 11.2 HEREOF.
10.6. Headings. Section headings in the Loan Documents are for
convenience of reference only, and shall not govern the interpretation of any of
the provisions of the Loan Documents.
10.7. Entire Agreement. The Loan Documents embody the entire
agreement and understanding among the Obligors and the Lender and supersede all
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prior agreements and understandings among the Obligors and the Lender relating
to the subject matter thereof.
10.8. Expenses; Indemnification. The Obligors agree, jointly and
severally, to reimburse the Lender for any costs, internal charges and
out-of-pocket expenses (including fees, time charges and out-of-pocket expenses
of outside legal counsel to the Lender) paid or incurred by the Lender in
connection with the preparation, review, execution, and delivery of the Loan
Documents, subject to a maximum amount required to be reimbursed by the Obligors
to the Lender of $50,000. Notwithstanding the foregoing, after the occurrence
and during the continuance of a Default, the Obligors agree, jointly and
severally, to reimburse the Lender for any costs, internal charges and
out-of-pocket expenses (including reasonable fees and time charges of outside
legal counsel to the Lender) paid or incurred by the Lender in connection with
the collection and enforcement of the Loan Documents. The Obligors further
agree, jointly and severally, to indemnify the Lender, its directors, officers,
employees and attorneys against all losses, claims, damages, penalties,
judgments, liabilities and expenses (including, without limitation, all expenses
of litigation or preparation therefor whether or not the Lender is a party
thereto) (collectively, "Costs") which any of them may pay or incur arising out
of or relating to this Agreement, the other Loan Documents, the transactions
contemplated hereby or the direct or indirect application or proposed
application of the Loan Proceeds; provided, however, that with respect to any
legal proceeding between the Lender and one or more of the Obligors, if the
Obligors shall finally prevail in such proceeding (as evidenced by a final
judgment not subject to further appeal), the Obligors shall not be obligated to
indemnify the Lender with respect to Costs incurred in connection with such
proceeding (as it relates solely to the matter or matters in dispute between the
Obligors and the Lender and not any dispute between the Lender and any third
party). The obligations of the Obligors under this Section shall survive the
termination of this Agreement.
10.9. Accounting. Except as provided to the contrary herein, all
accounting terms used herein shall be interpreted and all accounting
determinations hereunder shall be made in accordance with Agreement Accounting
Principles.
10.10. Severability of Provisions. Any provision in any Loan
Document that is held to be inoperative, unenforceable, or invalid in any
jurisdiction shall, as to that jurisdiction, be inoperative, unenforceable, or
invalid without affecting the remaining provisions in that jurisdiction or the
operation, enforceability, or validity of that provision in any other
jurisdiction, and to this end the provisions of all Loan Documents are declared
to be severable.
10.11. Confidentiality; Public Disclosures. Subject to Geotek's
disclosure obligations under the Securities Act and the Exchange Act, and unless
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otherwise required by law or order of a court, administrative agency or other
quasi-judicial body of competent jurisdiction, and then only after providing
prompt written notice of its intention to disclose, no party hereto shall issue
any press release or make any public statement relating to the transactions
evidenced by this Agreement or otherwise disclose this agreement to any third
party without the other parties' written approval (such approval not to be
unreasonably withheld), except that this Agreement may be disclosed to each
party's attorneys, financial advisors and others in a confidential relationship
to such party.
ARTICLE XI
NOTICES
11.1. Giving Notice. Any notice required or permitted to be given
under this Agreement may be, and shall be deemed, given when deposited in the
United States mail, postage prepaid, or by facsimile transmission when
mechanical confirmation of a successful transmission has been received, or by
telegraph or telex when delivered to the appropriate office for transmission,
charges prepaid, addressed to the applicable Obligor or the Lender at the
addresses indicated below their signatures to this Agreement.
11.2. Change of Address. The Obligors and the Lender may each
change the address for service of notice upon it by a notice in writing to the
other parties hereto.
ARTICLE XII
COUNTERPARTS
This Agreement may be executed in any number of counterparts, all
of which taken together shall constitute one agreement, and either of the
parties hereto may execute this Agreement by signing any such counterpart. This
Agreement shall be effective when it has been executed by each of the Obligors
and the Lender.
36
<PAGE> 37
IN WITNESS WHEREOF, the Borrower, Geotek and the Lender have
executed this Agreement as of the date first above written.
Borrower:
GEOTEK FINANCING CORPORATION
By: /s/ Yaron Eitan
-------------------------------------------------
Title: President
Address: c/o Geotek Communications, Inc.
20 Craig Road
Montvale, NJ 07645
Geotek:
GEOTEK COMMUNICATIONS, INC.
By: /s/ Yaron Eitan
-------------------------------------------------
Title: President and Chief Executive Officer
Address: 20 Craig Road
Montvale, NJ 07645
Lender:
HUGHES NETWORK SYSTEMS, INC.
By: /s/ Jack A. Shaw
-------------------------------------------------
Title: Chairman and Chief Executive Officer
Address: 11717 Exploration Lane
Germantown, MD 20876
37
<PAGE> 38
ANNEX A TO LOAN AGREEMENT
Adjustment of Maximum Conversion Price
<PAGE> 39
ANNEX A TO LOAN AGREEMENT
Adjustment of Maximum Conversion Price
The Maximum Conversion Price, as defined in the Loan Agreement of which
this Annex A forms a part (the "Loan Agreement"), and the number of shares of
Common Stock of Geotek issuable upon the conversion of the Loans shall be
adjusted in certain instances as provided herein. Capitalized terms not
otherwise defined herein shall have the meanings given to them in the Loan
Agreement.
(a) Adjustment for Change in Capital Stock.
If Geotek:
(1) pays a dividend or makes a distribution on its Common Stock
in shares of its Common Stock;
(2) subdivides its outstanding shares of Common Stock into a
greater number of shares;
(3) combines its outstanding shares of Common Stock into a
smaller number of shares;
(4) makes a distribution on its Common Stock in shares of its
Capital Stock other than Common Stock or preferred stock; or
(5) issues by reclassification of its Common Stock any shares of
its Capital Stock;
then the Maximum Conversion Price in effect immediately prior to such action
shall be proportionately adjusted so that, upon conversion of the Loans, the
Lender may receive the aggregate number and kind of shares of Capital Stock of
Geotek which the Lender would have owned immediately following such action if
such Loans had been converted immediately prior to such action.
The adjustment shall become effective immediately after the record date
in the case of a dividend or distribution and immediately after the effective
date in the case of a subdivision, combination or reclassification.
If after an adjustment the Lender may receive upon conversion shares of
two or more classes of Capital Stock of Geotek, Geotek shall determine the
allocation of the adjusted Maximum Conversion Price between the classes of
Capital Stock. After such allocation, the exercise privilege and the Maximum
Conversion Price of each class of Capital Stock shall thereafter be subject to
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<PAGE> 40
adjustment on terms comparable to those applicable to Common Stock this Annex A.
Such adjustment shall be made successively whenever any event listed
above shall occur.
(b) Adjustment for Rights Issue.
If Geotek distributes any rights, options or warrants to all holders of
its Common Stock entitling them for a period expiring within 60 days after the
record date mentioned below to purchase shares of Common Stock at a price per
share less than the current market price per share on that record date, the
Maximum Conversion Price shall be adjusted in accordance with the formula:
O + N x P
-----
E' = E x M
-------
O + N
where:
E'= the adjusted Maximum Conversion Price.
E = the current Maximum Conversion Price.
O = the number of shares of Common Stock outstanding on the record
date.
N = the number of additional shares of Common Stock offered pursuant
to such rights issuance.
P = the offering price per share of the additional shares.
M = the current market price per share of Common Stock on the record
date.
The adjustment shall be made successively whenever any such rights,
options or warrants are issued and shall become effective immediately after the
record date for the determination of stockholders entitled to receive the
rights, options or warrants. If at the end of the period during which such
rights, options or warrants are exercisable, not all rights, options or warrants
shall have been exercised, the Maximum Conversion Price shall be immediately
readjusted to what it would have been if "N" in the above formula had been the
number of shares actually issued.
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<PAGE> 41
(c) Adjustment for Other Distributions.
If Geotek distributes to all holders of its Common Stock any of its
assets (including but not limited to cash (other than as provided below)), debt
securities, or any rights or warrants to purchase debt securities, assets or
other securities of Geotek, the Maximum Conversion Price shall be adjusted in
accordance with the formula:
E' = E x M - F
-----
M
where:
E'= the adjusted Maximum Conversion Price.
E = the current Maximum Conversion Price.
M = the current market price per share of Common Stock on the record
date mentioned below.
F = the fair market value on the record date of the assets,
securities, rights or warrants applicable to one share of Common
Stock. The Board of Directors of Geotek shall determine the fair
market value, such determination to be evidenced by a board
resolution.
The adjustment shall be made successively whenever any such distribution
is made and shall become effective immediately after the record date for the
determination of stockholders entitled to receive the distribution.
This section (c) does not apply to (i) rights, options or warrants
referred to in section (b) of this Annex A or (ii) cash dividends or
distributions paid out of consolidated current or retained earnings.
(d) Current Market Price.
In sections (b) and (c) of this Annex A the current market price per
share of Common Stock on any date is the average of the Quoted Prices of the
Common Stock for 30 consecutive trading days commencing 45 trading days before
the date in question. The "Quoted Price" of the Common Stock is the last
reported sales price of the Common Stock as reported by NASDAQ, National Market
System, or if the Common Stock is listed on a securities exchange, the last
reported sales price of the Common Stock on such exchange which shall be for
consolidated trading if applicable to such exchange, or if neither so reported
or listed, the last reported bid price of the Common Stock. In the absence of
one or
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<PAGE> 42
more such quotations, the Board of Directors of Geotek shall determine the
current market price on the basis of such quotations as it in good faith
considers appropriate, such determination to be evidenced by a board resolution.
(e) When De Minimis Adjustment May Be Deferred.
No adjustment in the Maximum Conversion Price need be made unless the
adjustment would require an increase or decrease of at least 1% in the Maximum
Conversion Price. Any adjustments that are not made shall be carried forward and
taken into account in any subsequent adjustment.
All calculations under this Annex A shall be made to the nearest cent or
to the nearest 1/100th of a share, as the case may be.
(f) When No Adjustment Required.
No adjustment need be made for a transaction referred to in sections
(a), (b) or (c) of this Annex A if the Lender is to participate in the
transaction on a basis and with notice that the Board of Directors of Geotek
determines to be fair and appropriate in light of the basis and notice on which
holders of Common Stock participate in the transaction, such determination to be
evidenced by a board resolution.
No adjustment need be made for rights to purchase Common Stock pursuant
to a company plan for reinvestment of dividends or interest.
No adjustment need be made for a change in the par value or no par value
of the Common Stock.
(g) Notice of Adjustment.
Whenever the Maximum Conversion Price is adjusted as herein provided,
Geotek shall notify the Lender in accordance with Section 11.1 of the Loan
Agreement that the Maximum Conversion Price has been adjusted and set forth in
such notice the adjusted Maximum Conversion Price and the facts upon which such
adjustment is based.
(h) Voluntary Reduction.
Geotek from time to time may reduce the Maximum Conversion Price by any
amount for any period of time if the period is at least 20 days and if the
reduction is irrevocable during the period; provided, however, that in no event
may the Maximum Conversion Price be less than the par value of a share of Common
Stock.
A-4
<PAGE> 43
Whenever the Maximum Conversion Price is reduced, Geotek shall mail to
the Lender a notice of the reduction. Geotek shall mail the notice at least 15
days before the date the reduced Maximum Conversion Price takes effect. The
notice shall state the reduced Maximum Conversion Price and the period it will
be in effect.
A reduction of the Maximum Conversion Price does not change or adjust
the Maximum Conversion Price otherwise in effect for purposes of sections (a),
(b) and (c) of this Annex A.
A-5
<PAGE> 44
ANNEX B TO LOAN AGREEMENT
Registration Rights
<PAGE> 45
ANNEX B TO LOAN AGREEMENT
Registration Rights
The shares of Common Stock of Geotek issued upon conversion of the Loans
as set forth in the Loan Agreement of which this Annex B forms a part (the "Loan
Agreement"), shall be entitled to the registration rights provided herein with
respect to the resale thereof by the Holders (as hereinafter defined).
Capitalized terms not otherwise defined herein shall have the meanings given to
them in the Loan Agreement.
(A) Shelf Registration.
(1) Geotek shall file with the Commission, by June 30, 1996, a "shelf"
registration statement (a "Shelf Registration") with respect to all of the
Registrable Securities on an appropriate form pursuant to Rule 415 (or any
similar provision that may be adopted by the Commission) under the Securities
Act, which form shall be available for the sale of the Registrable Securities to
the public from time to time, and shall use its best efforts to cause the
Commission to declare such Shelf Registration effective for all of the
Registrable Securities on or prior to the first day of the Conversion Period.
(2) Geotek shall use its best efforts to keep the Shelf Registration
continuously effective and useable for resale of Registrable Securities until
the third anniversary of the Maturity Date or such shorter period that will
terminate when all the Registrable Securities covered by the Shelf Registration
have been sold pursuant to the terms of the Shelf Registration or are otherwise
no longer Registrable Securities.
Geotek further agrees to use its best efforts to prevent the happening
of any event that would cause the registration statement pursuant to this
Section A to contain a material misstatement or omission or to be not effective
and usable for resale of the Registrable Securities during the period that such
Registration Statement is required to be effective and usable.
(3) In the event that the registration statement (i) is not filed with
the Commission on or prior to the date specified for such filing in Section A(1)
hereof; (ii) has not been declared effective by the Commission pursuant to
Section A(1) hereof; or (iii) following the date such registration statement is
declared effective by the Commission, shall cease to be effective without being
restored to effectiveness by amendment or otherwise within 30 Business Days,
(each such event referred to in clauses (i) through (iii), a "Shelf Registration
Default") Geotek agrees to extend the period during which it shall use its best
efforts to keep the
B-1
<PAGE> 46
Shelf Registration effective, as provided in Section (A)(2) hereof, by the
number of days such Shelf Registration Default continues.
(B) Registration Expenses.
Geotek will pay all Registration Expenses in connection with each
registration of Registrable Securities.
(C) Registration Procedures.
(1) General Provisions. In connection with Geotek's registration
obligations set forth herein, Geotek will use its best efforts to effect such
registration to permit the sale of such Registrable Securities in accordance
with the intended method or methods of disposition thereof, and pursuant thereto
Geotek will as expeditiously as possible:
a. use its best efforts to keep such registration statement
continuously effective and provide all requisite financial statements
for the period specified in Section (A)(1) of this Annex B. Upon the
occurrence of any event that would cause any such registration statement
or the prospectus contained therein (A) to contain a material
misstatement or omission or (B) not to be effective and usable for
resale of Registrable Securities during the period required by this
Annex B, Geotek shall file promptly an appropriate amendment to such
registration statement or file appropriate documents that will be so
incorporated by reference, (1) in the case of clause (A), correcting any
such misstatement or omission, and (2) in the case of either clause (A)
or (B), use its best efforts to cause such amendment to be declared
effective and such registration statement and the related prospectus to
become usable for their intended purpose(s) as soon as practicable
thereafter;
b. prepare and file with the Commission such amendments and
post-effective amendments to the registration statement as may be
necessary to keep the registration statement effective for the period
set forth herein; cause the prospectus to be supplemented by any
required prospectus supplement, and as so supplemented to be filed
pursuant to Rule 424 under the Securities Act and to comply fully with
Rule 424, as applicable, under the Securities Act in a timely manner;
and comply in all material respects with the provisions of the
Securities Act with respect to the disposition of all securities covered
by such registration statement during the applicable period in
accordance with the intended method or methods of distribution by the
sellers thereof set forth in such registration statement or supplement
to the prospectus; Geotek shall not be deemed to have used its best
efforts to keep a registration statement effective during the applicable
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<PAGE> 47
period if it voluntarily takes any action that would result selling
Holders of the Registrable Securities covered thereby not being able to
sell such Registrable Securities during that period unless such action
is required or advisable under applicable law or the action is for a
valid business purpose in the interest of Geotek and its effect on the
registration statement is not the purpose of the action;
c. advise selling Holders promptly and, if requested by such
Persons, confirm such advice in writing, (1) when the prospectus or any
prospectus supplement or post-effective amendment has been filed, and,
with respect to any registration statement or any post-effective
amendment thereto, when the same has become effective, (2) of any
request by the Commission for amendments to the registration statement
or amendments or supplements to the prospectus or for additional
information relating thereto, (3) of the issuance by the Commission of
any stop order suspending the effectiveness of the registration
statement under the Securities Act or of the suspension by any state
securities commission of the qualification of the Registrable Securities
for offering or sale in any jurisdiction, or the initiation of any
proceeding for any of the preceding purposes, (4) of the existence of
any fact or the happening of any event that makes any statement of a
material fact made in the registration statement, the prospectus, any
amendment or supplement thereto or any document incorporated by
reference therein untrue, or that requires the making of any additions
to or changes in the registration statement in order to make the
statements therein not misleading, or that requires the making of any
additions to or changes in the prospectus in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading. If at any time the Commission shall issue any
stop order suspending the effectiveness of the registration statement,
or any state securities commission or other regulatory authority shall
issue an order suspending the qualification or exemption from
qualification of the Registrable Securities under state securities or
blue sky laws, Geotek shall use its best efforts to obtain the
withdrawal or lifting of such order at the earliest practicable time;
d. make available to each selling Holder named in any
registration statement or prospectus before filing with the Commission,
copies of any registration statement or any prospectus included therein
or any amendments or supplements to any such registration statement or
prospectus (including all documents incorporated by reference after the
initial filing of such registration statement), portions of which
relating to such Holders or their plan of distribution (the "Covered
Provisions") will be subject to the review and comment of such Holders
for a period of three Business Days, and Geotek will not file any such
registration statement or prospectus or any amendment or supplement to
any such registration
B-3
<PAGE> 48
statement or prospectus and will correct all of the Covered Provisions
to which the selling Holders covered by such registration statement
shall reasonably object within three Business Days after the receipt
thereof. A selling Holder shall be deemed to have reasonably objected to
such filing if such registration statement, amendment, prospectus or
supplement, as applicable, as proposed to be filed, if the Covered
Provision contains a material misstatement or omission or fails to
comply with the applicable requirements of the Securities Act;
e. promptly upon the filing of any document that is to be
incorporated by reference into a registration statement or prospectus,
make available copies of such document to the selling Holders, make
Geotek's representatives available for discussion of such document and
other customary due diligence matters, and include such information in
such document prior to the filing thereof as such selling Holders
reasonably may request;
f. make available at reasonable times for inspection by the
selling Holders and any attorney or accountant retained by such selling
Holders, all financial and other records, pertinent corporate documents
and properties of Geotek and cause Geotek's officers, directors and
employees to supply all information reasonably requested by any such
Holder, attorney or accountant in connection with such registration
statement or any post-effective amendment thereto subsequent to the
filing thereof and prior to its effectiveness; provided that any person
to whom information is provided under this clause f. agrees in writing
to maintain the confidentiality of such information to the extent such
information is not in the public domain;
g. if requested by any selling Holders, promptly include in any
registration statement or prospectus, pursuant to a supplement or
post-effective amendment if necessary, such information as such selling
Holders may reasonably request to have included therein, including,
without limitation, information relating to the "Plan of Distribution"
of the Registrable Securities, the purchase price being paid therefor
and any other terms of the offering of the Registrable Securities to be
sold in such offering; and make all required filings of such prospectus
supplement or post-effective amendment as soon as practicable after
Geotek is notified of the matters to be included in such prospectus
supplement or post-effective amendment;
h. furnish to each selling Holder, without charge, at least one
copy of the registration statement, as first filed with the Commission,
and of each amendment thereto;
B-4
<PAGE> 49
i. deliver to each selling Holder, without charge, as many
copies of the prospectus (including each preliminary prospectus) and any
amendment or supplement thereto as such Persons reasonably may request;
Geotek hereby consents to the use of the prospectus and any amendment or
supplement thereto by each of the selling Holders in connection with the
offering and the sale of the Registrable Securities covered by the
prospectus or any amendment or supplement thereto;
j. In connection with the registration statement contemplated by
this Annex B, Geotek shall:
(i) furnish to each selling Holder, upon the
effectiveness of the registration statement:
(1) a certificate, dated the date of
effectiveness of the registration statement, signed by
(x) the President or any Vice President and (y) a
principal financial or accounting officer of Geotek,
confirming, as of the date thereof, the matters set forth
in Section 3.2(ii)(a) of the Loan Agreement and such
other matters as the Holders may reasonably request;
(2) an opinion, dated the date of effectiveness
of the registration statement, of counsel for Geotek,
covering (i) due authorization and enforceability of the
Loan Agreement, (ii) a statement to the effect that such
counsel has participated in conferences with officers and
other representatives of Geotek and representatives of
the independent public accountants for Geotek and have
considered the matters required to be stated therein and
the statements contained therein, although such counsel
has not independently verified the accuracy, completeness
or fairness of such statements; and that such counsel
advises that, on the basis of the foregoing (relying as
to materiality to a large extent upon facts provided to
such counsel by officers and other representatives of
Geotek and without independent check or verification), no
facts came to such counsel's attention that caused such
counsel to believe that the applicable registration
statement, at the time such registration statement or any
post-effective amendment thereto became effective,
contained an untrue statement of a material fact or
omitted to state a material fact required to be stated
therein or necessary to make the statements therein not
misleading, or that the prospectus contained in such
registration statement as of its date contained an untrue
statement of a material fact or omitted to state a
material fact necessary in
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<PAGE> 50
order to make the statements therein, in the light of
the circumstances under which they were made, not
misleading and (iii) such other matters of the type
customarily covered in opinions of counsel for an issuer
in connection with similar securities offerings, as may
reasonably be requested by such parties. Without
limiting the foregoing, such counsel may state further
that such counsel assumes no responsibility for, and has
not independently verified, the accuracy, completeness
or fairness of the financial statements, notes and
schedules and other financial, statistical and
accounting data included in any registration statement
contemplated by this Annex B or the related prospectus;
and
(3) a customary comfort letter, dated as of the
date of effectiveness of the registration statement,
from Geotek's independent accountants, in the customary
form and covering matters of the type customarily
covered in such comfort letters; and
(ii) deliver such other documents and certificates as may
be reasonably requested by such parties to evidence compliance with
clause (i) above.
The above shall be done in connection with the filing of the
Shelf Registration and if at any time the representations and warranties
of Geotek contemplated in (i)(1) above cease to be true and correct,
Geotek shall so advise the selling Holders promptly and if requested by
such Persons, shall confirm such advice in writing;
k. prior to any public offering of Registrable Securities,
cooperate with the selling Holders and their respective counsel in
connection with the registration and qualification of the Registrable
Securities under the securities or blue sky laws of such jurisdictions
as the selling Holders may reasonably request and use its best efforts
to do any and all other acts or things necessary or advisable to enable
the disposition in such jurisdiction of the Registrable Securities
covered by the applicable registration statement; provided, however,
that Geotek shall not be required to register or qualify as a foreign
corporation where it is not now so qualified or to take any action that
would subject it to service of process in suits or to taxation other
than as to matters and transactions relating to the registration
statement, in any jurisdiction where it is not now so subject;
l. in connection with any sale of Registrable Securities that
will result in such securities no longer being Transfer Restricted
Securities,
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<PAGE> 51
cooperate with the selling Holders to facilitate the timely preparation
and delivery of certificates representing Registrable Securities to be
sold and not bearing any restrictive legends; and to register such
Registrable Securities in such denominations and such names as the
Holders may request at least two Business Days prior to such sale of
Registrable Securities;
m. use its best efforts to cause the Registrable Securities
covered by the registration statement to be registered with or approved
by such other governmental agencies or authorities as may be necessary
to enable the seller or sellers thereof to consummate the disposition of
such Registrable Securities, subject to the proviso contained in clause
k. above;
n. if any fact or event contemplated by clause c.(4) above shall
exist or have occurred, prepare a supplement or post-effective amendment
to the registration statement or related prospectus or any document
incorporated therein by reference or file any other required document so
that, as thereafter delivered to the purchasers of Registrable
Securities, the prospectus will not contain an untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they
were made, not misleading;
o. provide a CUSIP number for all Registrable Securities not
later than the effective date of a registration statement covering such
Registrable Securities;
p. otherwise use its best efforts to comply with all applicable
rules and regulations of the Commission, and make generally available to
its security holders with regard to the registration statement, as soon
as practicable, but in any event within sixteen months of the
effectiveness of the registration statement, a consolidated earnings
statement meeting the requirements of Rule 158 under the Securities Act
(which need not be audited) covering a twelve-month period beginning
after the effective date of the registration statement (as such term is
defined in paragraph (c) of such Rule 158); and
q. cause all Registrable Securities covered by the registration
statement to be listed on each securities exchange on which similar
securities issued by Geotek are then listed if requested by the Holders
of a majority in aggregate principal amount of Registrable Securities.
(2) Restrictions on Holders. Each Holder agrees by acquisition of a
Registrable Security that, upon receipt of any notice from Geotek of the
existence of any fact of the kind described in Section (C)(1)(c)(4) hereof, such
Holder will
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<PAGE> 52
forthwith discontinue disposition of Registrable Securities pursuant to the
registration statement until such Holder's receipt of the copies of the
supplemented or amended prospectus contemplated by Section (C)(1)(n) hereof, or
until it is advised in writing (the "Advice") by Geotek that the use of the
prospectus may be resumed, and has received copies of any additional or
supplemental filings that are incorporated by reference in the prospectus. If
so directed by Geotek, each Holder will deliver to Geotek (at Geotek's expense)
all copies, other than permanent file copies then in such Holder's possession,
of the prospectus covering such Registrable Securities that was current at the
time of receipt of such notice. In the event Geotek shall give any such notice,
the time period regarding the effectiveness of such registration statement set
forth in herein shall be extended by the number of days during the period from
and including the date of the giving of such notice pursuant to Section
(C)(1)(c)(4) hereof to and including the date when each selling Holder covered
by such registration statement shall have received the copies of the
supplemented or amended prospectus contemplated by Section (C)(1)(c)(4) hereof
or shall have received the Advice.
(D) Indemnification.
(1) Indemnification by Geotek. Geotek agrees to indemnify and hold
harmless each Holder, its officers, directors, employees and agents and each
person who controls such Holder within the meaning of either Section 15 of the
Securities Act or Section 20(a) of the Exchange Act (each such person being
sometimes hereinafter referred to as an "Indemnified Holder") from and against
all losses, claims, damages, liabilities and expenses (including reasonable
costs of investigation and legal expenses) arising out of or based upon any
untrue statement or alleged untrue statement of a material fact contained in any
registration statement or prospectus or in any amendment or supplement thereto
or in any preliminary prospectus, or arising out of or based upon any omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, except insofar as such
losses, claims, damages, liabilities or expenses arise out of or are based upon
any such untrue statement or omission or allegation thereof based upon
information relating to such Indemnified Holder and furnished in writing to
Geotek by such Indemnified Holder expressly for use therein. This indemnity will
be in addition to any liability which Geotek may otherwise have.
If any action or proceeding (including any governmental investigation or
inquiry) shall be brought or asserted against an Indemnified Holder in respect
of which indemnity may be sought from Geotek, such Indemnified Holder shall
promptly notify Geotek in writing, and Geotek shall assume the defense thereof,
including the employment of counsel reasonably satisfactory to such Indemnified
Holder and the payment of all expenses. Such Indemnified Holder shall have the
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<PAGE> 53
right to employ separate counsel in any such action and to participate in the
defense thereof, but the fees and expenses of such counsel shall be at the
expense of such Indemnified Holder unless (a) Geotek has agreed to pay such fees
and expenses or (b) Geotek shall have failed to assume the defense of such
action or proceeding and has failed to employ counsel reasonably satisfactory to
such Indemnified Holder in any such action or proceeding or (c) the named
parties to any such action or proceeding (including any impleaded parties)
include both such Indemnified Holder and Geotek, and there are one or more legal
defenses available to such Indemnified Holder which are different from or
additional to those available to Geotek (in which case, if such Indemnified
Holder notifies Geotek in writing that it elects to employ separate counsel at
the expense of Geotek, Geotek shall not have the right to assume the defense of
such action or proceeding on behalf of such Indemnified Holder, it being
understood, however, that Geotek shall not, in connection with any one such
action or proceeding or separate but substantially similar or related actions or
proceedings in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the reasonable fees and expenses of
more than one separate firm of attorneys at any time for such Indemnified Holder
and any other Indemnified Holders, which firm shall be designated in writing by
such Indemnified Holders). Geotek shall not be liable for any settlement of any
such action or proceeding effected without its written consent, but if settled
with its written consent, or if there be a final judgment for the plaintiff in
any such action or proceeding, Geotek agrees to indemnify and hold harmless such
Indemnified Holders from and against any loss or liability by reason of such
settlement or judgment.
(2) Indemnification by Holder of Registrable Securities. Each Holder
agrees to indemnify and hold harmless Geotek, its directors and officers and
each person, if any, who controls Geotek within the meaning of either Section
15 of the Securities Act or Section 20 of the Exchange Act to the same extent
as the foregoing indemnity from Geotek to such Holders, but only with respect to
information relating to such Holders furnished in writing by such Holders
expressly for use in any registration statement or prospectus, or any amendment
or supplement thereto, or any preliminary prospectus. In case any action or
proceeding shall be brought against Geotek or its directors or officers or any
such controlling person, in respect of which indemnity may be sought against a
Holder, such Holder shall have the rights and duties given to Geotek and Geotek
or its directors or officers or such controlling person shall have the rights
and duties given to each Holder by the preceding paragraph. In no event shall
the liability of any Holder hereunder be greater in amount than the dollar
amount of the proceeds received by such Holder upon the sale of the Registrable
Securities giving rise to such indemnification obligation.
(3) Contribution. If the indemnification provided for in this Section
(D) is unavailable to an indemnified party under Section (D)(1) or Section
(D)(2) hereof
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(other than by reason of exceptions provided in those Sections) in respect of
any losses, claims, damages, liabilities or expenses referred to therein, then
each applicable 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, liabilities or expenses in such
proportion as is appropriate to reflect the relative benefits received by Geotek
on the one hand and the Holders on the other hand from their sale of Registrable
Securities or if such allocation is not permitted by applicable law, the
relative fault of Geotek on the one hand and of the Indemnified Holder on the
other in connection with the statements or omissions which resulted in such
losses, claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The relative fault of Geotek on the one hand and of
the Indemnified Holder on the other shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by Geotek or by the Indemnified Holder and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The amount paid or payable by a party as a
result of the losses, claims, damages, liabilities and expenses referred to
above shall be deemed to include, subject to the limitations set forth in the
second paragraph of Section (D)(1), any legal or other fees or expenses
reasonably incurred by such party in connection with investigating or defending
any action or claim.
Geotek and each Holder agree that it would not be just and equitable if
contribution pursuant to this Section (D)(3) were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to in the immediately preceding paragraph.
Notwithstanding the provisions of this Section (D)(3), an Indemnified Holder
shall not be required to contribute any amount in excess of the amount by which
the total price at which the Registrable Securities sold by such Indemnified
Holder or its affiliated Indemnified Holders and distributed to the public were
offered to the public exceeds the amount of any damages which such Indemnified
Holder, or its affiliated Indemnified Holder, 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.
(E) Specific Performance
Geotek acknowledges that there would be no adequate remedy at law if it
fails to perform any of its obligations under this Annex B and the Holders may
be irreparably harmed by any such failure, and accordingly agrees that the
Holders, in addition to any other remedy to which such Holders may be entitled
at law or in
B-10
<PAGE> 55
equity, shall be entitled to compel specific performance of the obligations of
Geotek under this Annex B in accordance with the terms and conditions of this
Annex B, in any court of the United States or any State thereof having
jurisdiction. To the extent that Geotek's obligations under this Annex B are not
absolute but, rather, are subject to "best efforts" or similar provisions, the
right of the Lender to compel specific performance hereunder shall be a right to
compel Geotek to use such efforts as it has obligated itself to undertake
hereunder.
B-11
<PAGE> 56
EXHIBIT A
THIS NOTE AND THE SHARES OF COMMON STOCK OF GEOTEK COMMUNICATIONS, INC.,
ISSUABLE UPON CONVERSION HEREOF MAY NOT BE OFFERED OR SOLD, UNLESS REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND APPLICABLE STATE SECURITIES
LAWS OR UNLESS AN EXEMPTION FROM REGISTRATION IS AVAILABLE AND THEN ONLY IN
COMPLIANCE WITH THE RESTRICTIONS ON TRANSFER SET FORTH IN THE LOAN AGREEMENT,
DATED AS OF DECEMBER 21, 1995, A COPY OF WHICH MAY BE OBTAINED FROM GEOTEK
FINANCING CORPORATION AT ITS PRINCIPAL EXECUTIVE OFFICE.
GUARANTEED SECURED CONVERTIBLE NOTE
$24,500,000 _____________, 1996
GEOTEK FINANCING CORPORATION, a Delaware corporation (the "Borrower"), promises
to pay to Hughes Network Systems, Inc. (the "Lender"), in immediately available
funds, the principal sum of TWENTY-FOUR MILLION FIVE HUNDRED THOUSAND DOLLARS
($24,500,000), or such lesser amount as may then constitute the aggregate unpaid
principal amount of the Loans made to the Borrower by the Lender pursuant to the
Loan Agreement (as defined below), together with interest thereon at the rates
and on the dates specified in Section 2.2 of the Loan Agreement, dated as of
December 21, 1995, by and among the Borrower, the Lender and Geotek
Communications, Inc., as Guarantor (as the same may be amended, modified or
restated from time to time, the "Loan Agreement"). Capitalized terms used herein
and not otherwise defined herein are used with the meanings attributed to them
in the Loan Agreement.
All interest shall be computed for actual days elapsed on the basis of a 360-day
year.
The obligations of the Borrower under this Note have been unconditionally
guaranteed by the Guarantor, as more fully provided in Article VI of the Loan
Agreement.
Subject to and upon compliance with the terms of the Loan Agreement, the Lender,
at its option, at any time and from time to time before the Maturity Date, shall
have the right to convert the outstanding principal amount of this Note into
fully-paid and non-assessable shares of Common Stock of the Guarantor at the
Conversion Price, in such amounts and in the manner set forth in Article IX of
the Loan Agreement. The Maximum Conversion Price is subject to adjustment as
provided in the Loan Agreement.
The Borrower hereby authorizes the Lender to endorse on the Schedule annexed to
this Note the principal amount of all Loans made by the Lender to the Borrower
under
<PAGE> 57
the Loan Agreement as well as the reductions to the aggregate principal amount
of this Note related to the conversion of such principal amount to shares of
Common Stock of the Guarantor; provided, that the failure to make any such
notations on such Schedule shall not limit or otherwise affect the obligations
of the Borrower under the Loan Agreement or this Note.
The Borrower shall have no right to prepay the Loans evidenced by this Note, in
whole or in part, prior to the Maturity Date.
This Note is the Note issued pursuant to, and is entitled to the benefits of,
the Loan Agreement, to which Loan Agreement, as it may be amended from time to
time, reference is hereby made for a statement of the terms and conditions under
which the Maturity Date of this Note may be accelerated.
This Note is secured pursuant to the terms of the Pledge Agreement.
This Note is subject to the restrictions on transfer set forth in Section 10.1
of the Loan Agreement.
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS (AND NOT THE
LAW OF CONFLICTS) OF THE STATE OF NEW YORK.
GEOTEK FINANCING CORPORATION
By:_______________________________
Title: ___________________________
2
<PAGE> 58
SCHEDULE OF BORROWINGS AND CONVERSIONS OF PRINCIPAL
TO
GUARANTEED SECURED CONVERTIBLE NOTE
OF GEOTEK FINANCING CORPORATION
DATED ________________, 1996
<TABLE>
<CAPTION>
Amount of Amount of Principal
Date Borrowing Converted Unpaid Balance
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
</TABLE>
3
<PAGE> 1
EXHIBIT III
AMENDMENT NO. 1 TO LOAN AGREEMENT
DATED AS OF DECEMBER 21,1995
BETWEEN
GEOTEK FINANCING CORPORATION, AS BORROWER
GEOTEK COMMUNICATIONS, INC., AS GUARANTOR AND
HUGHES NETWORK SYSTEMS, INC., AS LENDER
THIS AMENDMENT NO. 1 TO LOAN AGREEMENT (this "Amendment") is made as
of the 27th day of September, 1996, by and among GEOTEK FINANCING CORPORATION, a
Delaware Corporation ("Borrower"), GEOTEK COMMUNICATIONS, INC., a Delaware
Corporation and the corporate parent of Borrower ("Geotek") and HUGHES NETWORK
SYSTEMS, INC., a Delaware corporation (the "Lender").
BACKGROUND:
A. The parties hereto entered into a Loan Agreement as of the 21st day of
December, 1995 (the "Loan Agreement") and, simultaneous with the execution of
this Amendment, are entering into a Vendor Credit Financing Agreement (the
"Credit Agreement").
B. As an inducement to the parties hereto to enter into the Credit
Agreement and the other Facility Documents (as defined in the Credit Agreement),
the parties have agreed to amend certain provisions of the Loan Agreement as set
forth herein.
AGREEMENT:
1. Definitions.
(a) As used herein. the following terms shall have the
following meanings and such definitions shall be added in the appropriate place
in Article I of the Loan Agreement:
"CONVERSION SHARES" means shares of Common Stock issued upon
conversion of the Note and upon exercise of the Warrants.
"CREDIT AGREEMENT" means that certain Vendor Credit Financing
Agreement dated as of September 27, 1996 by and among Borrower. Geotek and
Lender.
"MAXIMUM SALES AMOUNT" means the greater of (i) a number of
shares of Common Stock, with an aggregate market value (based on the Quoted
Price of Geotek's Common Stock on the Trading Day immediately preceding the sale
or transfer for which the determination is being made) equal to $500,000 and
(ii) such number of shares which is equal to 5% of the average daily trading
volume of Geotek's Common Stock on the primary interdealer quotation system or
national
<PAGE> 2
securities exchange on which the Common Stock is traded for the thirty (30)
Trading Day period immediately preceding the date of the sale or transfer.
"QUOTED PRICE" means the last reported sales price of the Common
Stock on any national securities exchange on which the Common Stock is listed
which shall be for consolidated trading if applicable to such exchange, or if
not so listed, the last reported bid price of the Common Stock.
"WARRANTS" means the warrants issued by Geotek to the Lender in
connection with the Credit Agreement, as such Warrants may be amended or
otherwise modified from time to time.
The definition of Permitted Liens contained in the Loan Agreement shall
be deleted and replaced with the definition of Permitted Liens contained in the
Credit Agreement and the definition of "Pledge Agreement" shall be amended and
restated in its entirety to read as follows:
"Pledge Agreement" means the Amended and Restated Borrower
Pledge Agreement between the Borrower and Lender, dated as of
September 27, 1996, substantially in the form attached as
Exhibit B to the Credit Agreement.
All other capitalized terms used herein and not otherwise defined,
shall have the respective meanings set forth in the Loan Agreement.
(b) The Funding Cutoff Date shall be amended to mean October 4,
1996.
2. Section 9.1(a) of the Loan Agreement is amended and restated
in its entirety to read as follows:
(a) Subject to and upon compliance with the provisions of this
Article IX, at the option of the Lender, the outstanding principal
amount of the Loans may be converted into fully paid and nonassessable
shares (calculated as to each conversion to the nearest 1/100 of a
share) of Common Stock of Geotek, at the Conversion Price, determined as
hereinafter provided, in effect at the time of conversion. Such
conversion right shall commence immediately on the Initial Funding Date
and shall expire on the Maturity Date (the "Conversion Period").
3. Sections 9.2(a)-(c) of the Loan Agreement are amended and
restated in their entirety to read as follows:
(a) (i) At all times prior to October 1, 1996, Lender and its
Affiliates may only convert the Loans to the extent that the Conversion
Shares issuable upon such conversion does not exceed 10,000 shares of
Common Stock per Trading Day.
(ii) During the portion of the Conversion Period occurring
on or
-2-
<PAGE> 3
after October 1, 1996, Lender and its Affiliates may only convert up to
$500,000 of the Loans into Conversion Shares on any Trading Day;
provided, however, that the Lender and its Affiliates may convert the
entire remaining principal balance of the Loans into Conversion Shares
on the Trading Day next preceding the Maturity Date.
(b) Notwithstanding the provisions of paragraph (a) above, on
any Trading Day during the Conversion Period, the Lender and its
Affiliates may convert the entire remaining balance of the Loans into
Conversion Shares at the Maximum Conversion Price thereunder; provided
that, the Lender and its Affiliates thereafter comply with Section (c)
hereof.
(c) Notwithstanding the provisions of paragraph (a) and (b)
hereof, so long as Lender or any of its Affiliates owns any Conversion
Shares neither Lender nor any of its Affiliates shall sell or otherwise
transfer (other than sales or transfers between Lender and one or more
of its Affiliates or between Lender's Affiliates) (i) greater than
10,000 Conversion Shares on any Trading Day occurring prior to October
1, 1996 or (ii) on any Trading Day occurring on or after October 1,
1996, greater than such number of Conversion Shares as is equal to the
Maximum Sales Amount. All sales and transfers by Lender and its
Affiliates on a Trading Day shall be aggregated for the purpose of
determining whether the Lender and its Affiliates have complied with
this Section.
4. Section 9.2(d) of the Loan Agreement is amended by replacing
"$300,000" with "the Maximum Sales Amount".
5. Section 2.4(a) of the Loan Agreement is amended and restated in
its entirety to read as follows:
(a) If the proceeds of a Loan are to be used concurrently
with the making of such Loan to purchase any Auction 900
MHz Licenses or are to be used to reimburse the Borrower
for the prior purchase of any Auction 900 MHz Licenses,
then not later than 12:00 noon (New York time) on the
applicable Funding Date, the Lender shall make available
the applicable Loan Amount in funds immediately
available by wire-transferring such funds to the
Borrower, which in the case of Loans the proceeds of
which are to be used concurrently with purchase of any
Auction 900 MHz Licenses, shall promptly remit such
funds to the FCC (or to Holdings for prompt remittance
to the FCC).
and the definition of Auction 900 MHz Licenses is amended to mean any 900 MHz
Licenses purchased or to be purchased by Holdings from the FCC with the proceeds
of the Loans (whether
-3-
<PAGE> 4
such proceeds are provided to Borrower before or after the purchase).
6. Section 3.2(i)(c) of the Loan Agreement is amended by adding at
the end thereof: "or (3) such Auction 900 MHz Licenses are then held by Holdings
(including copies of all such 900MHz Licenses)."
7. The penultimate sentence of Section 5.4 of the Loan Agreement is
amended by adding at the end thereof: "and other than transactions contemplated
by Section 5.13(b) of the Loan Agreement and Section 5.3 of the Credit
Agreement."
8. Section 5.11 of the Loan Agreement is amended and restated in
its entirety as follows:
Indebtedness. The Borrower will not, nor will it permit any of
its Subsidiaries to incur any Indebtedness other than (a) the
Loans, (b) Advances under the Credit Agreement, (c) the Holdings
Note (in the case of Holdings) and (d) the Guarantees by the
Borrower and Holdings required to be provided under the
Indenture as in effect on the date hereof.
9. Section 5.18 of the Loan Agreement is amended by adding at the
end thereof: "or pursuant to Section 5.17 of the Credit Agreement."
10. Section 5.20 of the Loan Agreement is amended by adding at the
end thereof: "other than Letters of Credit for the benefit of Hughes Network
Systems, Inc."
11. Section 5.21 of the Loan Agreement is amended by adding at the
end thereof: "or in the Credit Agreement."
12. Section 5.26 of the Loan Agreement is amended and restated in
its entirety as follows:
Ownership of Acquired 900 MHz Licenses. All Acquired 900 MHz
Licenses shall be issued in the name of, or transferred to,
Holdings and not transferred by Holdings to any other Person
(except as contemplated by Section 5.13 hereof).
13. The last sentence of Section 10.1(b) of the Loan Agreement is
amended and restated in its entirety to read as follows:
Notwithstanding the foregoing, except upon the prior occurrence
and continuance of a Default, the Lender shall not sell, assign
or otherwise transfer any interest in the Note or the other Loan
Documents prior to September 30, 1997, provided, however, that
nothing contained in this Section 10.1(b) shall prevent Lender
from converting the Note or selling Conversion Shares prior to
September
-4-
<PAGE> 5
30, 1997 or thereafter as provided by and subject to the
limitations contained in Article IX.
14. Borrower agrees, no later than the day of execution of the
Credit Agreement, to deliver to Lender a notice which complies with the
requirements set forth in Section 3.2(i) (which notice shall be irrevocable) of
the Loan Agreement with respect to a Loan Amount equal to $24,500,000 and to
otherwise satisfy (unless waived by Lender) the conditions precedent set forth
in Article III of the Loan Agreement.
15. Except as expressly supplemented and/or modified herein, the
terms of the Loan Agreement shall continue in full force and effect.
