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EXHIBIT T
January 23, 1997
Board of Directors
Geotek Communications, Inc.
00 Xxxxx Xxxx
Xxxxxxxx, XX 00000
Re: Regulation D Offering
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Ladies and Gentlemen:
Reference is made to the Convertible Securities Subscription Agreement
(the "Agreement") of even date and delivery herewith between the undersigned
persons, (each an "Investor" and collectively, the "Investors"), and Geotek
Communications, Inc. (the "Company"). Capitalized terms contained in this letter
shall have the same meanings ascribed to them in the Agreement.
In addition to the representations and covenants of the Investors
contained in the Agreement, the Company has required all Investors to execute
and deliver this letter pursuant to which the Investors further covenant and
agree as follows:
1. In the event that any Investor, individually or collectively with
any other Investor, engages in any Block Trade Sales (as hereinafter defined),
such Investor agrees to complete those Block Trade Sales at a price(s) which
would be (x) on a neutral or uptick versus the price of the last market
transaction in the Common Stock of the Company and (y) greater than the previous
day's closing market price of the Common Stock of the Company. For purposes
herein, Block Trade Sales shall mean any executed sale of more than 100,000
shares of the Common Stock of the Company.
2. In the event an Investor (or any of such Investor's affiliates)
engages in short sales transactions or other hedging activities during a day
which such Investor utilizes to determine the Conversion Date Market Price (the
"Pricing Period") which involve, among other things, sales of shares of the
Common Stock of the Company, the Investor will place (or shall cause its
affiliate to place) its sale orders for common stock in the course of such
activities so as not to complete or effect any such sale on any trading day
during the Pricing Period at a price which is lower than the lowest sale
effected on such day by persons other than the Investor and its affiliates. In
addition, in each computation of the Average Stock Price, each Investor agrees
to calculate the Average Stock Price without including any trades for common
stock that such Investor or any of its affiliates executed on the day utilized
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in determining the Conversion Date Market Price.
3. Convertible Percentage. Unless the Company and holders of at least
66 2/3% of the Series P Preferred Stock of the Company (the "Preferred Stock")
otherwise agree, each holder of Preferred Stock may convert, in the aggregate,
not more than that percentage of Preferred Stock held by such holder set forth
in the column below (the "Convertible Percentage") opposite the time period
during which any Holder Conversion Date (as defined in the Certificate of
Designation) occurs; provided, however, that in the event the Company effects a
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Disposition Transaction (as defined in the Certificate of Designation), the
Convertible Percentage shall become one hundred percent (100%) effective on the
date such Disposition Transaction is consummated:
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Holder Conversion Date
(Number of Days after December 31, 1996) Percentage of all Preferred Shares
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0 to 90 0%
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91 to 180 20%
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181 to 365 50%
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366 to 540 80%
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541 and thereafter 100%
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4. Except as permitted in Section 13 of the Certificate of Designation
for the Preferred Stock, during any Trading Restriction Period or any Stand-Off
Period (each as defined in the Certificate of Designation for the Preferred
Stock), each holder of Preferred Stock shall be prohibited from trading any
Common Stock. Notwithstanding the foregoing, nothing herein shall prevent a
holder of Preferred Stock from converting any shares of Preferred Stock or
exercising any Warrants during a Trading Restriction Period or a Stand-Off
Period.
5. No Investor shall effect any transfer of any share of Preferred
Stock unless, prior to and as a condition of such transfer, the proposed
transferee executes and delivers to the Company a counterpart of this letter
agreement agreeing to comply with and be bound by all of its terms; provided,
--------
however, that in the event that the proposed transferee is not an affiliate of
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any of the Investors, such proposed transferee must execute and deliver to the
Company a letter agreement in the form of that certain Letter Agreement, dated
as of December 31, 1996, by and between the Company and the subscribers of the
Company's Series O Convertible Preferred Stock (the "Series O Letter
Agreement"), agreeing to comply and be bound by all of its terms with respect to
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the Preferred Stock. A copy of the Series O Letter Agreement is attached hereto
as Exhibit A.
6. For purposes of complying with any applicable provisions of the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), each holder of Preferred Stock and the Company (as the case may be)
agrees to provide promptly to the other, upon the other's written request, all
reasonable requested information regarding itself and its affiliates which is
necessary for the requesting party to file any notifications or other
information with the United States Justice Department or Federal Trade
Commission pursuant to the HSR Act. In the event a holder of Preferred Stock is
required to file a premerger notification under the HSR Act with respect to the
transactions contemplated by the Agreement, the holder of Preferred Stock and
the Company shall promptly prepare and make all such required filings and shall
request early termination of the waiting period with respect thereto.
7. For so long as an Investor owns any Preferred Stock, on the last
day of each quarterly calendar period beginning March 31, 1997, such Investor
shall deliver to the Company a certificate signed by one of its duly authorized
officers or agents stating that it has complied with all of the terms of this
letter agreement, or if it has not so complied, the details of each such
violation. An Investor's failure to deliver any such certificate under this
Section 7 shall not constitute a violation of this letter agreement for purposes
of Section 8 unless such failure continues for a period of ten (10) business
days after its receipt of notice from the Company of such failure.
8. In the event an Investor violates any of the terms of this letter
agreement, the Company shall be entitled, in addition to any other remedies
available to it, to recover from such Investor an amount equal to the greater of
(i) all profits derived by such Investor in the transactions conducted by such
Investor in violation of this letter agreement and (ii) $10,000 for each such
violation. Such amount shall be payable in United States dollars, free of any
tax or other deduction, and shall include interest from the date of the
applicable violation of this Agreement to the date on which the award is paid,
at a rate determined by the arbitrators referred to below.
9. The Company hereby agrees to seek the approval of its shareholders
at their annual meeting in 1997 of a vote approving the issuance of Common Stock
in conjunction with (i) the exercise of conversion rights contained in the
Certificate of Designation for the Preferred Stock and (ii) the exercise of
Warrants, in each case to the extent that the exercise of those rights would
result in the Company issuing a number of shares of Common Stock which exceeds
twenty percent (20%) of the Company's Common Stock outstanding as of the date
hereof.
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10. Any claim, dispute or controversy arising out of or in connection
with this Agreement shall be settled by binding arbitration conducted in New
York, New York before three arbitrators, with each party appointing one
arbitrator and those two arbitrators choosing the third arbitrator. If a party
hereto fails to appoint an arbitrator within fifteen (15) days after receiving
notice of the other party's selection of an arbitrator, the last two arbitrators
shall be selected by the first arbitrator. Any arbitration hereunder shall be
conducted in accordance with the rules observed by the American Arbitration
Association. The parties hereto consent to the jurisdiction of the courts of the
Supreme Court of New York and the United States District Court for the Southern
District of New York for purposes of enforcement of any final award by the
arbitrators.
Very truly yours,
Investor:
By:
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Its:
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Xxxxxx and accepted on January 23, 1997
GEOTEK COMMUNICATIONS, INC.
By:
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Title:
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