[SIGNATURE PAGE FOLLOWS]
-5-
<PAGE> 6
IN WITNESS WHEREOF, the Borrower, Geotek and Lender have executed this
Amendment as of this 27 day of September, 1996.
Borrower:
GEOTEK FINANCING CORPORATION
By: /s/ MICHAEL MCCOY
------------------------------------
Name: Michael McCoy
Title: Chief Financial Officer
Geotek:
GEOTEK COMMUNICATIONS, INC.
By: /s/ MICHAEL MCCOY
------------------------------------
Name: Michael McCoy
Title: Chief Financial Officer
Lender:
HUGHES NETWORK SYSTEMS, INC.
By: /s/ PRADEEP KAUL
------------------------------------
Name: Pradeep Kaul
Title: Executive Vice President
-6-
<PAGE> 1
EXHIBIT IV
[EXECUTION COPY]
VENDOR CREDIT FINANCING AGREEMENT
dated as of September 27, 1996
between
GEOTEK FINANCING CORPORATION, AS BORROWER,
GEOTEK COMMUNICATIONS, INC., AS GUARANTOR,
and
HUGHES NETWORK SYSTEMS, INC., AS LENDER
<PAGE> 2
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
ARTICLE I DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II THE ADVANCES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.1. The Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.2. Procedure for Making Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.3. Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.4. [Intentionally Omitted] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.5. Repayment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.6. Interest on Overdue Amounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.7. Interest Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.8. Method of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
2.9. Schedules to Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
2.10. Optional Prepayment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
2.11. Obligations Absolute . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE III CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
3.1. Conditions to Initial Advance . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
3.2. Conditions to Each Advance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.3. Changes and Cancellations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE IV REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.1. Corporate Existence and Standing . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.2. Authorization and Validity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.3. Compliance with Laws and Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.4. Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.5. Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.6. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.7. Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.8. ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.9. Accuracy and Completeness of Information . . . . . . . . . . . . . . . . . . . . . . . 23
4.10. Material Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.11. Compliance with Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.12. Subordinated Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
4.13. Licenses and Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE V COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
5.1. Reporting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
5.2. Notice of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
5.3. Conduct of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
</TABLE>
i
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<TABLE>
<CAPTION>
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<S> <C> <C>
5.4. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
5.5. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
5.6. Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
5.7. Maintenance of Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
5.8. Inspection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.9. Restricted Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.10. Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.11. Corporate Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.12. Sale of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.13. Sale and Leaseback . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
5.14. Investments and Acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
5.15. Guarantees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
5.16. Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
5.17. Asset Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
5.18. Rentals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
5.19. Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
5.20. Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
5.21. Preservation of Licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
5.22. Ownership of Borrower and Holdings . . . . . . . . . . . . . . . . . . . . . . . . . . 29
5.23. Compliance with other Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
5.24. Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
5.25. Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
ARTICLE VI GUARANTY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
6.1. The Guaranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
6.2. Guaranty Unconditional . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
6.3. Discharge Only Upon Payment In Full; Reinstatement In Certain Circumstances . . . . . 31
6.4. Waivers by the Guarantor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
6.5. Subrogation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
6.6. Stay of Acceleration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
ARTICLE VII DEFAULTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
ARTICLE VIII ACCELERATION, REMEDIES, WAIVERS AND AMENDMENTS . . . . . . . . . . . . . . . . . . . . 35
8.1. Acceleration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
8.2. Preservation of Rights; Amendments and Waivers . . . . . . . . . . . . . . . . . . . . 35
ARTICLE IX GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
9.1. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
9.2. Survival of Representations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
9.3. Governmental Regulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
</TABLE>
ii
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----
<S> <C> <C>
9.4. New York Law; Submission to Jurisdiction; Waiver of Jury Trial; Service of Process . . 38
9.5. Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
9.6. Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
9.7. Expenses; Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
9.8. Accounting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
9.9. Severability of Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
9.10. Confidentiality; Public Disclosures . . . . . . . . . . . . . . . . . . . . . . . . . 40
9.11. Risk of Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
9.12. Setoff . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
9.13. Registration Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
ARTICLE X NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
10.1. Giving Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
10.2. Change of Address . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
ARTICLE XI COUNTERPARTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
</TABLE>
iii
<PAGE> 5
VENDOR CREDIT FINANCING AGREEMENT
THIS VENDOR CREDIT FINANCING AGREEMENT (this "Agreement") is
made as of the 27th day of September 1996, by and among GEOTEK FINANCING
CORPORATION, a Delaware corporation (the "Borrower"), GEOTEK COMMUNICATIONS,
INC., a Delaware corporation and the corporate parent of the Borrower ("Geotek"
or the "Guarantor") and HUGHES NETWORK SYSTEMS, INC., a Delaware corporation
("HNS" and, together with its successors and assigns, referred to collectively
as the "Lenders").
WHEREAS, the Borrower, HNS and the Guarantor have entered into
a Manufacturing Agreement of even date herewith (the "Manufacturing Agreement")
pursuant to which, among other things, HNS will manufacture and sell to the
Borrower certain FHMA base station equipment more fully described in Exhibit C
to the Manufacturing Agreement and any other base station equipment
manufactured by HNS pursuant to the Manufacturing Agreement (whether operating
in the 900 MHz range or otherwise) (collectively, "Base Station Equipment");
WHEREAS, the Borrower and Geotek desire that the Lenders
provide certain financing for the purchase by the Borrower from HNS of Base
Station Equipment; and
WHEREAS, the Lenders are willing to provide certain financing
to the Borrower for the purchase of Base Station Equipment on the terms and
conditions set forth herein.
NOW THEREFORE, the Borrower, Geotek and the Lenders hereby
agree as follows:
ARTICLE I
DEFINITIONS
As used in this Agreement:
"Advance Cutoff Date" means June 30, 1999.
"Advance Date" means the Initial Advance Date and each
Subsequent Advance Date.
"Advance Period" means the period from and including the
Initial Advance Date through and including the Advance Cutoff Date.
"Advances" means the extensions of credit for the account of
the Borrower made by the Lenders pursuant to Article II and "Advance" means any
one of them.
<PAGE> 6
"Affiliate" of a Person means any other Person directly or
indirectly controlling, controlled by or under direct or indirect common
control with such Person. A Person shall be deemed to control another Person
if the controlling Person owns 10% or more (50% or more for purposes of Section
9.1(b) only) of any class of voting securities of the controlled Person or
possesses, directly or indirectly, the power to direct or cause the direction
of the management or policies of the controlled Person, whether through
ownership of stock, by contract or otherwise.
"Agreement Accounting Principles" means GAAP in effect at the
time of the preparation of the financial statements referred to in Section 4.4,
applied in a manner consistent with that used in preparing such statements.
"Article" means an article of this Agreement unless another
document is specifically referenced.
"Base Station Equipment" has the meaning given in the recitals
hereof.
"Base Station Equipment Invoice" has the meaning given in
Section 2.2.
"Base Station Equipment Purchase Order" has the meaning given
in Section 3.2.
"Business Day" means a day on which banks are open for
business in New York, New York and Baltimore, Maryland.
"Capital Stock" means, with respect to any Person, any and all
shares, interests, participations, rights in or other equivalents (however
designated) of such Person's capital stock, and any rights (other than debt
securities convertible into capital stock), warrants or options exchangeable
for or convertible into such capital stock.
"Capitalized Lease" of a Person means any lease of property by
such Person as lessee which would be capitalized on a balance sheet of such
Person prepared in accordance with Agreement Accounting Principles.
"Capitalized Lease Obligations" of a Person means the amount
of the obligations of such Person under Capitalized Leases which would be shown
as a liability on a balance sheet of such Person, prepared in accordance with
Agreement Accounting Principles.
"Change of Control" has the meaning given in the 1995
Indenture as in effect on the date hereof.
"Change of Control Date" has the meaning given in Section
2.5(b).
"Change of Control Offer" has the meaning given in Section
2.5(b).
"Change of Control Repayment Date" has the meaning given in
Section 2.5(b).
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<PAGE> 7
"Collateral" means any and all assets and rights and interests
in or to property of the Borrower pledged from time to time as security for the
Obligations, whether pursuant to the Security Agreement, the Pledge Agreement,
any other Collateral Document or otherwise.
"Collateral Agent" means HNS, in its capacity as collateral
agent for the Lenders, and any successor to HNS.
"Collateral Documents" means the Pledge Agreement, the
Security Agreement and any other document or instrument granting or purporting
to grant a Lien on any property of the Borrower (or others) as security for the
Obligations.
"Commitment" of any Lender means the maximum face amount set
forth on the Note issued to such Lender hereunder.
"Common Stock" means, with respect to any person, any and all
shares, interests or other participations in, and other equivalents (however
designated and whether voting or nonvoting) of, such person's common stock,
whether outstanding on the date hereof or issued after the date hereof, and
includes, without limitation, all series and classes of such common stock, in
each case to the extent that such series or class of common stock does not rank
prior, as to the payment of dividends or as to the distribution of assets upon
any voluntary or involuntary liquidation, dissolution or winding up of such
Person, to shares of Capital Stock of any other class of such Person.
"Consolidated Entity" means Geotek and each of its
Subsidiaries which would be consolidated with Geotek for purposes of financial
reporting.
"Controlled Group" means all members of a controlled group of
corporations and all trades or businesses (whether or not incorporated) under
common control which, together with Geotek or any Subsidiary, are treated as a
single employer under Section 414(b) or 414(c) of the Internal Revenue Code of
1986, as amended from time to time.
"Costs" has the meaning given in Section 9.7.
"Default" means an event described in Article VII.
"Disclosure Letter" means the letter delivered by the Obligors
to the Lenders pursuant to Article IV hereof, which letter describes, on a
Section-by-Section basis, any exceptions to the representations and warranties
set forth in such Article, and which letter is expressly made a part hereof as
if contained herein.
"Dollars" or "$" means lawful currency of the United States of
America.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time.
3
<PAGE> 8
"Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time.
"Excess Interest" has the meaning given in Section 2.7.
"Facility Documents" means the Financing Documents, the
Warrants, the Manufacturing Agreement, the Sales Representation Agreement and
the Registration Rights Agreement.
"Federal Bankruptcy Code" means Title 11, United States Code,
as amended from time to time.
"FCC" means the United States Federal Communications
Commission or any other regulatory body which succeeds to the functions of the
Federal Communications Commission.
"FCC License" means any license, permit or authorization
issued by the FCC.
"Financing Documents" means this Agreement, the Notes, the
Pledge Agreement, the Security Agreement and the other Collateral Documents (if
any).
"GAAP" means generally accepted accounting principles.
"Guaranteed Obligations" has the meaning given in Section 6.1.
"Guaranty" of a Person means any agreement by which such
Person assumes, guarantees, endorses, contingently agrees to purchase or
provide funds for the payment of, or otherwise becomes liable upon, the
obligation of any other Person, or agrees to maintain the net worth or working
capital or other financial condition of any other Person or otherwise assures
any creditor of such other Person against loss, including, without limitation,
any comfort letter, operating agreement or take-or-pay contract and shall
include, without limitation, the contingent liability of such Person in
connection with any application for a Letter of Credit. When used as a verb,
the words "guaranty" and "guarantee" shall have correlative meanings.
"Holdings" means Geotek License Holdings, Inc., a Delaware
corporation and a wholly-owned subsidiary of the Borrower.
"Holdings Note" has the meaning given in the Loan Agreement.
"Hughes Subsidiary" means any corporation more than 50% of the
outstanding voting securities of which shall at the time be owned or
controlled, directly or indirectly through one or more intermediaries, by
Hughes Electronics Corporation.
"Indebtedness" of a Person means such Person's (i) obligations
for borrowed money, (ii) obligations representing the deferred purchase price
of property (other than
4
<PAGE> 9
accounts payable arising in the ordinary course of such Person's business on
terms customary in the trade), (iii) obligations, whether or not assumed,
secured by Liens on property now or hereafter owned or acquired by such Person,
(iv) obligations which are evidenced by notes, acceptances or other similar
instruments (including interest rate protection and other derivative
agreements), (v) Capitalized Lease Obligations and (vi) obligations for which
such Person is obligated pursuant to a Guaranty.
"Indemnified Parties" has the meaning given in Section 9.7.
"Initial Advance" means the Advance to be made to the Borrower
on the Initial Advance Date.
"Initial Advance Date" means the Business Day on which the
Lenders make the first Advance to the Borrower hereunder, which date shall not
be prior to the date of first delivery of Base Station Equipment from HNS to
the Borrower pursuant to the Manufacturing Agreement.
"Initial Order Date" means the date on which the Borrower
submits to HNS its first Base Station Equipment Purchase Order pursuant to the
Manufacturing Agreement for the manufacture and delivery of Base Station
Equipment to be financed with an Advance pursuant to this Agreement.
"Interest Payment Date" means June 15 and December 15 of each
year until the Maturity Date.
"Investment" of a Person means any loan, advance, extension of
credit (excluding accounts receivable arising in the ordinary course of
business), deposit account (other than deposit accounts used for the payment of
obligations in the ordinary course of business otherwise permitted hereunder)
or contribution of capital by such Person to any other Person or any investment
in, or purchase or other acquisition of, the stock, notes, debentures or other
securities of any other Person made by such Person, excluding trade credit in
the ordinary course of business and investments paid for solely in
nonredeemable Capital Stock of such Person.
"Landlord Waiver Location" has the meaning given in Section
3.2(iii)(c).
"Letter of Credit" of a Person means a letter of credit or
similar instrument which is issued upon the application of such Person, upon
which such Person is an account party or for which such Person is in any way
liable.
"Lien" of a Person means any security interest, mortgage,
pledge, hypothecation, assignment, lien (statutory or other), claim, charge,
encumbrance, title retention agreement, lessor's interest under a Capitalized
Lease or analogous instrument, in, of or on any property of such Person.
5
<PAGE> 10
"Loan Agreement" means the Loan Agreement, dated as of
December 21, 1995, among HNS, the Borrower and Geotek, as such agreement may be
amended or otherwise modified from time to time.
"Loss" has the meaning given in Section 9.11.
"Majority Lenders" means, at any time, those Lenders owed or
holding more than fifty percent (50%) of the aggregate outstanding principal
amount of the Notes.
"Manufacturing Agreement" has the meaning given in the
recitals hereof.
"Material Adverse Effect" means (a) a material adverse effect
upon the business, operations, properties, assets, condition (financial or
otherwise) or prospects of either of the Obligors and their respective
Subsidiaries, taken as a whole or (b) the impairment in any material respect of
the ability of any of the Obligors to perform their respective obligations
under any Financing Document or of the Collateral Agent or the Lenders to
enforce or collect any of the Obligations.
"Maturity Date" means December 1, 2003.
"Maximum Advance Amount" means $100,000,000 (which shall
include any and all interest added to principal pursuant to Section 2.3).
"Maximum Rate" has the meaning given in Section 2.7.
"Multiemployer Plan" means a Plan that is a "multiemployer
plan" as defined in Section 4001(a)(3) of ERISA to Geotek or any member of the
Controlled Group is obligated to make contributions.
"900 MHz Licenses" means FCC Licenses to construct and operate
900 MHz Specialized Mobile Radio Systems.
"1995 Indenture" means that certain Indenture, dated as of
June 30, 1995, between Geotek, as Issuer, and IBJ Schroder Bank & Trust
Company, as Trustee, relating to Geotek's 15% Senior Secured Discount Notes due
2005.
"1996 Indenture" means that certain Indenture, dated as of
March 5, 1996, between Geotek, as Issuer, and The Bank of New York, as Trustee,
relating to Geotek's 12% Senior Subordinated Convertible Notes due 2001.
"Nonconforming Base Station Equipment" has the meaning given in
Section 3.3.
"Note" means any promissory note in substantially the form of
Exhibit A hereto, duly executed and delivered to any Lender by the Borrower
evidencing the aggregate Indebtedness of the Borrower to such Lender resulting
from the Advances made by such
6
<PAGE> 11
Lender or acquired by such Lender pursuant to Section 9.1 hereof, as the same
may be amended or otherwise modified or replaced from time to time, and "Notes"
means all of them.
"Obligations" means all unpaid principal of and accrued and
unpaid interest on the Notes, all accrued and unpaid fees and expenses and all
other obligations (monetary and other) of the Obligors to the Lenders and the
Collateral Agent arising under the Financing Documents.
"Obligors" means, collectively, the Borrower and Geotek, and
their respective successors and assigns, and "Obligor" means either of the
foregoing.
"Order Date" means each date on which the Borrower submits to
HNS a Base Station Equipment Purchase Order pursuant to the Manufacturing
Agreement for the manufacture and delivery of Base Station Equipment to be
financed with an Advance or Advances pursuant to this Agreement.
"PBGC" means the Pension Benefit Guaranty Corporation and its
successors and assigns.
"Perfection Costs" has the meaning given in Section 9.7.
"Permitted Liens" means the following types of Liens:
(a) Liens for taxes, assessments or governmental charges or
claims either (i) not delinquent or (ii) being contested in good faith
by appropriate proceedings and as to which the Borrower or any of its
Subsidiaries shall have set aside on its books such reserves as may be
required pursuant to GAAP;
(b) judgment Liens not giving rise to a Default if such
reserve or other appropriate provision, if any, as shall be required
by GAAP shall have been made in respect thereof and any appropriate
legal proceedings which may have been duly initiated for the review of
such judgment shall not have been finally terminated or the period
within which such proceedings may be initiated shall not have expired;
(c) statutory Liens of landlords and other Liens imposed by
law and Liens of carriers, warehousemen, mechanics, suppliers,
materialmen and repairmen incurred in the ordinary course of business
for sums not yet delinquent or being contested in good faith, if a
reserve or other appropriate provision, if any, as shall be required
by GAAP shall have been made in respect thereof;
(d) Liens in favor of customs and revenue authorities which
arise as a matter of law to secure payment of customs duties in
connection with the importation of Base Station Equipment (or
components thereof), which payments either are not yet delinquent or
are being contested in good faith, if a reserve or other appropriate
7
<PAGE> 12
provision, if any, as shall be required by GAAP shall have been made in respect
thereof; and
(e) Liens created under the Security Agreement, the Pledge
Agreement and any other Collateral Document.
"Person" means any corporation, natural person, firm, joint
venture, partnership, trust, unincorporated organization, enterprise, limited
liability company or other entity, government or any department or agency of
any government.
"Plan" means an employee pension benefit plan which is covered
by Title IV of ERISA or subject to the minimum funding standards under Section
412 of the Internal Revenue Code as to which Geotek or any Subsidiary may have
any liability.
"Pledge Agreement" means an Amended and Restated Pledge
Agreement, dated as of the date hereof, between the Borrower and the Collateral
Agent, in substantially the form attached hereto as Exhibit B, as such
agreement may be amended or otherwise modified from time to time.
"PST means PowerSpectrum Technology Ltd.
"Prepayment Moratorium Period" has the meaning given in
Section 9.1(c).
"Prepayment Notice Period" has the meaning given in Section
9.1(c).
"Proportionate Share" means, with respect to any Lender, a
fraction (expressed as a percentage), the numerator of which shall be the
amount of such Lender's Commitment and the denominator of which shall be the
Maximum Advance Amount.
"Reacquired Base Station Equipment" has the meaning given in
Section 5.12(c).
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of the date hereof, among the Borrower, the Guarantor and
HNS, in substantially the form attached hereto as Exhibit F, as such agreement
may be amended or otherwise modified from time to time.
"Rentals" of a Person means the aggregate amounts payable by
such Person under any lease of real or personal property having an original
term (including any required renewals or any renewals at the option of the
lessor or lessee) of one year or more but does not include any amounts payable
under Capitalized Leases of such Person.
"Repayment Amount" has the meaning given in Section 2.5(b).
"Replacement Communications Equipment" has the meaning given
in Section 5.12(c).
8
<PAGE> 13
"Reportable Event" means a reportable event as defined in
Section 4043 of ERISA and the regulations issued under such Section, with
respect to a Plan, excluding, however, such events as to which the PBGC by
regulation waived the requirement of Section 4043(a) of ERISA that it be
notified within 30 days of the occurrence of such event, provided that a
failure to meet the minimum funding standard of Section 412 of the Internal
Revenue Code and of Section 302 of ERISA shall be a reportable event regardless
of the issuance of any waiver in accordance with Section 412(d) of the Internal
Revenue Code.
"Sales Representation Agreement" means the Sales
Representation Agreement of even date herewith between Geotek and HNS.
"S-C Rig Loan Agreement" means that certain Senior Loan
Agreement, dated April 4, 1996, between Geotek, as borrower, and S-C Rig
Investments-III, L.P., as lender.
"SEC" means the United States Securities and Exchange
Commission or any other regulatory body which succeeds to the functions of the
Securities and Exchange Commission.
"Section" means a numbered section of this Agreement, unless
another document is specifically referenced.
"Securities Act" means the Securities Act of 1933, as amended
from time to time.
"Security Agreement" means a Security Agreement, dated as of
the date hereof, between the Borrower and the Collateral Agent, in
substantially the form attached hereto as Exhibit C, as such agreement may be
amended or otherwise modified from time to time.
"Single Employer Plan" means a Plan maintained by Geotek or
any member of the Controlled Group for employees of Geotek or any member of the
Controlled Group.
"Subsequent Advance Date" means any date on which any Lender
makes an Advance to the Borrower hereunder, other than the Initial Advance
Date.
"Subsidiary" means any corporation more than 50% of the
outstanding voting securities of which shall at the time be owned or
controlled, directly or indirectly, by Geotek or by one or more Subsidiaries or
by Geotek and one or more Subsidiaries, or any similar business organization
which is so owned or controlled.
"Unfunded Liabilities" means, on any date of determination,
(a) in the case of Single Employer Plans, all "unfunded benefit liabilities" as
defined in Section 4001(a)(18) of ERISA, and (b) in the case of Multiemployer
Plans, the liability of Geotek and its Subsidiaries if they were to incur a
complete or partial withdrawal from any Multiemployer Plan.
9
<PAGE> 14
"Unmatured Default" means an event which, but for the lapse of
time or the giving of notice, or both, would constitute a Default.
"Warrants" means the Warrants issued by Geotek to HNS in
connection herewith for the purchase of the Common Stock of Geotek, in
substantially the forms attached hereto as Exhibit D, as amended or otherwise
modified from time to time.
"Wholly-Owned Subsidiary" means any Subsidiary all of the
outstanding voting securities of which shall at the time be owned or
controlled, directly or indirectly, by Geotek or one or more Wholly-Owned
Subsidiaries, or by Geotek and one or more Wholly-Owned Subsidiaries, or any
similar business organization which is so owned or controlled.
The foregoing definitions shall be equally applicable to both
the singular and plural forms of the defined terms.
ARTICLE II
THE ADVANCES
2.1. The Advances. Subject to the terms and conditions
set forth herein, commencing on the Initial Advance Date, each Lender severally
agrees to make Advances to the Borrower from time to time on any Business Day
during the Advance Period in an aggregate principal amount not to exceed its
Proportionate Share. The Advances shall be evidenced by the Notes and secured
by the Collateral.
2.2. Procedure for Making Advances. (a) Subject to
Article III, and except as provided in Section 2.2(b), each Advance shall be
deemed to have been made to the Borrower on the date on which HNS issues to the
Borrower (with a copy to the Lenders) an invoice (the "Base Station Equipment
Invoice") for Base Station Equipment which has been delivered to the Borrower
pursuant to the Manufacturing Agreement and shall be deemed to be in an amount
equal to the lesser of such Lender's Proportionate Share of (i) the "Balance
Due" on such invoice and (ii) ninety percent (90%) of the total purchase price
of the Base Station Equipment covered by such Base Station Equipment Invoice,
in each case exclusive of all sales, use or similar taxes, broker's fees and
shipping charges, if any. The amount of any Advance hereunder with respect to
any Base Station Equipment Invoice issued by HNS to the Borrower shall be
binding on the Borrower unless the Borrower disputes in writing the amount of
such invoice within 10 Business Days of receipt thereof; provided that the
Lenders' obligation to make any additional Advances hereunder shall be
suspended during the pendency of any dispute regarding the amount of any
Advance hereunder with respect to any Base Station Equipment Invoice. The
immediately preceding sentence is intended to ensure that the amount of any
Advances made hereunder are not subject to dispute and nothing herein shall
preclude the Borrower from making any claims against HNS under the
Manufacturing Agreement with respect to any invoice or any Base Station
Equipment covered thereby.
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<PAGE> 15
(b) Notwithstanding the foregoing, if on the Advance
Cutoff Date any Base Station Equipment ordered pursuant to the Manufacturing
Agreement and originally scheduled for delivery on or before the Advance Cutoff
Date has not yet been delivered to the Borrower (and no Advance for the
purchase price therefor has been made hereunder), the Lenders may (or shall, at
the request of the Borrower), subject to the dollar and percentage limitations
in Sections 2.1 and 2.2(a), make Advances on the Advance Cutoff Date with
respect to all or part of such Base Station Equipment as if such Base Station
Equipment had been delivered to the Borrower (and a Base Station Equipment
Invoice had been issued therefore) on the Advance Cutoff Date. The making of
Advances by the Lenders under this Section 2.2(b) shall not be deemed to be a
waiver by the Lenders of the conditions precedent to such Advances set forth in
Section 3.2, which conditions must be satisfied by the Borrower as if such
Advance were to be made on the delivery date set forth in the applicable Base
Station Equipment Purchase Order or HNS may refuse to deliver the Base Station
Equipment with respect to which such Advances were made until all such
conditions precedent are satisfied. In the event such conditions are not
satisfied on the delivery date for such Base Station Equipment, the Borrower
may purchase any such Base Station Equipment to which such failed conditions
relate by prepaying all or such portion of the Advances (together with accrued
interest thereon) as are attributable to such Base Station Equipment, and as
soon as practicable after such prepayment, HNS shall deliver to the Borrower
all of the Base Station Equipment it so refused to deliver under this Section
2.2(b).
(c) Immediately upon its making, HNS shall credit the
amount of any Advance against the amounts due under the applicable Base Station
Equipment Invoice, with the Borrower responsible for any remaining balance.
There shall be no cash disbursements of any Advances made pursuant to this
Agreement.
(d) Each Advance is subject to the fulfillment of the
conditions precedent set forth in Article III. Notwithstanding the immediately
preceding sentence (and except as provided in Section 2.2(b)), (i) each Lender
may (but is not obligated to), in the exercise of its sole discretion, make an
Advance despite the failure of the Borrower to fulfill all such conditions
precedent or (ii) with respect to the Borrower's failure to fulfill only the
condition precedent set forth in Section 3.2(vi), upon the request of the
Borrower each Lender shall make the applicable Advance despite the failure of
the Borrower to fulfill such condition precedent; provided that, in each case,
HNS shall retain possession of the Base Station Equipment to which such Advance
relates until such time as the Collateral Agent is satisfied that the Borrower
has fulfilled all such conditions precedent with respect to such Advance (other
than by virtue of HNS's possession of such Base Station Equipment). In the
event the Lenders so make an Advance pursuant to clause (ii) hereof and the
Borrower has not been able to satisfy the conditions precedent to such Advance
for a period of ten (10) days after the date of such Advance, the Borrower may,
no later than June 30, 1999, purchase all of the Base Station Equipment to
which such failed conditions relate by prepaying all or such portion of the
Advances (together with accrued interest thereon) as are attributable to such
Base Station Equipment, and as soon as practicable after such prepayment, HNS
shall deliver to the Borrower all of the Base Station Equipment being so
purchased. Any warehousing or other related costs, as well as the risk of
loss, with respect to such Base Station Equipment retained by HNS shall be
borne by the Borrower and the
11
<PAGE> 16
Borrower shall indemnify HNS and the Lenders from and against any other loss,
cost or expense resulting therefrom.
(e) For the avoidance of doubt, unless otherwise
agreed in writing by the Lenders and the Borrower, no amounts other than the
actual purchase price of Base Station Equipment (as set forth in Exhibit E to
the Manufacturing Agreement), as adjusted from time to time pursuant to the
Manufacturing Agreement, will be financed by the Lenders hereunder (subject at
all times to the terms and conditions of this Agreement).
2.3. Interest. (a) Interest shall accrue on the unpaid
principal amount of each Advance at a fixed rate per annum equal to eleven
percent (11%) from the date of such Advance until the Maturity Date, and,
subject to Section 2.3(b), shall be payable in cash semi- annually in arrears
on (a) each Interest Payment Date occurring after the Initial Advance Date, and
(b) on the Maturity Date (or such earlier date as the aggregate outstanding
principal amount of the Advances is repaid in full pursuant to this Agreement).
All interest shall be computed for actual days elapsed on the basis of a year
consisting of 365 days (or 366 days, as appropriate). In computing interest on
any Advance, the Advance Date of such Advance shall be included and the date of
payment shall be excluded so long as such payment is received by the applicable
Lender at or before 12:00 p.m. (New York time) on the date when due.
(b) Notwithstanding the provisions of Section 2.3(a),
so long as no Default has occurred and is continuing, interest payable on any
Advance on any Interest Payment Date prior to June 30, 1999, shall not be
payable in cash on such Interest Payment Date and shall, on such Interest
Payment Date, be added to the outstanding principal balance of the Advances and
shall be payable as principal pursuant to Section 2.5.
2.4. [Intentionally Omitted].
2.5. Repayment. (a) Except as set forth in subsection (b)
hereof or in Sections 2.2(b), 2.2(d), 5.12 or 9.11, the Borrower shall repay
the aggregate principal amount of the Advances in ten equal installments, with
the first two installments being due on July 10, 1999, and December 15, 1999,
respectively, and the remaining installments being due on the expiration of
each six (6) month period after December 15, 1999 (i.e., June 15, 2000,
December 15, 2000, etc.). Once repaid, any amount of principal repaid may not
be reborrowed.
(b) (i) Upon the occurrence of a Change of Control
(the date of such occurrence, the "Change of Control Date"), the Borrower will
notify the Lenders in writing of such occurrence and shall make an offer to
repay (the "Change of Control Offer"), and shall repay, on a Business Day (the
"Change of Control Repayment Date") not more than 60 days following the Change
of Control Date (and in no event later than the date on which any other
Indebtedness of Geotek or its Subsidiaries is repaid as a result of such Change
of Control) up to the entire principal amount of all Notes then outstanding,
plus accrued and unpaid interest (and all other Obligations due hereunder and
under the other Financing Documents), if any, to the Change of Control
Repayment Date.
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(ii) Notice of a Change of Control Offer shall be
mailed by the Borrower not later than the 30th day after the Change of Control
Date to the Lenders at their addresses for notices provided herein, with a copy
to the Collateral Agent. The Change of Control Offer shall remain open from
the time of mailing for at least 20 Business Days and until 5;00 p.m., New York
City time, on the Change of Control Repayment Date. The notice, which shall
govern the terms of the Change of Control Offer, shall state:
(1) that the Change of Control Offer is being
made pursuant to this Section 2.5(b) and that all Notes
validly tendered into the Change of Control Offer and not
withdrawn will be accepted for payment;
(2) the Change of Control Repayment Date and the
date on which the Change of Control Offer expires;
(3) that any Note (or portion thereof) not repaid
will continue to accrue interest in accordance with the terms
thereof;
(4) that, unless the Borrower shall default in
the payment of the Repayment Amount, any Note accepted for
payment pursuant to the Change of Control Offer shall cease to
accrue interest after the Change of Control Repayment Date;
(5) that Lenders electing to have Notes (or any
portion thereof) repaid must notify the Borrower no later than
5:00 p.m., New York City time, on the fifth Business Day
immediately preceding the Change of Control Repayment Date of
the principal amount of their respective Notes to be repaid,
as well as the amount of accrued but unpaid interest (and
other Obligations) allocable thereto.
(6) that Lenders electing to have Notes repaid
pursuant to a Change of Control Offer will be required to
return their Notes to the Borrower on the second Business Day
immediately following the date on which such Lender receives
full payment for its Note (including accrued and unpaid
interest) and its Proportionate Share of all other Obligations
due hereunder and under the other Financing Documents
(collectively, the "Repayment Amount") in immediately
available funds;
(7) that Lenders will be entitled to withdraw
their election if the Borrower receives, not later than 5:00
p.m., New York City time, on the third Business Day
immediately preceding the Change of Control Repayment Date, a
telex, facsimile transmission or letter setting forth the name
of the Lender and a statement that such Lender is withdrawing
its election to have its Note repaid to the extent set forth
in such letter; and
(8) information concerning the business of
Geotek, the most recent annual and quarterly reports of Geotek
filed with the SEC pursuant to the
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Exchange Act (or, if the Company is not then permitted to file any
such reports with the SEC, the comparable reports prepared pursuant to
Section 4.07 of the 1995 Indenture), a description of material
developments in Geotek's business, information with respect to pro
forma historical financial information after giving effect to such
Change of Control and such other information concerning the
circumstances and relevant facts regarding such Change of Control
Offer as would be material to a Lender in connection with the decision
of such Lender as to whether or not it should accept the Change of
Control Offer.
(iii) On the Change of Control Repayment Date, the
Company shall repay to each Lender electing such repayment such Lender's
Repayment Amount in immediately available funds to the account specified for
payments to such Lender as provided herein.
2.6. Interest on Overdue Amounts. In the event that any
principal amount of any Advance or any interest, fees or other amounts payable
hereunder is not paid when due as provided herein (after accounting for any
applicable grace periods), the Borrower shall pay late payment interest on such
unpaid amount from the date such amount is due until the date such amount is
paid in full, payable on demand, at an interest rate per annum equal to sixteen
percent (16%).
2.7. Interest Laws. Notwithstanding any provision to the
contrary contained in this Agreement or the other Facility Documents, the
Borrower shall not be required to pay, and the Lenders shall not be permitted
to collect, any amount of interest in excess of the maximum amount of interest
permitted by applicable law ("Excess Interest"). If any Excess Interest is
provided for or determined by a court of competent jurisdiction to have been
provided for in this Agreement or in any of the other Facility Documents, then
in such event: (1) the provisions of this subsection shall govern and control;
(2) the Borrower shall not be obligated to pay any Excess Interest; (3) any
Excess Interest that any Lender may have received hereunder shall be, at such
Lender's option, (a) applied as a credit against the outstanding principal
balance of the Obligations or accrued and unpaid interest (not to exceed the
maximum amount permitted by law), (b) refunded to the payor thereof, or (c) any
combination of the foregoing; (4) the interest rate(s) provided for herein
shall be automatically reduced to the maximum lawful rate allowed from time to
time under applicable law (the "Maximum Rate"), and this Agreement and the
other Facility Documents shall be deemed to have been, and shall be, reformed
and modified to reflect such reduction; and (5) the Borrower shall not have any
action against such Lender for any damages arising out of the payment or
collection of any Excess Interest. Notwithstanding the foregoing, if for any
period of time interest on any Obligations is calculated at the Maximum Rate
rather than the applicable rate under this Agreement, and thereafter such
applicable rate becomes less than the Maximum Rate, the rate of interest
payable on such Obligations shall remain at the Maximum Rate until the Lenders
shall have received the amount of interest which the Lenders would have
received during such period on such Obligations had the rate of interest not
been limited to the Maximum Rate during such period.
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2.8. Method of Payment. All payments of principal,
interest, expenses and other amounts hereunder shall be made by wire transfer
in immediately available funds to the Lenders at the First National Bank of
Maryland, Baltimore MD 21203, ABA# 052000113, Account No. 401-5029-0 (for the
account of Hughes Network Systems, Inc.) (or, with respect to payments to be
made to any Lender other than HNS, such other account as such Lender may notify
the Borrower in writing at least three (3) Business Days prior to the scheduled
date for any such payment) by noon (New York time) on the date when due. If
any payment of principal of or interest on the Advances shall become due on a
day which is not a Business Day, such payment shall be made on the next
succeeding Business Day and, in the case of a principal payment, such extension
of time shall be included in computing interest in connection with such
payment. Unless otherwise provided herein or in the other Financing Documents,
any payment of any principal or interest on the Notes, or of any of the other
Obligations, shall be allocated among the Lenders pro rata based upon their
respective Proportionate Shares.
2.9. Schedules to Notes. The Borrower hereby authorizes
each Lender to endorse on the Schedule annexed to its Note the principal amount
of all Advances made by such Lender to the Borrower as well as all additions to
principal pursuant to Section 2.3(b) and all payments and prepayments of
principal made pursuant to the terms hereof; provided, that the failure to make
any such notations on such Schedule (or any error in such notation) shall not
limit or otherwise affect the obligations of the Borrower under this Agreement
or the Note.
2.10. Optional Prepayment. With respect only to those
Notes held by HNS or any of its Affiliates at the time of receiving the notice
of prepayment provided for in this Section 2.10 (or those Notes held by any
other Person at the time of receiving any such notice of prepayment prior to
the Advance Cutoff Date), the Borrower may, upon at least thirty (30) Business
Days' prior written notice to HNS or such Affiliate (or such other Person), as
applicable, stating the proposed date and aggregate principal amount of the
prepayment, and if such notice is given the Borrower shall, prepay the
outstanding aggregate principal on such Note, in whole or in part, together
with accrued interest to the date of such prepayment on the principal amount
prepaid; provided that (i) each partial prepayment shall be in an aggregate
principal amount not less than $10,000,000 (or such lesser amount as is then
outstanding) and shall be applied to principal installments in the inverse
order of their maturities; provided, further, that this shall not limit or
affect the rights of the Lender under Article VIII. Once prepaid, any amount
of principal prepaid may not be reborrowed. For the avoidance of doubt, except
as provided in Sections 2.2.(b), 2.2(d), 5.12 or 9.11, on and after July 1,
1999, any Note held by a Person other than HNS or its Affiliates which was
transferred to such Person in accordance with the terms hereof may not be
prepaid, in whole or in part, without the prior written consent of such Person,
unless such Note was transferred to such Person by HNS or its Affiliate
subsequent to receipt of the notice of prepayment provided for in this Section
2.10. Notwithstanding the foregoing, the Borrower shall have no right to
prepay any Note during any Prepayment Moratorium Period.
2.11. Obligations Absolute. (a) The Borrower's obligation
to pay all principal and interest on the Notes and all fees and expenses
hereunder and under the other
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Financing Documents, and to perform all other obligations hereunder and
thereunder are absolute and unconditional and shall not be affected or reduced
by any circumstances, including, without limitation:
(i) any set-off, counterclaim, recoupment, defense, or
other right which the Borrower, Geotek or any of
their respective Affiliates may have against HNS, any
other Lender, the Collateral Agent or any other
Person for any reason whatsoever (whether in
connection with the transactions contemplated hereby
or by the other Facility Documents or otherwise),
including, without limitation, any breach by HNS of
any of its obligations under any of the Facility
Documents or the Loan Agreement;
(ii) any defect in the title, condition, design,
operation, or fitness for use of, or any damage to or
loss or destruction of, any of the Base Station
Equipment, any interruption or cessation in the use
of or possession thereof by, or the availability
thereof to the Borrower, its Affiliates or any other
Person for any reason whatsoever, whether arising out
of or related to an act or omission of any Lender or
any other Person;
(iii) the invalidity or unenforceability or lack of due
authorization or other infirmity of this Agreement or
any absence of right, power or authority of HNS, the
Borrower or Geotek or any other party to enter into
this Agreement or any of the other Facility
Documents, as the case may be;
(iv) any insolvency, bankruptcy, reorganization, or
similar proceedings by or against HNS, any other
Lender, the Collateral Agent, the Borrower, Geotek or
any other Person;
(v) any other circumstance or happening of any nature
whatsoever, whether or not similar to any of the
foregoing, it being the express intention of the
Lender, the Borrower and Geotek that all Obligations
payable hereunder shall be payable in all events.
(b) Nothing in this Agreement shall operate to excuse or
diminish the Borrower's obligation to pay HNS the full purchase price of any
Base Station Equipment ordered from HNS pursuant to the Manufacturing
Agreement.
ARTICLE III
CONDITIONS PRECEDENT
3.1. Conditions to Initial Advance. The Obligation of the
Lenders to make the Initial Advance hereunder is subject to the satisfaction of
the following conditions precedent:
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(i) (a) On the date of execution of this Agreement, HNS shall
have received from the Borrower:
(1) an original of this Agreement (including all
Exhibits, Schedules and Annexes hereto), the Disclosure Letter, the
Security Agreement, the Pledge Agreement, the Warrants, the
Manufacturing Agreement, the Sales Representation Agreement and the
Registration Rights Agreement, duly-executed by each party hereto and
thereto, and all conditions precedent to the effectiveness of each
such document shall have been satisfied or waived in writing by the
Lenders;
(2) an incumbency certificate of each Obligor,
executed by the Secretary or an Assistant Secretary thereof, which
shall identify by name and title and bear the signature of the
officers of such Obligor authorized to sign the Facility Documents and
(in the case of the Borrower) to submit Base Station Equipment
Purchase Orders hereunder, upon which certificate the Lenders shall be
entitled to rely until informed of any change in writing by such
Obligor;
(3) (A) a copy of the Certificate of Incorporation of
each of the Obligors, together with all amendments thereto, certified
by the appropriate governmental officer in its jurisdiction of
incorporation and (B) certificates of good standing for each of the
Obligors certified by the appropriate governmental officer in its
jurisdiction of incorporation and in the State of New Jersey;
(4) a copy of the By-Laws of each of the Obligors,
together with all amendments thereto, certified by the Secretary or an
Assistant Secretary of such Obligor;
(5) a copy, certified by the Secretary or an
Assistant Secretary of such Obligor, as applicable, of each Obligors'
resolutions (and resolutions of other bodies, if any are deemed
necessary by counsel for the Lenders) authorizing the execution,
delivery and performance of the Facility Documents to be executed by
it and the transactions contemplated thereby; and
(6) a notice complying with the requirements set
forth in Section 3.2(i) of the Loan Agreement irrevocably obligating
the Borrower to borrow $24,500,000 from HNS thereunder on the Initial
Order Date (subject to satisfaction (or waiver by HNS) of the
conditions precedent to borrowing set forth therein).
(b) On the Initial Order Date, HNS shall have
received from the Borrower:
(1) a favorable opinion of counsel to the Obligors,
dated as of the date hereof, addressed to the Lenders, with respect to
matters of United States federal, New York and Delaware corporate law
customary in transactions of the type contemplated by this Agreement,
the Warrants and the Registration Rights Agreement, in substantially
the form attached hereto as Exhibit E;
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(2) the Facility Set-Up Fee (as defined in the
Manufacturing Agreement), by wire transfer in immediately available
funds; and
(3) the Initial Order (as defined in the
Manufacturing Agreement) and the required downpayment in connection
therewith (by wire transfer in immediately available funds).
(ii) On the date of execution of this Agreement each Lender
shall have received its Note, duly executed by the Borrower.
3.2. Conditions to Each Advance. The Obligation of each
Lender to make each of its Advances hereunder is subject to the satisfaction of
the following conditions precedent:
(i) On the applicable Order Date, the Borrower shall have
furnished to HNS:
(a) a purchase order (a "Base Station Equipment
Purchase Order") conforming to the requirements of the Manufacturing
Agreement setting forth the Base Station Equipment to be financed
hereunder and providing for a delivery date conforming to the
requirements of the Manufacturing Agreement and in any event on or
prior to June 30, 1999;
(b) at the option of the Borrower (in order to take
advantage of the cancellation rights set forth in Section 3.3(a)), a
written certificate signed by the Chief Financial Officer of the
Borrower listing the country, state and county (or other applicable
local jurisdiction) in which each item of Base Station Equipment
subject to such Base Station Equipment Purchase Order will be first
installed for operation after delivery from HNS (with a copy of such
certificate to the Collateral Agent (if different from HNS)); and
(c) a nonrefundable cash payment of ten percent (10%)
(as adjusted prior to the applicable Advance Date to reflect Changes
made pursuant to and as defined in the Manufacturing Agreement) of the
aggregate purchase price for the Base Station Equipment covered by the
applicable Base Station Equipment Purchase Order. For the avoidance
of doubt, all such cash payments shall be retained by HNS as partial
payment for the Base Station Equipment covered by the applicable Base
Station Equipment Purchase Order and shall not reduce the unpaid
amount of the Obligations.
(ii) no later than forty-five (45) days before the delivery
date specified in the applicable Base Station Equipment Purchase Order, the
Borrower shall have furnished to HNS a written certificate signed by the Chief
Financial Officer of the Borrower (a) setting forth the aggregate amount of the
Advances requested by the Borrower in connection with such Base Station
Equipment Purchase Order (which designation shall be irrevocable) and (2)
stating that the aggregate amount of the Advances requested by the Borrower in
connection with the applicable Base Station Equipment Purchase Order, when
aggregated with all prior Advances, will not exceed the Maximum Advance Amount.
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(iii) no later than forty-five (45) days before the delivery
date specified in the applicable Base Station Equipment Purchase Order, the
Borrower shall have furnished to the Collateral Agent, at the Borrower's
expense;
(a) (1) if the Borrower did not provide HNS on the
applicable Order Date with the information specified in Section
3.2(i)(b), a written certificate signed by the Chief Financial Officer
of the Borrower listing the country, state and county (or other
applicable local jurisdiction) in which each item of Base Station
Equipment subject to such Base Station Equipment Purchase Order will
be first installed for operation after delivery from HNS and (2)
duly-executed Uniform Commercial Code financing statements and/or
fixture filings (or the functional equivalent in jurisdictions not
subject to the Uniform Commercial Code) reasonably deemed necessary or
desirable by the Collateral Agent to perfect its security interest in
the Base Station Equipment to be sold to the Borrower pursuant to the
Manufacturing Agreement and the applicable Base Station Equipment
Purchase Order, in form suitable for filing in the appropriate filing
offices;
(b) the results of Uniform Commercial Code filing
searches (or the functional equivalent in jurisdictions not subject to
the Uniform Commercial Code) indicating that upon the sale of the
applicable Base Station Equipment to the Borrower and the first
installation for operation thereof, the Collateral Agent will have,
for its benefit and the ratable benefit of the Lenders, a first-
priority perfected security interest in such Base Station Equipment,
subject only to Permitted Liens;
(c) with respect to any Base Station Equipment to be
located on any real property the owner or mortgagee of which (by
statute, contract or otherwise) will have a Lien or other claim on
such Base Station Equipment that is prior in right to the Lien of the
Collateral Agent in such Base Station Equipment under the Security
Agreement and the rental and other payment obligations for which are
in the aggregate in excess of $10,000 per month (each, a "Landlord
Waiver Location"), instruments executed by such owner and/or
mortgagee, waiving or releasing such Lien or other claim, in suitable
form for recording in the appropriate recording office (except to the
extent that the aggregate purchase price of all Base Station Equipment
located at Landlord Waiver Locations and not subject to such waiver or
release does not exceed five percent (5%) of the aggregate purchase
price of all Base Station Equipment then subject to the Lien of the
Security Agreement); and
(d) if reasonably deemed necessary or desirable by
the Collateral Agent in its sole discretion, legal opinions (except as
to priority (unless, with respect to jurisdictions outside of the
United States, such opinions are customarily given in similar
circumstances)), search results, certificates from governmental
officials (United States or foreign) or other agreements, instruments
or documents providing comfort to the Collateral Agent that, upon
delivery to the Borrower (and thereafter until such security interest
is released in accordance with the terms hereof and of the Security
Agreement), the Collateral Agent will have, for its benefit and the
ratable benefit of the Lenders, a fully-enforceable first-priority
perfected security interest,
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subject to no other Liens or claims of any Person (other than
Permitted Liens (except as provided in Section 3.2(iii)(c)), in each
item of Base Station Equipment subject to such Base Station Equipment
Purchase Order.
(iv) on the applicable Order Date the following statements
shall be true and correct (and the furnishing by the Borrower to HNS of the
applicable Base Station Equipment Purchase Order shall constitute a
representation and warranty by the Borrower to the Lenders that on such Order
Date such statements are true):
(a) the representations and warranties contained in
Article IV, in the Security Agreement and in the Pledge
Agreement are true and correct on and as of such Order Date,
before and after giving effect to the Advances contemplated by
the applicable Base Station Equipment Purchase Order, as
though made on and as of such date; and
(b) no Default or Unmatured Default has occurred and
is continuing as of such Order Date, before and after giving
effect to the making of the Advances contemplated by the
applicable Base Station Equipment Purchase Order.
(v) on the applicable Advance Date the following statements
shall be true and correct (and the acceptance by the Borrower of the applicable
Advances shall constitute a representation and warranty by the Borrower to the
Lenders that on such Advance Date such statements are true):
(a) the representations and warranties contained in
Article IV, in the Security Agreement and in the Pledge
Agreement are true and correct on and as of such Advance Date,
before and after giving effect to the making of such Advances,
as though made on and as of such date;
(b) no Default or Unmatured Default has occurred and
is continuing as of such Advance Date, after giving effect to
the making of such Advances; and
(c) the aggregate amount of the Advances to be made
to the Borrower on such Advance Date, when aggregated with all
prior Advances, will not exceed the Maximum Advance Amount.
(vi) On the applicable Advance Date, after giving effect to
the Advances to be made on such Advance Date and the delivery to the Borrower
of the Base Station Equipment covered by the applicable Base Station Equipment
Invoice, the Collateral Agent shall have (and shall continue to have, after the
applicable Advance Date and until such security interest is released in
accordance with the terms hereof and of the Security Agreement), for its
benefit and the ratable benefit of the Lenders, a fully-enforceable valid and
perfected first-priority security interest in all of the Collateral owned by
the Borrower on such Advance Date, including, without limitation, such Base
Station Equipment, subject to no other Liens or claims of any Person, other
than Permitted Liens (except as provided in Section 3.2(iii)(c)
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<PAGE> 25
and after giving effect to any express, written waivers by the Collateral Agent
of any perfection requirements hereunder).
3.3. Changes and Cancellations. (a) If on the applicable
Order Date the Borrower provided HNS with the information specified in Section
3.2(i)(b), and if within fifteen (15) Business Days of such Order Date the
Borrower and the Collateral Agent determine that the Borrower will not be able
to satisfy the condition precedent set forth in Section 3.2(iii)(c) with
respect to any portion of the Base Station Equipment covered by a Base Station
Equipment Purchase Order (the "Nonconforming Base Station Equipment"), the
Borrower shall, within five (5) Business Days thereafter, (1) cancel its order
with respect to such Nonconforming Base Station Equipment, (2) specify a new
location for such Nonconforming Base Station Equipment that will cause the
Borrower to satisfy the condition precedent set forth in Section 3.2(iii)(c) or
(3) inform HNS and the other Lenders that it will pay cash for such
Nonconforming Base Station Equipment, such payment to be made in accordance
with the terms of the Manufacturing Agreement and subject to HNS' customary
credit approval; provided, that the failure of the Borrower to notify HNS of
its selection of either (1), (2) or (3) above shall be deemed to be a selection
by the Borrower to pay cash for such Nonconforming Base Station Equipment no
later than the applicable delivery date.
(b) Adjustments to the purchase price of Base Station
Equipment to be financed hereunder (and corresponding adjustments to the
required 10% downpayment and the amount to be financed hereunder) shall be made
to account for any Changes made pursuant to and as defined in the Manufacturing
Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Each of the Obligors represents and warrants to the Lenders
that, except as otherwise set forth in the Disclosure Letter:
4.1. Corporate Existence and Standing. Each of Geotek and
its Subsidiaries is a corporation duly incorporated, validly existing and in
good standing under the laws of its jurisdiction of incorporation and has all
requisite authority to conduct its business in each jurisdiction in which its
business is conducted, except where the failure to have such authority would
not have a Material Adverse Effect.
4.2. Authorization and Validity. Each of the Obligors has
the corporate power and authority to execute and deliver the Financing
Documents to which it is a party and to perform its obligations thereunder.
Each of the Financing Documents has been duly authorized, executed and
delivered by the applicable Obligor and constitutes a legal, valid and binding
obligation of the applicable Obligor,enforceable against the applicable Obligor
in accordance with its terms, except as such enforceability may be limited by
the effect of any applicable bankruptcy, insolvency, reorganization, fraudulent
conveyance, moratorium or other similar laws affecting creditors' rights
generally or general principles of equity (whether considered at law or in
equity).
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4.3. Compliance with Laws and Contracts. Neither the
execution and delivery by each Obligor of the Financing Documents to which it
is a party, nor the consummation of the transactions therein contemplated, nor
compliance with the provisions thereof, nor the use of the Base Station
Equipment by Geotek or its Affiliates, will violate any law, rule, regulation,
order, writ, judgment, injunction, decree or award binding on Geotek or any of
its Subsidiaries or Geotek's or any such Subsidiary's articles or certificate
of incorporation or by-laws or the provisions of any indenture, instrument or
agreement to which Geotek or any such Subsidiary is a party or is subject, or
by which it, or its property, is bound, or conflict with or constitute a
default thereunder, or result in the creation or imposition of any Lien in, of
or on the property of Geotek or any such Subsidiary pursuant to the terms of
any such indenture, instrument or agreement, except where such violation,
conflict, default or Lien would not have a Material Adverse Effect. No order,
consent, approval, license, permit, authorization, or validation of, or filing,
recording or registration with, or exemption by, any governmental or public
body or authority, or any subdivision thereof, is required to authorize, or is
required in connection with the execution, delivery and performance of, or the
legality, validity, binding effect or enforceability of, any of the Financing
Documents (except with respect to enforceability of the remedies provided for
in the Pledge Agreement, the requirement to obtain FCC approval before
effecting any transfer of any FCC License).
4.4. Financial Statements. The June 30, 1996 consolidated
financial statements of Geotek and its Subsidiaries heretofore delivered to HNS
were prepared in accordance with GAAP in effect on the date such statements
were prepared and consistent with prior periods and fairly present the
consolidated financial condition and operations of Geotek and its Subsidiaries
at such date and the consolidated results of their operations for the period
then ended.
4.5. Material Adverse Change. No material adverse change
in the business, condition (financial or otherwise), prospects or results of
operations of Geotek and its Subsidiaries (on a consolidated basis) has
occurred since the date of the financial statements referred to in Section 4.4.
4.6. Taxes. Geotek and its Subsidiaries have filed all
United States federal tax returns and all other tax returns which are required
to be filed prior to the date hereof and have paid all taxes due pursuant to
said returns or pursuant to any assessment received by Geotek or any such
Subsidiary (except such taxes, if any, as are being contested in good faith and
as to which adequate reserves have been provided), except, with respect only to
Subsidiaries of Geotek other than the Borrower and its Subsidiaries, where the
failure to so file or pay would not have a Material Adverse Effect. No tax
liens have been filed, and no claims are being asserted with respect to any
such taxes, except, with respect only to Subsidiaries of Geotek other than the
Borrower and its Subsidiaries, where such tax liens or claims would not have a
Material Adverse Effect. The charges, accruals and reserves on the books of
Geotek and its Subsidiaries in respect of any taxes or other governmental
charges are adequate, except, with respect only to Subsidiaries of Geotek other
than the Borrower and its Subsidiaries, where the failure to maintain adequate
charges, accruals or reserves would not have a Material Adverse Effect.
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4.7. Litigation. There is no litigation or proceeding
pending or, to the knowledge of any of their officers, threatened against or
affecting Geotek or any of its Subsidiaries which might have a Material Adverse
Effect.
4.8. ERISA. The Unfunded Liabilities of all Plans do not
in the aggregate exceed $100,000. Each Plan complies in all material respects
with all applicable requirements of law and regulations, and the minimum
funding requirements with respect to all Plans have been met, no Reportable
Event has occurred with respect to any Plan, no Lien in favor of the PBGC with
respect to any Plan has arisen or been recorded, neither Geotek nor any of its
Subsidiaries has withdrawn from any Plan or initiated steps to do so, and no
steps have been taken to terminate any Plan.
4.9. Accuracy and Completeness of Information. No
information, schedule, exhibit or report furnished by Geotek to HNS in
connection with the negotiation of the Financing Documents contained any
material misstatement of fact or omitted to state a material fact or any fact
necessary to make the statements contained therein not misleading.
4.10. Material Agreements. None of the Subsidiaries of
Geotek are party to any agreement or instrument or subject to any charter or
corporate restriction which, individually or when taken together with all other
such agreements, instruments or restrictions of all such Subsidiaries, is
reasonably likely to have a Material Adverse Effect. Neither Geotek nor any of
its Subsidiaries is in default in the performance, observance or fulfillment of
any of the obligations, covenants or conditions contained in (i) any agreement
to which it is a party, which default might have a Material Adverse Effect or
(ii) any agreement or instrument evidencing or governing Indebtedness of
Geotek. The Obligors have made available to HNS copies of each agreement of
Geotek which (a) evidences Indebtedness of Geotek or (b) if Geotek were to
default in its obligations thereunder, might have a Material Adverse Effect.
4.11. Compliance with Law. Neither Geotek nor any of its
Subsidiaries has violated or failed to comply with any law, rule, regulation,
order, writ, judgment, injunction, decree or award which could have a Material
Adverse Effect.
4.12. Subordinated Indebtedness. The Obligations are not
subordinate to any Indebtedness of the Obligors. The Borrower's Obligations
are senior (or, in the case of the Loan Agreement, pari passu) to all other
Indebtedness of the Borrower.
4.13. Licenses and Permits. Geotek and each of its
Subsidiaries have obtained and hold in full force and effect all licenses,
permits, orders or approvals of, and have made all required registrations with,
all state, federal and foreign government bodies that are material to the
conduct of the business of Geotek or its Subsidiaries (collectively,
"Permits"), except where the failure to have such Permits would not,
individually or in the aggregate, have a Material Adverse Effect. All such
Permits are in full force and effect and neither Geotek nor any of its
Subsidiaries have violated any of the terms thereof, except where the failure
to keep such Permits in full force and effect or where such violations would
not, individually or in the aggregate, have a Material Adverse Effect. Geotek
and any of its
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Subsidiaries which hold or will hold 900 MHz Licenses are fully qualified to
hold 900 MHz Licenses.
ARTICLE V
COVENANTS
During the term of this Agreement, unless the Majority Lenders
shall otherwise consent in writing:
5.1. Reporting. Geotek will furnish to the Lenders
(a) Without duplication, copies of all reports,
certificates, documents and other information required to be delivered
to the trustee under the 1995 Indenture and the 1996 Indenture and to
the lender under the S-C Rig Loan Agreement (in each case, as in
effect on the date hereof and whether or not then in effect). The
copies of any such reports, certificates or documents that are
addressed to such trustee or lender shall be addressed to the Lenders.
(b) Within forty-five (45) Business Days after the
close of each fiscal quarter of the Borrower, a compliance certificate
signed by the Chief Financial Officer of the Borrower stating that no
Default or Unmatured Default exists, or if any Default or Unmatured
Default exists, stating the nature and status thereof.
(c) Within two hundred seventy (270) days after the
close of each fiscal year, a statement of the Unfunded Liabilities of
each Plan, certified as correct by an actuary enrolled under ERISA.
(d) As soon as possible and in any event within (10)
days after Geotek knows that any Reportable Event has occurred with
respect to any Plan or any Lien has been asserted by the PBGC or has
arisen with respect to any Plan, a statement, signed by the chief
financial officer of Geotek, describing said Reportable Event or Lien
and the action which Geotek proposes to take with respect thereto.
(e) As soon as possible and in any event no later
than two (2) Business Days after the occurrence thereof, written
notice of the occurrence of a Change of Control.
(f) Such other information as any Lender may from
time to time reasonably request.
5.2. Notice of Default. Geotek will, and will cause each
of its Subsidiaries to, give prompt notice in writing to the Lenders of the
occurrence of any Default or Unmatured Default and of any other development,
financial or otherwise, which might have a Material Adverse Effect.
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5.3. Conduct of Business. Geotek will, and will cause
each of its Subsidiaries to, carry on and conduct its business in substantially
the same manner and in substantially the same fields of enterprise as it is
presently conducted and to do all things necessary to remain duly incorporated,
validly existing and in good standing as a domestic corporation in its
jurisdiction of incorporation and maintain all requisite authority to conduct
its business in each jurisdiction in which its business is conducted, except
where the failure to do so would not have a Material Adverse Effect. The
Borrower will engage in no business or transaction other than (i) the holding
of the capital stock of Holdings and certain other Subsidiaries formed to hold
certain assets to be used directly for the provision of Specialized Mobile
Radio services utilizing 900 MHz Licenses, (ii) the ownership of the Base
Station Equipment purchased from HNS under the Manufacturing Agreement and
(iii) the leasing or sale of Base Station Equipment in accordance with Section
5.12.
5.4. Taxes. Geotek will, and will cause each of its
Subsidiaries to, pay when due all taxes, assessments and governmental charges
and levies upon it or its income, profits or property, except those which are
being contested in good faith by appropriate proceedings and with respect to
which adequate reserves have been set aside.
5.5. Insurance. Geotek will, and will cause each of its
Subsidiaries to, maintain with financially sound and reputable insurance
companies insurance on its respective Base Station Equipment and all their
other property in such amounts and covering such risks as is consistent with
sound business practice, and Geotek will furnish to the Lenders upon request
full information as to the insurance carried.
5.6. Compliance with Laws. Geotek will, and will cause
each of its Subsidiaries to, comply with (i) all laws, rules, regulations,
orders, writs, judgments, injunctions, decrees or awards to which it may be
subject and (ii) the terms of all FCC Licenses held by it, including any
obligation to construct facilities and place them in operation with a minimum
number of sites and/or customers by a specified date, except where the failure
to do so would not have a Material Adverse Effect.
5.7. Maintenance of Properties. Geotek will, and will
cause each of its Subsidiaries to, do all things necessary to maintain,
preserve, protect and keep its properties in good repair, working order and
condition, and make all necessary and proper repairs, renewals and replacements
so that its business carried on in connection therewith may be properly
conducted at all times, except where the failure to do so would not have a
Material Adverse Effect.
5.8. Inspection. Geotek will, and will cause each of its
Subsidiaries to, permit representatives and agents appointed by the Collateral
Agent or the Majority Lenders, to inspect any of the properties, licenses,
corporate books and financial records of Geotek and each such Subsidiary, to
examine and make copies of the books of accounts and other financial records of
Geotek and each Subsidiary, and to discuss the affairs, finances and accounts
of Geotek and each Subsidiary with, and to be advised as to the same by, their
respective officers at such reasonable times and intervals as the Collateral
Agent or the Majority Lenders may designate. Geotek may require as a condition
of any such inspection
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and/or discussions that such representatives and agents enter into
confidentiality agreements customary in the asset-based lending field in form
and substance reasonably satisfactory to Geotek.
5.9. Restricted Payments. Prior to July 15, 2000, the
Borrower will not, nor will it permit any of its Subsidiaries to, (i) declare
or pay any dividends on its capital stock (other than dividends payable in its
own capital stock) or redeem, repurchase or otherwise acquire or retire any of
its capital stock at any time outstanding, except that any of the Borrower's
Subsidiaries may declare and pay dividends to the Borrower or to a Wholly-Owned
Subsidiary of the Borrower or (ii) directly or indirectly voluntarily prepay,
defease or in substance defease, purchase, redeem, retire or otherwise acquire,
any Indebtedness.
5.10. Indebtedness. The Borrower will not, nor will it
permit any of its Subsidiaries to, incur any Indebtedness other than (i) the
Advances (in the case of the Borrower), (ii) the Indebtedness of the Borrower
under the Loan Agreement, (iii) the Holdings Note (in the case of Holdings) and
(iv) the Guarantees by the Borrower and Holdings required to be provided under
the 1995 Indenture as in effect on the date hereof.
5.11. Corporate Changes. The Borrower will not, nor will
it permit any of its Subsidiaries to, merge or consolidate with or into any
other Person or otherwise alter or modify the Borrower's or any Subsidiary's
certificate or articles of incorporation or by-laws (unless such alteration or
modification would not have a Material Adverse Effect), corporate names,
mailing addresses, principal places of business, structure, status or
existence.
5.12. Sale of Assets. Subject to the second sentence of
this Section 5.12 and as contemplated by the proviso in the second sentence of
Section 5.13 of the Loan Agreement, the Borrower will not, nor will it permit
any of its Subsidiaries to, lease, sell or otherwise dispose of all, or a
substantial portion of, its property, assets or business to any other Person.
The Borrower will not sell, assign, lease, convey or otherwise transfer any
interest in any of the Collateral, except that the Borrower may:
(i) sell any Base Station Equipment if:
(a) simultaneous with such sale, the Borrower repays
the remaining unpaid principal balance of the Advances in respect of
such Base Station Equipment (i.e., up to ninety percent (90%) of the
purchase price thereof) (together with all accrued and unpaid interest
thereon);
(b) such sale is made expressly subject to the
Collateral Agent's security interest in such Base Station Equipment
and the Collateral Agent is satisfied in its reasonable discretion
that following such sale the Collateral Agent will continue to have a
fully-enforceable, first-priority security interest in such
Collateral, subject to no other Liens or other claims of any Person
(other than Permitted Liens), it being understood that the Collateral
Agent may require the purchaser of such Base Station Equipment (and
its lenders, landlords and mortgagees) to enter into certain
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agreements with the Borrower and/or the Collateral Agent in order to
satisfy the Collateral Agent hereunder; or
(c) the Borrower receives "fair value" for such Base
Station Equipment (as certified by the Chief Financial Officer of the
Borrower with respect to sales of Base Station Equipment the original
purchase price of which was less than $3,000,000, and as determined by
a reputable, experienced independent appraiser of wireless
communications equipment reasonably acceptable to the Collateral Agent
with respect to sales the original purchase price of which was equal
to or greater than $3,000,000 (it being agreed, however, that the
"fair value" of Base Station Equipment sold by the Borrower shall not
be less than (x) prior to first installation thereof, the original
purchase price thereof, as established pursuant to the Manufacturing
Agreement and (y) after first installation thereof, the net book value
thereof at the time of such sale)) in the form of cash in which the
Collateral Agent has a fully- enforceable, first-priority perfected
security interest (subject only to Permitted Liens not otherwise
waived or released hereunder) as security for the Obligations until
(1) used by the Borrower to (A) repay all or a portion of the Advances
or (B) purchase from HNS other wireless communications equipment
("Replacement Communications Equipment") in which the Collateral Agent
is granted a fully- enforceable, first-priority perfected security
interest (subject only to Permitted Liens not otherwise waived or
released hereunder) as security for the Obligations or (2) the Base
Station Equipment so sold is reacquired by the Borrower ("Reacquired
Base Station Equipment")and the Collateral Agent is granted a
fully-enforceable, first-priority perfected security interest therein
(subject only to Permitted Liens not otherwise waived or released
hereunder) (it being understood that the determination of the
enforceability, priority or perfection of any security interest
referred to in this clause (c) shall be made by the Collateral Agent
in its reasonable discretion and that the Collateral Agent may require
the Borrower to deliver a legal opinion of counsel reasonably
acceptable to the Collateral Agent with respect to such matters of
enforceability, priority (but only with respect to jurisdictions
outside of the United States where such opinions are customarily given
in similar circumstances) and perfection); and
(ii) lease any Base Station Equipment if:
(a) such lease is made expressly subject and
subordinate to the Collateral Agent's security interest in such Base
Station Equipment;
(b) such lease is on arms-length terms and at market
rates; and
(c) the Collateral Agent is satisfied in its
reasonable discretion that after the commencement of such lease the
Collateral Agent will continue to have a fully-enforceable,
first-priority security interest in such Collateral, subject to no
other Liens or other claims of any Person (other than Permitted
Liens), it being understood that the Collateral Agent may require the
lessee (and its lenders, landlords and mortgagees) of such Base
Station Equipment to enter into certain agreements with the
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Borrower and/or the Collateral Agent in order to satisfy the
Collateral Agent hereunder.
For the avoidance of doubt, neither the Collateral Agent nor any of the Lenders
shall be responsible for any of the costs of fulfilling the requirements of
subsection 5.12(i)(b), 5.12(i)(c) or 5.12(ii).
5.13. Sale and Leaseback. The Borrower will not, nor will
it permit any of its Subsidiaries to, sell or transfer any property in order to
concurrently or subsequently lease as lessee such or similar property.
5.14. Investments and Acquisitions. The Borrower will not,
nor will it permit any of its Subsidiaries to, make or suffer to exist any
Investments (including without limitation, loans and advances to, and other
Investments in, Subsidiaries), or commitments therefor, or to create any new
Subsidiary or to become or remain a partner in any partnership or joint
venture, or to acquire any going business or all or substantially all of the
assets of any Person or any division or business of a Person, whether through
purchase of assets, merger or otherwise, except existing Investments in
Subsidiaries in existence on the date hereof and the purchases of 900 MHz
Licenses and related assets as provided in the Loan Agreement.
5.15. Guarantees. The Borrower will not, nor will it
permit any of its Subsidiaries to, make or suffer to exist any Guaranty
(including, without limitation, any Guaranty of the obligations of a Subsidiary
of Geotek), other than the Guarantees by the Borrower and Holdings required to
be provided under the 1995 Indenture as in effect on the date hereof.
5.16. Liens. The Borrower will not, nor will it permit any
of its Subsidiaries to, create, incur, or suffer to exist any Lien in, of or on
the property of the Borrower or any of its Subsidiaries, except Permitted
Liens.
5.17. Asset Expenditures. The Borrower will not, nor will
it permit any of its Subsidiaries to, acquire any assets, other than the
acquisition (or reacquisition) by the Borrower or its Subsidiaries of Base
Station Equipment pursuant to the Manufacturing Agreement or hereto (including,
without limitation, Section 5.12(c)), as applicable, and the acquisition by
Holdings of the 900 MHz Licenses and related assets as provided in the Loan
Agreement.
5.18. Rentals. The Borrower will not, nor will it permit
any of its Subsidiaries to, create, incur or suffer to exist any obligations
for Rentals.
5.19. Letters of Credit. The Borrower will not, nor will
it permit any of its Subsidiaries to, apply for or become liable with respect
to any Letter of Credit (other than for the benefit of HNS).
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5.20. Affiliates. The Borrower will not, nor will it
permit any of its Subsidiaries to, enter into any transaction with any
Affiliate, except as contemplated by this Agreement (including, without
limitation, Sections 5.12 and 5.17).
5.21. Preservation of Licenses. The Borrower will not, and
will not permit any of its Subsidiaries to, allow any FCC License held by it to
lapse or be revoked or suspended.
5.22. Ownership of Borrower and Holdings. The Borrower
shall at all times be a Wholly-Owned Subsidiary of Geotek and Holdings shall at
all times be a Wholly-Owned Subsidiary of the Borrower.
5.23. Compliance with other Agreements. Geotek shall, and
shall cause each of its Subsidiaries to, comply with all covenants,
restrictions and other agreements applicable to them in the 1995 Indenture, the
1996 Indenture and the S-C Rig Loan Agreement as in effect on the date hereof
(without giving effect to any amendments, waivers or other modifications
thereof or supplements thereto, unless otherwise consented to in writing by the
Majority Lenders, such consent not to be unreasonably withheld).
5.24. Further Assurances. Geotek shall take, and shall
cause each of the Subsidiaries to take, all such further actions and execute
all such further documents and instruments as the Collateral Agent may at any
time reasonably determine to be necessary or desirable to further carry out and
consummate the transactions contemplated by the Financing Documents, to cause
the execution, delivery and performance of the Financing Documents to be duly
authorized and to perfect, protect and maintain the Liens (and the priority
status thereof) of the Collateral Agent on the Collateral.
5.25. Payments. Geotek will, and will cause its
Subsidiaries (and any other Person obligated thereon) to, pay when due all rent
or mortgage loan installments with respect to any Landlord Waiver Location,
except where such payments are being contested in good faith if a reserve or
other appropriate provision, if any, as shall be required by GAAP shall have
been made in respect thereof.
ARTICLE VI
GUARANTY
6.1. The Guaranty. The Guarantor hereby absolutely,
unconditionally and irrevocably guarantees to the Lenders and their respective
successors and assigns the full and punctual payment and performance (whether
at stated maturity, upon acceleration or otherwise) of the Obligations,
including all reasonable costs of collection and enforcement thereof
(including, without limitation, all fees and disbursements of counsel) and
interest thereon which would be owing by the Borrower but for the effect of the
Bankruptcy Code, 11 U.S.C. Section 101 et seq. (collectively, the "Guaranteed
Obligations"). The Guarantor understands, agrees and confirms that any Lender
may enforce this Guaranty up to the full amount guaranteed by the Guarantor
hereunder without proceeding against the Borrower or
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any other obligor, against the Collateral or against any other guarantor under
any other guarantee covering the Guaranteed Obligations. All payments made by
the Guarantor under this Guaranty shall be paid at the place and in the manner
specified in Section 2.8.
6.2. Guaranty Unconditional. The obligations of the
Guarantor hereunder shall be unconditional and absolute and, without limiting
the generality of the foregoing, shall not be released, discharged or otherwise
affected by:
(a) any extension, renewal, settlement, compromise,
waiver or release in respect of any obligation of any Obligor under
any of the Facility Documents, by operation of law or otherwise;
(b) any modification or amendment of or supplement to
this Agreement, any Note or any of the other Facility Documents,
including, without limitation, any increase in the principal amount of
the Advances;
(c) any release, non-perfection or invalidity of any
direct or indirect security herefor or for, or any other guarantee of,
any of the Guaranteed Obligations;
(d) any change in the corporate existence, structure
or ownership of any of the Obligors, or any insolvency, bankruptcy,
reorganization or other similar proceeding affecting any of the
Obligors or any of their assets or any resulting release or discharge
of any obligation of any Obligor contained in this Agreement or any
Note;
(e) the existence of any claim, set-off or other
rights which the Guarantor may have at any time against the Borrower
or any other Person, whether in connection herewith or with any
unrelated transactions, provided that nothing herein shall prevent the
assertion of any such claim by separate suit or compulsory
counterclaim;
(f) any invalidity or unenforceability relating to or
against any Obligor for any reason of any of the Facility Documents,
or any provision of applicable law or regulation purporting to
prohibit the payment by the Borrower of the principal of or interest
on the Advances or any other amount payable by it under the Facility
Documents; or
(g) any other act or omission to act or delay of any
kind by any Obligor or any other Person or any other circumstance
whatsoever which might, but for the provisions of this paragraph,
constitute a legal or equitable discharge of the Guarantor's
obligations hereunder.
In addition, the obligations of the Guarantor hereunder are joint and several
with the obligations of each other guarantor or obligor in respect of the
Guaranteed Obligations.
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6.3. Discharge Only Upon Payment In Full; Reinstatement In
Certain Circumstances. The Guarantor's obligations hereunder shall remain in
full force and effect until the Guaranteed Obligations shall have been paid in
full. If at any time any payment of any of the Guaranteed Obligations is
rescinded or must be otherwise restored or returned upon the insolvency,
bankruptcy or reorganization of the Borrower or otherwise, the Guarantor's
obligations hereunder with respect to such payment shall be reinstated at such
time as though such payment had been due but not made at such time.
6.4. Waivers by the Guarantor. The Guarantor irrevocably
waives acceptance hereof, presentment, demand, protest and any notice not
provided for herein, as well as any requirement that at any time any action be
taken by any Person against the Borrower or any other Person.
6.5. Subrogation. Prior to July 15, 2000, the Guarantor
shall not exercise any rights which it may have acquired by way of subrogation
under this Guaranty, by any payment made hereunder or otherwise, nor shall the
Guarantor seek any reimbursement from the Borrower in respect of payments made
by the Guarantor hereunder, unless and until all of the Guaranteed Obligations
shall have been paid to the Lenders and discharged, in full. On or after July
15, 2000, to the extent not expressly prohibited by the terms of the 1995
Indenture or the S-C Rig Loan Agreement (each as in effect on the date hereof),
the Guarantor shall not exercise any rights which it may have acquired by way
of subrogation under this Guaranty, by any payment made hereunder or otherwise,
nor shall the Guarantor seek any reimbursement from the Borrower in respect of
payments made by the Guarantor hereunder, unless and until all of the
Guaranteed Obligations shall have been paid to the Lenders and discharged, in
full. If any payment shall be made to the Guarantor on account of the
subrogation, contribution or reimbursement rights discussed in this Section 6.5
at any time when the Guaranteed Obligations shall not have been paid and
discharged, in full, each and every amount so paid shall forthwith be paid to
the Lenders to be credited and applied against the Guaranteed Obligations,
whether matured or unmatured.
6.6. Stay of Acceleration. In the event that acceleration
of the time for payment of any of the Guaranteed Obligations is stayed upon
insolvency, bankruptcy or reorganization of the Borrower, all such amounts
otherwise subject to acceleration under the terms of this Agreement and the
Note shall nonetheless be payable by the Guarantor forthwith on demand by the
Lender.
ARTICLE VII
DEFAULTS
The occurrence of any one or more of the following events
shall constitute a Default:
7.1. Any representation or warranty made or deemed made by or
on behalf of either of the Obligors to the Collateral Agent or the Lenders
under or in connection with this Agreement, any Note, any other Financing
Document or any certificate or information
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delivered in connection herewith or therewith shall be materially false as of
the date on which made.
7.2. (a) Nonpayment of principal of any Note within one (1)
day of when due, or (b) nonpayment of interest upon any Note or of any other
Obligations under any of the Financing Documents within five (5) days of notice
from any Lender of such nonpayment or, with respect to nonpayment of interest,
if shorter, within eight (8) days of when due.
7.3. The breach by either Obligor of any of the terms or
provisions of Article V (except, with respect to a breach by the Borrower of
Section 5.25 only, if all overdue rent payments (not being contested in good
faith as provided in Section 5.25) with respect to all leases for all Landlord
Waiver Locations do not, in the aggregate, exceed at any time $50,000) and,
where such breach is reasonably capable of cure and provided such breach has
not otherwise caused a Material Adverse Effect, the failure of either Obligor
to cure such breach within thirty (30) days of a senior officer of either
Obligor obtaining actual knowledge thereof.
7.4. The breach by either Obligor (other than a breach which
constitutes a Default under Section 7.1, 7.2 or 7.3) of any of the terms or
provisions of this Agreement or any Note which is not remedied within ten (10)
days after written notice from the Collateral Agent.
7.5. Failure of Geotek or any of its Subsidiaries to pay any
Indebtedness in excess of $2,000,000 when due (including any applicable grace
periods); or the default by Geotek or any of its Subsidiaries in the
performance of any term, provision or condition contained in any agreement
under which any Indebtedness in excess of $3,500,000 was created or is
governed, the effect of which is to cause, or to permit the holder or holders
of such Indebtedness to cause, such Indebtedness to become due prior to its
stated maturity; or any Indebtedness in excess of $3,500,000 shall be declared
to be due and payable or required to be prepaid (other than by a regularly
scheduled payment) prior to the stated maturity thereof.
7.6. Geotek, the Borrower or any of the Borrower's
Subsidiaries shall (a) have an order for relief entered with respect to it
under the Federal Bankruptcy Code, (b) not pay, or admit in writing its
inability to pay, its debts generally as they become due, (c) make an
assignment for the benefit of creditors, (d) apply for, seek, consent to, or
acquiesce in, the appointment of a receiver, custodian, trustee, examiner,
liquidator or similar official for it or any substantial part of its property,
(e) institute any proceeding seeking an order for relief under the Federal
Bankruptcy Code or seeking to adjudicate it a bankrupt or insolvent, or seeking
dissolution, winding up, liquidation, reorganization, arrangement, adjustment
or composition of it or its debts under any law relating to bankruptcy,
insolvency or reorganization or relief of debtors or fail to file an answer or
other pleading denying the material allegations of any such proceeding filed
against it, (f) take any corporate action to authorize or effect any of the
foregoing actions set forth in this Section 7.6, or (g) fail to contest in good
faith any appointment or proceeding described in Section 7.7.
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7.7. Without the application, approval or consent of Geotek,
the Borrower or any of the Borrower's Subsidiaries, a receiver, trustee,
examiner, liquidator or similar official shall be appointed for Geotek, the
Borrower or any of the Borrower's Subsidiaries or any substantial part of their
respective properties, or a proceeding described in Section 7.6(e) shall be
instituted against Geotek, the Borrower or any of the Borrower's Subsidiaries
and such appointment continues undischarged or such proceeding continues
undismissed or unstayed for a period of 60 consecutive days.
7.8. Any court, government or governmental agency shall
condemn, seize or otherwise appropriate, or take custody or control of greater
than $1,000,000 worth of Collateral (as measured by the aggregate purchase
price thereof) or all or any substantial portion of the property of Geotek, the
Borrower or any of the Borrower's Subsidiaries.
7.9. Geotek, the Borrower or any of the Borrower's
Subsidiaries shall fail within 30 days to pay, bond or otherwise discharge any
judgment or order for the payment of money in excess of $1,000,000 which is not
stayed on appeal or otherwise being appropriately contested in good faith.
7.10. The Unfunded Liabilities of all Plans shall exceed in
the aggregate $1,000,000, any Lien in favor of the PBGC with respect to any
Plan shall arise or be recorded, or any Reportable Event shall occur in
connection with any Plan.
7.11. Any Lien, levy or assessment is filed or recorded with
respect to or otherwise imposed upon all or any part of the Collateral by the
United States or any department or instrumentality thereof or by any state,
county, municipality or other governmental agency (other than Permitted Liens)
and such lien, levy or assessment is not stayed, vacated, paid or discharged
within ten (10) days.
7.12. Geotek, the Borrower or any of the Borrower's
Subsidiaries is enjoined, restrained or in any way prevented by the order of
any court or any administrative or regulatory agency from conducting all or any
material part of its business and such order continues for more than thirty
(30) days.
7.13. Any of the Financing Documents for any reason, other
than a partial or full release in accordance with the terms thereof, ceases to
be in full force and effect or is declared to be null and void, or either
Obligor denies that it has any further liability under any Financing Document
to which it is party, or gives notice to such effect.
7.14. Any strike, lockout, labor dispute, embargo,
condemnation, act of God or public enemy, or other casualty which causes, for
more than fifteen (15) consecutive days, the cessation or substantial
curtailment of revenue producing activities at any facility of Geotek or any of
its Subsidiaries if any such event or circumstance could have a Material
Adverse Effect.
7.15. The loss, suspension, revocation or amendment of, or
failure to renew, any FCC License now held or hereafter acquired by Geotek or
any of its Subsidiaries, if
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such loss, suspension, revocation, amendment or failure to renew could have a
Material Adverse Effect. For purposes of this Section 7.15, the loss,
suspension, revocation or failure to renew of any 900 MHz License owned by the
Borrower or any of its Subsidiaries is deemed to have a Material Adverse
Effect.
7.16. The FCC schedules or conducts a hearing with respect
to, or commences an action or proceeding seeking the termination, suspension,
revocation or material adverse amendment of, any FCC License now held or
hereafter acquired by Geotek or any of its Subsidiaries (other than a hearing
with respect to a pending competing application) and (i) the Majority Lenders
reasonably believe that the result thereof would be the termination,
revocation, suspension or material adverse amendment of such License and (ii)
in the case of any Subsidiary of Geotek other than the Borrower or any of the
Borrower's Subsidiaries, such termination, revocation, suspension or material
adverse amendment would have a Material Adverse Effect.
7.17. Geotek or any of its Subsidiaries defaults in the
payment of any other written obligation to HNS in excess of $2,000,000,
including, without limitation, with respect to any extension of trade credit by
HNS; provided that such default shall not be a Default if it is the subject of
a good-faith dispute for no longer than ninety (90) days.
7.18. The Collateral Agent does not have or ceases to have a
fully-enforceable valid and perfected first-priority security interest in the
Collateral (subject only to Permitted Liens (except as provided in Section
3.2(iii)(c)), in each case, for any reason other than the failure of the
Collateral Agent to take any reasonable action (other than involving the
payment of money) within its control and requested in writing by the Borrower
(and which is not otherwise the responsibility of the Borrower hereunder or
under the Collateral Documents).
7.19. Any judgment, order or ruling is entered, or partial or
full resolution is reached, with respect to any litigation or proceeding listed
in the Disclosure Letter (or any Schedule thereto), which judgment, order,
ruling or resolution could have a Material Adverse Effect.
7.20. The breach by Geotek or any of its Subsidiaries of any
of the terms or provisions of any of the other Financing Documents and, where
such breach is reasonably capable of cure and provided such breach has not
otherwise caused a Material Adverse Effect, the failure of Geotek or such
Subsidiary to cure such breach within ten (10) days of becoming aware thereof.
7.21. The breach by the Borrower of its obligations to the
Lender under Section 5.3 of the Manufacturing Agreement.
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<PAGE> 39
7.22. Any court shall enjoin the manufacture, sale, lease,
use, repair, reconstruction, import or export of the Base Station Equipment by
Geotek, the Borrower or PST on the grounds of infringement of intellectual
property rights held by a third party.
ARTICLE VIII
ACCELERATION, REMEDIES, WAIVERS AND AMENDMENTS
8.1. Acceleration. If any Default described in Section
7.6 or 7.7 occurs, the obligation of the Lenders to make Advances hereunder
shall immediately and automatically terminate and the Obligations shall
immediately become due and payable, in each case without any election or action
on the part of the Lenders. If any other Default occurs, the Majority Lenders
may (i) declare the obligation of the Lenders to make Advances to be
terminated, whereupon the same shall forthwith terminate and (ii) declare the
Obligations to be due and payable, whereupon the Obligations shall become
immediately due and payable, without presentment, demand, protest or notice of
any kind, all of which the Obligors hereby expressly waive. The Lenders'
remedies hereunder shall be in addition to any remedies available to the
Lenders or the Collateral Agent upon a Default under any of the other Financing
Documents or otherwise pursuant to applicable law. All remedies contained in
the Financing Documents or by law afforded shall be cumulative and all shall be
available to the Lenders and the Collateral Agent until the Obligations have
been paid in full. No individual Lender shall have any right to institute any
proceeding or pursue any remedy with respect to this Agreement, the Notes or
any other Financing Document (such right belonging to the Majority Lenders (or
the Collateral Agent, at the direction of the Majority Lenders)); provided,
however, that any Lender may institute a proceeding or pursue any remedy for
the enforcement of the payment of principal of, or accrued interest on, any
Note on or after the respective due dates set forth in such Note (or any
applicable prepayment date, if earlier), subject to applicable grace periods;
provided, further, that the foregoing shall not limit any right of HNS (in its
individual capacity and not as a Lender hereunder) to institute any proceeding
or pursue any remedy under the Manufacturing Agreement, the Sales
Representation Agreement or any other Facility Document (other than the
Financing Documents).
8.2. Preservation of Rights; Amendments and Waivers. No
delay or omission of the Lenders or the Collateral Agent to exercise any right
under the Facility Documents shall impair such right or be construed to be a
waiver of any Default or an acquiescence therein. Any single or partial
exercise of any such right shall not preclude other or further exercise thereof
or the exercise of any other right, and no waiver, amendment or other variation
of the terms, conditions or provisions of the Financing Documents whatsoever
shall be valid unless in writing signed by the Majority Lenders, and then only
to the extent in such writing specifically set forth; provided that the consent
of all the Lenders is required to (i) increase the Maximum Advance Amount, (ii)
reduce the principal of, or interest on, the Notes, (iii) postpone any date
fixed for any payment in respect of principal of, or interest on, the Notes,
(iv) change the percentage of the
35
<PAGE> 40
Commitments, or any minimum requirement necessary for the Lenders or the
Majority Lenders to take any action hereunder, (v) change the definition of
Majority Lenders or (vi) except as otherwise expressly provided in this
Agreement or the other Financing Documents, and other than in connection with
the sale or other disposition of any asset of the Borrower permitted under this
Agreement, release any Liens in favor of the Lenders on a material portion of
the Collateral; provided, further, that the consent of the Collateral Agent
shall be required for any amendment, waiver or consent affecting the rights or
duties of the Collateral Agent under any Financing Document, in addition to the
consent of the Majority Lenders or the Lenders otherwise required by this
Section.
ARTICLE IX
GENERAL PROVISIONS
9.1. Successors and Assigns. (a) The terms and provisions
of the Facility Documents shall be binding upon and inure to the benefit of the
Obligors, the Lenders, the Collateral Agent and their respective successors and
assigns.
(b) Subject to the Securities Act and applicable
state securities laws, the Lender may (i) on or prior to the Advance Cutoff
Date, (1) sell, assign or otherwise transfer the Note, subject to the terms
thereof (and its rights and obligations under the other Financing Documents),
in whole or in part, to (A) any Hughes Subsidiary, (B) any other Affiliate of
the Lender (other than a competitor of Geotek engaged or, to the knowledge of
the Lender, planning to engage in the business of providing wireless voice or
data communications services to mobile customers or of providing equipment in
connection therewith) or, (C) with the prior written consent of Geotek, such
consent not to be unreasonably withheld, any other Person or (2) assign the
payments due under the Note to any bank or financial institution and (ii) after
the Advance Cutoff Date, sell, assign or otherwise transfer the Note, subject
to the terms thereof (and its rights and obligations under the other Financing
Documents), in whole or in part (but in parts representing no less than
$1,000,000 in principal amount), to any Person (other than a competitor of
Geotek engaged or, to the knowledge of the Lender, planning to engage in the
business of providing wireless voice or data communications services to mobile
customers or of providing equipment in connection therewith (except for Hughes
Subsidiaries)). Notwithstanding the foregoing, after the occurrence and during
the continuance of a Default, the Lender may sell, assign or otherwise transfer
the Note (and its rights and obligations under the other Financing Documents)
to any Person without any restriction (other than as imposed by the Securities
Act and applicable state securities laws) or right of the Borrower to approve
or disapprove such transfer.
(c) Except upon the occurrence and during the
continuance of a Default, before HNS or any of its Affiliates may sell, assign
or otherwise transfer any Note pursuant to Section 9.1(b), it shall give the
Borrower written notice of its good faith intention to do so, whereupon the
Borrower shall have fifteen (15) days from the date of such notice
36
<PAGE> 41
(the "Prepayment Notice Period") to notify HNS or such Affiliate in writing of
its intention to prepay such Note in its entirety (including any accrued and
unpaid interest and any other Obligations allocable thereto). If the Borrower
so chooses to prepay such Note, it shall do so within thirty (30) days of its
notice to HNS or such Affiliate of such intention to do so. If the Borrower
does not give HNS or such Affiliate notice of its intention to prepay such Note
during the Prepayment Notice Period, then HNS or such Affiliate may sell,
assign or otherwise transfer such Note or any portion thereof at any time
during the seventy-five (75) day period beginning on the day immediately
following the last day of the applicable Prepayment Notice Period without any
right of the Borrower to prepay such Note hereunder or under Section 2.10 (the
"Prepayment Moratorium Period"). If HNS or such Affiliate does not sell,
assign or otherwise transfer such Note or any portion thereof during the
Prepayment Moratorium Period, the Borrower's prepayment rights hereunder shall
revive with respect to any portion not sold, assigned or transferred until the
occurrence of another Prepayment Moratorium Period in accordance herewith.
(d) The Obligors authorize the Lenders to disclose to
any prospective purchaser, assignee or other transferee of an interest in the
Financing Documents the Financing Documents and any financial or other
information pertaining to the Financing Documents and the Advances known to the
Lenders and the Obligors agree to cooperate in providing such purchaser or
prospective purchaser with any publicly- filed or publicly-available
information about the Obligors or their respective businesses.
(e) Except as expressly set forth to the contrary in
Section 9.1(b), from and after the completion of any sale, assignment or other
transfer permitted hereunder, the purchaser, assignee or transferee shall have
all of the rights and obligations of a "Lender" hereunder and under the other
Financing Documents, to the extent of the interest sold, assigned or otherwise
transferred to such Person.
(f) In connection with any sale, assignment or other
transfer permitted hereunder, the Borrower and the Lenders agree to execute
such agreements, certificates, instruments or other documents, and to take such
other actions as the transferor or transferee Lender or the Borrower may
reasonably request (including, without limitation, the execution and delivery
by the Borrower of replacement Notes), to evidence such sale, assignment or
other transfer and to preserve the rights of the Lenders, such transferee and
the Borrower under the Notes and the other Financing Documents (including,
without limitation, their respective rights and the rights of the Collateral
Agent in the Collateral).
(g) The Obligors may not assign or otherwise transfer
any of their rights or obligations under any of the Facility Documents.
9.2. Survival of Representations. All representations and
warranties of the Obligors contained in any Financing Document shall survive
delivery of the Notes and the making of the Advances herein contemplated.
37
<PAGE> 42
9.3. Governmental Regulation. Anything contained in any
Facility Document to the contrary notwithstanding, the Lenders shall not be
obligated to extend credit to the Borrower in violation of any limitation or
prohibition provided by any applicable statute or regulation.
9.4. New York Law; Submission to Jurisdiction; Waiver of
Jury Trial; Service of Process. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE INTERNAL LAWS (AND NOT THE LAW OF
CONFLICTS) OF THE STATE OF NEW YORK. EACH PARTY HERETO HEREBY SUBMITS TO THE
NONEXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN
DISTRICT OF NEW YORK AND OF ANY NEW YORK STATE COURT SITTING IN NEW YORK CITY
(AND APPELLATE COURTS FROM ANY THEREOF) FOR PURPOSES OF ALL LEGAL PROCEEDINGS
ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE OTHER FINANCING DOCUMENTS OR
THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. EACH PARTY HERETO IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW
OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN
SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS
BEEN BROUGHT IN AN INCONVENIENT FORUM. EACH PARTY HERETO HEREBY IRREVOCABLY
WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT
OF OR RELATING TO THIS AGREEMENT, THE OTHER FINANCING DOCUMENTS OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. EACH OBLIGOR AGREES THAT SERVICE
OF PROCESS IN ANY SUCH ACTION OR PROCEEDING MAY BE EFFECTED BY MAILING A COPY
THEREOF BY REGISTERED OR CERTIFIED MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM OF
MAIL), POSTAGE PREPAID, TO THE APPLICABLE OBLIGOR AT ITS ADDRESS SET FORTH ON
THE SIGNATURE PAGES TO THIS AGREEMENT OR AT SUCH OTHER ADDRESS OF WHICH THE
LENDER SHALL HAVE BEEN NOTIFIED PURSUANT TO SECTION 10.2.
9.5. Headings. Section headings in the Financing
Documents are for convenience of reference only, and shall not govern the
interpretation of any of the provisions of the Financing Documents.
9.6. Entire Agreement. The Facility Documents embody the
entire agreement and understanding among the Obligors, the Lenders and the
Collateral Agent and supersede all prior agreements and understandings among
the Obligors, the Lenders and the Collateral Agent relating to the subject
matter thereof.
9.7. Expenses; Indemnification. The Obligors agree,
jointly and severally, to reimburse the Lenders and the Collateral Agent for
any out-of-pocket costs and expenses
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<PAGE> 43
(including reasonable fees and time charges of outside legal counsel to the
Collateral Agent) paid or incurred by the Lenders and the Collateral Agent in
connection with (i) obtaining (or confirming) the required perfection and
first-priority status of the Collateral Agent's security interest in the Base
Station Equipment ("Perfection Costs") and (ii) after the occurrence and during
the continuance of a Default, the collection and enforcement of the Financing
Documents. The Obligors further agree, jointly and severally, to indemnify the
Lenders, the Collateral Agent and their respective directors, officers,
employees, agents and attorneys (collectively, the "Indemnified Parties")
against all losses, claims, damages, penalties, judgments, liabilities and
expenses (including, without limitation, all expenses of litigation (or
preparation therefor (if litigation actually commences)) whether or not any
Indemnified Party is a party thereto, but excluding the costs of negotiating,
documenting and closing the financing transaction contemplated by this
Agreement (other than Perfection Costs)) (collectively, "Costs") which any of
them may pay or incur arising out of or relating to this Agreement, the other
Financing Documents, the transactions contemplated hereby or the direct or
indirect application or proposed application of the proceeds of the Advances;
provided, however, that with respect to any Costs incurred in connection with
any legal proceeding between an Indemnified Party and one or more of the
Obligors (solely as such Costs relate to the matter or matters in dispute
between an Obligor or the Obligors and such Indemnified Party and not to any
matters in dispute between such Indemnified Party and any third party), the
Obligors shall only be required to indemnify such Indemnified Party in the
event the Indemnified Party shall finally prevail in such proceeding (as
evidenced by a final judgment not subject to further appeal). The obligations
of the parties under this Section shall survive the termination of this
Agreement.
9.8. Accounting. Except as provided to the contrary
herein, all accounting terms used herein shall be interpreted and all
accounting determinations hereunder shall be made in accordance with Agreement
Accounting Principles.
9.9. Severability of Provisions. Any provision in any
Financing Document that is held to be inoperative, unenforceable, or invalid in
any jurisdiction shall, as to that jurisdiction, be inoperative, unenforceable,
or invalid without affecting the remaining provisions in that jurisdiction or
the operation, enforceability, or validity of that provision in any other
jurisdiction, and to this end the provisions of all Financing Documents are
declared to be severable.
9.10. Confidentiality; Public Disclosures. Subject to the
parties' disclosure obligations under the Securities Act and the Exchange Act,
and unless otherwise permitted under Section 9.1(d) or required by law or order
of a court, administrative agency or other quasi- judicial body of competent
jurisdiction, and then only after providing prompt written notice of its
intention to disclose, no party hereto shall issue any press release or make
any public statement relating to the transactions evidenced by this Agreement
or otherwise disclose this agreement to any third party without the other
parties' written approval (such approval not to be unreasonably withheld),
except that this Agreement may be disclosed to
39
<PAGE> 44
each party's attorneys, financial advisors and others in a confidential
relationship to such party.
9.11. Risk of Loss. The Borrower bears the risk of loss of
the Base Station Equipment financed hereunder. If any item of such Base
Station Equipment is lost, stolen, destroyed, damaged beyond repair or rendered
permanently unfit for use (each, a "Loss"), the Borrower shall immediately
notify the Lenders, and shall, no later than thirty (30) days from the date of
such Loss, pay to the Lenders the remaining unpaid principal balance of the
Advances in respect of such item (i.e., up to ninety percent (90%) of the
purchase price thereof), together with all amounts of interest and other
amounts due to the Lenders with respect to such item.
9.12. Setoff. To the extent that any amount is owing at
any time to Geotek by HNS pursuant to any of the Warrants for the payment of
the "Exercise Price" thereunder, HNS may satisfy such amount, in whole or in
part, by set-off against any amount then due and payable by either Obligor
hereunder (whether at the stated maturity, by acceleration or otherwise).
9.13. Registration Rights. The Notes shall be entitled to
the Registration Rights set forth in the Registration Rights Agreement. In
connection therewith, the parties hereto agree to any amendments to this
Agreement made pursuant to and as contemplated by Section 6(a) thereof.
ARTICLE X
NOTICES
10.1. Giving Notice. Any notice required or permitted to
be given under this Agreement may be, and shall be deemed, given when
personally delivered, or when deposited in the United States mail for overnight
delivery, postage prepaid, or when sent by facsimile transmission and
mechanical confirmation of a successful transmission has been received, or when
deposited with a reputable overnight delivery service, charges prepaid, in each
case addressed to the applicable Obligor or HNS at the addresses indicated
below their signatures to this Agreement or to any other Lender at the address
specified in writing by such Lender to the parties hereto. All notices to be
given to the Collateral Agent hereunder or under the other Financing Documents
shall, so long as HNS is the Collateral Agent, be delivered to the address for
notices to HNS set forth on the signature page hereto.
10.2. Change of Address. The Obligors, HNS, the Lenders
and the Collateral Agent may each change the address for service of notice upon
it by a notice in writing to the other parties hereto.
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<PAGE> 45
ARTICLE XI
COUNTERPARTS
This Agreement may be executed in any number of counterparts,
all of which taken together shall constitute one agreement, and either of the
parties hereto may execute this Agreement by signing any such counterpart.
This Agreement shall be effective when it has been executed by each of the
Obligors and HNS.
[SIGNATURE PAGE FOLLOWS]
41
<PAGE> 46
IN WITNESS WHEREOF, the Borrower, Geotek and the Lender have
executed this Agreement as of the date first above written.
Borrower:
GEOTEK FINANCING CORPORATION
By: /s/ Michael McCoy
--------------------------------------------
Title: Chief Financial Officer
Address: c/o Geotek Communications, Inc.
20 Craig Road
Montvale, NJ 07645
Telecopy No.: (201) 930-9614
Geotek (Guarantor):
GEOTEK COMMUNICATIONS, INC.
By: /s/ Michael McCoy
--------------------------------------------
Title: Chief Financial Officer
Address: 20 Craig Road
Montvale, NJ 07645
Telecopy No.: (201) 930-9614
HNS (Lender)
HUGHES NETWORK SYSTEMS, INC.
By: /s/ Pradeep Kaul
--------------------------------------------
Title: Executive Vice President
Address: 10450 Pacific Center Court
San Diego, CA 92121
Telecopy No.: (619) 457-4994
<PAGE> 47
EXHIBIT A
FORM OF NOTE
THIS NOTE MAY NOT BE OFFERED OR SOLD, UNLESS REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, AND APPLICABLE STATE SECURITIES LAWS OR UNLESS AN
EXEMPTION FROM REGISTRATION IS AVAILABLE AND THEN ONLY IN COMPLIANCE WITH THE
RESTRICTIONS ON TRANSFER SET FORTH IN THE VENDOR CREDIT FINANCING AGREEMENT,
DATED AS OF SEPTEMBER ___, 1996, A COPY OF WHICH MAY BE OBTAINED FROM GEOTEK
FINANCING CORPORATION AT ITS PRINCIPAL EXECUTIVE OFFICE.
GUARANTEED SECURED PROMISSORY NOTE
$[100,000,000] _____________, 1996
GEOTEK FINANCING CORPORATION, a Delaware corporation (the "Borrower"), promises
to pay to HUGHES NETWORK SYSTEMS, INC. (the "Lender"), in immediately available
funds, the principal sum of [ONE HUNDRED MILLION] DOLLARS ($[100,000,000]), or
such lesser amount as may then constitute the aggregate unpaid principal amount
of the Advances made to the Borrower by the Lender pursuant to the Vendor
Credit Financing Agreement (as defined below), together with interest thereon
at the rates and on the dates specified in Section 2.3 of the Vendor Credit
Financing Agreement, dated as of September ___, 1996, by and among the
Borrower, the Lender and Geotek Communications, Inc., as Guarantor (as the same
may be amended, modified or restated from time to time, the "Vendor Credit
Financing Agreement"). Capitalized terms used herein and not otherwise defined
herein are used with the meanings attributed to them in the Vendor Credit
Financing Agreement.
All interest shall be computed for actual days elapsed on the basis of a 365
(or 366, as appropriate)-day year.
The obligations of the Borrower under this Note have been unconditionally
guaranteed by the Guarantor, as more fully provided in Article VI of the Vendor
Credit Financing Agreement.
The Borrower hereby authorizes the Lender to endorse on the Schedule annexed to
this Note the principal amount of all Advances made by the Lender to the
Borrower under the Vendor Credit Financing Agreement as well as all repayments
of principal permitted thereunder and all additions to principal made pursuant
to Section 2.3(b) thereof; provided, that the failure to make any such
notations on such Schedule shall not limit or otherwise affect the obligations
of the Borrower under the Vendor Credit Financing Agreement or this Note.
<PAGE> 48
This Note is one of the Notes issued pursuant to, and is entitled to the
benefits of, the Vendor Credit Financing Agreement, to which Vendor Credit
Financing Agreement reference is hereby made for a statement of the terms and
conditions under which the Maturity Date of this Note may be accelerated. This
Note is subject to optional and mandatory prepayment as provided in the Vendor
Credit Financing Agreement.
This Note is secured pursuant to the terms of the Pledge Agreement and the
Security Agreement and the other Collateral Documents in existence from time to
time.
This Note is subject to the restrictions on transfer set forth in Section 9.1
of the Vendor Credit Financing Agreement and is entitled to the Registration
Rights set forth in Annex A attached to the Vendor Credit Financing Agreement.
The Borrower hereby waives presentment, demand, protest and notice of any kind.
No failure to exercise, and no delay in exercising any rights hereunder on the
part of the holder hereof shall operate as a waiver of such rights.
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS (AND NOT THE
LAW OF CONFLICTS) OF THE STATE OF NEW YORK.
GEOTEK FINANCING CORPORATION
By:_______________________________
Title: ___________________________
<PAGE> 49
SCHEDULE OF BORROWINGS OF, ADDITIONS TO AND REPAYMENTS OF PRINCIPAL TO
GUARANTEED SECURED PROMISSORY NOTE
OF GEOTEK FINANCING CORPORATION
DATED ________________, 1996
<TABLE>
<CAPTION>
Amount of
Amount of Addition to Amount Unpaid
Date Borrowing Principal Repaid Balance
- ----------------------------------------------------------------------------- ---------
<S> <C> <C> <C> <C>
</TABLE>
<PAGE> 50
EXHIBIT C
FORM OF
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (this "Security Agreement") is made and entered
into as of September __, 1996 by GEOTEK FINANCING CORPORATION, a Delaware
corporation, having its principal office at c/o Geotek Communications, Inc., 20
Craig Road, Montvale, NJ 07645 (the "Borrower"), in favor of HUGHES NETWORK
SYSTEMS, INC., a Delaware corporation, having an office at 10450 Pacific Center
Court, San Diego, CA 92121 ("HNS"), for itself and as collateral agent for the
benefit of the Lenders (as defined below) (in such capacity, the "Collateral
Agent").
W I T N E S S E T H:
WHEREAS, the Borrower, Geotek Communications, Inc., as guarantor (the
"Guarantor") and HNS have entered into a Manufacturing Agreement of even date
herewith (as amended or otherwise modified from time to time, the
"Manufacturing Agreement") pursuant to which the Borrower will purchase from
HNS from time to time Base Station Equipment (as described therein);
WHEREAS, the Borrower, the Guarantor and HNS (together, with its
successors and assigns, referred to collectively as the "Lenders") have entered
into a Vendor Credit Financing Agreement of even date herewith (as amended or
otherwise modified from time to time, the "Financing Agreement") pursuant to
which the Lenders have agreed to make Advances (as defined therein) to the
Borrower as evidenced by the Notes (as defined therein) to finance the purchase
by the Borrower from HNS of Base Station Equipment pursuant to the
Manufacturing Agreement. Capitalized terms used herein and not otherwise
defined herein shall have the meanings given to such terms in the Financing
Agreement;
WHEREAS, the Lenders have required, as a condition to their entering into
the Financing Agreement, that the Borrower (i) grant to the Collateral Agent a
security interest in and to the Collateral (as defined herein) and (ii) execute
and deliver this Security Agreement in order to secure the payment and
performance by the Borrower of the Obligations.
AGREEMENT
NOW THEREFORE, in consideration of the premises and in order to induce HNS
to make the Advances under the Financing Agreement, the Borrower hereby agrees
with the Collateral Agent for its benefit and the ratable benefit of the
Lenders as follows:
SECTION 1. CREATION OF SECURITY INTEREST. The Borrower hereby grants
to the Collateral Agent for its benefit and the ratable benefit of the Lenders
a continuing security interest in all of the Borrower's right, title and
interest in and to the collateral described in
<PAGE> 51
Section 2 hereof (the "Collateral") in order to secure the payment and
performance of all Obligations.
SECTION 2. COLLATERAL. The Collateral is:
(a) All Base Station Equipment (as defined in the Financing
Agreement) and other related equipment purchased by the Borrower from HNS
utilizing Advances under the Financing Agreement and all Replacement
Communications Equipment and Reacquired Base Station Equipment (each as defined
in the Financing Agreement), whether purchased on the date hereof or hereafter
at any time by the Borrower from HNS and wherever located, including, without
limitation, mobile radio infrastructure equipment (which includes, without
limitation, remote sector equipment, mini-sector equipment, microsites, sector
controllers, power amplifier racks, transceiver racks and antenna box final
assemblies (and any wiring, harnesses, incidental equipment and hardware
contained in such mobile radio infrastructure equipment)) to be used by the
Borrower, the Guarantor, and Geotek Affiliates (as defined in the Manufacturing
Agreement, "Geotek Affiliates") and their respective joint-venture partners and
participants for the provision of mobile wireless communications services
throughout the world or in any network in which the Guarantor or any Geotek
Affiliate owns an interest or for any other purpose;
(b) all cash substituted by the Borrower for Base Station Equipment
as Collateral hereunder pursuant to the provisions of Section 5.12(c) of the
Financing Agreement; and
(c) all products and proceeds of any of the foregoing including,
without limitation, (i) whatever is now or hereafter received by the Borrower
upon the sale, exchange, collection or other disposition of any item of
Collateral, whether such proceeds constitute inventory, accounts, accounts
receivable, general intangibles, instruments, securities (including, without
limitation, United States of America Treasury Bills), credits, claims, demands,
documents, letters of credit and letter of credit proceeds, chattel paper,
documents of title, certificates of title, certificates of deposit, warehouse
receipts, bills of lading, leases, deposit accounts, money, tax refund claims,
contract rights, goods, equipment, machinery or computers and related
equipment, (ii) any such items which are now or hereafter acquired by the
Borrower with any proceeds of Collateral hereunder and (iii) any insurance now
or hereafter payable by reason of loss or damage to any item of Collateral or
any proceeds thereof.
SECTION 3. THE BORROWER'S REPRESENTATIONS AND WARRANTIES. The Borrower
represents and warrants to the Collateral Agent and the Lenders as follows:
(a) Location of Chief Executive Office. The Borrower's chief
executive office is located at c/o Geotek Communications, Inc., 20 Craig Road,
Montvale, NJ 07645.
(b) Perfection and Priority of Security Interest. With respect to
Collateral constituting Base Station Equipment to be located in a jurisdiction
subject to the Uniform Commercial Code, upon (i) the delivery (or redelivery,
as contemplated by Section 5.12(c) of the Financing
2
<PAGE> 52
Agreement) to the Borrower of such Collateral, (ii) the filing of Uniform
Commercial Code financing statements naming the Collateral Agent as secured
party and the Borrower as debtor with respect to such Collateral in the
appropriate filing office(s) in such jurisdiction, and (iii) if applicable,
compliance by the Collateral Agent with the provisions of Section 9-312(c) of
the applicable Uniform Commercial Code relating to notice to the holders of
conflicting security interests in the Collateral, if any (it being understood
by the Borrower that such conflicting security interests may not be permitted
hereunder or under the Financing Agreement and may result in an Event of
Default hereunder), the Collateral Agent shall have, for its benefit and the
ratable benefit of the Lenders, a fully-enforceable valid and perfected
first-priority security interest in such Collateral, securing the payment of
the Obligations.
(c) No Consents or Filings. Except for those obtained prior to the
date hereof, no authorization, approval, or other action by, and no notice to
or filing with, any governmental authority or regulatory body is required for
the grant of the security interest by the Borrower in the Collateral pursuant
to this Security Agreement or for the execution, delivery or performance of
this Security Agreement by the Borrower.
(d) Authority. The Borrower has full power and authority to enter
into this Security Agreement and to grant a security interest in the Collateral
as provided by this Security Agreement.
(e) Enforceable Obligation. This Security Agreement has been duly
authorized, executed and delivered by the Borrower and constitutes a legal,
valid and binding obligation of the Borrower, enforceable against the Borrower
in accordance with its terms, except as such enforceability may be limited by
the effect of any applicable bankruptcy, insolvency, reorganization, fraudulent
conveyance, moratorium or other similar laws affecting creditors' rights
generally or general principles of equity (whether considered at law or in
equity).
(f) No Conflict, etc. The execution, delivery and performance of
this Security Agreement by the Borrower and the consummation of the
transactions contemplated hereby will not conflict with or result in a breach
of any of the terms or provisions of, or constitute a default under, any
agreement, indenture, mortgage, deed of trust, equipment lease, instrument or
other document to which the Borrower, the Guarantor or any of their respective
Subsidiaries is a party.
(g) Purchase Money Security Interest. The security interest granted
to the Collateral Agent in Collateral comprised of Base Station Equipment
(other than Base Station Equipment sold and reacquired by the Borrower as
contemplated by Section 5.12(c) of the Financing Agreement) pursuant to this
Security Agreement constitutes a "purchase money security interest" as defined
in the Uniform Commercial Code in effect on the date hereof in the State of New
York (without giving effect to any disposition and reacquisition of such Base
Station Equipment as contemplated by Section 5.12 of the Financing Agreement.
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SECTION 4. COVENANTS OF THE BORROWER. During the term of this
Security Agreement, unless the Collateral Agent shall otherwise consent in
writing:
(a) Adverse Claims. The Borrower will defend the Collateral against
all claims and demands of all persons at any time claiming the same or any
interest therein unless both the Collateral Agent and the Borrower determine
that the claim or demand is not material and that, consequently, such defense
would not be consistent with good business judgment. The Borrower will not
permit any notice of any Lien with respect to the Collateral or any portion
thereof to exist or be on file in any public office, except for Permitted Liens
not otherwise waived or released in connection with the Financing Agreement.
(b) Changes Affecting Collateral. The Borrower will not (i) change
the location of its chief executive office from that listed in Section 3(a)
hereof; (ii) move or permit movement of any Collateral from the county or other
jurisdiction specified by the Borrower pursuant to Section 3.2(i)(b) or
3.2(iii)(a), as applicable, of the Financing Agreement with respect to such
Collateral or (iii) voluntarily or involuntarily change its identity or
corporate structure, unless in each case the Borrower shall have given the
Collateral Agent thirty (30) days prior written notice thereof and shall have
in advance executed and caused to be filed and/or delivered to the Collateral
Agent any financing statements or other documents required by the Collateral
Agent to maintain its fully-enforceable valid and perfected first-priority
security interest in all Collateral in accordance with Section 4(c) hereof, all
in form and substance satisfactory to the Collateral Agent.
(c) Further Assurances. The Borrower will, promptly upon request by
the Collateral Agent, execute and deliver or procure any document, give any
notices, execute and file any financing statements, mortgages or other
documents, all in form and substance reasonably satisfactory to the Collateral
Agent, mark any chattel paper, deliver any chattel paper or instruments to the
Collateral Agent and take any other actions that are necessary or, in the
opinion of the Collateral Agent, desirable to perfect or continue the
perfection and the first-priority of the Collateral Agent's security interest
in the Collateral, to protect the Collateral against the rights, claims or
interests of third persons or to effect the purposes of this Security
Agreement. The Borrower will pay all actual out-of-pocket costs and expenses
incurred in connection with any of the foregoing.
(d) Liens; Dispositions. Without the prior written consent of the
Collateral Agent, the Borrower will not in any way hypothecate or create or
permit to exist any Lien, security interest, charge or encumbrance on or other
interest in the Collateral, except for Permitted Liens not otherwise waived or
released in connection with the Financing Agreement, and the Borrower will not
sell, transfer, assign, pledge, collaterally assign, exchange or otherwise
dispose of the Collateral, except as expressly permitted by the Financing
Agreement (including Section 5.12 thereof) and this Security Agreement. If the
proceeds of any such sale are notes, instruments, documents of title, letters
of credit or chattel paper, such proceeds shall be promptly delivered to the
Collateral Agent to be held as Collateral hereunder. If the Collateral, or any
part thereof, is sold, transferred, assigned, exchanged, or otherwise disposed
of in violation of these provisions, the security interest of the Collateral
Agent shall continue in such Collateral or part
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thereof notwithstanding such sale, transfer, assignment, exchange or other
disposition, and the Borrower will hold the proceeds thereof in a separate
account for the benefit of the Collateral Agent and the Lenders. Following
such a sale, the Borrower will transfer such proceeds to the Collateral Agent
in kind.
(e) Contractual Obligations. Except as expressly contemplated by
the Financing Documents, the Borrower will not enter into any contractual
obligations which may restrict or inhibit the Collateral Agent's legal rights
to sell or otherwise dispose of the Collateral or any part thereof after the
occurrence of an Event of Default (as hereinafter defined).
(f) Protection of Security Interest. Upon the occurrence and during
the continuance of an Event of Default (as hereinafter defined), the Collateral
Agent shall have the right at any time to do any acts the Collateral Agent may
deem necessary to protect its security interest in the Collateral, including,
without limitation, the rights to pay, purchase, contest or compromise any
encumbrance, charge or Lien which, in the judgment of the Collateral Agent,
appears to be prior to or superior to the security interest granted hereunder,
and appear in and defend any action or proceeding purporting to affect its
security interest in, and/or the value of, the Collateral. Without limiting
the generality of Section 9.7 of the Financing Agreement, the Borrower hereby
agrees to reimburse the Collateral Agent for all payments made and expenses
incurred under this Security Agreement including fees, expenses and
disbursements of attorneys and paralegals (including the allocated costs of
inside counsel) acting for the Collateral Agent, including any of the foregoing
payments under or acts taken to protect its security interest in the
Collateral, which amounts shall be secured under this Security Agreement, and
agrees that it shall be bound by any payment made or act taken by the
Collateral Agent hereunder absent the Collateral Agent's gross negligence or
willful misconduct. The Collateral Agent shall have no obligation to make any
of the foregoing payments or perform any of the foregoing acts.
(g) Taxes. The Borrower shall pay and discharge all taxes,
assessments and charges or levies against the Collateral prior to delinquency
thereof, and shall keep the Collateral free of all unpaid taxes, assessments
and charges (other than to the extent such unpaid taxes, assessments and
charges constitute Permitted Liens).
(h) Insurance. The Borrower, at its own expense, shall have and
maintain, or cause to be maintained, insurance at all times with respect to all
Collateral against such risks and liabilities, with such carriers and in such
amounts as the Collateral Agent may reasonably require. Such insurance shall
be payable to the Collateral Agent and to the Borrower as their interests may
appear, shall include a loss payee endorsement, and shall not be subject to
cancellation or reduction in coverage without thirty (30) days' prior written
notice to the Collateral Agent. The Borrower shall supply evidence of such
insurance to the Collateral Agent upon request.
(i) Inspection. The Collateral Agent shall have, at all times, with
reasonable prior notice (except after the occurrence and during the continuance
of an Event of Default (as hereinafter defined), when no notice shall be
required, the right to enter into and upon any premises where any of the
Collateral or records with respect thereto are located for the purpose
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of inspecting the same, performing an audit, making copies of records,
observing the use of any part of the Collateral, protecting the Collateral
Agent's security interest in the Collateral, or otherwise determining whether
the Borrower is in compliance with the terms of this Security Agreement.
(j) Priority. The Borrower, at its own expense, will provide the
Collateral Agent with all information, filings and other documentation and
cooperation necessary to enable the Collateral Agent to comply with the
provisions of Section 9-312 of the applicable Uniform Commercial Code in order
to preserve the priority of the Collateral Agent's purchase money security
interest in the Collateral against the holders of conflicting security
interests in such Collateral, if any, it being understood by the Borrower that
such conflicting security interests may not be permitted hereunder or under the
Financing Agreement and may result in an Event of Default hereunder.
SECTION 5. EVENTS OF DEFAULT. The occurrence of any Default (as
defined in the Financing Agreement) shall constitute an event of default
("Event of Default") under this Security Agreement.
SECTION 6. REMEDIES UPON AN EVENT OF DEFAULT.
Upon the occurrence and during the continuance of an Event of
Default, the Collateral Agent may, in addition to the remedies provided for in
Article VIII of the Financing Agreement, without notice to or demand upon the
Borrower, do any one or more of the following:
(a) Exercise any or all of the rights and remedies provided for by
the applicable Uniform Commercial Code, specifically including, without
limitation, the right to recover the fees and expenses incurred by the
Collateral Agent in the enforcement of this Security Agreement or in connection
with the Borrower's redemption of the Collateral, including fees, expenses and
disbursements of attorneys and paralegals (including the allocated costs of
inside counsel).
(b) Require the Borrower to assemble the Collateral or any part
thereof and make it available at one or more places as the Collateral Agent may
reasonably designate and to deliver possession of the Collateral or any part
thereof to the Collateral Agent, who shall have full right to enter upon any or
all of the Borrower's premises and property to exercise the Collateral Agent's
rights hereunder.
(c) Use, manage, operate and control the Collateral in order to
preserve such Collateral or its value, including, without limitation, the
rights to take possession of all of the Collateral, to exclude any third
parties, whether or not claiming under the Borrower, from the Borrower's
premises and property, to make repairs, replacements, alterations, additions
and improvements to the Collateral, and to dispose of all or any portion of the
Collateral in the ordinary course of the Borrower's business.
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(d) Use (and assign or license such right to use), in connection
with any repair, replacement, alteration, addition, improvement, assembly, use,
sale or disposition of the Collateral, any intellectual property (including,
without limitation, patents, copyrights, trademarks and service marks) or other
technical knowledge or process used or utilized from time to time by the
Borrower or within the power of the Borrower to license or sublicense.
(e) Enforce one or more remedies hereunder, successively or
concurrently, and such action shall not operate to estop or prevent the
Collateral Agent from pursuing any other or further remedy which it may have,
and any repossession or retaking or sale of the Collateral pursuant to the
terms hereof shall not operate to release the Borrower from its obligations
hereunder.
(f) In connection with any public or private sale under the
applicable Uniform Commercial Code (or the equivalent with respect to a
jurisdiction not subject to the Uniform Commercial Code), the Collateral Agent
shall give the Borrower at least fifteen (15) days' prior written notice of the
time and place of any public sale of the Collateral or of the time after which
any private sale or other intended disposition thereof may be made, which shall
be deemed to be reasonable notice of such sale or other disposition. Such
notice may be given to the Borrower in accordance with the provisions of
Section 11.1 hereof.
(g) Proceed by an action or actions at law or in equity to foreclose
this Security Agreement and sell the Collateral, or any portion thereof,
pursuant to a judgment or decree of a court or courts of competent
jurisdiction.
(h) If the Collateral Agent recovers possession of all or any part
of the Collateral pursuant to a writ of possession or other judicial process,
whether prejudgment or otherwise, the Collateral Agent may thereafter retain,
sell or otherwise dispose of such Collateral in accordance with this Security
Agreement or the applicable Uniform Commercial Code, and following such
retention, sale or other disposition, the Collateral Agent may voluntarily
dismiss without prejudice the judicial action in which such writ of possession
or other judicial process was issued. The Borrower hereby consents to the
voluntary dismissal by the Collateral Agent of such judicial action, and the
Borrower further consents to the exoneration of any bond that the Collateral
Agent files in such action.
SECTION 7. NO ASSUMPTION OF DUTIES; REASONABLE CARE. The rights and
powers granted to the Collateral Agent hereunder are being granted in order to
preserve and protect the Collateral Agent's security interest in and to the
Collateral granted hereby and shall not be interpreted to, and shall not,
impose any duties on the Collateral Agent in connection therewith other than
such duties as may be imposed by Article 9 of the Uniform Commercial Code and
other applicable laws and not expressly and validly waived hereunder. The
Collateral Agent shall be deemed to have exercised reasonable care in the
custody and preservation of the Collateral in its possession if the Collateral
is accorded treatment substantially equal to that which the Collateral Agent
accords its own property, it being understood that the Collateral Agent shall
not have any responsibility for (i) ascertaining or taking action with respect
to any matters relative to any Collateral, whether or not the Collateral Agent
has or is deemed to have
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knowledge of such matters, or (ii) taking any necessary steps to preserve
rights against any parties with respect to any Collateral.
SECTION 8. SECURITY INTEREST ABSOLUTE. All rights of the Collateral
Agent and security interests hereunder, and all obligations of the Borrower
hereunder, shall be absolute and unconditional irrespective of, and unaffected
by:
(a) any lack of validity or enforceability of any Facility Document;
(b) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Obligations, or any other amendment or
waiver of or any consent to any departure from any Facility Document;
(c) any exchange, surrender, release or non-perfection of any other
collateral, or any release or amendment or waiver of or consent to
departure from any guaranty, for all or any of the Obligations; or
(d) any other circumstance which might otherwise constitute a
defense available to, or a discharge of, the Borrower in respect of the
Obligations or of this Security Agreement.
SECTION 9. DISTRIBUTION OF PROCEEDS UPON EVENT OF DEFAULT. Upon the
sale or other disposition of any Collateral pursuant to Section 6 hereof, the
proceeds of such sale or other disposition shall be applied by the Collateral
Agent in the following order of priority:
(a) first, to the reasonable out-of-pocket costs and expenses of the
Collateral Agent incurred in connection with the performance of its duties
under this Security Agreement;
(b) second, to the Lenders pro rata based on their respective
Proportionate Shares until payment in full of all Obligations; and
(c) third, delivered to the Borrower.
For the avoidance of doubt, none of the proceeds of such sale or
other disposition shall be distributed to the Lenders pursuant to Section 9(b)
hereof until the Collateral Agent has received full payment for all expenses
incurred by it in connection with the performance of its duties under this
Security Agreement and none of the proceeds of such sale or other disposition
shall be distributed to the Borrower under Section 9(c) hereof until all of the
Obligations have been paid in full.
SECTION 10. THE COLLATERAL AGENT AS THE LENDERS' CONTRACTUAL
REPRESENTATIVE.
SECTION 10.1. Appointment of Collateral Agent. Each Lender hereby
designates HNS as Collateral Agent to act as herein specified. Each Lender
hereby irrevocably authorizes the
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Collateral Agent to take such action on its behalf under the provisions of this
Security Agreement and any other instruments and agreements referred to herein
and to exercise such powers and to perform such duties hereunder and thereunder
as are specifically delegated to or required of the Collateral Agent by the
terms hereof and thereof and such other powers as are reasonably incidental
thereto. The Collateral Agent shall hold all Collateral and proceeds from the
Collateral for the benefit of itself and the Lenders to be distributed as
provided herein. The Collateral Agent may perform any of its duties hereunder
by or through its agents or employees.
SECTION 10.2. Nature of Duties of Collateral Agent. The Collateral Agent
shall have no duties or responsibilities except those expressly set forth in
this Security Agreement. Neither the Collateral Agent nor any of its officers,
directors, employees or agents shall be liable to the Lenders for any action
taken or omitted by it as such hereunder or in connection herewith, unless
caused by its or their gross negligence or willful misconduct. The duties of
the Collateral Agent shall be mechanical and administrative in nature, and the
Collateral Agent shall not have by reason of this Security Agreement a
fiduciary relationship in respect of any Lender.
SECTION 10.3. Lack of Reliance on Collateral Agent. The Collateral Agent
shall not be required to make any inquiry concerning either the performance or
observance of any of the terms, provisions or conditions of this Security
Agreement, the Financing Agreement or the Notes or the existence or possible
existence of any Event of Default, unless any Lender specifically requests the
Collateral Agent to do so in writing.
SECTION 10.4. Certain Rights of the Collateral Agent. The Collateral
Agent shall have the right to request instructions from the Majority Lenders at
any time. If the Collateral Agent shall request instructions from the Majority
Lenders with respect to any act or action (including the failure to act) in
connection with this Security Agreement, the Collateral Agent shall be entitled
to refrain from such act or taking such action unless and until the Collateral
Agent shall have received instructions from the Majority Lenders, and the
Collateral Agent shall not incur liability to any Person by reason of so
refraining. Without limiting the foregoing, no Lender shall have any right of
action whatsoever against the Collateral Agent as a result of the Collateral
Agent acting or refraining from acting hereunder in accordance with the
instructions of the Majority Lenders.
SECTION 10.5. Reliance by Collateral Agent. The Collateral Agent shall
be entitled to rely, and shall be fully protected in relying, upon any note,
writing, resolution, notice, statement, certificate, telex, teletype or
telecopier message, cablegram, radiogram, order or other documentary,
teletransmission or telephone message believed by it to be genuine and correct
and to have been signed, sent or made by the proper Person. The Collateral
Agent may consult with legal counsel (including counsel for the Borrower with
respect to matters concerning the Borrower), independent public accountants and
other experts selected by it and shall not be liable for any action taken or
omitted to be taken by it in good faith in accordance with the advice of such
counsel, accountants or experts.
SECTION 10.6. Indemnification of Collateral Agent. To the extent the
Collateral Agent is not reimbursed and indemnified by the Borrower, each Lender
will reimburse and indemnify
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the Collateral Agent for and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses
(including counsel fees and disbursements) or disbursements of any kind or
nature whatsoever which may be imposed on, incurred by or asserted against the
Collateral Agent in performing its duties hereunder, in any way relating to or
arising out of this Security Agreement, provided that no Lender shall be liable
for any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements resulting from the
Collateral Agent's gross negligence or willful misconduct.
SECTION 10.7. The Collateral Agent in its Individual Capacity . With
respect to its obligation as a Lender under this Security Agreement, the
Collateral Agent shall have the same rights and powers hereunder as any other
Lender and may exercise the same as though it was not performing the duties
specified herein; and the term "Lenders" or any similar term shall, unless the
context clearly otherwise indicates, include the Collateral Agent in its
individual capacity as a Lender. The Lenders acknowledge that HNS is the
seller of the Base Station Equipment to the Borrower and has engaged in certain
other business transactions with the Borrower and other Geotek Affiliates and
agree that the Collateral Agent may lend money to, acquire equity interests in,
and generally engage in any kind of financial advisory or other business with
the Borrower or any other Geotek Affiliate as if it were not performing the
duties specified herein, and may accept fees and other consideration from the
Borrower for services in connection with this Security Agreement and otherwise
without having to account for the same to the Lenders.
SECTION 10.8. Successor Collateral Agent.
(a) The Collateral Agent may, upon five (5) Business Days' notice to
the Lenders and the Borrower, resign at any time (effective upon the
appointment of a successor collateral agent pursuant to the provisions of
this Section 10.8) by giving written notice thereof to the Lenders and the
Borrower. Upon any such resignation, the Majority Lenders shall have the
right, upon five (5) days' notice and approval by the Borrower (which
approval shall not be unreasonably withheld), to appoint a successor
collateral agent. If no successor collateral agent (i) shall have been so
appointed by the Majority Lenders, and (ii) shall have accepted such
appointment, within thirty (30) days after the Collateral Agent's giving
of notice of resignation, then, upon five (5) days' notice, the Collateral
Agent may, on behalf of the Lenders, appoint a successor collateral agent.
(b) Upon the acceptance of any appointment as collateral agent
hereunder by a successor collateral agent, such successor collateral agent
shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the Collateral Agent, all references in this
Security Agreement to "Collateral Agent" shall refer to such successor
collateral agent and the Collateral Agent shall be discharged from its
duties and obligations under this Security Agreement. After the
Collateral Agent's resignation hereunder as collateral agent, the
provisions of Section 10 hereof shall continue to inure to its benefit as
to any actions taken or omitted to be taken by it while it was Collateral
Agent under this Security Agreement.
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(c) In the event of a material breach by the Collateral Agent of its
duties hereunder, the Collateral Agent may be removed by the Majority
Lenders for cause and the provisions of this Section 10.8 shall apply to
the appointment of a successor collateral agent.
SECTION 10.9. Collateral Matters.
(a) The Collateral Agent is hereby authorized on behalf of all of
the Lenders, without the necessity of any notice to or further consent
from any Lender, from time to time prior to an Event of Default, to take
any action with respect to any Collateral which may be necessary to
perfect and maintain perfected the security interest in and Liens upon the
Collateral.
(b) The Lenders hereby authorize the Collateral Agent to, and the
Collateral Agent shall, release any Lien granted to or held by the
Collateral Agent upon any Collateral (i) upon the payment and satisfaction
of all of the Obligations, (ii) constituting property being sold or
disposed of in conformance with the requirements of the Financing
Agreement and this Security Agreement (provided that the proceeds of such
sale are applied or pledged as required therein and herein) or (iii) if
approved, authorized or ratified in writing by the Majority Lenders. Upon
request by the Collateral Agent at any time, the Lenders will confirm in
writing the Collateral Agent's authority to release particular types or
items of Collateral pursuant to this Section 10.9.
(c) Upon any sale and transfer of Collateral which is expressly
permitted pursuant to the terms of the Financing Agreement or this
Security Agreement or consented to in writing by the Majority Lenders, and
upon at least five (5) Business Days' prior written request by the
Borrower, the Collateral Agent shall (and is hereby irrevocably authorized
by the Lenders to) execute such documents as may be necessary to evidence
the release of the Liens granted to the Collateral Agent for its benefit
and the benefit of the Lenders herein or pursuant hereto upon the
Collateral that was sold or transferred; provided that (i) the Collateral
Agent shall not be required to execute any such document on terms which,
in the Collateral Agent's opinion, would expose the Collateral Agent or
the Lenders to liability or create any obligation or entail any
consequence other than the release of such Liens without recourse or
warranty and (ii) such release shall not in any manner discharge, affect
or impair the Obligations or any Liens upon all interests retained by the
Borrower, including (without limitation) the proceeds of the sale, all of
which shall continue to constitute part of the Collateral. In the event
of any sale or transfer of Collateral, or any foreclosure with respect to
any of the Collateral, the Collateral Agent shall be authorized to deduct
all of the expenses reasonably incurred by the Collateral Agent from the
proceeds of any such sale, transfer or foreclosure.
(d) The Collateral Agent shall have no obligation whatsoever to the
Lenders or to any other Person to assure that the Collateral exists or is
owned by the Borrower or is cared for, protected or insured or that the
Liens granted to the Collateral Agent herein or pursuant hereto have been
properly or sufficiently or lawfully created, perfected, protected or
enforced or are entitled to any particular priority, or to exercise or to
continue exercising
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at all or in any manner or under any duty of care, disclosure or fidelity
any of the rights, authorities and powers granted or available to the
Collateral Agent in this Section 10.9, it being understood and agreed that
in respect of the Collateral, or any act, omission or event related
thereto, the Collateral Agent may act in any manner it may deem
appropriate, in its sole discretion, given the Collateral Agent's own
interest in the Collateral as one of the Lenders and that the Collateral
Agent shall have no duty or liability whatsoever to the Lenders, except
for its gross negligence or willful misconduct.
SECTION 10.10. Actions with Respect to Events of Default. The Collateral
Agent shall take such action with respect to an Event of Default as shall be
directed by the Majority Lenders; provided that until the Collateral Agent
shall have received such directions, the Collateral Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with
respect to such Event of Default as it shall deem advisable and in the best
interests of the Lenders.
Any amendment or waiver of any provision of this Security Agreement
and any consent to any departure by the Borrower from any provision of this
Security Agreement shall be effected by the Collateral Agent pursuant to
Section 11.4 hereof and only upon the written authorization of the Majority
Lenders.
SECTION 10.11. Delivery of Information. The Collateral Agent shall not be
required to deliver to any Lender originals or copies of any documents,
instruments, notices, communications or other information received by the
Collateral Agent from the Borrower, the Majority Lenders, any Lender or any
other Person under or in connection with this Security Agreement except (i) as
specifically provided in this Security Agreement and (ii) as specifically
requested from time to time in writing by any Lender with respect to a specific
document, instrument, notice or other written communication received by and in
the possession of the Collateral Agent at the time of receipt of such request
and then only in accordance with such specific request.
SECTION 11. MISCELLANEOUS PROVISIONS.
SECTION 11.1. Notices. All notices, approvals, consents or other
communications required or desired to be given hereunder shall be in the form
and manner, and delivered to each of the parties hereto at their respective
addresses, set forth in Article X of the Financing Agreement or Article XI of
the Loan Agreement, as applicable.
SECTION 11.2. Headings. Section headings in this Security Agreement are
for convenience of reference only, and shall not govern the interpretation of
any of the provisions of this Security Agreement.
SECTION 11.3. Severability. Any provision in this Security Agreement
that is held to be inoperative, unenforceable, or invalid in any jurisdiction
shall, as to that jurisdiction, be inoperative, unenforceable, or invalid
without affecting the remaining provisions in that
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jurisdiction or the operation, enforceability, or validity of that provision in
any other jurisdiction, and to this end the provisions of this Security
Agreement are declared to be severable.
SECTION 11.4. Amendments, Waivers and Consents. No delay or omission of
the Collateral Agent to exercise any right under this Security Agreement shall
impair such right or be construed to be a waiver of any Event of Default or an
acquiescence therein. Any single or partial exercise of any such right shall
not preclude other or further exercise thereof or the exercise of any other
right and no waiver, amendment or other variation of the terms, conditions or
provisions of this Security Agreement whatsoever shall be valid unless in
writing signed by the Collateral Agent, and then only to the extent in such
writing specifically set forth. All remedies contained in this Security
Agreement or by law afforded shall be cumulative and all shall be available to
the Collateral Agent, for the benefit of the Lenders, until the Obligations
have been paid in full.
SECTION 11.5. Interpretation of Agreement. Time is of the essence in
each provision of this Security Agreement of which time is an element. All
terms not defined herein or in the Financing Agreement shall have the meaning
set forth in the applicable Uniform Commercial Code, except where the context
otherwise requires. To the extent a term or provision of this Security
Agreement conflicts with the Financing Agreement and is not dealt with herein
with more specificity, the Financing Agreement shall control with respect to
the subject matter of such term or provision. Acceptance of or acquiescence in
a course of performance rendered under this Security Agreement shall not be
relevant in determining the meaning of this Security Agreement even though the
accepting or acquiescing party had knowledge of the nature of the performance
and opportunity for objection.
SECTION 11.6. Continuing Security Interest; Transfer of Notes. This
Security Agreement shall create a continuing security interest in the
Collateral and shall (i) remain in full force and effect until payment in full
of the Obligations, (ii) be binding upon the Borrower, its successors and
assigns, and (iii) inure to the benefit of the Collateral Agent, the Lenders
and their respective successors, transferees and assigns. Without limiting the
generality of clause (iii), above, any Lender may, except as limited by the
express terms of the Financing Agreement or the Notes, assign or otherwise
transfer any Note held by it to any other Person, and such other Person shall
thereupon become vested with all the benefits in respect thereof granted to
such Lender herein or otherwise.
SECTION 11.7. Reinstatement. To the extent permitted by law, this
Security Agreement shall continue to be effective or be reinstated, as the case
may be, if at any time any amount received by the Collateral Agent or any
Lender in respect of the Obligations is rescinded or must otherwise be restored
or returned by such Lender upon the insolvency, bankruptcy, dissolution,
liquidation or reorganization of the Borrower or upon the appointment of any
receiver, intervenor, conservator, trustee or similar official for the Borrower
or any substantial part of its assets, or otherwise, all as though such
payments had not been made.
SECTION 11.8. Survival of Provisions. All representations, warranties
and covenants of the Borrower contained herein shall survive the execution and
delivery of this Security
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Agreement, and shall terminate only upon the full and final payment and
performance by the Borrower of the Obligations secured hereby.
SECTION 11.9. Power of Attorney. The Borrower hereby irrevocably
appoints and constitutes the Collateral Agent, or any Person or agent the
Collateral Agent may designate, as the Borrower's attorney-in-fact to exercise
all of the following powers upon the occurrence and during the continuance of
an Event of Default (as defined in Section 5 hereof): (i) collection of
proceeds of any Collateral; (ii) conveyance of any item of Collateral to any
purchaser thereof; (iii) giving of any notices or recording of any Liens
hereunder; (iv) making of any payments or taking any acts hereunder and (v)
paying or discharging taxes or Liens levied or placed upon or threatened
against the Collateral, the legality or validity thereof and the amounts
necessary to discharge the same to be determined by the Collateral Agent in its
sole discretion, and such payments made by the Collateral Agent to become the
obligations of the Borrower to the Collateral Agent, due and payable
immediately without demand. The Collateral Agent's authority hereunder shall
include, without limitation, the authority to endorse and negotiate, for the
Collateral Agent's own account, any checks or instruments in the name of the
Borrower, execute and give receipt for any certificate of ownership or any
document, transfer title to any item of Collateral, sign the Borrower's name on
all financing statements or any other documents deemed necessary or appropriate
to preserve, protect or perfect the security interest in the Collateral and to
file the same, prepare, file and sign the Borrower's name on any notice of
Lien, and prepare, file and sign the Borrower's name on a proof of claim in
bankruptcy or similar document against any creditor of the Borrower, and to
take any other actions arising from or incident to the powers granted to the
Collateral Agent in this Security Agreement. This power of attorney is coupled
with an interest and is irrevocable by the Borrower.
SECTION 11.10. Authority of the Collateral Agent; Indemnification. The
Collateral Agent shall have and be entitled to exercise all powers hereunder
which are specifically granted to the Collateral Agent by the terms hereof,
together with such powers as are reasonably incident thereto. The Collateral
Agent may perform any of its duties hereunder or in connection with the
Collateral by or through agents or employees and shall be entitled to retain
counsel and to act in reliance upon the advice of counsel concerning all such
matters. Neither the Collateral Agent nor any Lender, nor any director,
officer, employee, attorney or agent of the Collateral Agent or any Lender
shall be liable to the Borrower for any action taken or omitted to be taken by
it or them hereunder, except for its or their own gross negligence or willful
misconduct, nor shall the Collateral Agent be responsible for the validity,
effectiveness or sufficiency of this Security Agreement or of any document or
security furnished pursuant hereto. The Collateral Agent and its directors,
officers, employees, attorneys and agents shall be entitled to rely on any
communication, instrument or document reasonably believed by it or them to be
genuine and correct and to have been signed or sent by the proper Person or
Persons. The Borrower agrees to indemnify and hold harmless the Collateral
Agent and its officers, directors, employees and agents from and against any
and all costs, expenses (including reasonable fees, expenses and disbursements
of attorneys and paralegals), claims and liabilities incurred by the Collateral
Agent (in its capacity as Collateral Agent) or such officers, directors,
employees and agents (in each case in their capacity as such) hereunder as a
result of the Borrower's actions, breach or assertion of a defense hereunder or
under the other Financing Documents, unless such claim or
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<PAGE> 64
liability shall be due to willful misconduct or gross negligence on the part of
the Collateral Agent or such Person, as applicable.
SECTION 11.11. Release; Termination of Agreement. Subject to the
provisions of Section 11.8 hereof, this Security Agreement shall terminate upon
full and final payment and performance of all the Obligations. At such time,
the Collateral Agent shall, at the request and expense of the Borrower,
promptly reassign and redeliver to the Borrower all of the Collateral hereunder
which has not been sold, disposed of, retained or applied by the Collateral
Agent, for its benefit and the benefit of the Lenders, in accordance with the
terms hereof. Such reassignment and redelivery shall be without warranty by or
recourse to the Collateral Agent, except as to the absence of any prior
assignments by the Collateral Agent of its interest in the Collateral, and
shall be at the expense of the Borrower.
SECTION 11.12. Counterparts. This Security Agreement may be executed in
any number of counterparts, all of which taken together shall constitute one
agreement, and any of the parties hereto may execute this Security Agreement by
signing any such counterpart.
SECTION 11.13. SUBMISSION TO JURISDICTION; WAIVERS. THE BORROWER AND THE
GUARANTOR EACH HEREBY IRREVOCABLY AND UNCONDITIONALLY:
(a) SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS SECURITY AGREEMENT, OR FOR RECOGNITION AND
ENFORCEMENT OF ANY JUDGMENT IN RESPECT HEREOF, TO THE NON-EXCLUSIVE GENERAL
JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK, THE COURTS OF THE UNITED
STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK AND APPELLATE COURTS
FROM ANY THEREOF;
(b) CONSENTS THAT ANY SUCH ACTION OR PROCEEDING MAY BE BROUGHT IN
SUCH COURTS AND WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE
VENUE OF ANY SUCH ACTION OR PROCEEDING IN ANY SUCH COURT OR THAT SUCH ACTION OR
PROCEEDING WAS BROUGHT IN AN INCONVENIENT FORUM AND AGREES NOT TO PLEAD OR
CLAIM THE SAME;
(c) AGREES THAT SERVICE OF PROCESS IN ANY SUCH ACTION OR PROCEEDING
MAY BE EFFECTED BY MAILING A COPY THEREOF BY REGISTERED OR CERTIFIED MAIL (OR
ANY SUBSTANTIALLY SIMILAR FORM OF MAIL), POSTAGE PREPAID, TO THE BORROWER AT
ITS ADDRESS SET FORTH BELOW OR AT SUCH OTHER ADDRESS OF WHICH THE COLLATERAL
AGENT SHALL HAVE BEEN NOTIFIED PURSUANT HERETO;
(d) AGREES THAT NOTHING HEREIN SHALL AFFECT THE RIGHT TO EFFECT
SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE
RIGHT OF THE COLLATERAL AGENT OR ANY OF THE LENDERS TO COMMENCE LEGAL
PROCEEDINGS AGAINST THE BORROWER OR ITS PROPERTY IN ANY OTHER JURISDICTION;
15
<PAGE> 65
(e) WAIVES ALL RIGHTS OF NOTICE AND HEARING OF ANY KIND PRIOR TO THE
EXERCISE BY THE COLLATERAL AGENT OR ANY OF THE LENDERS OF THEIR RIGHTS FROM AND
AFTER AN EVENT OF DEFAULT TO REPOSSESS THE COLLATERAL WITH JUDICIAL PROCESS OR
TO REPLEVY, ATTACH OR LEVY UPON THE COLLATERAL. THE BORROWER WAIVES THE
POSTING OF ANY BOND OTHERWISE REQUIRED OF THE COLLATERAL AGENT OR ANY OF THE
LENDERS IN CONNECTION WITH ANY JUDICIAL PROCESS OR PROCEEDING TO OBTAIN
POSSESSION OF, REPLEVY, ATTACH OR LEVY UPON THE COLLATERAL, TO ENFORCE ANY
JUDGMENT OR OTHER SECURITY FOR THE OBLIGATIONS, TO ENFORCE ANY JUDGMENT OR
OTHER COURT ORDER ENTERED IN FAVOR OF SUCH PARTY OR TO ENFORCE BY SPECIFIC
PERFORMANCE, TEMPORARY RESTRAINING ORDER OR PRELIMINARY OR PERMANENT
INJUNCTION, THIS SECURITY AGREEMENT, OR ANY OTHER AGREEMENT OR DOCUMENT BETWEEN
THE BORROWER AND ANY SUCH PARTY.
(f) WAIVES THE RIGHT TO ASSERT ANY SETOFF, COUNTERCLAIM OR
CROSS-CLAIM IN RESPECT OF, AND ALL STATUTES OF LIMITATIONS WHICH MAY BE
RELEVANT TO, SUCH ACTION OR PROCEEDING; AND
(g) WAIVES DUE DILIGENCE, DEMAND, PRESENTMENT AND PROTEST AND ANY
NOTICES THEREOF AS WELL AS NOTICE OF NONPAYMENT.
SECTION 11.14. JURY TRIAL. THE BORROWER, THE COLLATERAL AGENT AND THE
LENDERS EACH HEREBY WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATING TO THIS SECURITY AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY.
SECTION 11.15. GOVERNING LAW. THIS SECURITY AGREEMENT SHALL BE CONSTRUED
IN ACCORDANCE WITH AND GOVERNED BY THE INTERNAL LAWS (AND NOT THE LAW OF
CONFLICTS) OF THE STATE OF NEW YORK.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the undersigned has caused this Security
Agreement to be duly executed and delivered as of the day and year first above
written.
Borrower:
GEOTEK FINANCING CORPORATION
By:
--------------------------------------
Title:
-----------------------------------
Address: c/o Geotek Communications, Inc.
20 Craig Road
Montvale, NJ 07645
Telecopy No.: (201) 930-9614
Collateral Agent:
HUGHES NETWORK SYSTEMS, INC.,
as Collateral Agent
By:
--------------------------------------
Title:
-----------------------------------
Address: 10450 Pacific Center Court
San Diego, CA 92121
Telecopy No.: (619) 457-4994
With respect to Section 10 only:
Lender
HUGHES NETWORK SYSTEMS, INC.
By:
--------------------------------------
Title:
-----------------------------------
Address: 10450 Pacific Center Court
San Diego, CA 92121
Telecopy No.: (619) 457-4994
<PAGE> 1
EXHIBIT V
[EXECUTION COPY]
AMENDED AND RESTATED BORROWER PLEDGE AGREEMENT
THIS AMENDED AND RESTATED BORROWER PLEDGE AGREEMENT (this "Agreement")
is made and entered into as of September 27, 1996 by GEOTEK FINANCING
CORPORATION, a Delaware corporation, having its principal office at c/o Geotek
Communications, Inc., 20 Craig Road, Montvale, NJ 07645 (the "Pledgor"), in
favor of HUGHES NETWORK SYSTEMS, INC., a Delaware corporation, having an office
at 10450 Pacific Center Court, San Diego, CA 92121 ("HNS"), for itself and as
collateral agent for the benefit of the Lenders (as defined below) (in such
capacity, the "Collateral Agent") and AMENDS AND RESTATES IN FULL the Borrower
Pledge Agreement dated as of December 21, 1995, among the Pledgor and HNS, as
lender (HNS, together with its successors and assigns, referred to collectively
as the "Loan Agreement Lenders") (the "Original Pledge Agreement").
W I T N E S S E T H:
WHEREAS, the Pledgor, Geotek Communications, Inc., as guarantor (the
"Guarantor") and HNS (HNS, together with its successors and assigns and the
other Lenders described in the Financing Agreement referred to collectively as
the "Financing Agreement Lenders" and, together with the Loan Agreement Lenders,
referred to collectively as the "Lenders") have entered into a Vendor Credit
Financing Agreement of even date herewith (as amended or otherwise modified from
time to time, the "Financing Agreement") pursuant to which the Financing
Agreement Lenders have agreed to make Advances (as defined therein) to the
Pledgor as evidenced by the Notes (as defined therein). Capitalized terms used
herein and not otherwise defined herein shall have the meanings given to such
terms in the Financing Agreement;
WHEREAS, pursuant to the Original Pledge Agreement, the Pledgor pledged
to the Loan Agreement Lenders all of the Pledgor's right, title and interest in
and to the outstanding shares of stock set forth on Schedule I hereto (the
"Pledged Shares") and those certain inter-company promissory notes in favor of
the Pledgor set forth on Schedule II hereto (the "Pledged Notes" and, together
with the Pledged Shares, the "Pledged Securities") as collateral for all
obligations of the Pledgor (the "Loan Agreement Obligations") under that certain
Loan Agreement, dated as of December 21, 1996 (the "Loan Agreement"), among the
Pledgor, the Guarantor and HNS, as evidenced by the promissory notes executed
and delivered to any Loan Agreement Lender by the Pledgor in connection with the
Loan Agreement (the "Loan Agreement Notes" and, together with the Notes, the
"Secured Notes");
WHEREAS, the Financing Agreement Lenders have required, as a condition
to their entering into the Financing Agreement, that the Pledgor grant to the
Collateral Agent, for its benefit and the ratable benefit of the Financing
Agreement Lenders, a security interest in the Pledged Securities to secure the
Obligations, such security interest to be shared equally and ratably with the
Loan Agreement Lenders; and
<PAGE> 2
WHEREAS, the Loan Agreement Lenders are willing to share their security
interest in the Pledged Securities equally and ratably with the Financing
Agreement Lenders.
AGREEMENT
NOW THEREFORE, in consideration of the premises and in order to induce
the Financing Agreement Lenders to make the Advances under the Financing
Agreement and the Loan Agreement Lenders to make the loans under the Loan
Agreement, the Pledgor hereby agrees with the Collateral Agent as follows:
SECTION 1. PLEDGE. The Pledgor hereby pledges to the Collateral Agent,
for its benefit and the ratable benefit of the Lenders, and grants to the
Collateral Agent, for its benefit and the ratable benefit of the Lenders, a
continuing first priority perfected security interest in, the following (the
"Pledged Collateral"):
(a) the Pledged Shares and the certificates representing the Pledged
Shares, and all products and proceeds of any of the Pledged Shares
including, without limitation, all dividends, cash, instruments,
subscriptions, warrants and any other rights and options and other property
from time to time received, receivable or otherwise distributed in respect
of or in exchange for any or all of the Pledged Shares; and
(b) all additional shares of stock of, or equity interests in, Holdings
from time to time acquired by the Pledgor in any manner, and the
certificates representing such additional shares (any such additional
shares shall constitute part of the Pledged Shares under and as defined in
this Agreement), and all products and proceeds of any of such additional
Pledged Shares, including, without limitation, all dividends, cash,
instruments, subscriptions, warrants and any other rights and options and
other property from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of such additional
Pledged Shares; and
(c) the Pledged Notes and the instruments representing the Pledged
Notes, and all products and proceeds of the Pledged Notes, including,
without limitation, all interest and principal payments, instruments, and
other property from time to time received, receivable or otherwise
distributed in respect of or in exchange for the Pledged Notes; and
(d) all additional promissory notes of Holdings from time to time held
by the Pledgor in any manner, and the instruments representing such
additional promissory notes (any such additional promissory notes shall
constitute part of the Pledged Notes under and as defined in this
Agreement) and all products and proceeds of any such additional promissory
notes, including, without limitation, all interest and principal payments,
instruments, and other property from time to time received, receivable or
otherwise distributed in respect of or in exchange for any such additional
promissory notes; and
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<PAGE> 3
(e) all other claims of any kind or nature and any instruments,
certificates, chattel paper or other writings evidencing such claims,
whether in contract or tort and whether arising by operation of law,
consensual agreement or otherwise, at any time acquired by the Pledgor
against any Subsidiary of the Pledgor.
SECTION 2. SECURITY FOR SECURED OBLIGATIONS. This Agreement secures the
payment of all of the Obligations and the Loan Agreement Obligations
(collectively, the "Secured Obligations"), whether for principal, interest,
fees, expenses or otherwise, and all obligations of the Pledgor now or hereafter
existing under this Agreement (including, without limitation, all expenses as
set forth under Section 16 hereof), any of the Loan Documents (as defined by the
Loan Agreement, the "Loan Documents") or any of the Financing Documents (the
Secured Obligations and all such obligations of the Pledgor now or hereafter
existing under this Agreement being referred to herein as the "Liabilities").
SECTION 3. DELIVERY OF PLEDGED COLLATERAL. All certificates or
instruments representing or evidencing the Pledged Collateral shall be delivered
to and held by the Collateral Agent, for its benefit and the ratable benefit of
the Lenders, pursuant hereto and shall be in suitable form for transfer by
delivery, or shall be accompanied by duly executed instruments of transfer or
assignment in blank, all in form and substance satisfactory to the Collateral
Agent.
SECTION 4. REPRESENTATIONS AND WARRANTIES. The Pledgor represents and
warrants as follows:
(a) The Pledged Shares have been duly authorized and validly issued and
are fully paid and non-assessable. The Pledged Notes have been duly
authorized and executed by Holdings and constitute the legal, valid and
binding obligations of Holdings.
(b) The Pledgor is the legal and beneficial owner of the Pledged
Collateral, free and clear of any Lien on the Pledged Collateral, except as
expressly permitted in the Loan Agreement and the Financing Agreement.
(c) (i) Upon the delivery to the Collateral Agent of the Pledged
Collateral, the pledge of the Pledged Collateral pursuant to this Agreement
creates in favor of the Collateral Agent, for its benefit and the ratable
benefit of the Lenders, a valid and perfected first priority security
interest in such Pledged Collateral securing the payment of the Liabilities
and (ii) the valid and perfected first priority status of the pledge by the
Pledgor of the Pledged Collateral pursuant to the Original Pledge Agreement
shall continue uninterrupted and unaffected.
(d) Except as otherwise provided in Sections 14 and 15 hereof and
except for those obtained prior to the date hereof, no authorization,
approval, or other action by, and no notice to or filing with, any
governmental authority or regulatory body is required either (i) for the
pledge by the Pledgor of the Pledged Collateral pursuant to this Agreement
or for
3
<PAGE> 4
the execution, delivery or performance of this Agreement by the Pledgor or
(ii) for the exercise by the Collateral Agent, for its benefit and the
ratable benefit of the Lenders, of the voting or other rights provided for
in this Agreement or the remedies in respect of the Pledged Collateral
pursuant to this Agreement.
(e) The Pledgor has full power and authority to enter into this
Agreement and has the right to vote, pledge and grant a security interest
in the Pledged Shares and to pledge and grant a security interest in the
Pledged Notes as provided by this Agreement.
(f) This Agreement has been duly authorized, executed and delivered by
the Pledgor and constitutes a legal, valid and binding obligation of the
Pledgor, enforceable against the Pledgor in accordance with its terms,
except as such enforceability may be limited by the effect of any
applicable bankruptcy, insolvency, reorganization, fraudulent conveyance,
moratorium or other similar laws affecting creditors' rights generally or
general principles of equity (whether considered at law or in equity).
(g) The Pledged Shares constitute, as of the date hereof, all of the
outstanding shares of Capital Stock and voting securities of Holdings
beneficially owned by the Pledgor.
(h) The Pledged Notes listed on Schedule II hereto constitute the only
promissory notes of Holdings in favor of the Pledgor as of the date hereof.
(i) Except for the Pledged Securities, there are no other instruments,
certificates, securities or other writings, or any chattel paper,
evidencing or representing any interest in or claim against Holdings or any
subsidiary of Holdings, other than the guarantee given by Holdings pursuant
to the 1995 Indenture, as permitted by the Loan Agreement.
SECTION 5. FURTHER ASSISTANCE. The Pledgor agrees that at any time and
from time to time, at the expense of the Pledgor, the Pledgor will promptly
execute and deliver, or cause to be executed and delivered, all stock powers,
note powers, proxies, assignments, instruments and documents and take all
further action, that is reasonably necessary, at the Collateral Agent's request,
in order to perfect any security interest granted or purported to be granted
hereby or to enable the Collateral Agent, for its benefit and the ratable
benefit of the Lenders, to exercise and enforce its rights and remedies
hereunder with respect to any Pledged Collateral and to carry out the provisions
and purposes hereof.
SECTION 6. VOTING RIGHTS; DIVIDENDS; ETC.
(a) Notwithstanding the pledge of the Pledged Shares set forth in
Section 1 hereof, so long as no Default as defined in the Loan Agreement (a
"Loan Agreement Default") or Default as defined in the Financing Agreement
(a "Financing Agreement Default" and, any Financing Agreement Default or
Loan Agreement Default being referred to collectively herein as a
"Default") shall have occurred and be continuing, the Pledgor shall be
entitled to exercise any and all voting and other consensual rights
pertaining to the Pledged Shares
4
<PAGE> 5
or any part thereof for any purpose not inconsistent with the terms of this
Agreement, any of the Loan Documents or any of the Financing Documents;
provided, however, that the Pledgor shall not exercise or shall refrain
from exercising any such right if such action would have a material adverse
effect on the value of the Pledged Collateral to the Lenders or any part
thereof or be inconsistent with or violate any provisions of this
Agreement, any of the Loan Documents or any of the Financing Documents.
(b) Notwithstanding the pledge of the Pledged Notes set forth in
Section 1 hereof, so long as no Default shall have occurred and be
continuing, the Pledgor shall be entitled to receive all cash payments of
interest and principal paid from time to time with respect to the Pledged
Notes.
(c) Notwithstanding the pledge of the Pledged Shares set forth in
Section 1 hereof, so long as no Default shall have occurred and be
continuing, the Pledgor shall be entitled to receive all cash dividends
paid from time to time in respect of the Pledged Shares.
(d) Any and all (i) dividends or other distributions and interest or
principal paid or payable in the form of instruments and other property
(other than cash interest and principal payments permitted under Section
6(b) hereof and cash dividends permitted under Section 6(c) hereof)
received, receivable or otherwise distributed in respect of, or in exchange
for, any Pledged Collateral, (ii) dividends and other distributions paid or
payable in cash received, receivable or otherwise distributed in respect of
any Pledged Shares in connection with a partial or total liquidation or
dissolution or in connection with a reduction of capital, capital surplus
or paid-in-surplus, and (iii) cash paid, payable or otherwise distributed
in redemption of, or in exchange for, any Pledged Shares, shall in each
case be delivered forthwith to the Collateral Agent to hold, for its
benefit and the ratable benefit of the Lenders, as Pledged Collateral and
shall, if received by the Pledgor, be received in trust for the Collateral
Agent, for its benefit and the ratable benefit of the Lenders, be
segregated from the other property or funds of the Pledgor, and be
forthwith delivered to the Collateral Agent as Pledged Collateral in the
same form as so received (with any necessary endorsement).
(e) The Collateral Agent shall execute and deliver (or cause to be
executed and delivered) to the Pledgor all such proxies and other
instruments as the Pledgor may reasonably request for the purpose of
enabling the Pledgor to exercise the voting and other rights which it is
entitled to exercise pursuant to Section 6(a) above and to receive
dividends and distributions pursuant to Sections 6(b) and 6(c) above.
(f) All dividends or other distributions and all interest and principal
payments which are received by the Pledgor contrary to the provisions of
this Section 6 shall be received in trust for the Collateral Agent, for its
benefit and the ratable benefit of the Lenders, shall be segregated from
other funds of the Pledgor and shall be forthwith paid over to the
Collateral Agent as Pledged Collateral in the same form as so received
(with any necessary endorsement).
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<PAGE> 6
(g) Upon the occurrence and during the continuance of a Default, all
rights of the Pledgor to exercise the voting and other consensual rights
which it would otherwise be entitled to exercise pursuant to Section 6(a)
shall cease, and all such rights shall become vested in the Collateral
Agent, for its benefit and the ratable benefit of the Lenders, which shall
thereupon have the sole right to exercise such voting and other consensual
rights.
(h) Upon the occurrence and during the continuance of a Default, all
cash payments of interest and principal with respect to the Pledged Notes
and all cash dividends or other distributions payable in respect of the
Pledged Shares shall be paid directly to the Collateral Agent and, if
received by the Pledgor, shall be received in trust for the Collateral
Agent, for its benefit and the ratable benefit of the Lenders, shall be
segregated from other funds of the Pledgor, and shall be forthwith paid
over to the Collateral Agent as Pledged Collateral in the same form as so
received (with any necessary endorsement) and the Pledgor's right to
receive such cash payments pursuant to Sections 6(b) and 6(c) hereof shall
immediately cease.
SECTION 7. TRANSFERS AND OTHER LIENS; ADDITIONAL SHARES.
(a) The Pledgor agrees that it will not (i) sell or otherwise dispose
of, or grant any option with respect to, any of the Pledged Collateral
without the prior written consent of the Collateral Agent, (ii) create or
permit to exist any Lien upon or with respect to any of the Pledged
Collateral, except for the security interest granted under this Agreement
or (iii) enter into any agreement or understanding that purports to or may
restrict or inhibit the Collateral Agent's rights or remedies hereunder,
including, without limitation, the Collateral Agent's right to sell or
otherwise dispose of the Pledged Collateral.
(b) The Pledgor agrees that it will pledge and deliver to the
Collateral Agent hereunder, immediately upon its acquisition (directly or
indirectly) thereof, any and all additional shares of stock, notes or other
securities of Holdings of which the Pledgor may become the beneficial owner
after the date hereof.
SECTION 8. COLLATERAL AGENT APPOINTED ATTORNEY-IN-FACT. The
Pledgor hereby appoints the Collateral Agent the Pledgor's attorney-in-fact,
with full authority in the place and stead of the Pledgor and in the name of the
Pledgor or otherwise, from time to time in the Collateral Agent's discretion to
take any action and to execute any instrument which the Collateral Agent may
deem necessary or advisable to further perfect and protect the security interest
granted hereby, including, without limitation, to receive, endorse and collect
all instruments made payable to the Pledgor representing any dividend, interest
or principal payment or other distribution in respect of the Pledged Collateral
or any part thereof and to give full discharge for the same. This power of
attorney is coupled with an interest and is irrevocable by the Pledgor. The
Pledgor hereby ratifies all that the Collateral Agent shall lawfully do or cause
to be done by virtue of this Section 8.
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<PAGE> 7
SECTION 9. COLLATERAL AGENT MAY PERFORM. If the Pledgor fails to
perform any agreement contained herein, the Collateral Agent may itself perform,
or cause performance of, such agreement, and the reasonable expenses of the
Collateral Agent incurred in connection therewith shall be payable by the
Pledgor under Section 16 hereof.
SECTION 10. NO ASSUMPTION OF DUTIES; REASONABLE CARE. The rights and
powers granted to the Collateral Agent hereunder are being granted in order to
preserve and protect the Collateral Agent's security interest in and to the
Pledged Collateral granted hereby and shall not be interpreted to, and shall
not, impose any duties on the Collateral Agent or any of the Lenders to the
Pledgor in connection therewith. The Collateral Agent shall be deemed to have
exercised reasonable care in the custody and preservation of the Pledged
Collateral in its possession if the Pledged Collateral is accorded treatment
substantially equal to that which the Collateral Agent accords its own property,
it being understood that the Collateral Agent shall not have any responsibility
for (i) ascertaining or taking action with respect to calls, conversions,
exchanges, maturities, tenders or other matters relative to any Pledged
Collateral, whether or not the Collateral Agent or any of the Lenders has or is
deemed to have knowledge of such matters, or (ii) taking any necessary steps to
preserve rights against any parties with respect to any Pledged Collateral.
SECTION 11. SUBSEQUENT CHANGES AFFECTING PLEDGED
COLLATERAL. The Pledgor represents to the Collateral Agent that the Pledgor has
made its own arrangements for keeping informed of changes or potential changes
affecting the Pledged Collateral (including, but not limited to, rights to
convert, rights to subscribe, payment of dividends, payments of interest and/or
principal, reorganization or other exchanges, tender offers and voting rights),
and the Pledgor agrees that the Collateral Agent and the Lenders shall have no
responsibility or liability for informing the Pledgor of any such changes or
potential changes or for taking any action or omitting to take any action with
respect thereto. The Pledgor covenants that it will not, without the prior
written consent of the Collateral Agent, sell or otherwise dispose of, or grant
any option with respect to, any of the Pledged Collateral or create or permit to
exist any Lien upon or with respect to any of the Pledged Collateral, except for
Permitted Liens (as defined in each of the Loan Agreement and the Financing
Agreement).
SECTION 12. REMEDIES UPON DEFAULT. If any Default shall have occurred
and be continuing, the Collateral Agent shall, in addition to all other rights
given by law or by this Agreement, any of the Loan Documents, any of the
Financing Documents, or otherwise, but subject to Sections 14 and 15 of this
Agreement, have all of the rights and remedies with respect to the Pledged
Collateral of a secured party under the Uniform Commercial Code in effect in the
State of New York at that time and the Collateral Agent (personally or through
an agent) may, without notice and at its option, transfer or register, and the
Pledgor shall register or cause to be registered upon request therefor by the
Collateral Agent, the Pledged Collateral or any part thereof on the books of
Holdings into the name of the Collateral Agent or the Collateral Agent's
nominee(s), indicating that such Pledged Collateral is subject to the security
interest hereunder. In addition, with respect to any Pledged Collateral which
shall then be in or shall thereafter come into the possession or custody of the
Collateral Agent, the Collateral
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Agent (personally or through an agent) may sell or cause the same to be sold at
any broker's board or at any public or private sale, in one or more sales or
lots, at such price or prices as the Collateral Agent may deem best, for cash or
on credit or for future delivery, without assumption of any credit risk, all in
accordance with the terms and provisions of this Agreement, the Loan Agreement
and the Financing Agreement. The purchaser of any or all Pledged Collateral so
sold shall thereafter hold the same absolutely, free from any claim, encumbrance
or right of any kind whatsoever. Unless any of the Pledged Collateral threatens
to decline speedily in value or is or becomes of a type sold on a recognized
market, the Collateral Agent will give the Pledgor reasonable notice of the time
and place of any public sale thereof, or of the time after which any private
sale or other intended disposition is to be made. Any sale of the Pledged
Collateral conducted in conformity with reasonable commercial practices of
lenders in general disposing of property similar to the Pledged Collateral shall
be deemed to be commercially reasonable. Any requirements of reasonable notice
shall be met if such notice is mailed to the Pledgor as provided in Section 19.1
below, at least fifteen (15) days before the time of the sale or disposition.
Any other requirement of notice, demand or advertisement for sale is, to the
extent permitted by law, waived. The Collateral Agent may, for its benefit and
the ratable benefit of the Lenders, buy any of the Pledged Collateral at any
public sale and, if permitted by applicable law, at any private sale. All
expenses (including court costs and reasonable attorneys' fees, expenses and
disbursements) of, or incident to, the enforcement of any of the provisions
hereof shall be recoverable from the proceeds of the sale or other disposition
of the Pledged Collateral.
In addition, upon the occurrence and during the continuance of a
Default, all rights of the Pledgor to exercise the voting and other rights which
it would otherwise be entitled to exercise shall cease, and all such rights
shall thereupon become vested in the Collateral Agent, for its benefit and the
ratable benefit of the Lenders, as provided in and subject to the terms of
Section 6(g) hereof.
SECTION 13. DISTRIBUTION OF PROCEEDS UPON DEFAULT. Upon the sale or
other disposition of any Pledged Collateral pursuant to Section 12 hereof, the
proceeds of such sale or other disposition shall be applied by the Collateral
Agent in the following order of priority:
(a) first, to the reasonable, out-of-pocket costs and expenses of the
Collateral Agent incurred in connection with the performance of its duties
under this Agreement;
(b) second, to the Lenders pro rata based on their respective
Outstanding Balance Shares (as defined below) until payment in full of all
Liabilities; and
(c) third, delivered to the Pledgor.
"Outstanding Balance Share" means a fraction (expressed as a
percentage), the numerator of which shall be the aggregate of the outstanding
principal amount of the Secured Notes held by such Lender and the denominator of
which shall be the aggregate outstanding
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principal amount of all Secured Notes.
For the avoidance of doubt, none of the proceeds of such sale or other
disposition shall be distributed to the Lenders pursuant to Section 13(b) hereof
until the Collateral Agent has received full payment for all expenses incurred
by it in connection with the performance of its duties under this Agreement and
none of the proceeds of such sale or other disposition shall be distributed to
the Pledgor under Section 13(c) hereof until all of the Liabilities have been
paid in full.
SECTION 14. REGISTRATION RIGHTS; PRIVATE SALES.
(a) If the Collateral Agent shall, for its benefit and the ratable
benefit of the Lenders, determine to exercise its right to sell any or all
of the Pledged Shares pursuant to Section 12 hereof, and if in the opinion
of the Collateral Agent it is necessary or advisable to have the Pledged
Shares, or that portion thereof to be sold, registered under the provisions
of the Securities Act, the Pledgor will use its commercially reasonable
efforts to cause Holdings to (1) execute and deliver, and cause the
directors and officers of Holdings to execute and deliver, all such
instruments and documents, and do or cause to be done all such other acts
as may be, in the opinion of the Collateral Agent, necessary or advisable
to register the Pledged Shares, or that portion thereof to be sold, under
the provisions of the Securities Act, (2) to use its commercially
reasonable efforts to cause the registration statement relating thereto to
become effective and to remain effective for a period of one year from the
date of the first public offering of the Pledged Shares, or that portion
thereof to be sold, and (3) to make all amendments thereto and/or to the
related prospectus which, in the opinion of the Collateral Agent, are
necessary or advisable, all in conformity with the requirements of the
Securities Act and the rules and regulations of the Commission applicable
thereto. The Pledgor agrees to use its commercially reasonable efforts to
cause Holdings to comply with the provisions of the securities or "Blue
Sky" laws of any and all jurisdictions which the Collateral Agent shall
designate and to make available to the Collateral Agent and its security
holders, as soon as practicable, an earnings statement (which need not be
audited) which will satisfy the provisions of Section 11(a) of the
Securities Act.
(b) The Pledgor recognizes that the Collateral Agent may be unable to
effect a public sale of any or all the Pledged Shares, by reason of certain
prohibitions contained in the Securities Act and applicable state
securities laws or otherwise, and may be compelled to resort to one or more
private sales thereof to a restricted group of purchasers which will be
obliged to agree, among other things, to acquire such securities for their
own account for investment and not with a view to the distribution or
resale thereof. The Pledgor acknowledges and agrees that any such private
sale may result in prices and other terms less favorable than if such sale
were a public sale and, notwithstanding such circumstances, agrees that any
such private sale shall be deemed to have been made in a commercially
reasonable manner. The Collateral Agent shall be under no obligation to
delay a sale of any of the Pledged Shares for the period of time necessary
to permit Holdings to register such
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securities for public sale under the Securities Act, or under applicable
state securities laws, even if Holdings would agree to do so.
(c) The Pledgor further agrees to use its commercially reasonable
efforts to do or cause to be done all such other acts as may be necessary
to make such sale or sales of all or any portion of the Pledged Shares
pursuant to this Section valid and binding and in compliance with any and
all other applicable requirements of law. The Pledgor further agrees that a
breach of any of the covenants contained in this Section will cause
irreparable injury to the Lenders, that the Lenders have no adequate remedy
at law in respect of such breach and, as a consequence, that each and every
covenant contained in this Section shall be specifically enforceable
against the Pledgor, and the Pledgor hereby waives and agrees not to assert
any defenses against an action for specific performance of such covenants
except for a defense that no Default has occurred.
SECTION 15. FCC MATTERS.
(a) If a Default shall have occurred and be continuing, the Pledgor
shall take any action which the Collateral Agent may request in the
exercise of its rights and remedies under this Agreement to transfer and
assign to the Collateral Agent, or to such one or more third parties as the
Collateral Agent may designate, or to a combination of the foregoing, the
Pledged Collateral. To enforce the provisions of this Section 15, the
Collateral Agent is hereby empowered to seek from the FCC an involuntary
transfer of control of Holdings for the purpose of seeking a bona fide
purchaser to whom control will ultimately be transferred. If a Default
shall have occurred and be continuing, the Pledgor hereby agrees to
authorize such an involuntary transfer of control upon the request of the
Collateral Agent. Upon the occurrence and continuation of a Default, the
Pledgor shall use its commercially reasonable efforts to assist in
obtaining approval of the FCC, if required, for any action or transactions
contemplated by this Agreement, including, without limitation, the
preparation, execution and filing with the FCC of the Pledgor's portion of
any application or applications for consent to transfer of control
necessary or appropriate under the FCC's rules and regulations for approval
of the transfer or assignment of any portion of the Pledged Collateral.
(b) The Pledgor acknowledges that FCC authorization for the transfer of
control of the licenses of Holdings and its Subsidiaries is integral to the
Lenders' realization of the value of the Pledged Collateral, that there is
no remedy at law for failure by the Pledgor to comply with the provisions
of this Section 15 and that such failure would not be adequately
compensable in damages, and therefore agrees that the agreements of the
Pledgor contained in this Section 15 may be specifically enforced.
(c) Notwithstanding anything to the contrary contained in this
Agreement, the Collateral Agent shall not, without first obtaining approval
of the FCC, take any action pursuant to this Agreement which would
constitute or result in any change of control of Holdings or any of its
Subsidiaries if such change in control would require, under then
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existing law (including the written rules and regulations of the FCC), the
prior approval of the FCC.
(d) Upon the occurrence and during the continuance of a Default and
subject to the other provisions of Sections 12 and 14, the Pledgor consents
to the transfer of control or assignment of the Pledged Collateral to a
receiver, trustee, transferee, or similar official or to any purchaser of
the Pledged Collateral pursuant to any public or private sale, judicial
sale, foreclosure or exercise of other remedies available to the Collateral
Agent, for its benefit and the ratable benefit of the Lenders, under this
Agreement and as permitted by applicable law.
(e) Notwithstanding anything to the contrary contained in this
Agreement, prior to the occurrence of a Default and compliance with all
applicable laws by the Collateral Agent, this Agreement and the
transactions contemplated hereby do not, will not, and are not intended to,
constitute, create or have the effect of constituting or creating, directly
or indirectly, actual or practical ownership of the Pledgor, Holdings or
any of their respective Subsidiaries by the Collateral Agent or the Lenders
or control, affirmative or negative, direct or indirect, of the Pledgor,
Holdings or any of their respective Subsidiaries, over the management or
any other aspect of the operations of the Pledgor, Holdings or any of their
respective Subsidiaries, which ownership and control remain exclusively and
at all times in the Pledgor, Holdings and their respective Subsidiaries, as
the case may be.
SECTION 16. EXPENSES. The Pledgor will, upon demand, pay to the
Collateral Agent the amount of any and all reasonable expenses, including,
without limitation, the reasonable fees, expenses and disbursements of its
counsel (including allocated costs of inside counsel), of any investment banking
firm, business broker or other selling agent and of any other experts and agents
retained by the Collateral Agent, which the Collateral Agent may incur in
connection with (i) the administration of this Agreement, (ii) the custody or
preservation of, or the sale of, collection from, or other realization upon, any
of the Pledged Collateral, (iii) the exercise or enforcement of any of the
rights of the Collateral Agent hereunder or (iv) the failure by the Pledgor to
perform or observe any of the provisions hereof. All expenses incurred in
connection therewith shall be for the sole account of the Pledgor, and shall
constitute part of the Liabilities secured hereby.
SECTION 17. SECURITY INTEREST ABSOLUTE. All rights of the Collateral
Agent and security interests hereunder, and all obligations of the Pledgor
hereunder, shall be absolute and unconditional irrespective of, and unaffected
by:
(a) any lack of validity or enforceability of any Loan Document;
(b) any lack of validity or enforceability of any Financing Document;
(c) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Liabilities, or any other amendment or
waiver of or any consent to any
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departure from any Loan Document or any Financing Document;
(d) any exchange, surrender, release or non-perfection of any other
collateral, or any release or amendment or waiver of or consent to
departure from any guaranty, for all or any of the Liabilities; or
(e) any other circumstance which might otherwise constitute a defense
available to, or a discharge of, the Pledgor in respect of the Liabilities
or of this Agreement.
SECTION 18. THE COLLATERAL AGENT AS THE LENDERS'
CONTRACTUAL REPRESENTATIVE.
SECTION 18.1 Appointment of Collateral Agent. Each Lender hereby
designates HNS as Collateral Agent to act as herein specified. Each Lender
hereby irrevocably authorizes the Collateral Agent to take such action on its
behalf under the provisions of this Agreement and any other instruments and
agreements referred to herein and to exercise such powers and to perform such
duties hereunder and thereunder as are specifically delegated to or required of
the Collateral Agent by the terms hereof and thereof and such other powers as
are reasonably incidental thereto. The Collateral Agent shall hold all Pledged
Collateral and proceeds for the benefit of itself and the Lenders to be
distributed as provided herein. The Collateral Agent may perform any of its
duties hereunder by or through its agents or employees.
SECTION 18.2 Nature of Duties of Collateral Agent. The Collateral
Agent shall have no duties or responsibilities except those expressly set forth
in this Agreement. Neither the Collateral Agent nor any of its officers,
directors, employees or agents shall be liable to the Lenders for any action
taken or omitted by it as such hereunder or in connection herewith, unless
caused by its or their gross negligence or willful misconduct. The duties of the
Collateral Agent shall be mechanical and administrative in nature, and the
Collateral Agent shall not have by reason of this Agreement a fiduciary
relationship in respect of any Lender.
SECTION 18.3 Lack of Reliance on Collateral Agent. The Collateral
Agent shall not be required to make any inquiry concerning either the
performance or observance of any of the terms, provisions or conditions of this
Agreement, the Financing Agreement, the Loan Agreement or the Secured Notes or
the existence or possible existence of any Default, unless any Lender
specifically requests the Collateral Agent to do so in writing.
SECTION 18.4 Certain Rights of the Collateral Agent. The Collateral
Agent shall have the right to request instructions from the Directing Lenders
(as defined below) at any time. If the Collateral Agent shall request
instructions from the Directing Lenders with respect to any act or action
(including the failure to act) in connection with this Agreement, the Collateral
Agent shall be entitled to refrain from such act or taking such action unless
and until the Collateral Agent shall have received instructions from the
Directing Lenders, and the Collateral Agent shall not incur liability to any
Person by reason of so refraining. Without limiting the foregoing, no Lender
shall have any right of action whatsoever against the Collateral Agent as
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a result of the Collateral Agent acting or refraining from acting hereunder in
accordance with the instructions of the Directing Lenders. The "Directing
Lenders" means such Lenders that hold Secured Notes that have an aggregate
maximum face principal amount greater than fifty percent (50%) of the aggregate
of the maximum face principal amount of all of the Secured Notes then
outstanding.
SECTION 18.5 Reliance by Collateral Agent. The Collateral Agent
shall be entitled to rely, and shall be fully protected in relying, upon any
note, writing, resolution, notice, statement, certificate, telex, teletype or
telecopier message, cablegram, radiogram, order or other documentary,
teletransmission or telephone message believed by it to be genuine and correct
and to have been signed, sent or made by the proper Person. The Collateral Agent
may consult with legal counsel (including counsel for the Pledgor with respect
to matters concerning the Pledgor), independent public accountants and other
experts selected by it and shall not be liable for any action taken or omitted
to be taken by it in good faith in accordance with the advice of such counsel,
accountants or experts.
SECTION 18.6 Indemnification of Collateral Agent. To the extent the
Collateral Agent is not reimbursed and indemnified by the Pledgor, each Lender
will reimburse and indemnify the Collateral Agent for and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses (including counsel fees and disbursements) or disbursements of
any kind or nature whatsoever which may be imposed on, incurred by or asserted
against the Collateral Agent in performing its duties hereunder, in any way
relating to or arising out of this Agreement, provided that no Lender shall be
liable for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements resulting
from the Collateral Agent's gross negligence or willful misconduct.
SECTION 18.7 The Collateral Agent in its Individual Capacity. With
respect to its obligation as a Lender under this Agreement, the Collateral Agent
shall have the same rights and powers hereunder as any other Lender and may
exercise the same as though it was not performing the duties specified herein;
and the term "Lenders" or any similar term shall, unless the context clearly
otherwise indicates, include the Collateral Agent in its individual capacity as
a Lender. The Lenders acknowledge that HNS is the seller of the Base Station
Equipment to the Pledgor and has engaged in certain other business transactions
with the Pledgor and other Geotek Affiliates (as defined in the Manufacturing
Agreement) and agree that the Collateral Agent may lend money to, acquire equity
interests in, and generally engage in any kind of financial advisory or other
business with the Pledgor or any Geotek Affiliate as if it were not performing
the duties specified herein, and may accept fees and other consideration from
the Pledgor for services in connection with this Agreement and otherwise without
having to account for the same to the Lenders.
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SECTION 18.8 Successor Collateral Agent.
(a) The Collateral Agent may, upon five (5) Business Days' notice
to the Lenders and the Pledgor, resign at any time (effective upon the
appointment of a successor collateral agent pursuant to the provisions
of this Section 18.8) by giving written notice thereof to the Lenders
and the Pledgor. Upon any such resignation, the Directing Lenders shall
have the right, upon five (5) days' notice and approval by the Pledgor
(which approval shall not be unreasonably withheld), to appoint a
successor collateral agent. If no successor collateral agent (i) shall
have been so appointed by the Directing Lenders, and (ii) shall have
accepted such appointment, within thirty (30) days after the Collateral
Agent's giving of notice of resignation, then, upon five (5) days'
notice, the Collateral Agent may, on behalf of the Lenders, appoint a
successor collateral agent.
(b) Upon the acceptance of any appointment as collateral agent
hereunder by a successor collateral agent, such successor collateral
agent shall thereupon succeed to and become vested with all the rights,
powers, privileges and duties of the Collateral Agent, all references
in this Agreement to "Collateral Agent" shall refer to such successor
collateral agent and the Collateral Agent shall be discharged from its
duties and obligations under this Agreement. After the Collateral
Agent's resignation hereunder as collateral agent, the provisions of
Section 18 shall continue to inure to its benefit as to any actions
taken or omitted to be taken by it while it was Collateral Agent under
this Agreement.
(c) In the event of a material breach by the Collateral Agent of
its duties hereunder, the Collateral Agent may be removed by the
Directing Lenders for cause and the provisions of this Section 18.8
shall apply to the appointment of a successor collateral agent.
SECTION 18.9 Collateral Matters.
(a) The Collateral Agent is hereby authorized on behalf of all of
the Lenders, without the necessity of any notice to or further consent
from any Lender, from time to time prior to a Default, to take any
action with respect to any Pledged Collateral which may be necessary to
perfect and maintain perfected the security interest in and Liens upon
the Pledged Collateral.
(b) The Lenders hereby authorize the Collateral Agent, and the
Collateral Agent shall, release any Lien granted to or held by the
Collateral Agent upon any Pledged Collateral (i) upon the payment and
satisfaction of all of the Liabilities or (ii) if approved, authorized
or ratified in writing by the Directing Lenders. Upon request by the
Collateral Agent at any time, the Lenders will confirm in writing the
Collateral Agent's authority to release particular types or items of
Pledged Collateral pursuant to this Section 18.9.
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(c) Upon any sale and transfer of Pledged Collateral which is
expressly permitted pursuant to the terms of the Financing Agreement,
the Loan Agreement or this Agreement or consented to in writing by the
Directing Lenders, and upon at least five (5) Business Days' prior
written request by the Pledgor, the Collateral Agent shall (and is
hereby irrevocably authorized by the Lenders to) execute such documents
as may be necessary to evidence the release of the Liens granted to the
Collateral Agent for its benefit and the benefit of the Lenders herein
or pursuant hereto upon the Pledged Collateral that was sold or
transferred; provided that (i) the Collateral Agent shall not be
required to execute any such document on terms which, in the Collateral
Agent's opinion, would expose the Collateral Agent or the Lenders to
liability or create any obligation or entail any consequence other than
the release of such Liens without recourse or warranty and (ii) such
release shall not in any manner discharge, affect or impair the
Liabilities or any Liens upon all interests retained by the Pledgor,
including (without limitation) the proceeds of the sale, all of which
shall continue to constitute part of the Pledged Collateral. In the
event of any sale or transfer of Pledged Collateral, or any foreclosure
with respect to any of the Pledged Collateral, the Collateral Agent
shall be authorized to deduct all of the expenses reasonably incurred
by the Collateral Agent from the proceeds of any such sale, transfer or
foreclosure.
(d) The Collateral Agent shall have no obligation whatsoever to the
Lenders or to any other Person to assure that the Pledged Collateral
exists or is owned by the Pledgor or is cared for, protected or insured
or that the Liens granted to the Collateral Agent herein or pursuant
hereto have been properly or sufficiently or lawfully created,
perfected, protected or enforced or are entitled to any particular
priority, or to exercise or to continue exercising at all or in any
manner or under any duty of care, disclosure or fidelity any of the
rights, authorities and powers granted or available to the Collateral
Agent in this Section 18.9, it being understood and agreed that in
respect of the Pledged Collateral, or any act, omission or event
related thereto, the Collateral Agent may act in any manner it may deem
appropriate, in its sole discretion, given the Collateral Agent's own
interest in the Pledged Collateral as one of the Lenders and that the
Collateral Agent shall have no duty or liability whatsoever to the
Lenders, except for its gross negligence or willful misconduct.
SECTION 18.10 Actions with Respect to Defaults. The Collateral
Agent shall take such action with respect to a Default as shall be directed by
the Directing Lenders; provided that until the Collateral Agent shall have
received such directions, the Collateral Agent may (but shall not be obligated
to) take such action, or refrain from taking such action, with respect to such
Default as it shall deem advisable and in the best interests of the Lenders.
Any amendment or waiver of any provision of this Agreement and any
consent to any departure by the Pledgor from any provision of this Agreement
shall be effected by the Collateral Agent pursuant to Section 19.4 hereof and
only upon the written authorization of the Directing Lenders.
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SECTION 18.11 Delivery of Information. The Collateral Agent shall
not be required to deliver to any Lender originals or copies of any documents,
instruments, notices, communications or other information received by the
Collateral Agent from the Pledgor, the Directing Lenders, any Lender or any
other Person under or in connection with this Agreement except (i) as
specifically provided in this Agreement and (ii) as specifically requested from
time to time in writing by any Lender with respect to a specific document,
instrument, notice or other written communication received by and in the
possession of the Collateral Agent at the time of receipt of such request and
then only in accordance with such specific request.
SECTION 19. MISCELLANEOUS PROVISIONS.
SECTION 19.1 Notices. All notices, approvals, consents or other
communications required or desired to be given hereunder shall be in the form
and manner, and delivered to each of the parties hereto at their respective
addresses, set forth in Article X of the Financing Agreement or Article XI of
the Loan Agreement, as applicable.
SECTION 19.2 Headings. Section headings in this Agreement are for
convenience of reference only, and shall not govern the interpretation of any of
the provisions of this Agreement.
SECTION 19.3 Severability. Any provision in any Loan Document or in
any Financing Document that is held to be inoperative, unenforceable, or invalid
in any jurisdiction shall, as to that jurisdiction, be inoperative,
unenforceable, or invalid without affecting the remaining provisions in that
jurisdiction or the operation, enforceability, or validity of that provision in
any other jurisdiction, and to this end the provisions of this Agreement are
declared to be severable.
SECTION 19.4 Amendments, Waivers and Consents. No delay or omission
of the Collateral Agent to exercise any right under this Agreement shall impair
such right or be construed to be a waiver of any Default or an acquiescence
therein. Any single or partial exercise of any such right shall not preclude
other or further exercise thereof or the exercise of any other right and no
waiver, amendment or other variation of the terms, conditions or provisions of
this Agreement whatsoever shall be valid unless in writing signed by the
Collateral Agent, and then only to the extent in such writing specifically set
forth. All remedies contained in this Agreement or by law afforded shall be
cumulative and all shall be available to the Collateral Agent, for its benefit
and the ratable benefit of the Lenders, until the Liabilities have been paid in
full.
SECTION 19.5 Interpretation of Agreement. Time is of the essence in
each provision of this Agreement of which time is an element. All terms not
defined herein or in the Financing Agreement shall have the meaning set forth in
the applicable Uniform Commercial Code, except where the context otherwise
requires. To the extent a term or provision of this Agreement conflicts with the
Loan Agreement or the Financing Agreement and is not dealt with herein with more
specificity, the Loan Agreement or the Financing Agreement, as applicable,
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shall control with respect to the subject matter of such term or provision.
Acceptance of or acquiescence in a course of performance rendered under this
Agreement shall not be relevant in determining the meaning of this Agreement
even though the accepting or acquiescing party had knowledge of the nature of
the performance and opportunity for objection.
SECTION 19.6 Continuing Security Interest; Transfer of Secured
Notes. This Agreement shall create a continuing security interest in the Pledged
Collateral and shall (i) remain in full force and effect until payment in full
of the Liabilities, (ii) be binding upon the Pledgor, its successors and
assigns, and (iii) inure to the benefit of the Collateral Agent, the Lenders and
their respective successors, transferees and assigns. Without limiting the
generality of clause (iii), above, any Lender may, except as limited by the
express terms of the Loan Agreement, the Financing Agreement or the Secured
Notes, assign or otherwise transfer, in whole or in part, any Secured Note held
by it to any other Person, and such other Person shall thereupon become vested
with all the benefits in respect thereof granted to such Lender herein or
otherwise.
SECTION 19.7 Reinstatement. To the extent permitted by law, this
Agreement shall continue to be effective or be reinstated, as the case may be,
if at any time any amount received by the Collateral Agent or any Lender in
respect of the Liabilities is rescinded or must otherwise be restored or
returned by such Lender upon the insolvency, bankruptcy, dissolution,
liquidation or reorganization of the Pledgor or upon the appointment of any
receiver, intervenor, conservator, trustee or similar official for the Pledgor
or any substantial part of its assets, or otherwise, all as though such payments
had not been made.
SECTION 19.8 Survival of Provisions. All representations,
warranties and covenants of the Pledgor contained herein shall survive the
execution and delivery of this Agreement, and shall terminate only upon the full
and final payment and performance by the Pledgor of the Liabilities secured
hereby.
SECTION 19.9 Waivers. The Pledgor waives presentment and demand for
payment of any of the Liabilities, protest and notice of dishonor or default
with respect to any of the Liabilities, and all other notices to which the
Pledgor might otherwise be entitled, except as otherwise expressly provided in
this Agreement, the Loan Agreement or the Financing Agreement, as applicable.
SECTION 19.10 Authority of the Collateral Agent; Indemnification.
The Collateral Agent shall, for the benefit of the Lenders, have and be entitled
to exercise all powers hereunder which are specifically granted to the
Collateral Agent by the terms hereof, together with such powers as are
reasonably incident thereto. The Collateral Agent may perform any of its duties
hereunder or in connection with the Pledged Collateral by or through agents or
employees and shall be entitled to retain counsel and to act in reliance upon
the advice of counsel concerning all such matters. Neither the Collateral Agent
nor any Lender, nor any director, officer, employee, attorney or agent of the
Collateral Agent or any Lender shall be liable to the Pledgor for any action
taken or omitted to be taken by it or them hereunder, except
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for its or their own gross negligence or willful misconduct, nor shall the
Collateral Agent or any of the Lenders be responsible for the validity,
effectiveness or sufficiency of this Agreement or of any document or security
furnished pursuant hereto. The Collateral Agent and its directors, officers,
employees, attorneys and agents shall be entitled to rely on any communication,
instrument or document reasonably believed by it or them to be genuine and
correct and to have been signed or sent by the proper Person or Persons. The
Pledgor agrees to indemnify and hold harmless the Collateral Agent and its
officers, directors, employees and agents from and against any and all costs,
expenses (including reasonable fees, expenses and disbursements of attorneys and
paralegals), claims and liabilities incurred by the Collateral Agent (in its
capacity as Collateral Agent) or such officers, directors, employees and agents
(in each case in their capacity as such) as a result of the Pledgor's actions,
breach or assertion of a defense under this Agreement, any of the Loan Documents
or any of the Financing Documents, unless such claim or liability shall be due
to willful misconduct or gross negligence on the part of the Collateral Agent or
such Person, as applicable.
SECTION 19.11 Release; Termination of Agreement. Subject to the
provisions of Section 19.7 hereof, this Agreement shall terminate upon full and
final payment and performance of all the Liabilities. At such time, the
Collateral Agent shall, at the request and expense of the Pledgor, promptly
reassign and redeliver to the Pledgor all of the Pledged Collateral hereunder
which has not been sold, disposed of, retained or applied by the Collateral
Agent, for its benefit and the benefit of the Lenders, in accordance with the
terms hereof. Such reassignment and redelivery shall be without warranty by or
recourse to the Collateral Agent or any of the Lenders, except as to the absence
of any prior assignments by the Collateral Agent of its interest in the Pledged
Collateral, and shall be at the expense of the Pledgor.
SECTION 19.12 INTERRELATIONSHIP WITH ORIGINAL PLEDGE AGREEMENT. As
stated in the preamble hereof, this Agreement is intended to amend and restate
the provisions of the Original Pledge Agreement and, except as expressly
modified herein, (a) all of the terms and provisions of the Original Pledge
Agreement shall continue to apply for the period prior to the date hereof and
(b) the pledge by the Pledgor of the Pledged Collateral (pursuant to and as
defined in the Original Pledge Agreement) shall continue uninterrupted
notwithstanding this amendment and restatement of the Original Pledge Agreement.
All references in the Loan Agreement, the other Loan Documents, the Financing
Agreement or the other Financing Documents to the "Pledge Agreement" shall be
deemed to include references to this Agreement. As of the date hereof, all of
the covenants set forth in the Original Pledge Agreement are of no further force
and effect, it being understood that all obligations of the Pledgor with respect
to the Pledged Collateral (as defined in the Original Pledge Agreement) shall be
governed by this Agreement from and after the date hereof. For the avoidance of
doubt, this Agreement has been executed in renewal, amendment, restatement and
modification, but not in extinguishment of, the Original Pledge Agreement.
18
<PAGE> 19
SECTION 19.13 SUBMISSION TO JURISDICTION; WAIVERS. THE
PLEDGOR HEREBY IRREVOCABLY AND UNCONDITIONALLY:
(a) SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS AGREEMENT, OR FOR RECOGNITION AND ENFORCEMENT OF ANY
JUDGMENT IN RESPECT HEREOF, TO THE NONEXCLUSIVE GENERAL JURISDICTION OF THE
COURTS OF THE STATE OF NEW YORK, THE COURTS OF THE UNITED STATES OF AMERICA FOR
THE SOUTHERN DISTRICT OF NEW YORK AND APPELLATE COURTS FROM ANY THEREOF;
(b) CONSENTS THAT ANY SUCH ACTION OR PROCEEDING MAY BE BROUGHT IN SUCH
COURTS AND WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE
OF ANY SUCH ACTION OR PROCEEDING IN ANY SUCH COURT OR THAT SUCH ACTION OR
PROCEEDING WAS BROUGHT IN AN INCONVENIENT FORUM AND AGREES NOT TO PLEAD OR CLAIM
THE SAME;
(c) AGREES THAT SERVICE OF PROCESS IN ANY SUCH ACTION OR PROCEEDING MAY
BE EFFECTED BY MAILING A COPY THEREOF BY REGISTERED OR CERTIFIED MAIL (OR ANY
SUBSTANTIALLY SIMILAR FORM OF MAIL), POSTAGE PREPAID, TO THE PLEDGOR AT ITS
ADDRESS SET FORTH BELOW OR AT SUCH OTHER ADDRESS OF WHICH THE COLLATERAL AGENT
SHALL HAVE BEEN NOTIFIED PURSUANT HERETO;
(d) AGREES THAT NOTHING HEREIN SHALL AFFECT THE RIGHT TO EFFECT SERVICE
OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT OF THE
COLLATERAL AGENT OR ANY OF THE LENDERS TO COMMENCE LEGAL PROCEEDINGS AGAINST THE
PLEDGOR OR ITS PROPERTY IN ANY OTHER JURISDICTION;
(e) WAIVES ALL RIGHTS OF NOTICE AND HEARING OF ANY KIND PRIOR TO THE
EXERCISE BY THE COLLATERAL AGENT OR ANY OF THE LENDERS OF THEIR RIGHTS FROM AND
AFTER AN EVENT OF DEFAULT TO REPOSSESS THE COLLATERAL WITH JUDICIAL PROCESS OR
TO REPLEVY, ATTACH OR LEVY UPON THE COLLATERAL. THE PLEDGOR WAIVES THE POSTING
OF ANY BOND OTHERWISE REQUIRED OF THE COLLATERAL AGENT OR ANY OF THE LENDERS IN
CONNECTION WITH ANY JUDICIAL PROCESS OR PROCEEDING TO OBTAIN POSSESSION OF,
REPLEVY, ATTACH OR LEVY UPON THE COLLATERAL, TO ENFORCE ANY JUDGMENT OR OTHER
SECURITY FOR THE LIABILITIES, TO ENFORCE ANY JUDGMENT OR OTHER COURT ORDER
ENTERED IN FAVOR OF SUCH PARTY OR TO ENFORCE BY SPECIFIC PERFORMANCE, TEMPORARY
RESTRAINING ORDER OR PRELIMINARY OR PERMANENT INJUNCTION, THIS AGREEMENT, OR ANY
OTHER AGREEMENT OR DOCUMENT BETWEEN THE PLEDGOR AND ANY SUCH PARTY.
19
<PAGE> 20
(f) WAIVES THE RIGHT TO ASSERT ANY SETOFF, COUNTERCLAIM OR
CROSS-CLAIM IN RESPECT OF, AND ALL STATUTES OF LIMITATIONS WHICH MAY
BE RELEVANT TO, SUCH ACTION OR PROCEEDING; AND
(g) WAIVES DUE DILIGENCE, DEMAND, PRESENTMENT AND PROTEST AND ANY
NOTICES THEREOF AS WELL AS NOTICE OF NONPAYMENT.
SECTION 19.14 JURY TRIAL. THE PLEDGOR, THE COLLATERAL AGENT AND THE
LENDERS EACH HEREBY WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY.
SECTION 19.15 GOVERNING LAW. THE VALIDITY, INTERPRETATION
AND ENFORCEMENT OF THIS AGREEMENT SHALL BE GOVERNED BY THE
INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS) OF THE STATE OF NEW
YORK.
SECTION 19.16 COUNTERPARTS. This Agreement may be executed in any
number of counterparts, all of which taken together shall constitute one
agreement, and either of the parties hereto may execute this Agreement by
signing any such counterpart.
[SIGNATURE PAGE FOLLOWS]
20
<PAGE> 21
IN WITNESS WHEREOF, the Pledgor and the Collateral Agent have each
caused this Agreement to be duly executed and delivered as of the date first
above written.
PLEDGOR:
GEOTEK FINANCING CORPORATION,
a Delaware corporation
By: /s/ MICHAEL MCCOY
-----------------------------------
Name: Michael McCoy
Title: Chief Financial Officer
COLLATERAL AGENT:
HUGHES NETWORK SYSTEMS, INC.,
as Collateral Agent
By: /s/ S.P. CARRIER
-----------------------------------
Name: S.P. Carrier
Title: Vice President and Secretary
With respect to Section 18 only:
LENDER:
HUGHES NETWORK SYSTEMS, INC.
By: /s/ PRADEEP KAUL
-----------------------------------
Name: Pradeet Kaul
Title: Executive Vice President
<PAGE> 22
Schedule I
PLEDGED SHARES
<TABLE>
<CAPTION>
Number of Pledged Share Certificate Percentage of
Issuer Shares Numbers Outstanding
- ------ ------ ------- -----------
<S> <C> <C> <C>
Geotek License
Holdings, Inc. 100 1 100%
</TABLE>
<PAGE> 23
Schedule II
PLEDGED NOTES
<TABLE>
<CAPTION>
Obligor Description of Note Principal Amount of Note
- ------- ------------------- ------------------------
<S> <C> <C>
Geotek License Promissory Note dated $24,500,000
Holdings, Inc. September 27, 1996
</TABLE>
<PAGE> 1
EXHIBIT VI
NEITHER THIS WARRANT NOR THE SECURITIES ISSUABLE UPON EXERCISE HEREOF NOR ANY
INTEREST OR PARTICIPATION HEREIN OR THEREIN MAY BE OFFERED, SOLD, OR IN ANY
OTHER MANNER TRANSFERRED OR DISPOSED OF IN THE UNITED STATES EXCEPT IN
COMPLIANCE WITH THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
ANY APPLICABLE STATE SECURITIES LAWS AND THE TERMS AND CONDITIONS HEREOF. THE
HOLDER OF THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF ARE
SUBJECT TO THE RESTRICTIONS HEREIN SET FORTH.
VOID AFTER 5:00 P.M., NEW YORK, NEW YORK TIME, September 26, 2003
************************************************
WARRANT
to
PURCHASE COMMON STOCK
of
GEOTEK COMMUNICATIONS, INC.
************************************************
This certifies that, for good and valuable consideration, Geotek
Communications, Inc., a Delaware corporation (the "Company"), grants to Hughes
Network Systems, Inc., a Delaware corporation, or permitted assigns (the
"Warrantholder" or "Warrantholders"), the right to subscribe for and purchase
from the Company, at a purchase price of $_______ per share (the "Exercise
Price"), at any time and from time to time after the Initial Exercise Date (as
defined below), and to and including 5:00 P.M. New York City time on September
26, 2003 (the "Expiration Date"), One Million (1,000,000) shares, as such number
of shares may be adjusted from time to time (the "Warrant Shares"), of the
Company's Common Stock, par value $.01 per share (the "Common Stock"), subject
to the provisions and upon the terms and conditions herein setforth. The
Exercise Price and the number of Warrant Shares are subject to adjustment from
time to time as provided in Section l.5(c) and Section 6. The Initial Exercise
Date shall be the earlier of (x) September 27, 1997 and (y) a Change of Control
(as defined in the Indenture dated as of June 30, 1995 by and between the
Company and IBJ Schroder Bank & Trust Company, as trustee, as in effect on the
date hereof).
This Warrant has been issued as part of a duly authorized issue of
warrants expiring September 26, 2003 (which warrants are hereinafter referred to
collectively as the "Warrants") pursuant to that certain Vendor Credit Financing
Agreement made as of the 27th day of September,
<PAGE> 2
1996 (the "Credit Agreement") by and among Geotek Financing Corporation
("Finance Corporation"), the Company and Hughes Network Systems, Inc. ("HNS").
SECTION 1. EXERCISE OF WARRANT; LIMITATION ON EXERCISE; PAYMENT OF
TAXES.
1.1 Exercise of Warrant.
(a) Subject to the limitations set forth in Section 1.2 hereof,
the Warrantholder may exercise this Warrant, in whole or in part at any time and
from time to time on or after the Initial Exercise Date, by presentation and
surrender of this Warrant to the Company at its principal executive offices or
at the office of its stock transfer agent, if any, with the Subscription Form
annexed hereto duly executed and payment of the full Exercise Price for each
Warrant Share to be purchased in accordance with Section 1.3 hereof.
(b) Upon receipt of this Warrant, with the Subscription Form duly
executed and payment of the aggregate Exercise Price in accordance with Section
1.3 hereof for the Warrant Shares for which this Warrant is then being
exercised, the Company shall cause to be issued certificates for the total
number of whole shares of Common Stock for which this Warrant is being exercised
(adjusted to reflect the effect of the antidilution provisions contained in
Section 6 hereof, if any, and as provided in Sections 5 and 8.8 hereof) in such
denominations as are requested for delivery to the Warrantholder, and the
Company shall thereupon promptly deliver such certificates to the Warrantholder.
The stock certificates so delivered shall be in such denominations as may be
specified by the Warrantholder and shall be issued in the name of the
Warrantholder or, if permitted by Section 5 and in accordance with the
provisions thereof, such other name as shall be designated in the Subscription
Form. The Warrantholder shall be deemed to be the holder of record of the shares
of Common Stock issuable upon such exercise, notwithstanding that the stock
transfer books of the Company shall then be closed or that certificates
representing such shares of Common Stock shall not then be actually delivered to
the Warrantholder. If at the time this Warrant is exercised, a registration
statement is not in effect to register under the Securities Act the issuance of
the Warrant Shares upon exercise of this Warrant, the Company may require the
Warrantholder to make such customary representations and deliver such customary
opinions of counsel, and may place such customary legends on certificates
representing the Warrant Shares, as may be reasonably required in the opinion of
counsel to the Company to permit the Warrant Shares to be issued without such
registration.
(c) If this Warrant shall have been exercised only in part, the
Company shall, at the time of delivery of the certificates for the Warrant
Shares, deliver to the Warrantholder a new Warrant evidencing the rights to
purchase the remaining Warrant Shares, which new Warrant shall in all other
respects be identical with this Warrant. No adjustments or payments shall be
made on or in respect of Warrant Shares issuable on the exercise of this
Warrant for any regular cash dividends paid or payable to holders of record of
Common Stock prior to the date as of which the Warrantholder shall be deemed to
be the record holder of such Warrant Shares.
-2-
<PAGE> 3
1.2 Limitation on Exercise of Warrants and Sales of Warrant Shares.
(a) If this Warrant is not exercised prior to 5:00 p.m. on the
Expiration Date (or the next succeeding Business Day, if the Expiration Date is
a Saturday, Sunday or a day on which the New York Stock Exchange is authorized
to close or on which the Company is otherwise closed for business (a
"Nonbusiness Day")), this Warrant, or any new Warrant issued pursuant to Section
1.1, shall cease to be exercisable and shall become void and all rights of the
Warrantholder hereunder shall cease. This Warrant shall not be exercisable and
no Warrant Shares shall be issued hereunder prior to 9:00 a.m. New York City
time on the Initial Exercise Date.
(b) Notwithstanding anything herein to the contrary, no
Warrantholder, without the Company's prior written consent, shall be entitled to
sell or otherwise transfer (other than sales or transfers between Warrantholder
and one or more of its affiliates (as defined in Rule 501 under the Securities
Act) or between its affiliates) greater than 10,000 Warrant Shares on any
trading day occurring prior to October 1, 1996 or greater than the Maximum Sales
Amount (as defined below) on any trading day occurring on or after October 1,
1996. All sales and transfers by Warrantholder and its affiliates on a trading
day shall be aggregated for purposes of determining whether Warrantholder has
complied with this Section. For purposes of this Section 1.2(b), the "Maximum
Sales Amount" shall mean the greater of (x) a number of shares of Common Stock
with an aggregate market value (based on the Quoted Price (as defined herein) of
the Common Stock on the trading day immediately preceding the sale or transfer
for which the determination is being made) equal to $500,000 and (y) such number
of shares which is equal to 5% of the average daily trading volume of the
Company's Common Stock on the primary interdealer quotation system or national
securities exchange on which the Common Stock is traded for the thirty (30)
trading day period immediately preceding the date of sale or transfer.
(c) For so long as HNS or any of its affiliates own any Warrants
or Warrant Shares, neither HNS nor any of its affiliates may sell on any day
more shares of the Company's Common Stock than HNS and its affiliates (other
than HNS Retirement Plans (as defined below)) own on such day (including shares
in respect of which it has or will properly exercise its exercise rights under
the Warrants on such day). Nothing in this Section 1.2(c) shall restrict (i) the
ability of HNS or any of its affiliates to sell, assign or otherwise transfer
this Warrant in accordance with the terms, and subject to the limitations,
contained herein or (ii) the ability of any pension or other retirement plan
(other than a pension or retirement plan which owns Warrants or Warrant Shares)
for the primary benefit of employees or former employees of HNS and its
affiliates (each such plan is referred to herein as an "HNS Retirement Plan")
from engaging in any trading activity with respect to the Company's Common
Stock.
1.3 Payment of Exercise Price. Payment of the Exercise Price pursuant to
Section 1.1 (a) shall be made to the Company no later than the fourth trading
day following delivery of the Subscription Form with respect to such exercise by
one of the following methods (at the option of the Warrantholder): (a) in cash;
(b) by certified or official bank check payable in United States dollars to the
order of the Company; (c) by wire transfer of same day funds in accordance with
the
-3-
<PAGE> 4
Company's written wiring instructions; (d) by applying all or any portion of
the Obligations under the Credit Agreement that are then past due and payable
under the Credit Agreement against the Exercise Price; or (e) by any combination
of the foregoing. Any portion of the Exercise Price paid by the Warrantholder in
the manner set forth in clause (d) of this Section 1.3 shall be in complete
satisfaction of Finance Corporation's and the Company's obligations to pay such
amount under the Credit Agreement.
1.4 Payment of Taxes. The issuance of certificates for Warrant Shares
shall be made without charge to the Warrantholder for any stock transfer or
other issuance tax in respect thereto; provided, however, that the Warrantholder
shall be required to pay any and all taxes which may be payable in respect to
any transfer involved in the issuance and delivery of any certificates for
Warrant Shares in a name other than that of the then Warrantholder as reflected
upon the books of the Company.
1.5 Mandatory Exercise.
(a) From and after September 27, 2000, the Company may, in its
sole discretion, require the exercise of all or any portion of this Warrant
following a Mandatory Exercise Calculation Period in accordance with the
Mandatory Exercise Procedures (as defined in Section 1.5(b) below). "Mandatory
Exercise Calculation Period" shall be any period during which for ten (10)
consecutive trading days after September 27, 2000, the Closing Price (as defined
below) of the Common Stock equaled or exceeded the Mandatory Exercise Price. The
initial Mandatory Exercise Price shall be equal to $12.9375. The Mandatory
Exercise Price shall be subject to equitable adjustment in accordance with the
antidilution provisions set forth in Section 6(a) to the same extent as the
Exercise Price is subject to adjustment. At any time during the ten (10)
business day period immediately following the conclusion of a Mandatory Exercise
Calculation Period, the Company may mail to the holder of this Warrant at its
last address reflected on the Company's books and records (and in the case of
HNS, with copies of such notice sent by certified or registered mail, postage
prepaid and return receipt requested, to each of the General Counsel and the
Chief Financial Officer of HNS at 11717 Exploration Lane, Germantown, Maryland
20876 and to the Treasurer of Hughes Electronics Corporation at 7200 Hughes
Terrace, Los Angeles, California 90045) a notice ( a "Mandatory Exercise
Notice") notifying such holder that the Company has exercised its right pursuant
to this Section 1.5 and that the Holder is subject to the Mandatory Exercise
Procedures set forth in Section 1.5(b). Such notice shall set forth (i) the last
date by which the Warrantholder must have initiated the Mandatory Exercise
Procedures, (ii) the aggregate number of shares of Common Stock issuable upon
exercise of this Warrant which are subject to Mandatory Exercise Procedures and
(iii) any restrictions on the number of shares of Common Stock which the
Warrantholder may sell pursuant to the Mandatory Exercise Procedures (the
"Volume Limitations"). Notwithstanding the foregoing, this Warrant shall not be
subject to mandatory exercise pursuant to this Section 1.5 at any time that the
issuance of the Warrant Shares upon exercise of the Warrant or the resale of
such is not registered under the Securities Act. As used in this Agreement,
"Closing Price" shall mean the last reported sales price of the Common Stock on
any national securities exchange on which the Common Stock is listed which shall
be for consolidated trading if applicable to such exchange, or
-4-
<PAGE> 5
if not so listed, the last reported bid price of the Common Stock, as reported
on the NASDAQ Stock Market or on the principal securities market on which the
Common Stock is then being traded.
(b) As used in this Section 1.5, "Mandatory Exercise Procedures"
shall consist of the following:
(i) Within five (5) business days after receiving a
Mandatory Exercise Notice, the Warrantholder shall deliver a standing order to a
nationally recognized brokerage firm to use its reasonable best efforts to sell,
in an orderly manner and subject to the Volume Limitations and the restrictions
contained in Section 1.2 hereof, such number of shares of Common Stock that such
brokerage firm can sell at a price at or above the Mandatory Exercise Price. The
Warrantholder shall not revoke or otherwise modify such standing order other
than as contemplated by subparagraph (iii) of these Mandatory Exercise
Procedures or otherwise with the written consent of the Company and shall
deliver to the Company (when delivered to the brokerage firm) copies of all
correspondence to the brokerage firm which relates to such standing order.
(ii) Within four (4) trading days after any sale by the
Warrantholder of any shares of Common Stock pursuant to these Mandatory Exercise
Procedures, the Warrantholder shall exercise this Warrant to purchase the full
number of shares so sold.
(iii) In the event the Company shall modify or impose any
new Volume Limitations or increase the Maximum Sales Amount with respect to any
Mandatory Exercise Procedures then in effect, such modified or new Volume
Limitations and/or Mandatory Sales Amount shall become effective on the third
trading day following the Company's written notice to the Warrantholder of such
modified or new Volume Limitations and/or Mandatory Sales Amount. The
Warrantholder shall promptly (but in no event later than one (1) trading day
prior to the effective date of such new criteria) notify the brokerage firm
implementing the Mandatory Exercise Procedures of the new or modified Volume
Limitations and/or Mandatory Sales Amount and shall deliver a copy of such
notification to the Company.
(c) In the event the holder of this Warrant (i) fails to
implement the Mandatory Exercise Procedures within the time frames set forth
therein (including, without limitation, any failure by the brokerage firm
referenced in Section 1.5(b)(i) hereof to utilize its reasonable best efforts to
sell, in an orderly manner, the maximum number of Shares it is authorized to
sell under such Mandatory Exercise Procedures) or fails to exercise this Warrant
in accordance with such procedures and (ii) fails to fully cure all such
failures during the thirty (30) day period (the "Maximum Exercise Cure Period")
following the date upon which such holder receives notice from the Company of
its failure to exercise any portion of this Warrant pursuant to the Mandatory
Exercise Procedures, then, effective on the first day following the Maximum
Exercise Cure Period and continuing until such time as such holder shall fully
cure all such failures which have occurred through the date of such cure (the
"Cure Date"), the Exercise Price with respect to each Warrant Share (a "Default
Share") which would have been purchased upon exercise of this Warrant in
accordance with the Mandatory Exercise Procedures through the Cure Date shall be
equal to the
-5-
<PAGE> 6
Mandatory Default Exercise Price. The Mandatory Default Exercise Price shall
initially equal one hundred and ten percent (110%) of the Exercise Price then
in effect and shall increase, on a daily basis, at a rate of ten percent (10%)
of the Exercise Price in effect at the time of the Mandatory Exercise Notice per
month until the Cure Date. In the event the Cure Date does not occur within five
(5) months after the expiration of the Mandatory Exercise Cure Period, the
Company, in addition to all other remedies available to it at law or in equity,
may terminate this Warrant effective on the Mandatory Exercise Date.
(d) In no event shall any Mandatory Exercise Procedures
(including, without limitation, any Volume Limitations set forth therein) limit
the Warrantholder's ability to exercise this Warrant or sell Warrant Shares in
accordance with and subject to the limitations contained elsewhere in this
Warrant (including, without limitation, Section 1.2 hereof). For the avoidance
of doubt, any Volume Limitations established by the Company as part of the
Mandatory Exercise Procedures shall not limit the Warrantholder's ability to
elect to sell up to the Maximum Sales Amount as contemplated by Section 1.2
hereof even if such Maximum Sales Amount is greater than any such Volume
Limitations.
SECTION 2. RESERVATION AND LISTING OF SHARES, ETC.
All Warrant Shares which are issued upon the exercise of the
rights represented by this Warrant shall, upon issuance and payment of the
Exercise Price, be validly issued, fully paid and nonassessable without any
preemptive rights, and free from all taxes, liens, security interests, charges
and other encumbrances with respect to the issue thereof other than taxes in
respect of any transfer occurring contemporaneously with such issue. During the
period within which this Warrant may be exercised, the Company shall at all
times have authorized and reserved, and keep available and free from preemptive
rights, and free from all taxes, liens, security interests, charges and other
encumbrances with respect to the issue thereof, a sufficient number of shares of
Common Stock to provide for the exercise of this Warrant, and if at any time the
number of authorized but unissued shares of Common Stock shall not be sufficient
to effect the exercise of this Warrant, in addition to such other remedies as
shall be available to a Warrantholder, the Company will take such corporate
action as may, in the opinion of its counsel, be necessary to increase its
authorized but unissued shares of Common Stock to such number of shares as shall
be sufficient for such purposes. In addition, prior to the issuance of any
Warrant Shares, the Company shall at its expense procure the listing of the
Warrant Shares (or any other issues of capital stock issuable upon the exercise
of this Warrant if such other class of capital stock is then so listed) which
shall be issued upon exercise of this Warrant (subject to official notice of
issuance) as then may be required on all stock exchanges or interdealer
quotation systems on which the Common Stock is then listed and shall maintain
such listing if and so long as any shares of the same class shall be listed on
such stock exchanges or interdealer quotation systems. The Company shall, from
time to time, take all such action as may be required to assure that the par
value per share of the Warrant Shares is at all times equal to or less than the
then effective Exercise Price.
-6-
<PAGE> 7
SECTION 3. EXCHANGE, LOSS OR DESTRUCTION OF WARRANT.
If permitted by Section 5 and in accordance with the provisions
thereof, upon surrender of this Warrant to the Company with a duly executed
instrument of assignment and funds sufficient to pay any transfer tax, the
Company shall, without charge, execute and deliver a new Warrant of like tenor
in the name of the assignee named in such instrument of assignment and this
Warrant shall promptly be canceled. Upon receipt by the Company of evidence
reasonably satisfactory to it of the loss, theft, destruction or mutilation of
this Warrant, and, in the case of loss, theft or destruction, of such bond or
indemnification as the Company may reasonably require, and, in the case of such
mutilation, upon surrender and cancellation of this Warrant, the Company will
execute and deliver a new Warrant of like tenor. The term "Warrant" as used
herein includes any Warrants issued in substitution or exchange of this Warrant.
SECTION 4. OWNERSHIP OF WARRANT: CERTAIN RIGHTS OF WARRANTHOLDERS.
(a) The Company may deem and treat the Person (as defined in
Section 7.1 hereof) in whose name this Warrant is registered as the holder and
owner hereof (notwithstanding any notations of ownership or writing hereon made
by anyone other than the Company) for all purposes and shall not be affected by
any notice to the contrary, until presentation of this Warrant for registration
of transfer as provided in subsection 1.1, Section 3 or Section 5.
(b) Nothing contained in this Warrant shall be construed as
conferring upon the Warrantholder or its transferees the right to vote or to
receive dividends or to consent or to receive notice as a stockholder in respect
of any meeting of stockholders for the election of directors of the Company or
of any other matter, or any rights whatsoever as stockholders of the Company.
The Company shall give notice to the Warrantholder by registered mail if at any
time prior to the expiration or exercise in full of the Warrants, any of the
following events shall occur:
(i) the Company shall authorize the payment of any
dividend payable in any securities upon shares of Common Stock or authorize the
making of any distribution (other than a regular cash dividend paid out of net
profits legally available therefor) to all holders of Common Stock;
(ii) the Company shall authorize the issuance to all
holders of Common Stock of any additional shares of Common Stock or securities
that are convertible into or exercisable for shares of Common Stock ("Common
Stock Equivalents") or of rights, options or warrants to subscribe for or
purchase Common Stock or Common Stock Equivalents or of any other subscription
rights, options or warrants;
(iii) a dissolution, liquidation or winding up of the
Company; or
-7-
<PAGE> 8
(iv) a capital reorganization or reclassification of the
Common Stock (other than a subdivision or combination of the outstanding Common
Stock and other than a change in the par value of the Common Stock) or any
consolidation or merger of the Company with or into another corporation (other
than a consolidation or merger in which the Company is the continuing
corporation and that does not result in any reclassification or change of Common
Stock outstanding) or in the case of any sale or conveyance to another
corporation of the property of the Company as an entirety or substantially as an
entirety or a tender offer or exchange offer for shares of Common Stock.
Such giving of notice shall be initiated at least 20 days prior
to the date fixed as a record date or effective date or the date of closing of
the Company's stock transfer books for the determination of the stockholders
entitled to such dividend, distribution, issuance or subscription rights, or for
the determination of the stockholders entitled to vote on such proposed merger,
consolidation, sale, conveyance, dissolution, liquidation or winding up or to
participate in such tender or exchange offer. Such notice shall specify (A) the
date as of which the holders of record of shares of Common Stock to be entitled
to receive any such rights, options, warrants or distribution are to be
determined, or (B) the initial expiration date set forth in any tender offer or
exchange offer for shares of Common Stock or any securities convertible into or
exchangeable for Common Stock, or (C) the date on which any such reorganization,
reclassification, consolidation, merger, sale, conveyance, dissolution,
liquidation or winding up is expected to become effective or consummated, and
the date as of which it is expected that holders of record of shares for
securities or other property, if any, deliverable upon such reorganization,
reclassification, consolidation, merger, sale, conveyance, dissolution,
liquidation or winding up are to be determined. Failure to provide such notice
shall not affect the validity of any action taken in connection with such
dividend, distribution, issuance or subscription rights, or proposed merger,
consolidation, sale, conveyance, tender offer, exchange offer, dissolution,
liquidation or winding up.
SECTION 5. SPLIT-UP, COMBINATION, EXCHANGE AND TRANSFER OF WARRANTS.
(a) Subject to the provisions of Section 5(b), this Warrant may
be split up, combined or exchanged for another Warrant or Warrants containing
the same terms to purchase a like aggregate number of Warrant Shares. If the
Warrantholder desires to split up, combine or exchange this Warrant, he, she or
it shall make such request in writing delivered to the Company and shall
surrender to the Company this Warrant and any other Warrants to be so split up,
combined or exchanged. Upon any such surrender for a split up, combination or
exchange, the Company shall execute and deliver to the Person entitled thereto a
Warrant or Warrants, as the case may be, as so requested. The Company shall not
be required to effect any split up, combination or exchange which will result in
the issuance of a warrant entitling the Warrantholder to purchase upon exercise
a fraction of a share of Common Stock or a fractional Warrant. The Company may
require such Warrantholder to pay a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any split up,
combination or exchange of Warrants.
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<PAGE> 9
(b) Neither this Warrant nor the Warrant Shares may be
transferred, disposed of or encumbered (any such action, a "Transfer") except in
accordance with and subject to the provisions of the Securities Act, any
applicable state securities laws and the rules and regulations promulgated
thereunder. If at the time of a Transfer, a registration statement is not in
effect to register this Warrant or the issuance of the Warrant Shares, this
Warrant may only be transferred to an "Accredited Investor" (as defined in the
Securities Act) and the Company may require the Warrantholder to make such
customary representations and deliver such customary opinions of counsel, and
may place such customary legends on certificates representing this Warrant, as
may be reasonably required in the opinion of counsel to the Company to permit a
Transfer without such registration.
(c) Warrantholder shall not sell or otherwise transfer any
Warrants to a competitor of the Company engaged or, to the knowledge of
Warrantholder, planning to engage in the business of providing wireless voice or
data communications services to mobile customers or of providing equipment in
connection therewith; provided, however, that nothing in this Section 5 (c)
shall restrict the ability of any Warrantholder from selling or transferring any
Warrants to a Hughes Subsidiary (as defined in the Credit Agreement) or to any
pension or retirement plan which is a "qualified institutional buyer" within the
meaning of Rule 144A under the Securities Act.
SECTION 6. ADJUSTMENTS OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES
ISSUABLE. The Exercise Price and the number of Warrant Shares issuable upon the
exercise of this Warrant are subject to adjustment from time to time upon the
occurrence of the events enumerated in this Section 6. For purposes of this
Section 6, "Common Stock" means the Common Stock and any other capital stock of
the Company, however designated, for which the Warrants may be exercisable.
(a) Adjustment for Change in Capital Stock.
If the Company:
(i) pays a dividend or makes a distribution on its Common
Stock in shares of its Common Stock;
(ii) subdivides its outstanding shares of Common Stock
into a greater number of shares;
(iii) combines its outstanding shares of Common Stock into
a smaller number of shares;
(iv) makes a distribution on its Common Stock in shares of
its capital stock other than Common Stock; or
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<PAGE> 10
(v) issues by reclassification of its Common Stock any
shares of its capital stock,
then the Exercise Price and the number and kind of shares of capital stock of
the Company issuable upon the exercise of this Warrant (as in effect immediately
prior to such action) shall be proportionately adjusted so that the
Warrantholder may receive, upon exercise of this Warrant, the aggregate number
and kind of shares of capital stock of the Company which he would have owned
immediately following such action if this Warrant had been exercised immediately
prior to such action.
The adjustment shall become effective immediately after the
record date, subject to subsection (n) of this Section 6, in the case of a
dividend or distribution and immediately after the effective date in the case of
a subdivision, combination or reclassification.
If after an adjustment, a Warrantholder shall be entitled to
receive shares of two or more classes or series of capital stock of the Company
upon exercise of this Warrant, the Company shall determine the allocation of the
adjusted Exercise Price between the classes or series of capital stock. After
such allocation, the exercise privilege and the Exercise Price of each class or
series of capital stock shall thereafter be subject to adjustment on terms
comparable to those applicable to Common Stock in this Section 6.
Such adjustment shall be made successively whenever any event
listed above shall occur.
(b) Adjustment for Rights Issue. If the Company distributes any
rights, options or warrants to all holders of its Common Stock entitling them
for a period expiring within 60 days after the record date mentioned below to
purchase shares of Common Stock or securities convertible into or exercisable or
exchangeable for shares of Common Stock at a price per share less than the
current market price (as defined below) per share (including, in the case of
securities convertible into or exercisable or exchangeable for shares of Common
Stock, the consideration payable for such convertible, exercisable or
exchangeable security and the minimum consideration per share payable upon the
conversion, exercise or exchange of such security into or for Common Stock) on
that record date, the Exercise Price shall be adjusted in accordance with the
following formula:
O + N x P
-----
E' = E x M
---------
O+ N
where:
E' = the adjusted Exercise Price.
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<PAGE> 11
E = the current Exercise Price.
O = the number of shares of Common Stock outstanding on the
record date.
N = the number of additional shares of Common Stock offered.
P = the offering price per share of the additional shares.
M = the current market price per share of Common Stock on the
record date.
The adjustment shall be made successively whenever any such
rights, options or warrants are issued and shall become effective immediately
after the record date for the determination of stockholders entitled to receive
the rights, options or warrants. If at the end of the period during which such
rights, options or warrants are exercisable, not all rights, options or warrants
shall have been exercised, the Exercise Price shall be immediately readjusted to
what it would have been if "N" in the above formula had been the number of
shares actually issued.
(c) Adjustment for Other Distributions. If the Company
distributes to all holders of its Common Stock any of its assets or debt
securities or any rights or warrants to purchase debt securities, assets or
other securities of the Company, the Exercise Price shall be adjusted in
accordance with the following formula:
E' = E x M - F
-----
M
where:
E' = the adjusted Exercise Price.
E = the current Exercise Price.
M = the current market price per share of Common Stock on the
record date mentioned in the immediately succeeding
paragraph.
F = the fair market value on the record date of the assets,
securities, rights or warrants applicable to one share of
Common Stock. The Board of Directors of the Company shall
determine the fair market value.
The adjustment shall be made successively whenever any such
distribution is made and shall become effective immediately after the record
date for the determination of stockholders entitled to receive the distribution.
This subsection (c) does not apply to:
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<PAGE> 12
(i) rights, options or warrants referred to in subsection
(b) of this Section 6, or
(ii) cash dividends or cash distributions paid out of
consolidated current or retained earnings as shown on the books of the Company
prepared in accordance with generally accepted accounting principles other than
any Extraordinary Cash Dividend (as defined below). An "Extraordinary Cash
Dividend" shall be that portion, if any, of the aggregate amount of all cash
dividends paid in any fiscal year which exceeds $25 million. In all cases, the
Company shall give the Warrantholders at least 30 days notice of a record date
for any dividend payment on its Common Stock.
(d) Adjustment for Common Stock Issue. If the Company issues
shares of Common Stock for a consideration per share less than the current
market price per share on the date the Company fixes the offering price of such
additional shares, the Exercise Price shall be adjusted in accordance with the
following formula:
P
--
E' = E x 0 + M
-----
A
where:
E' = the adjusted Exercise Price.
E = the then current Exercise Price.
O = the number of shares outstanding immediately prior to the
issuance of such additional shares.
P = the aggregate consideration received for the issuance of
such additional shares.
M = the current market price per share on the date the Company
fixes the offering price of such additional shares.
A = the number of shares outstanding immediately after the
issuance of such additional shares.
The adjustment shall be made successively whenever any such
issuance is made, and shall become effective immediately after such issuance.
This subsection (d) does not apply to:
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<PAGE> 13
(i) any of the transactions described in subsections (a),
(b) and (c) of this Section 6,
(ii) the conversion, exercise or exchange of securities
convertible or exchangeable for Common Stock,
(iii) Common Stock issuable upon the exercise of rights or
warrants issued to the holders of Common Stock,
(iv) Common Stock issued to shareholders of any Person
which merges into the Company in proportion to their stock holdings of such
Person immediately prior to such merger, upon such merger,
(v) Common Stock issued in a bona fide public offering
pursuant to a firm commitment underwriting, or
(vi) Common Stock issued in a bona fide private placement
through a placement agent which is a member firm of the National Association of
Securities Dealers, Inc. (except to the extent that any discount from the
current market price attributable to restrictions on transferability of the
Common Stock, as determined in good faith by the Board of Directors and
described in a Board resolution, shall exceed 20%).
(e) Adjustment for Convertible Securities Issue. If the Company
issues any securities convertible into or exercisable or exchangeable for Common
Stock (other than securities issued in transactions described in subsections
(a), (b) and (c) of this Section 6) for a consideration per share (including the
minimum consideration per share payable upon conversion, exercise or exchange of
any securities convertible into or exercisable or exchangeable for Common Stock)
of Common Stock initially deliverable upon conversion, exercise or exchange of
such securities less than the current market price per share on the date the
Company fixes the offering price of such securities, the Exercise Price shall be
adjusted in accordance with this formula:
P
--
E' = E x 0 + M
-----
0 + D
where:
E' = the adjusted Exercise Price.
E = the then current Exercise Price.
O = the number of shares outstanding immediately prior to the
issuance of such securities.
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<PAGE> 14
P = the aggregate consideration received for the issuance of
such securities.
M = the current market price per share on the date the Company
fixes the offering price of such securities.
D = the maximum number of shares deliverable upon conversion or
exercise of or in exchange for such securities at the
initial conversion, exercise or exchange rate.
The adjustment shall be made successively whenever any such
issuance is made, and shall become effective immediately after such issuance.
If all of the Common Stock deliverable upon conversion, exercise
or exchange of such securities has not been issued when such securities are no
longer outstanding, then the Exercise Price shall promptly be readjusted to the
Exercise Price which would then be in effect had the adjustment upon the
issuance of such securities been made on the basis of the actual number of
shares of Common Stock issued upon conversion, exercise or exchange of such
securities.
This subsection (e) does not apply to:
(i) convertible, exercisable or exchangeable securities
issued to shareholders of any Person which merges into the Company, or with a
subsidiary of the Company, in proportion to their stock holdings of such Person
immediately prior to such merger, upon such merger,
(ii) convertible, exercisable or exchangeable securities
issued in a bona fide public offering pursuant to a firm commitment underwriting
or pursuant to agreements in effect on the date of issuance of this Warrant,
(iii) convertible, exercisable or exchangeable securities
issued in a bona fide private placement through a placement agent which is a
member firm of the National Association of Securities Dealers, Inc. (except to
the extent that any discount from the current market price attributable to
restrictions on transferability of Common Stock issuable upon conversion, as
determined in good faith by the Board of Directors and described in a Board
resolution which shall be filed with the Trustee, shall exceed 20% of the then
current market price) or
(iv) stock options issued to the Company's directors,
officers or employees.
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<PAGE> 15
(f) Adjustment for Tender or Exchange Offer. If the Company or
any Subsidiary of the Company consummates a tender or exchange offer for all or
any portion of the Common Stock or any securities convertible into or
exercisable or exchangeable for Common Stock, to the extent that the cash and
value of any other consideration included in such payment per share of Common
Stock (determined on an as-converted basis in the case of any such convertible,
exercisable or exchangeable securities so tendered or exchanged) exceeds the
average of the Quoted Prices (as defined in subsection (g) of this Section 6) of
the Common Stock for the five consecutive trading days (the "Adjustment Period")
commencing on the first trading day (such trading day, the "First Trading Day")
immediately following the last time tenders or exchanges may be made pursuant to
such tender or exchange offer (the "Expiration Time"), the Exercise Price shall
be adjusted in accordance with this formula:
E' = E x 0 x M
-----------
P + (A x M)
E' = the adjusted Exercise Price.
E = the current Exercise Price.
O = the number of shares of Common Stock outstanding
immediately prior to the Expiration Time, including, in
the case of any tender or exchange offer in respect of
securities convertible into or exercisable or exchangeable
for Common Stock, any shares of Common Stock issuable upon
the conversion, exercise or exchange of such securities.
M = the average of the Quoted Prices (as defined in subsection
(g) of this Section 6) of the Common Stock for the
Adjustment Period.
P = the aggregate cash consideration and the fair market value
of any non-cash consideration payable to stockholders
based on the number of shares of Common Stock (or
securities convertible into or exercisable or exchangeable
for Common Stock) tendered or exchanged (and not
withdrawn) in connection with the tender or exchange offer
and accepted by the Company. The Board of Directors shall
determine the fair market value of any non-cash
consideration.
A = the number of shares of Common Stock outstanding at the
time of acceptance by the Company of any shares of Common
Stock (or securities convertible into or exercisable or
exchangeable for Common Stock) so tendered or exchanged
and accepted by the Company, including, in the case of any
tender or exchange offer in respect of securities
convertible into or exercisable or exchangeable for Common
Stock, any shares of Common Stock issuable upon the
conversion, exercise or exchange of such securities.
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<PAGE> 16
The adjustment shall be made successively whenever any such
tender or exchange offer is made. To the extent a Warrantholder exercises such
holder's Warrant(s) prior to the conclusion of the Adjustment Period, any
adjustment in the number of Warrant Shares issuable upon exercise of such
Warrant(s) shall be for the benefit of the holder of record of such Warrant(s)
at the close of trading on the First Trading Day.
This subsection (f) does not apply to redemptions of securities
pursuant to redemption provisions contained in the certificate of designation
pertaining to such securities in effect at the time such securities were issued,
whether such redemptions are optional or mandatory.
(g) Current Market Price. In subsections (b), (c), (d) and (e) of
this Section 6, the current market price per share of Common Stock on any date
is the average of the Quoted Prices of the Common Stock for 30 consecutive
trading days commencing 45 trading days before the date in question. The "Quoted
Price" of the Common Stock is the last reported sales price of the Common Stock
on any national securities exchange on which the Common Stock is listed which
shall be for consolidated trading if applicable to such exchange, or if not so
listed, the last reported bid price of the Common Stock (reduced in each case to
reflect any dividend for the period during which the Common Stock is traded on
an ex-dividend basis). In the absence of one or more such quotations, the Board
of Directors of the Company shall determine the current market price on such
basis as it in good faith considers appropriate.
(h) Consideration Received. For purposes of any computation
respecting consideration received pursuant to subsections (d) and (e) of this
Section 6, the following shall apply:
(i) in the case of the issuance of shares of Common Stock
for cash, the consideration shall be the amount of such cash, provided that in
no case shall any deduction be made for any commissions, discounts or other
expenses incurred by the Company for any underwriting of the issue or otherwise
in connection therewith;
(ii) in the case of the issuance of shares of Common Stock
for a consideration in whole or in part other than cash, the consideration other
than cash shall be deemed to be the fair market value thereof as determined in
good faith by the Company's Board of Directors (irrespective of the accounting
treatment thereof), whose determination shall be conclusive and described in a
Board resolution; and
(iii) in the case of the issuance of securities
convertible into or exercisable or exchangeable for shares, the aggregate
consideration received therefor shall be deemed to be the consideration received
by the Company for the issuance of such securities plus the additional minimum
consideration, if any, to be received by the Company upon the conversion,
exercise or exchange thereof (the consideration in each case to be determined in
the same manner as provided in clauses (i) and (ii) of this subsection).
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<PAGE> 17
(i) When De Minimis Adjustment May Be Deferred. No adjustment in
the Exercise Price need be made unless the adjustment would require an increase
or decrease of at least 1 % in the Exercise Price. Any adjustments that are not
made shall be carried forward and taken into account in any subsequent
adjustment.
All calculations under this Section 6 shall be made to the
nearest cent or to the nearest 1/100th of a share, as the case may be.
(j) When No Adjustment Required. No adjustment need be made for a
transaction referred to in subsections (a), (b), (c), (d), (e) or (f) of this
Section 6 if Warrantholders are to participate in the transaction on a basis and
with notice that the Board of Directors determines to be fair and appropriate in
light of the basis and notice on which holders of Common Stock participate in
the transaction.
No adjustment need be made for (i) a transaction referred to in
subsections (b), (d) or (e) of this Section 6 if the below market portion of
such issuances, taken together with the below market portions all other
issuances and with the above market portions of all tender or exchange offers
described in clause (ii) of this paragraph made on and after the date of this
Agreement, is less than 2.0% of the Total Market Capitalization (as defined
below) of the Company (determined by reference to the sum of the percentages of
Total Market Capitalization of the Company attributable to each such transaction
on the date thereof) and (ii) a transaction referred to in subsection (f) of
this Section 6 if the above market portion of such tender or exchange offers,
taken together with the above market portions of all other tender or exchange
offers and with the below market portions of all issuances described in clause
(i) of this paragraph made on or after the date of this Agreement, is less than
2.0% of the Total Market Capitalization of the Company (determined by reference
to the sum of the percentages of Total Market Capitalization of the Company
attributable to each such transaction on the date thereof). For purposes of this
Agreement, the Total Market Capitalization of the Company shall mean as of any
day of determination, the sum of (a) the consolidated indebtedness of the
Company and its subsidiaries on such day plus (b) the product of (i) the
Company's aggregate number of outstanding primary shares of Common Stock on such
day (which shall not include any options or warrants on, or securities
convertible or exchangeable into, shares of Common Stock other than any shares
of preferred stock of the Company, that, as of the day of determination, cannot,
pursuant to the terms thereof as in effect on the date of this Warrant, be
required to be redeemed by the Company in cash), and (ii) the average Closing
Price of such Common Stock over the 20 consecutive trading days immediately
preceding such day, plus (c) the liquidation value of any outstanding shares of
preferred stock of the Company on such day. If no such Closing Price exists with
respect to shares of any such class, the value of such shares for purposes of
clause (b) for the preceding sentence shall be determined by the Company's Board
of Directors in good faith.
No adjustment need be made for a change in the par value, or from
par value to no par value, or from no par value to par value, of the Common
Stock.
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<PAGE> 18
To the extent the Warrants become convertible into cash, no
adjustment need be made thereafter as to the cash. Interest will not accrue on
the cash.
(k) Voluntary Reduction. The Company from time to time may, as
the Board of Directors deems appropriate, reduce the Exercise Price by any
amount for any period of time if the period is at least 20 days and if the
reduction is irrevocable during the period; provided that in no event may the
Exercise Price be less than the par value of a share of Common Stock.
Whenever the Exercise Price is reduced, the Company shall mail to
Warrantholders a notice of the reduction. The Company shall mail the notice at
least 15 days before the date the reduced Exercise Price takes effect. The
notice shall state the reduced Exercise Price and the period it will be in
effect.
A voluntary reduction of the Exercise Price pursuant to this
Section 6(k), other than a reduction which the Company has irrevocably committed
will be in effect for so long as any Warrants are outstanding, does not change
or adjust the Exercise Price otherwise in effect for purposes of subsections
(a), (b), (c), (d), (e) and (f) of this Section 6.
(l) Reorganization of the Company.
(i) If the Company consolidates or merges with or into, or
transfers or leases all or substantially all its assets to, any Person, upon
consummation of such transaction this Warrant shall automatically become
exercisable for the kind and amount of securities, cash or other assets which
the holder of a Warrant would have owned immediately after the consolidation,
merger, transfer or lease if the holder had exercised the Warrant immediately
before the effective date of the transaction. Concurrently with the consummation
of such transaction, the corporation formed by or surviving any such
consolidation or merger if other than the Company, or the Person to which such
sale or conveyance shall have been made (any such Person, the "Successor
Entity"), shall enter into a supplemental agreement so providing and further
providing for adjustments which shall be as nearly equivalent as may be
practical to the adjustments provided for in this Section 6. The Successor
Entity shall mail to the Warrant holder a notice describing the supplemental
agreement. If the issuer of securities deliverable upon exercise of this Warrant
under the supplemental agreement is an affiliate of the formed, surviving,
transferee or lessee corporation, that issuer shall join in the supplemental
agreement.
(ii) If this subsection (1) applies, subsections (a), (b),
(c), (d), (e) and (f) of this Section 6 do not apply.
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<PAGE> 19
(m) Company Determinations. Any determination that the Company or
the Board of Directors must make pursuant to subsection (a), (c), (d), (e), (f),
(g), (h) or (j) of this Section 6 may be challenged in good faith by
Warrantholders (other than the Company and entities controlled by the Company)
that hold HNS Warrants entitling them to purchase more than 50% of the shares of
Common Stock issuable upon exercise of HNS Warrants held by all holders other
than the Company and entities controlled by the Company (the "Consent
Warrantholders") by providing the Company written notice of such challenge
within ten (10) business days of the Company providing Warrantholders notice of
such determination. Any such challenge shall be resolved by an investment
banking firm selected by the Company and reasonably acceptable to the Consent
Warrantholders, which resolution shall be conclusive and binding on the Company
and the Warrantholders.
(n) When Issuance or Payments May Be Deferred. In any case in
which this Section 6 shall require that an adjustment in the Exercise Price be
made effective as of or immediately after a record date for a specified event,
the Company may elect to defer until the occurrence of such event (i) issuing to
the holder of any Warrant exercised after such record date the Warrant Shares
and other capital stock of the Company, if any, issuable upon such exercise over
and above the Warrant Shares and other capital stock of the Company, if any,
issuable upon such exercise on the basis of the Exercise Price prior to such
adjustment and (ii) paying to such holder any amount in cash in lieu of a
fractional share pursuant to Section 8.8 hereof; provided that the Company
shall deliver to such holder a due bill or other appropriate instrument
evidencing such holder's right to receive such additional Warrant Shares, other
capital stock and cash upon the occurrence of the event requiring such
adjustment.
(o) Adjustment in Number of Shares. Upon each adjustment of the
Exercise Price pursuant to Section 1.5(c) or this Section 6 (other than an
adjustment pursuant to Section 6(k) hereof), this Warrant shall thereafter
evidence the right to receive upon payment of the adjusted Exercise Price that
number of shares of Common Stock (calculated to the nearest hundredth) obtained
from the following formula:
N' = N x E
--
E'
where:
N' = the adjusted number of Warrant Shares issuable upon
exercise of a Warrant by payment of the adjusted
Exercise Price.
N = the number of Warrant Shares previously issuable upon
exercise of this Warrant by payment of the Exercise
Price prior to adjustment.
E' = the adjusted Exercise Price.
E = the Exercise Price prior to adjustment.
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<PAGE> 20
(p) Certificate as to Adjustments. Upon the occurrence of each
adjustment or readjustment of the Exercise Price or number of Warrant Shares
issuable upon exercise hereof pursuant to this Section 6, the Company, at its
expense, shall promptly compute such adjustment or readjustment in accordance
with the terms hereof and prepare and furnish to each Warrantholder a
certificate prepared by the Company setting forth such adjustment or
readjustment and showing in reasonable detail the method of calculation and the
facts upon which such adjustment or readjustment is based. The Company shall,
upon the written request at any time of any Warrantholder, furnish or cause to
be furnished to such holder a like certificate setting forth (i) such adjustment
and readjustment, (ii) the Exercise Price at the time in effect, and (iii) the
number of shares of Common Stock and the amount, if any, of other property which
at the time would be received upon the exercise of this Warrant.
SECTION 7. REGISTRATION RIGHTS
7.1 Definitions. For purposes of this Section 7:
(a) The term "RNS WARRANTS" shall mean this Warrant and the other
warrants to purchase Common Stock issued to HNS on the date this Warrant was
originally issued.
(b) The term "HOLDER" means any Person owning or having the right
to acquire Registrable Securities.
(c) The term "PERSON" shall mean an individual, partnership,
corporation, trust or unincorporated organization, or a government or agency or
political subdivision thereof
(d) The term "REGISTER", "REGISTERED", and "REGISTRATION" refer
to a registration effected by preparing and filing a registration statement or
similar document in compliance with the Securities Act, and the declaration or
ordering of effectiveness of such registration statement or document;
(e) The term "REGISTRABLE SECURITIES" shall mean the HNS Warrants
and the Warrant Shares; provided, however, that (i) the HNS Warrants shall cease
to be Registrable Securities when (A) a Registration Statement with respect to
the HNS Warrants shall have been declared effective under the Securities Act and
such HNS Warrants shall have been disposed of by a Holder pursuant to such
Registration Statement, (B) the HNS Warrants may be distributed to the public
pursuant to Rule 144(k) (or any similar provision then in force) under the
Securities Act or (C) the HNS Warrants shall have ceased to be outstanding and
(ii) the Warrant Shares shall cease to be Registrable Securities when (w) if the
Holders can resell publicly the Warrant Shares issuable upon exercise of the HNS
Warrants without further registration under the Securities Act (as reasonably
determined by counsel for the applicable Holder), a Registration Statement with
respect to the issuance of the Warrant Shares shall have been declared effective
under the Securities Act and such Warrant Shares shall have been issued pursuant
to such Registration Statement, (x) if the Holders cannot resell publicly the
Warrant Shares issuable upon exercise of the HNS Warrants
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<PAGE> 21
without further registration under the Securities Act (as reasonably determined
by counsel for the applicable Holder), a Registration Statement with respect to
the resale of the Warrant Shares shall have been declared effective under the
Securities Act and such Warrant Shares shall have been disposed of by a Holder
pursuant to such Registration Statement, (y) the Warrant Shares may be
distributed to the public pursuant to Rule 144(k) (or any similar provision then
in force) under the Securities Act or (z) the Warrant Shares shall have ceased
to be outstanding.
(f) The term "REGISTRATION STATEMENT" shall mean a "shelf"
registration statement of the Company pursuant to the provisions of Section 7.2
of this Agreement covering the resale of the Warrants and the issuance and
resale of all of the Warrant Shares on an appropriate form under Rule 415 under
the Securities Act, or any similar rule that may be adopted by the SEC, and all
amendments and supplements to such registration statement, including
post-effective amendments, and in each case including the prospectus contained
therein, all exhibits thereto and all material incorporated by reference
therein; provided, that, if more than one Registration Statement is required in
order to satisfy the registration requirements set forth in this Agreement, the
term "Registration Statement" shall refer to all such Registration Statements
prepared pursuant to this Agreement, unless the context otherwise requires.
(g) The term "SEC" shall mean the Securities and Exchange
Commission.
7.2 Registration Under the Securities Act. The Company shall file and
shall use all reasonable efforts to cause a Registration Statement pertaining to
the Registrable Securities to be declared effective by the SEC prior to
September 30, 1996. The Company agrees to use all reasonable efforts to keep the
Registration Statement continuously effective until the earlier of October 27,
2003 and such date that no Registrable Securities are issuable or outstanding
(the "Registration Period"). The Company further agrees to supplement or amend
the Registration Statement, if required by the rules, regulations or
instructions applicable to the registration form used by the Company for the
Registration Statement or by the Securities Act or by any other rules and
regulations thereunder for shelf registration or if reasonably requested by a
Holder with respect to information relating to such Holder in order to
accurately reflect information regarding such Holder or such Holder's plan of
distribution as required by the Registration Statement, and to use all
reasonable efforts to cause any such amendment to become effective and such
Registration Statement to become usable as soon as thereafter practicable. The
Company agrees to furnish to the Holders copies of any such supplement or
amendment promptly after its being made available for use or filed with the SEC.
7.3 Obligations of the Company. Whenever required under this Section 7
to effect the registration of any Registrable Securities, the Company shall,
during the Registration Period and within the time limits set forth in this
Section 7, or if no specific time limit is specified, as expeditiously as
reasonably possible:
(a) use its best efforts to keep such Registration Statement
continuously effective. Upon the occurrence of any event that would cause any
such Registration Statement or the
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<PAGE> 22
prospectus contained therein (i) to contain a material misstatement or omission
or (ii) not to be effective and usable for the issuance and resale of
Registrable Securities during the Registration Period, the Company shall file
promptly an appropriate amendment to such Registration Statement or file
appropriate documents that will be so incorporated by reference, (A) in the case
of clause (i), correcting any such misstatement or omission, and (B) in the case
of either clause (i) or (ii), use all reasonable efforts to cause such amendment
to be declared effective and such Registration Statement and the related
prospectus to become usable for their intended purpose(s) as soon as practicable
thereafter;
(b) prepare and file with the SEC such amendments and
post-effective amendments to the Registration Statement as may be necessary to
keep the Registration Statement effective for the Registration Period; cause the
prospectus to be supplemented by any required prospectus supplement, and as so
supplemented to be filed pursuant to Rule 424 under the Securities Act and to
comply fully with Rule 424, as applicable, under the Securities Act in a timely
manner; and comply in all material respects with the provisions of the
Securities Act with respect to the disposition of all securities covered by such
Registration Statement during the Registration Period in accordance with the
intended method or methods of distribution by the sellers thereof set forth in
such Registration Statement or supplement to the prospectus; the Company shall
not be deemed to have used all reasonable efforts to keep a Registration
Statement effective during the Registration Period if it voluntarily takes any
action that would result in Holders of the Registrable Securities covered
thereby not being able to sell Registrable Securities or the Company not being
able to issue Warrant Shares, in each case, pursuant to the Registration
Statement and during that period unless such action is required or advisable
under applicable law or the action is for a valid business purpose in the
interest of the Company and its effect on the Registration Statement is not the
purpose of the action;
(c) advise Holders promptly and, if requested by such Holders,
confirm such advice in writing, (1) when the prospectus or any prospectus
supplement or post-effective amendment has been filed, and, with respect to any
Registration Statement or any post-effective amendment thereto, when the same
has become effective, (2) of any request by the SEC for amendments to the
Registration Statement or amendments or supplements to the prospectus or for
additional information relating thereto, (3) of the issuance by the SEC of any
stop order suspending the effectiveness of the Registration Statement under the
Securities Act or of the suspension by any state securities commission of the
qualification of the Registrable Securities for offering or sale in any
jurisdiction, or the initiation of any proceeding for any of the preceding
purposes, (4) of the existence of any fact or the happening of any event that
makes any statement of a material fact made in the Registration Statement, the
prospectus, any amendment or supplement thereto or any document incorporated by
reference therein untrue, or that requires the making of any additions to or
changes in the Registration Statement in order to make the statements therein
not misleading, or that requires the making of any additions to or changes in
the prospectus in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. If at any time during
the Registration Period the SEC shall issue any stop order suspending the
effectiveness of the Registration Statement, or any state securities commission
or other regulatory
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<PAGE> 23
authority shall issue an order suspending the qualification or exemption from
qualification of the Registrable Securities under state securities or blue sky
laws, the Company shall use its best efforts to obtain the withdrawal or lifting
of such order at the earliest practicable time;
(d) make available to each selling Holder named in any
Registration Statement or prospectus before filing with the SEC copies of any
Registration Statement or any prospectus included therein or any amendments or
supplements to any such Registration Statement or prospectus (including all
documents incorporated by reference after the initial filing of such
Registration Statement), portions of which relating to such Holders or their
plan of distribution (the "Covered Provisions") will be subject to the review
and comment of such Holders for a period of three business days, and the Company
will not file any such Registration Statement or prospectus or any amendment or
supplement to any such Registration Statement or prospectus and will correct all
of the Covered Provisions to which the selling Holders covered by such
Registration Statement shall reasonably object within three business days after
the receipt thereof. A selling Holder shall be deemed to have reasonably
objected to such filing of such Registration Statement, amendment, prospectus or
supplement, as applicable, as proposed to be filed, if the Covered Provision
contains a material misstatement or omission or fails to comply with the
applicable requirements of the Securities Act;
(e) promptly upon the filing of any document that is to be
incorporated by reference into a Registration Statement or prospectus, make
available copies of such document to the selling Holders, make the Company's
representatives available for discussion of such document and other customary
due diligence matters, and include such information in such document prior to
the filing thereof as such selling Holders reasonably may request;
(f) make available at reasonable times for inspection by the
selling Holders and any attorney or accountant retained by such selling Holders,
all financial and other records, pertinent corporate documents and properties of
the Company and cause the Company's officers, directors and employees to supply
all information reasonably requested by any such Holder, attorney or accountant
in connection with such Registration Statement or any post-effective amendment
thereto subsequent to the filing thereof and prior to its effectiveness;
provided, that, any Person to whom information is provided under this clause (f)
agrees in writing to maintain the confidentiality of such information to the
extent such information is not in the public domain;
(g) if requested by any selling Holders, promptly include in any
Registration Statement or prospectus, pursuant to a supplement or post-effective
amendment if necessary, such information as such selling Holders may reasonably
request to have included therein, including, without limitation, information
relating to the "Plan of Distribution" of the Registrable Securities, the
purchase price being paid therefor and any other terms of the offering of the
Registrable Securities to be sold in such offering; and make all required
filings of such prospectus supplement or post-effective amendment as soon as
practicable after the Company is notified of the matters to be included in such
prospectus supplement or post-effective amendment;
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<PAGE> 24
(h) furnish to each Holder, without charge, at least one copy of
the Registration Statement, as first filed with the SEC, and of each amendment
thereto;
(i) deliver to each selling Holder, without charge, as many
copies of the prospectus (including each preliminary prospectus) and any
amendment or supplement thereto as such Holder reasonably may request; the
Company hereby consents to the use of the prospectus and any amendment or
supplement thereto by each of the selling Holders in connection with the
offering and the sale of the Registrable Securities covered by the prospectus or
any amendment or supplement thereto;
(j) furnish to each selling Holder, upon the effectiveness of the
Registration Statement:
(i) a certificate, dated the date of effectiveness of the
Registration Statement, signed by (x) the President or any Vice President and
(y) a principal financial or accounting officer of the Company, confirming, as
of the date thereof, the matters set forth in Section 3.2 (iv)(a) and (b) of the
Credit Agreement;
(ii) an opinion, dated the date of the effectiveness of
the Registration Statement, of counsel for the Company, covering (A) a statement
to the effect that such counsel has participated in conferences with officers
and other representatives of the Company and representatives of the independent
public accountants for the Company and have considered the matters required to
be stated therein and the statements contained therein, although such counsel
has not independently verified the accuracy, completeness or fairness of such
statements; and that such counsel advises that, on the basis of the foregoing
(relying as to materiality to a large extent upon facts provided to such counsel
by officers and other representatives of the Company and without independent
check or verification), no facts came to such counsel's attention that caused
such counsel to believe that the applicable Registration Statement, at the time
such Registration Statement or any post-effective amendment thereto became
effective, contained an untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary to make the
statements therein not misleading, or that the prospectus contained in such
Registration Statement as of its date contained an untrue statement of a
material fact or omitted to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading and (B) such other matters of the type customarily covered
in opinions of counsel for an issuer in connection with similar securities
offerings, as may reasonably be requested by such parties. Without limiting the
foregoing, such counsel may state further that such counsel assumes no
responsibility for, and has not independently verified, the accuracy,
completeness or fairness of the financial statements, notes and schedules and
other financial, statistical and accounting data included in any Registration
Statement contemplated by this Section 7 or the related prospectus;
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<PAGE> 25
(iii) a customary comfort letter, dated as of the date of
effectiveness of the Registration Statement, from the Company's independent
accountants, in the customary form and covering matters of the type customarily
covered in such comfort letters; and
(iv) such other documents and certificates as may be
reasonably requested by such parties to evidence compliance with clauses
(i)-(iii) above.
The above shall be done in connection with the filing of the
Registration Statement and if at any time the representations and warranties of
the Company contemplated in (i) above cease to be true and correct, the Company
shall so advise the selling Holders promptly and if requested by such Persons,
shall confirm such advice in writing;
(k) prior to any public offering of Registrable Securities,
cooperate with the Holders and their respective counsel in connection with the
registration and qualification of the Registrable Securities under the
securities or blue sky laws of such jurisdictions as the selling Holders may
reasonably request and use its best efforts to do any and all other acts or
things necessary or advisable to enable the disposition in such jurisdictions of
the Registrable Securities covered by the applicable Registration Statement;
provided, however, that the Company shall not be required to register or qualify
as a foreign corporation where it is not now so qualified or where its principal
executive offices are not currently located or to take any action that would
subject it to service of process in suits or to taxation, other than as to
matters and transactions relating to the Registration Statement, in any
jurisdiction where it is not now so subject;
(l) in connection with any sale of Registrable Securities that
will result in such securities no longer being Transfer Restricted Securities
(as defined below), cooperate with the selling Holders to facilitate the timely
preparation and delivery of certificates representing Registrable Securities to
be sold and not bearing any restrictive legends; and to register such
Registrable Securities in such denominations and such names as the Holders may
request at least two business days prior to such sale of Registrable Securities.
For purposes of this Section 7, "Transfer Restricted Securities" shall mean the
Warrants and Warrant Shares until such Warrants or Warrant Shares, as
applicable, (i) have been effectively registered under the Securities Act and
disposed of in accordance with the Registration Statement covering it, (ii) are
distributed to the public pursuant to Rule 144 under the Securities Act, (iii)
may be sold or transferred pursuant to Rule 144(k) (or any similar provisions
then in force) under the Securities Act or otherwise or (iv) may be sold freely
in full in any one three month period before Rule 144(k) is available;
(m) use its best efforts to cause the Registrable Securities
covered by the Registration Statement to be registered with or approved by such
other governmental agencies or authorities as may be necessary to enable the
seller or sellers thereof to consummate the disposition of such Registrable
Securities, subject to the proviso contained in clause (k) above;
(n) if any fact or event contemplated by clause (c)(4) above
shall exist or have occurred, prepare a supplement or post-effective amendment
to the Registration Statement or related
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<PAGE> 26
prospectus or any document incorporated therein by reference or file any other
required document so that, as thereafter delivered to the purchasers of
Registrable Securities, the prospectus will not contain an untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading;
(o) provide a CUSIP number for all Registrable Securities not
later than the effective date of a Registration Statement covering such
Registrable Securities;
(p) otherwise use its best efforts to comply with all applicable
rules and regulations of the SEC, and make generally available to its security
holders with regard to the Registration Statement, as soon as practicable, but
in any event within sixteen months of the effectiveness of the Registration
Statement, a consolidated earnings statement meeting the requirements of Rule
158 under the Securities Act (which need not be audited) covering a twelve-month
period beginning after the effective date of the Registration Statement (as such
term is defined in paragraph (c) of such Rule 158); and
(q) cause all Registrable Securities covered by the Registration
Statement to be listed on each securities exchange on which similar securities
issued by the Company are then listed if requested by the Holders of a majority
in aggregate principal amount of Registrable Securities. For purposes of this
Section 7.3(q), the HNS Warrants shall not be deemed to be securities which are
similar to the Company's Common Stock.
7.4 Restrictions on Holders. Each Holder agrees by acquisition of a
Registrable Security that, upon receipt of any notice from the Company of the
existence of any fact of the kind described in Section 7.3(c)(4) hereof, such
Holder will forthwith discontinue disposition of Registrable Securities pursuant
to the Registration Statement until such Holder's receipt of the copies of the
supplemented or amended prospectus contemplated by Section 7.3(n) hereof, or
until it is advised in writing (the "Advice") by the Company that the use of the
prospectus may be resumed, and has received copies of any additional or
supplemental filings that are incorporated by reference in the prospectus. If so
directed by the Company, each Holder will deliver to the Company (at the
Company's expense) all copies, other than permanent file copies then in such
Holder's possession, of the prospectus covering such Registrable Securities that
was current at the time of receipt of such notice. In the event the Company
shall give any such notice, the time period regarding the effectiveness of such
Registration Statement set forth herein shall be extended by the number of days
during the period from and including the date of the giving of such notice
pursuant to Section 7.3(c)(4) hereof to and including the date when each selling
Holder covered by such Registration Statement shall have received the copies of
the supplemented or amended prospectus contemplated by Section 7.3(c)(4) hereof
or shall have received the Advice.
7.5 Furnish Information. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this Section 7 with
respect to the Registrable Securities of any selling Holder that such Holder
shall have furnished to the Company such information regarding
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itself, the Registrable Securities held by it, and the intended method of
disposition of such securities as shall be reasonably required to effect the
registration of such Holder's Registrable Securities.
7.6 Expenses of Registration. All expenses (other than selling discounts
and commissions) incurred by the Company in connection with registrations,
filings or qualifications pursuant to this Section 7 (including without
limitation all registration, filing and qualification fees, printers, and
accounting fees and fees and disbursements of counsel for the Company) shall be
borne by the Company.
7.7 Indemnification and Contribution. In connection with a Registration
Statement covering the resale of HNS Warrants or Warrant Shares under this
Section 7:
(a) To the extent permitted by law, the Company will indemnify
and hold harmless each Holder, any underwriter (as defined in the Securities
Act) and each Person if any, who controls such Holder or underwriter within the
meaning of the Securities Act or the Exchange Act against any losses, claims,
damages or liabilities (joint or several) to which they or any of them may
become subject under the Securities Act, the Exchange Act or any other federal
or state law, insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of or are based upon any of the following
statements, omissions or violations (collectively a "Violation") incurred in
connection with the resale of Registrable Securities: (i) any untrue statement
or alleged untrue statement of a material fact contained in such Registration
Statement, including any preliminary prospectus (but only if such is not
corrected in the final prospectus and copies of such final prospectus have been
provided to the Holders)) contained therein or any amendments or supplements
thereto, (ii) the omission or alleged omission to state therein a material fact
required to be stated therein, or necessary to make the statements therein not
misleading (but only if such is not corrected in the final prospectus and copies
of such final prospectus have been provided to the Holders), or (iii) any
violation or alleged violation by the Company in connection with the
registration of Registrable Securities under the Securities Act, the Exchange
Act, any state securities law or any rule or regulation promulgated under the
Securities Act, the Exchange Act or any state securities law; and the Company
will pay to each such Holder, underwriter or controlling Person, as incurred,
any legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided, however, that the indemnity agreement contained in this Section 7.7(a)
shall not apply to amounts paid in settlement of any such loss, claim, damage,
liability or action if such settlement is effected without the consent of the
Company (which consent shall not be unreasonably withheld), nor shall the
Company be liable to any such Holder, underwriter or controlling Person in any
such case for any such loss, claim, damage, liability or action to the extent
that it arises out of or is based upon a Violation which occurs in reliance upon
and in conformity with written information furnished expressly for use in
connection with such registration by such Holder, underwriter or controlling
Person.
(b) To the extent permitted by law, each selling Holder will
indemnify and hold harmless the Company, each of its directors, each of its
officers who has signed the Registration Statement, each Person, if any who
controls the Company within the meaning of the Securities Act,
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any underwriter, any other Holder selling securities in such Registration
Statement and any controlling Person of any such underwriter or other Holder,
against any losses, claims, damages or liabilities (joint or several) to which
any of the foregoing Persons may become subject, under the Securities Act, the
Exchange Act or other federal or state law, insofar as such losses, claims,
damages or liabilities (or actions in respect thereto) arise out of or are based
upon any Violation, in each case to the extent (and only to the extent) that
such Violation occurs in reliance upon and in conformity with written
information furnished by such Holder expressly for use in connection with such
registration; and each such Holder will pay, as incurred, any legal or other
expenses reasonably incurred by any Person intended to be indemnified pursuant
to this Section 7.7(b), in connection with investigating or defending any such
loss, claim, damage, liability or action; provided, however, that the indemnity
agreement contained in this Section 7.7(b) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Holder, which consent shall
not be unreasonably withheld.
(c) Promptly after receipt by an indemnified party under Section
7.7(a) or (b) of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this Section 7.7, deliver to
the indemnifying party a written notice of the commencement thereof and the
indemnifying party shall, jointly with any other indemnifying party similarly
noticed, assume the defense thereof with counsel mutually satisfactory to the
parties; provided, however, that an indemnified party who is a named party in
such action shall have the right to retain its own counsel, with the fees and
expenses to be paid by the indemnifying party, if representation of such
indemnified party by the counsel retained by the indemnifying party would, in
the reasonable opinion of counsel to the indemnifying party, be inappropriate
due to actual or potential differing interests between such indemnified party
and any other party represented by such counsel in such proceeding, it being
understood, however, that the indemnifying party shall not, in connection with
any one such action or proceeding or separate but substantially similar or
related actions or proceedings in the same jurisdiction arising out of the same
general allegations or circumstances, be liable for the reasonable fees and
expenses of more than one separate firm of attorneys at any time for such
indemnified party and any other indemnified parties, which firm shall be
designated in writing by such indemnified parties. The failure to deliver
written notice to the indemnifying party within a reasonable time of the
commencement of any such action, if materially prejudicial to its ability to
defend such action, shall relieve such indemnifying party of any liability to
the indemnified party under this Section 7.7(a) and 7.7(b), but the omission so
to deliver written notice to the indemnifying party will not relieve it of any
liability (including contribution pursuant to Section 7.7(d) hereof) that it may
have to any indemnified party other than under Section 7.7(a) or (b).
(d) In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in Section 7.6(a) is
applicable but for any reason is held to be unavailable from the Company with
respect to all Holders or any Holder, the Company and the Holder or Holders, as
the case may be, shall contribute to the aggregate losses, claims, damages and
liabilities (including any investigation, legal and other expenses incurred in
connection with, and any amount paid in settlement of, any action, suit or
proceeding or any claims asserted) to which the
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Company and one or more of the Holders may be subject in such proportion as is
appropriate to reflect the relative fault of the Company on the one hand, and
the Holder or Holders on the other, in connection with statements or omissions
which resulted in such losses, claims, damages or liabilities. No Person guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) in connection with the sale of Registrable Securities shall be
entitled to contribution from any Person who was not guilty of such fraudulent
misrepresentation. Each Person, if any, who controls a Holder within the meaning
of the Securities Act shall have the same rights to contribution as such Holder.
(e) The obligations of the Company and Holders under this Section
7.6 shall survive the completion of any offering of Registrable Securities in a
Registration Statement under this Section 7 or otherwise.
SECTION 8. MISCELLANEOUS.
8.1 Entire Agreement. This Warrant and the Loan Agreement dated as of
December 21, 1996 by and among Finance Corporation, Geotek and Hughes Network
Systems, Inc. (as the same may have been or hereinafter may be amended)
constitute the entire agreement between the Company and the Warrantholder with
respect to this Warrant and the Warrant Shares.
8.2 Binding Effects; Benefits. This Warrant shall inure to the benefit
of and shall be binding upon the Company, the Warrantholder and holders of
Warrant Shares and their respective heirs, legal representatives, successors and
assigns. Nothing in this Warrant, expressed or implied, is intended to or shall
confer on any Person other than the Company, the Warrantholder and holders of
Warrant Shares, or their respective heirs, legal representatives, successors or
assigns, any rights, remedies, obligations or liabilities under or by reason of
this Warrant or the Warrant Shares.
8.3 Amendments and Waivers. This Warrant may not be modified or amended
except by an instrument in writing signed by the Company and the Warrantholders
that hold Warrants entitling them to purchase at least 50% of the Warrant Shares
entitled to be purchased by all Warrantholders. Notwithstanding the foregoing,
the Company, any Warrantholder or holders of Warrant Shares may, by an
instrument in writing, waive compliance by the other party with any term or
provision of this Warrant on the part of such other party hereto to be performed
or complied with; provided, however, that such waiver shall only be effective
against the Person delivering such waiver. The waiver by any such party of a
breach of any term or provision of this Warrant shall not be construed as a
waiver of any subsequent breach.
8.4 Section and Other Headings. The section and other headings contained
in this Warrant are for reference purposes only and shall not be deemed to be a
part of this Warrant or to affect the meaning or interpretation of this Warrant.
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<PAGE> 30
8.5 Further Assurances. Each of the Company, the Warrantholders and
holders of Warrant Shares shall do and perform all such further acts and things
(including, without limitation, any required filings under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended) and execute
and deliver all such other certificates, instruments and/or documents (including
without limitation, such proxies and/or powers of attorney as may be necessary
or appropriate) as any party hereto may, at any time and from time to time,
reasonably request in connection with the performance of any of the provisions
of this Warrant.
8.6 Notices. All demands, requests, notices and other communications
required or permitted to be given under this Warrant shall be in writing and
shall be deemed to have been duly given on the date delivered if delivered
personally or three business days after being sent (or, in the case of a
Mandatory Exercise Notice, when the last notice required to be sent to HNS or
Hughes Electronics Corporation pursuant to Section 1.5(a) hereof is sent) if
sent by United States certified or registered first class mail, postage prepaid,
or one business day after dispatch by recognized overnight carrier (provided
delivery is confirmed by the courier) to the parties hereto at the following
addresses or at such other address as any party hereto shall hereafter specify
by notice to the other party hereto:
(a) if to the Company, addressed to:
Geotek Communications, Inc.
20 Craig Road
Montvale, New Jersey 07645
Attention: President
(b) if to any Warrantholder or holder of Warrant Shares,
addressed to the address of such Person appearing on the books of the
Company (subject to Section 1.5(a) hereof).
8.7 Separability. Any term or provision of this Warrant which is invalid
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable any other term or provision of this Warrant
or affecting the validity or enforceability of any of the terms or provisions of
this Warrant in any other jurisdiction.
8.8 Fractional Shares. No fractional shares or scrip representing
fractional shares shall be issued upon the exercise of this Warrant. With
respect to any fraction of a share called for upon any exercise hereof, the
Company shall pay to the Warrantholder an amount in cash equal to such fraction
multiplied by the current market price (as determined as of the date of
exercise) of a share of such stock as of the date of such exercise.
8.9 Rights of the Holder. The Warrantholder shall not, solely by virtue
of this Warrant, be entitled to any rights of a stockholder of the Company,
either at law or in equity.
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8. 10 Governing Law. This Wan-ant shall be governed by and construed in
accordance with the laws of the State of New York, without regard to such
State's internal conflicts of laws principles.
IN WITNESS WHEREOF, the Company has caused this Warrant to be
signed by its duly authorized OFFICER.
GEOTEK COMMUNICATIONS, INC.
By: /s/ MICHAEL McCOY
------------------------------------------
Name: Michael McCoy
Title: Chief Financial Officer
Dated: September 27, 1996
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<PAGE> 32
ASSIGNMENT
(To be executed only upon assignment of Warrant Certificate)
For value received,___________________________hereby sells,
assigns and transfers unto______________________________________________the
within Warrant Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint_____________________________
attorney, to transfer said Warrant Certificate on the books of the within-named
Company with respect to the number of Warrant Shares set forth below, with full
power of substitution in the premises:
Name(s) of
Assignee(s) Address No. of Warrant Shares
----------- ------- ---------------------
And if said number of Warrant Shares shall not be all the Warrant Shares
represented by the Warrant Certificate, a new Warrant Certificate is to be
issued in the name of said undersigned for the balance remaining of the Warrant
Shares represented by said Warrant Certificate.
Dated:_____________________, 19__
_______________________________________________
Note: The above signature should correspond
exactly with the name on the face of
this Warrant Certificate.
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<PAGE> 33
SUBSCRIPTION FORM
(To BE EXECUTED UPON EXERCISE OF WARRANT
PURSUANT TO SECTION 1.1(a))
The undersigned hereby irrevocably elects to exercise the right
of purchase represented by the within Warrant Certificate for, and to purchase
thereunder,_________ shares of Common Stock, as provided for therein, and agrees
to deliver, within four (4) trading days after the date hereof, payment in full
of the Exercise Price in the amount of $ as follows:
Cash or Wire Transfer $__________
Certified or Official bank check $__________
Amount of past due Obligations
under the Credit Agreement to be
applied against the Exercise Price $__________
Upon receipt of the full Exercise Price, please issue a certificate
or certificates for such Common Stock in the name of, and pay any cash for any
fractional share to:
Name:____________________________________
Address:_________________________________
_________________________________
_________________________________
_________________________________
Social Security No.: _________________________________
(Please Print Name, Address and Social Security No.)
Signature:______________________________________
NOTE: The above signature should correspond
exactly with the name on the first page
of this Warrant Certificate or with the
name of the assignee appearing in the
assignment from delivered herewith.
And if said number of shares shall not be all the shares
purchasable under the within Warrant Certificate, a new Warrant Certificate is
to be issued in the name of said undersigned for the balance remaining of the
shares purchasable thereunder rounded up to the next higher number of shares.
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EXHIBIT VII
[EXECUTION COPY]
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") is made and
entered into as of September 27, 1996, by and among GEOTEK FINANCING
CORPORATION, a Delaware corporation (the "Company"), GEOTEK COMMUNICATIONS,
INC., a Delaware corporation (the "Guarantor"), and HUGHES NETWORK SYSTEMS,
INC., a Delaware corporation ("HNS"), as the holder of the Notes referred to
below on the date hereof.
This Agreement is made pursuant to the Vendor Credit Financing Agreement
(the "Financing Agreement"), dated as of September __, 1996, by and among the
Company, the Guarantor and HNS, in order to induce HNS to enter the Financing
Agreement and make the Advances (as defined in the Financing Agreement) as
evidenced by the Notes (as defined herein). Capitalized terms not otherwise
defined herein shall have the meanings given to them in the Financing Agreement.
1. Definitions
As used in this Agreement, the following capitalized terms shall have
the following meanings:
Additional Securities: See Section 5 hereof.
Covered Provisions: See Section 6(c) hereof.
Exchange Act: The Securities Exchange Act of 1934, as amended from time
to time.
Geotek Guarantee: The Guarantee by the Guarantor of the obligations of
the Company under the Financing Agreement and the Notes being issued pursuant to
the Financing Agreement, and any Guarantee issued in exchange or substitution
therefor.
Guarantee: A guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, letters of credit and
reimbursement agreements in respect thereof), of all or any part of any
indebtedness.
HNS Registration Expenses: See Section 7(a) hereof.
Indemnified Holder: See Section 8(a) hereof.
Indenture: See Section 6(a) hereof.
Issuer Registration Expenses: See Section 7(b) hereof.
Issuers: Collectively, the Company and the Guarantor.
NASD: National Association of Securities Dealers, Inc.
1995 Indenture: The indenture, dated as of June 30, 1995, between the
Guarantor and IBJ Schroder Bank & Trust Company, as trustee, governing the terms
of the Guarantor's 15% Senior Secured Discount Notes due 2005.
Notes: The Notes being issued pursuant to the Financing Agreement, and
any debt securities issued in exchange or substitution for the Notes.
<PAGE> 2
Person: An individual, partnership, corporation, trust or unincorporated
organization, or a government or agency or political subdivision thereof.
Prospectus: The prospectus included in any Registration Statement, as
amended or supplemented by any prospectus supplement with respect to the terms
of the offering of any portion of the Registrable Securities covered by the
Registration Statement and by all other amendments and supplements to the
prospectus, including post-effective amendments and all material incorporated by
reference in such prospectus.
Registration: See Section 3(a) hereof.
Registration Notice: See Section 3(a)(i) hereof.
Registration Request: See Section 3(a) hereof.
Registrable Securities: The Notes and the Geotek Guarantees issued with
such Notes; provided that a security ceases to be a Registrable Security when it
is no longer a Transfer Restricted Security.
Registration Statement: Any registration statement of the Issuers which
covers Registrable Securities pursuant to the provisions of this Agreement,
including the Prospectus, amendments and supplements to such Registration
Statement, including post-effective amendments, and all exhibits and all
material incorporated by reference in such Registration Statement.
Requesting Holders: See Section 3(a) hereof.
Restated Notes: See Section 6(a) hereof.
Securities Act: The Securities Act of 1933, as amended from time to
time.
SEC: The Securities and Exchange Commission.
Transfer Restricted Securities: The Notes and the Geotek Guarantees
issued with such Notes acquired by the holder thereof other than pursuant to an
effective registration under Section 5 of the Securities Act or pursuant to Rule
144 thereunder; provided that a Note and the Geotek Guarantee issued with such
Note that has ceased to be a Transfer Restricted Security cannot thereafter
become a Transfer Restricted Security.
Trust Indenture Act: The Trust Indenture Act of 1939 (15 U.S.C. Section
77aaa-77bbbb) and all rules and regulations promulgated thereunder, as in effect
on the date on which the Indenture is qualified under the Trust Indenture Act.
Trustee: See Section 6(b) hereof.
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2. Securities Subject to this Agreement.
(a) Registrable Securities. The securities entitled to the benefits of
this Agreement are the Registrable Securities.
(b) Holders of Registrable Securities. A Person is deemed to be a holder
of Registrable Securities whenever such Person owns Registrable Securities.
3. Registration.
(a) Request for Registration. At any time on or after April 1, 1999, the
holders (the "Requesting Holders") of an aggregate of at least 25% in aggregate
principal amount of the outstanding Registrable Securities may deliver a written
request (a "Registration Request") to the Issuers requiring the Issuers to
effect a registration of the Registrable Securities and indicating the proposed
method or methods of distribution thereof (the "Registration"). Subject to
Section 4(a)(ii) hereof, upon receipt of a Registration Request, the Issuers
shall:
(i) promptly give written notice of the proposed Registration to
all holders of Registrable Securities (a "Registration Notice"), which
notice shall indicate (A) that the Issuers intend to file a Registration
Statement with the SEC covering the Registrable Securities, (B) the
proposed method or methods of distribution thereof and (C) that any
holder of Registrable Securities who wishes to have the Registrable
Securities owned by it included in such Registration Statement must so
notify the Issuers within 30 days of receipt of such Registration
Notice;
(ii) in the event holders of at least 50% in aggregate principal
amount of the outstanding Registrable Securities elect to participate in
such Registration, as soon as practicable, file a Registration Statement
with the SEC covering all of the Registrable Securities held by the
Requesting Holders and by all other holders of Registrable Securities
who notify the Company pursuant to Section 3(a)(i) of their desire to
have their Registrable Securities included in such Registration
Statement;
(iii) use their best efforts to have such Registration Statement
declared effective as soon as practicable, but in any event within 135
days after receipt of the Registration Request, and otherwise effect
such registration (including, without limitation, the execution of an
undertaking to file post-effective amendments, appropriate qualification
under the applicable blue sky or other state securities laws and
appropriate compliance with exemptive regulations issued under the
Securities Act and any other governmental requirements or regulations)
and take such other actions as may be reasonably necessary to permit or
facilitate the sale and distribution of such Registrable Securities in
accordance with the intended method or methods of disposition thereof;
and
(iv) keep such Registration Statement effective for 120 days.
(b) Number of Registrations. The Issuers are not obligated to effect
more than two Registrations under this Agreement; provided that a Registration
will not count as a Registration under this Agreement until a Registration
Statement with respect thereto has become effective and has remained effective
for 120 days or until all Registrable Securities included therein have been
sold, if earlier.
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<PAGE> 4
(c) Term of Agreement. This Agreement shall be effective until the
longer of (i) three years from the date hereof and (ii) the date 75% in
aggregate principal amount of the Notes have been sold at least once pursuant to
a Registration Statement.
(d) Selection of Underwriters. If the Registration is to be in the form
of an underwritten offering, the investment banker or bankers and manager or
managers that will administer the offering shall be selected by the holders of a
majority in aggregate principal amount of the Registrable Securities to be
included in such offering, subject to the consent of the Issuers (which consent
shall not be unreasonably withheld).
4. Hold-Back Agreements
(a) Restrictions on Public Sale by Holder of Registrable Securities.
(i) Each holder of Registrable Securities whose Registrable
Securities are covered by a Registration Statement filed pursuant hereto
agrees, if requested in writing by the managing underwriters in an
underwritten offering, not to effect any public sale or distribution of
debt securities of the Issuers of the same class as the debt securities
included in such Registration Statement, including a sale pursuant to
Rule 144 or Rule 144A under the Securities Act (except as part of such
underwritten registration), during the 7-day period prior to, and during
the 90-day period following, the effective date of the Registration
Statement for any underwritten offering made pursuant to such
Registration Statement. The foregoing provisions shall not apply,
however, to any holder of Registrable Securities if such holder is
prevented by an applicable statute or regulation from entering into any
such agreement.
(ii) The Issuers may postpone for a reasonable period of time,
not to exceed 120 days, the filing or effectiveness of a Registration
requested pursuant to this Agreement if the boards of directors of the
Issuers in good faith determine that (A) such Registration might have a
material adverse effect on any plan or proposal by either Issuer or any
of their respective subsidiaries with respect to any financing,
acquisition, recapitalization, reorganization or other material
transaction or (B) either Issuer is in possession of material nonpublic
information that, if publicly disclosed, could result in a material
disruption of a major corporate development or transaction then pending
or in progress or in any other material adverse consequences to either
Issuer; provided, however, that as soon as the conditions permitting
such delay no longer exist, the Issuers shall give notice of such fact
to the holders of Registrable Securities who have requested such
Registration, and shall proceed with the Registration unless the holders
of a majority in aggregate principal amount of such Registrable
Securities shall have elected, at any time prior to the close of
business on the fifth business day after such notice from the Issuers,
to withdraw their request for Registration, and provided further, that
the Issuers may postpone a Registration not more than once in any 365
day period.
(b) Restrictions on Public Sale by the Issuers and Others. The Issuers
agree:
(i) not to register (including in a Registration Statement filed
pursuant hereto) or effect any public sale (other than a public sale of
debt securities offered in exchange for existing debt securities) or
distribution (or any private sale which contemplates a substantially
contemporaneous resale pursuant to Rule 144A) of their debt securities
that are substantially similar to the Registrable Securities during the
7-day period prior to, and during the 90-day period following, the
effective date of the Registration Statement for each underwritten
offering made pursuant to
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<PAGE> 5
a Registration Statement filed pursuant hereto, except with the consent
of the managing underwriter for such offering; and
(ii) to cause each holder of their privately placed debt
securities that are substantially similar to the Registrable Securities
issued by the Issuers at any time on or after the date of this Agreement
to agree not to effect any public sale or distribution, including a sale
pursuant to Rule 144 under the Securities Act, of any such securities
during the period set forth in clause (i) above, except with the consent
of the managing underwriter for such offering.
5. Incidental Registration.
The Issuers and, at the Issuers' election, any other holders of debt
securities with registration rights may include in any Registration requested
pursuant to this Agreement any debt securities that it or they shall determine
to include (the "Additional Securities") and the consent of the holders of the
Registrable Securities shall not be required with respect thereto; provided,
however, that if in the opinion of the managing underwriter of such offering
inclusion in such Registration of all Additional Securities would interfere with
the successful marketing of the Registrable Securities, the number of Additional
Securities shall be reduced to such number as such managing underwriter advises
could be included in such underwriting without interfering with the successful
marketing of the Registrable Securities.
6. Registration Procedures.
In connection with the Issuers' registration obligations pursuant
hereto, the Issuers shall use their best efforts to effect such Registration to
permit the sale of such Registrable Securities in accordance with the intended
method or methods of disposition thereof, and pursuant thereto the Issuers shall
as expeditiously as possible:
(a) enter into an amendment and restatement of the Financing Agreement
(as so amended and restated, the "Indenture") and the Notes (as so amended and
restated, the "Restated Notes") to conform the Indenture and the Restated Notes
to the requirements of the Trust Indenture Act and to make such other
modifications as the holders of a majority in aggregate principal amount of the
Registrable Securities to be included in the first Registration to be effected
hereunder shall require to facilitate the disposition thereof; provided,
however, that the Issuers shall not be required to include in the Indenture or
the Restated Notes any provision not contained in or that is more restrictive to
or burdensome on the Issuers (except as required by the Trust Indenture Act or
any other applicable securities laws) than any provision in the most restrictive
or most burdensome (with respect to such provision) of (i) the Financing
Agreement and the Notes, (ii) the 1995 Indenture and the securities issued
thereunder, in each case as in effect on the date hereof, and (iii) any other
indenture governing outstanding public debt securities of either of the Issuers
then in effect, and provided further, that the Issuers shall not be required to
provide any additional credit support in the form of additional guarantees,
pledges, granting of security interests or otherwise other than such credit
support as is included in the Financing Agreement;
(b) appoint a trustee to serve under the Indenture (the "Trustee"),
which Trustee shall be reasonably acceptable to the holders of a majority in
aggregate principal amount of the Registrable Securities to be included in the
first Registration to be effected hereunder;
(c) make available to each selling holder named in any Registration
Statement or Prospectus before filing with the SEC, copies of any Registration
Statement or Prospectus included therein or any amendments or supplements to any
such Registration Statement or Prospectus (including all documents
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<PAGE> 6
incorporated by reference after the initial filing of such Registration
Statement), portions of which relating to such holders or their plan of
distribution (the "Covered Provisions") will be subject to the review and
comment of such holders for a period of three business days, and the Issuers
will not file any such Registration Statement or Prospectus or any amendment or
supplement to any such Registration Statement or Prospectus and will correct all
of the Covered Provisions to which the selling holders covered by such
Registration Statement shall reasonably object within three business days after
the receipt thereof; provided, however, the Issuers shall not be obligated to
file such Registration Statement or Prospectus or such amendment or supplement
to such Registration Statement or Prospectus, as applicable, unless the Issuers,
a majority of the selling holders of Registrable Securities and the
underwriters, if any, are able to agree on the filing of such document. A
selling holder shall be deemed to have reasonably objected to such filing of
such Registration Statement, amendment, Prospectus or supplement, as applicable,
as proposed to be filed, if the Covered Provision contains a material
misstatement or omission or fails to comply with the applicable requirements of
the Securities Act;
(d) prepare and file with the SEC such amendments and post-effective
amendments to any Registration Statement, and such supplements to the
Prospectus, as may be required by the rules, regulations or instructions
applicable to the registration form utilized by the Issuers or by the Securities
Act or otherwise necessary to keep such Registration Statement effective until
the earlier of (i) such time as all of the Registrable Securities included in
such Registration Statement have been disposed of in accordance with the method
or methods of distribution set forth in such Registration Statement and (ii) the
last date of the applicable period set forth in Section 3(a)(iv) hereof, and
cause the Prospectus as so supplemented to be filed pursuant to Rule 424 under
the Securities Act; and comply with the provisions of the Securities Act with
respect to the disposition of all securities covered by such Registration
Statement during the applicable period set forth in Section 3(a)(iv) hereof in
accordance with the intended method or methods of disposition by the sellers
thereof set forth in such Registration Statement or supplement to the
Prospectus;
(e) notify the selling holders of Registrable Securities and the
managing underwriters, if any, promptly, and (if requested by any such Person)
confirm such advice in writing:
(i) when the Prospectus or any Prospectus supplement or
post-effective amendment has been filed, and, with respect to the
Registration Statement or any post-effective amendment, when the same
has become effective;
(ii) of any request by the SEC for amendments or supplements to
the Registration Statement or the Prospectus or for additional
information;
(iii) of the issuance by the SEC of any stop order suspending
the effectiveness of the Registration Statement or the initiation of any
proceedings for that purpose;
(iv) if at any time when the Prospectus relating to the
Registrable Securities included in such Registration is required to be
delivered under the Securities Act the representations and warranties of
the Issuers contemplated by Section 6(q)(i) hereof cease to be true and
correct;
(v) of the receipt by the Issuers of any notification with
respect to the suspension of the qualification of the Registrable
Securities for sale in any jurisdiction or the initiation or threatening
of any proceeding for such purpose; and
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<PAGE> 7
(vi) of the existence of any fact of which the Issuers become,
or reasonably should have become, aware which fact results in the
Registration Statement, the Prospectus or any document incorporated
therein by reference containing an untrue statement of material fact or
omitting to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading;
(f) make every reasonable effort to obtain the withdrawal of any order
suspending the effectiveness of the Registration Statement at the earliest
practicable time;
(g) if reasonably requested by the managing underwriter or underwriters
or a holder of Registrable Securities being sold in connection with an
underwritten offering, immediately incorporate in a Prospectus supplement or
post-effective amendment such necessary information as the managing underwriters
or the holders of a majority in aggregate principal amount of the Registrable
Securities being sold reasonably request to have included therein relating to
the plan of distribution with respect to such Registrable Securities, including,
without limitation, information with respect to the amount of Registrable
Securities being sold to such underwriters, the purchase price being paid
therefor by such underwriters and with respect to any other terms of the
underwritten (or best efforts underwritten) offering of the Registrable
Securities to be sold in such offering; and make all required filings of such
Prospectus supplement or post-effective amendment as soon as practicable
following notification to the Issuers of the matters to be incorporated in such
Prospectus supplement or post-effective amendment;
(h) at the request of any selling holder of Registrable Securities,
furnish to such selling holder of Registrable Securities and each managing
underwriter, without charge, at least one conformed copy of the Registration
Statement and any post-effective amendment thereto, including financial
statements and schedules, all documents incorporated therein by reference and
all exhibits (including those incorporated by reference);
(i) deliver to each selling holder of Registrable Securities and the
underwriters, if any, without charge, as many copies of the Prospectus
(including each preliminary prospectus) and any amendment or supplement thereto
as such Persons may reasonably request; the Issuers consent to the use of the
Prospectus or any amendment or supplement thereto by each of the selling holders
of Registrable Securities and the underwriters, if any, in connection with the
offering and sale of the Registrable Securities covered by the Prospectus or any
amendment or supplement thereto in accordance with the method or methods of
distribution set forth therein;
(j) prior to any public offering of Registrable Securities, register or
qualify or cooperate with the selling holders of Registrable Securities, the
underwriters, if any, and their respective counsel in connection with the
registration or qualification of such Registrable Securities for offer and sale
under the securities or blue sky laws of such jurisdictions as any seller or
underwriter reasonably requests in writing and use their commercially reasonable
best efforts to do any and all other acts or things necessary or advisable to
enable the disposition in such jurisdictions of the Registrable Securities
covered by the Registration Statement; provided that neither Issuer shall be
required to (i) qualify generally to do business in any jurisdiction where it is
not then so qualified, (ii) take any action which would subject it to general
service of process in any such jurisdiction where it is not then so subject or
(iii) subject it to taxation in any such jurisdiction where it is not then so
subject;
(k) cooperate with the selling holders of Registrable Securities and the
managing underwriters, if any, to facilitate the timely preparation and delivery
of certificates representing Registrable Securities to be sold and not bearing
any restrictive legends; and enable such Registrable Securities to be in such
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<PAGE> 8
denominations and registered in such names as the managing underwriters may
request at least two business days prior to any sale of Registrable Securities
to the underwriters;
(l) use their best efforts to cause the Registrable Securities covered
by the applicable Registration Statement to be registered with or approved by
such other governmental agencies or authorities as may be necessary to enable
the seller or sellers thereof and the underwriters, if any, to consummate the
disposition of such Registrable Securities;
(m) if any fact contemplated by Section 6(e)(vi) hereof shall exist,
prepare a supplement or post-effective amendment to the Registration Statement
or the related Prospectus or any document incorporated therein by reference or
file any other required document so that, as thereafter delivered to the
purchasers of the Registrable Securities, the Prospectus will not contain an
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading;
(n) cause all Registrable Securities covered by the Registration
Statement to be listed on each securities exchange on which similar securities
issued by the Issuers are then listed, if requested by the holders of a majority
in aggregate principal amount of such Registrable Securities or by the managing
underwriters, if any;
(o) cause the Registrable Securities covered by the Registration
Statement to be rated with the appropriate rating agencies, if so requested by
the holders of a majority in aggregate principal amount of such Registrable
Securities or the managing underwriters, if any;
(p) not later than the effective date of the applicable Registration
Statement, provide a CUSIP number for all Registrable Securities and provide the
applicable trustee(s) or transfer agent(s) with printed certificates for the
Registrable Securities which are in a form eligible for deposit with Depositary
Trust Company;
(q) enter into agreements (including underwriting agreements) in form,
scope and substance as are customarily entered into by issuers in similar
transactions and take all other appropriate actions reasonably requested by
holders of a majority in aggregate principal amount of Registrable Securities
included in such Registration in order to expedite or facilitate the disposition
of such Registrable Securities in accordance with the method or methods of
distribution set forth in such Registration Statement and in such connection,
whether or not an underwriting agreement is entered into and whether or not the
registration is an underwritten registration:
(i) make such representations and warranties to the holders of
such Registrable Securities and the underwriters, if any, in form, scope
and substance as are customarily made by issuers to underwriters in
primary underwritten offerings including, but not limited to, those set
forth in the Financing Agreement;
(ii) obtain opinions of counsel to the Issuers and updates
thereof (which counsel and opinions shall be reasonably satisfactory in
form, scope and substance to the managing underwriters, if any, and the
holders of a majority in aggregate principal amount of the Registrable
Securities being sold), dated as of the applicable closing date,
addressed to each selling holder and the underwriters, if any, covering
the matters customarily covered in opinions requested in underwritten
offerings and such other matters as may be reasonably requested by such
holders and underwriters;
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<PAGE> 9
(iii) obtain "cold comfort" letters, dated as of the effective
date of the applicable Registration Statement, and updates thereof from
the Issuers' independent certified public accountants addressed to the
selling holders of Registrable Securities and the underwriters, if any,
such letters to be in customary form and covering matters of the type
customarily covered in "cold comfort" letters to underwriters in
connection with primary underwritten offerings;
(iv) if an underwriting agreement is entered into, cause the
same to set forth in full the indemnification provisions and procedures
of Section 8 hereof (or such other substantially similar provisions and
procedures as the underwriters shall reasonably request) with respect to
all parties to be indemnified pursuant to said Section; and
(v) deliver at the applicable closing such documents and
certificates as are customary for underwritten offerings to evidence
compliance with the conditions contained in the underwriting agreement
or other agreement entered into by the Issuers.
(r) make available to a representative of the holders of a majority in
aggregate principal amount of the Registrable Securities, any underwriter
participating in any disposition pursuant to such Registration Statement, and
any attorney or accountant retained by the sellers or underwriter in connection
with such Registration Statement, or any post-effective amendment thereto
subsequent to the filing and prior to the effectiveness thereof, all financial
and other records, pertinent corporate documents and properties of the Issuers,
and cause the Issuers' officers, directors and employees to supply all
information reasonably requested by any such representative, underwriter,
attorney or accountant in connection with the registration, with respect to each
at such time or times as the Issuers shall reasonably determine; provided that
any records, information or documents that are designated by the Issuers in
writing as confidential shall be kept confidential by such Persons unless
disclosure of such records, information or documents is required by court or
administrative order and each such Person shall execute a confidentiality
agreement in form and substance satisfactory to the Issuers; and provided,
further, that nothing in this Agreement shall require any officers, directors or
employees of either Issuer to participate in any "road show" or any
presentations to any potential purchasers of Registrable Securities, except as
set forth in Section 6(v) hereof;
(s) otherwise use their best efforts to comply with all applicable rules
and regulations of the SEC, and make generally available to their security
holders with regard to the Registration Statement, as soon as practicable, but
in any event within sixteen months of the effectiveness of the Registration
Statement, a consolidated earnings statement meeting the requirements of Rule
158 under the Securities Act (which need not be audited) covering a twelve-month
period beginning after the effective date of the Registration Statement (as such
term is defined in paragraph (c) of such Rule 158);
(t) cooperate and assist in any filings required to be made with the
NASD and in the performance of any due diligence investigation by any
underwriter (including any "qualified independent underwriter" that is required
to be retained in accordance with the rules and regulations of the NASD);
(u) promptly upon the filing of any document which is to be incorporated
by reference into the Registration Statement or the Prospectus (after initial
filing of the Registration Statement) provide copies of such document to counsel
to the selling holders of Registrable Securities and to the managing
underwriters, if any, make the Issuers' representatives available for discussion
of such document and make such changes in such document as counsel for such
selling holders or underwriters may reasonably request; and
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(v) upon the reasonable advance request of a majority of the selling
holders, make available its senior officers for telephone conferences with
investors in connection with the sale of the Notes pursuant to a Registration
Statement; provided that such telephone conferences do not unreasonably disrupt
the normal business operations of the Issuers.
The Issuers may require each seller of Registrable Securities as to
which any registration is being effected to furnish to the Issuers such
information regarding such seller and the distribution of such securities as the
Issuers may from time to time reasonably request in writing.
Each holder of Registrable Securities agrees by acquisition of such
Registrable Securities that, upon receipt of any notice from the Issuers of the
happening of any event of the kind described in Sections 6(e)(iii) or 6(e)(vi)
hereof, such holder shall forthwith discontinue disposition of Registrable
Securities until such holder's receipt of the copies of the supplemented or
amended Prospectus contemplated by Section 6(m) hereof, or until it is advised
in writing by the Issuers that the use of the Prospectus may be resumed, and has
received copies of any additional or supplemental filings which are incorporated
by reference in the Prospectus, and, if so directed by the Issuers, such holder
shall deliver to the Issuers (at the Issuers' expense) all copies, other than
permanent file copies then in such holder's possession, of the Prospectus
covering such Registrable Securities current at the time of receipt of such
notice. In the event the Issuers shall give any such notice, the time periods
mentioned in Sections 3(a)(iv) and 3(b) hereof shall be extended by the number
of days during the period from and including the date of the giving of such
notice to and including the date when each seller of Registrable Securities
covered by such Registration Statement either receives the copies of the
supplemented or amended prospectus contemplated by Section 6(m) hereof or is
advised in writing by the Issuers that the use of the Prospectus may be resumed.
7. Registration Expenses.
(a) The following expenses incident to any Registration shall be paid by
HNS:
(i) all registration and filing fees (including, without
limitation, with respect to filings required to be made with the SEC and
the NASD);
(ii) fees and expenses of compliance with securities or blue sky
laws (including reasonable fees and disbursements of counsel for the
underwriters or selling holders in connection with blue sky
qualifications of the Registrable Securities and determination of their
eligibility for investment under the laws of such jurisdictions as the
managing underwriters or holders of Registrable Securities being sold
may designate);
(iii) the fees and expenses incurred in connection with the
listing of any securities to be registered on a securities exchange;
(iv) rating agency fees and expenses;
(v) the fees and expenses of the Trustee (including counsel
fees) incurred in connection with the Registration of the Registrable
Securities under the Securities Act, the qualification of the Indenture
under the Trust Indenture Act and the initial appointment of the
Trustee; provided, however, that the ongoing fees and disbursements of
the Trustee in connection with the performance of its duties under the
Indenture (including counsel fees) shall be paid by the Issuers; and
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(vi) printing (including, without limitation, expenses of
printing or engraving certificates for the Registrable Securities in a
form eligible for deposit with Depositary Trust Company and of printing
prospectuses); provided, however, that the Issuers agree, unless HNS
otherwise requests or consents, to only use the services of commercial
printers for purposes of electronic filing and making substantially
final changes to the Registration Statement for the purpose of making an
electronic filing (all such expenses listed in this Section 7(a) being
collectively called "HNS Registration Expenses").
(b) Subject to Section 7(c) hereof, all of the Issuers' expenses
incident to any Registration (other than HNS Registration Expenses) shall be
paid by the Issuers, including, without limitation:
(i) all out-of-pocket expenses (including, without limitation,
messenger, telephone and delivery expenses);
(ii) fees and disbursements of counsel for the Issuers;
(iii) fees and disbursements of all independent certified public
accountants of the Issuers (including the expenses of any special audit
and "cold comfort" letters required by or incident to such performance);
(iv) the Issuers' internal (i.e., not out-of-pocket) expenses
(including, without limitation, all salaries and expenses of their
officers and employees performing legal or accounting duties); and
(v) fees and expenses of other Persons retained by the Issuers
(all such expenses listed in this Section 7(b) being collectively called
"Issuer Registration Expenses").
(c) Notwithstanding Section 7(b) above, with respect to any reasonable
Issuer Registration Expenses (other than those set forth in Section 7(b)(iv)
hereof), HNS shall reimburse the Issuers for (1) the first $110,000 of such
documented Issuer Registration Expenses in connection with the first
Registration provided for in Section 3(b) hereof and (2) the first $60,000 of
such documented Issuer Registration Expenses in connection with the second
Registration provided for in Section 3(b) hereof. In addition, following the
completion of the first Registration provided for in Section 3(b) hereof and
until the earlier of (i) the maturity date of the Notes and (ii) the date on
which no Notes remain outstanding, HNS shall pay the Issuers a nonaccountable
maintenance and compliance expense allowance equal to $20,000 per year (the
first of such payments to be made on the first anniversary of the effective date
of the Registration Statement for the first Registration effected hereunder, and
subsequent payments to be made on each anniversary thereafter).
The Issuers shall not be liable for any fees, disbursements or other
expenses of any underwriters or the holders of any Registrable Securities
incident to any Registration or the sale of the Registrable Securities
(including, without limitation, any fees and disbursements of counsel retained
by the holders or underwriters or any selling discounts or commissions), it
being agreed that any of the fees, disbursements and expenses contemplated by
Section 7(b) above shall not be deemed to be fees, disbursements or expenses of
such holders or underwriters.
Notwithstanding any provision in this Section 7, this Section shall not
relieve the Issuers of the obligations to pay any costs or expenses required to
be paid by the Issuers under the Financing Agreement.
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8. Indemnification
(a) Indemnification by the Issuers. The Issuers agree, jointly and
severally, to indemnify and hold harmless each holder of Registrable Securities,
its officers, directors, employees and agents and each Person who controls such
holder within the meaning of either Section 15 of the Securities Act or Section
20 of the Exchange Act (each such Person being sometimes hereinafter referred to
as an "Indemnified Holder") from and against all losses, claims, damages,
liabilities and expenses (including reasonable costs of investigation and legal
expenses) arising out of or based upon any untrue statement or alleged untrue
statement of a material fact contained in any Registration Statement or
Prospectus or in any amendment or supplement thereto or in any preliminary
prospectus, or arising out of or based upon any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances under which they were
made, not misleading, except insofar as such losses, claims, damages,
liabilities or expenses arise out of or are based upon any such untrue statement
or omission or allegation thereof based upon information furnished in writing to
the Issuers by such holder expressly for use therein. This indemnity shall be in
addition to any liability which the Issuers may otherwise have. The Issuers
shall also indemnify any underwriters, selling brokers, dealer, managers and
similar securities industry professionals participating in the distribution,
their officers and directors and each Person who controls such Persons (within
the meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act) to the same extent as provided above with respect to the indemnification of
the Indemnified Holders of Registrable Securities; provided, however, that the
foregoing indemnity with respect to any untrue statement or omission or alleged
untrue statement or omission made in a preliminary prospectus shall not inure to
the benefit of any such underwriter, selling broker, dealer manager or similar
securities industry professional from whom the Person asserting any such loss,
liability, claim, damage or expense purchased any of the securities that are the
subject thereof if a copy of the Prospectus (as then amended or supplemented if
the Issuers shall have furnished any amendments or supplements thereto) was not
sent or given to such Person, if such is required by law, at or prior to the
written confirmation of the sale of the securities to such Person and if the
Prospectus (as so amended or supplemented) would have cured the defect giving
rise to such loss, liability, claim, damage or expense.
If any action or proceeding (including any governmental investigation or
inquiry) shall be brought or asserted against an Indemnified Holder in respect
of which indemnity may be sought from the Issuers, such Indemnified Holder shall
promptly notify the Issuers in writing, and the Issuers shall assume the defense
thereof, including the employment of counsel reasonably satisfactory to such
Indemnified Holder and the payment of all expenses. Such Indemnified Holder
shall have the right to employ separate counsel in any such action and to
participate in the defense thereof, but the fees and expenses of such counsel
shall be the expense of such Indemnified Holder unless (a) the Issuers have
agreed to pay such fees and expenses, (b) the Issuers shall have failed to
assume the defense of such action or proceeding or shall have failed to employ
counsel reasonably satisfactory to such Indemnified Holder in any such action or
proceeding or (c) the named parties to any such action or proceeding (including
any impleaded parties) include both such Indemnified Holder and the Issuers, and
such Indemnified Holder shall have been advised by counsel that representation
of both parties by the same counsel would be inappropriate due to actual or
potential material differing interests between them (in which case, if such
Indemnified Holder notifies the Issuers in writing that it elects to employ
separate counsel at the expense of the Issuers, the Issuers shall not have the
right to assume the defense of such action or proceeding on behalf of such
Indemnified Holder, it being understood, however, that the Issuers shall not, in
connection with any one such action or proceeding or separate but substantially
similar or related actions or proceedings in the same jurisdiction arising out
of the same general allegations or circumstances, be liable for the reasonable
fees and expenses of more than one separate firm of attorneys at any time for
such Indemnified
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Holder and any other Indemnified Holders, which firm shall be designated in
writing by such Indemnified Holders). The Issuers shall not be liable for any
settlement of any such action or proceeding effected without their written
consent, but if settled with their written consent, or if there be a final
judgment for the plaintiff in any such action or proceeding, the Issuers agree
to indemnify and hold harmless such Indemnified Holders from and against any
loss or liability by reason of such settlement or judgment.
(b) Indemnification by Holder of Registrable Securities. Each holder of
Registrable Securities severally agrees to indemnify and hold harmless the
Issuers, their directors and officers and each Person, if any, who controls the
Issuers within the meaning of either Section 15 of the Securities Act or Section
20 of the Exchange Act to the same extent as the foregoing indemnity from the
Issuers to such holder, but only with respect to information relating to such
holder or its plan of distribution furnished in writing by such holder expressly
for use in any Registration Statement or Prospectus, or any amendment or
supplement thereto, or any preliminary prospectus. In case any action or
proceeding shall be brought against the Issuers or their directors or officers
or any such controlling person, in respect of which indemnity may be sought
against a holder of Registrable Securities, such holder shall have the rights
and duties given the Issuers and the Issuers or their directors or officers or
such controlling person shall have the rights and duties given to each holder by
the preceding paragraph. In no event shall the liability of any selling holder
of Registrable Securities hereunder be greater in amount than the dollar amount
of the proceeds received by such holder upon the sale of the Registrable
Securities giving rise to such indemnification obligation.
The Issuers shall be entitled to receive indemnities from any
underwriters, selling brokers, dealer managers and similar securities industry
professionals participating in the distribution, to the same extent as provided
above with respect to information so furnished in writing by such Persons
specifically for inclusion in any Prospectus or Registration Statement or any
amendment or supplement thereto, or any preliminary prospectus.
(c) Contribution. If the indemnification provided for in this Section 8
is unavailable to an indemnified party under Section 8(a) or Section 8(b) hereof
(other than by reason of exceptions provided in those Sections) in respect of
any losses, claims, damages, liabilities or expenses referred to therein, then
each applicable 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, liabilities or expenses in such
proportion as is appropriate to reflect the relative benefits received by the
Issuers, on the one hand, and the Indemnified Holders, on the other hand, from
the sale of Registrable Securities or if such allocation is not permitted by
applicable law, the relative fault of the Issuers, on the one hand, and of the
Indemnified Holder, on the other hand, in connection with the statements or
omissions which resulted in such losses, claims, damages, liabilities or
expenses, as well as any other relevant equitable considerations. The relative
fault of the Issuers, on the one hand, and of the Indemnified Holder, on the
other hand, shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the Issuers
or by the Indemnified Holder and the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such statement or omission.
The amount paid or payable by a party as a result of the losses, claims,
damages, liabilities and expenses referred to above shall be deemed to include,
subject to the limitations set forth in the second paragraph of Section 8(a),
any legal or other fees or expenses reasonably incurred by such party in
connection with investigating or defending any action or claim.
The Issuers and each holder of Registrable Securities agree that it
would not be just and equitable if contribution pursuant to this Section 8(c)
were determined by pro rata allocation or by any other
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method of allocation which does not take account of the equitable considerations
referred to in the immediately preceding paragraph. Notwithstanding the
provisions of this Section 8(c), an Indemnified Holder shall not be required to
contribute any amount in excess of the amount by which the total price at which
the Securities sold by such Indemnified Holder or its affiliated Indemnified
Holders and distributed to the public were offered to the public exceeds the
amount of any damages which such Indemnified Holder, or its affiliated
Indemnified Holders, 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. Rule 144
The Issuers covenant that they will file the reports required to be
filed by it under the Securities Act and the Exchange Act and the rules and
regulations adopted by the SEC thereunder and will take such further action as
any holder of Registrable Securities may reasonably request, all to the extent
required from time to time to enable such holder to sell Registrable Securities
without registration under the Securities Act within the limitation of the
exemptions provided by (a) Rule 144 under the Securities Act, as such Rule may
be amended from time to time, or (b) any similar rule or regulation hereafter
adopted by the SEC. Upon the request of any holder of Registrable Securities,
the Issuers shall deliver to such holder a written statement as to whether it
has complied with such information and requirements.
10. Rule 144A
The Issuers hereby agree, for so long as any Registrable Securities
remain outstanding, to make available to any holder or beneficial owner of
Registrable Securities in connection with any sale thereof and any prospective
purchaser of such Registrable Securities from such holder or beneficial owner,
the information required by Rule 144A(d)(4) under the Securities Act in order to
permit resales of such Registrable Securities pursuant to Rule 144A.
11. Participation in Underwritten Registrations
No holder (or its successors or assigns) may participate in any
underwritten registration hereunder unless, in addition to complying with its
other obligations under this Agreement, such Person (a) agrees to sell such
Person's securities on the basis provided in any underwriting arrangements
approved by the underwriters and other Persons entitled hereunder to approve
such arrangements and (b) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents required
under the terms of such underwriting arrangements.
12. Miscellaneous
(a) Remedies. Each holder of Registrable Securities, in addition to
being entitled to exercise all rights provided herein, and as provided in the
Indenture and the Financing Documents and granted by law, including recovery of
damages, shall be entitled to specific performance of its rights under this
Agreement. The Issuers agree that monetary damages would not be adequate
compensation for any loss incurred by reason of a breach by it of the provisions
of this Agreement and hereby agrees to waive the defense in any action for
specific performance that a remedy at law would be adequate.
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(b) No Inconsistent Agreements. The Issuers shall not on or after the
date of this Agreement enter into any agreement with respect to their securities
which is inconsistent with the rights granted to the holders of Registrable
Securities in this Agreement or otherwise conflicts with the provisions hereof.
(c) Adjustments Affecting Registrable Securities. The Issuers shall not
take any action, or permit any change to occur, solely with respect to the
Registrable Securities which would (i) adversely affect the ability of the
holders of Registrable Securities to include such Registrable Securities in a
Registration undertaken pursuant to this Agreement or (ii) adversely affect the
marketability of such Registrable Securities in any such registration. Nothing
in this Section 11(c) shall prohibit the Issuers from taking any action or
permitting any change to occur that generally affects the Issuers' respective
businesses, assets, operations or prospects regardless of any ancillary effect
on the Registrable Securities, provided that such action or change is not
designed specifically to impair the value of the Registrable Securities.
(d) Amendments and Waivers. The provisions of this Agreement, including
the provisions of this sentence, may not be amended, modified or supplemented,
and waivers or consents to departures from the provisions hereof may not be
given unless the Issuers have obtained the written consent of holders of at
least 50% in outstanding aggregate principal amount of Registrable Securities.
Notwithstanding the foregoing, a waiver or consent to departure from the
provisions hereof that relates exclusively to the rights of holders of
Registrable Securities whose securities are being sold pursuant to a
Registration Statement and that does not directly or indirectly affect the
rights of other holders of Registrable Securities may be given by the holders of
50% in aggregate principal amount of the Registrable Securities being sold.
(e) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, registered
first-class mail, telecopier, or air courier guaranteeing overnight delivery:
(i) if to a holder of Registrable Securities, at the most
current address given by such holder to the Company in accordance with
the provisions of this Section 12(e), which address initially is, with
respect to each holder, the address set forth on HNS' signature page of
this Agreement, with a copy to Latham & Watkins, 1001 Pennsylvania
Avenue, N.W., Suite 1300, Washington, D.C., Attention: James F. Rogers,
Esq.; and
(ii) if to the Issuers, initially at its address set forth on
the Company's signature page of this Agreement and thereafter at such
other address, notice of which is given in accordance with the
provisions of this Section 12(e), with a copy to Klehr, Harrison,
Harvey, Branzburg & Ellers, 1401 Walnut Street, Philadelphia, PA 19102,
Attention: Leonard M. Klehr, Esq.
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; when received if
deposited in the mail, postage prepaid, if mailed; when receipt acknowledged, if
telecopied; and on the next business day, if timely delivered to an air courier
guaranteeing overnight delivery.
(f) Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon the successors and assigns of each of the parties,
including, without limitation, and without the need for an express assignment,
subsequent holders of Registrable Securities.
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(g) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(h) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(i) Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York.
(j) Severability. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.
(k) Entire Agreement. This Agreement is intended by the parties as a
final expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein
with respect to the registration rights granted by the Issuers with respect to
the securities sold pursuant to the Financing Agreement. This Agreement
supersedes all prior agreements and understandings between the parties with
respect to such subject matter.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
ISSUERS:
GEOTEK FINANCING CORPORATION
By: /s/ Michael McCoy
------------------------------------------
Title: Chief Financial Officer
Address: c/o Geotek Communications, Inc.
20 Craig Road
Montvale, NJ 07645
Telecopy No.: (201) 930-9614
GEOTEK COMMUNICATIONS, INC.
By: /s/ Michael McCoy
------------------------------------------
Title: Chief Financial Officer
Address: 20 Craig Road
Montvale, NJ 07645
Telecopy No.: (201) 930-9614
HNS:
HUGHES NETWORK SYSTEMS, INC.
By: /s/ Pradeep Kaul
------------------------------------------
Title: Executive Vice President
Address: 10450 Pacific Center Court
San Diego, CA 92121
Telecopy No.: (619) 457-4994
17
