Exhibit (c)(2)
FORM OF LETTER AGREEMENT
Board of Directors
Geotek Communications, Inc.
December 1997
Page 1
December 31, 1996
Board of Directors
Geotek Communications, Inc.
00 Xxxxx Xxxx
Xxxxxxxx, XX 00000
Re: Regulation D Offering
-----------------------
Ladies and Gentlemen:
Reference is made to the Convertible Securities Subscription Agreement
(the "Agreement") of even date and delivery herewith between the undersigned
person, individually and not on behalf of a class (the "Investor"), and Geotek
Communications, Inc. (the "Company"). Capitalized terms contained in this letter
shall have the same meaning ascribed to them in the Agreement.
In addition to the representations and covenants of the Investor
contained in the Agreement, the Company has required each Investor to execute
and deliver a letter of like tenor to the Company and, therefore, the Investor
further covenants and agrees as follows:
1. In the event that the Investor engages in any Block Trade Sales (as
hereinafter defined), the 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 single executed sale of more
than 100,000 shares of the Common Stock of the Company.
2. In the event the Investor engages in short sales transactions or
other hedging activities during a day which the 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 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, the Investor agrees to calculate the
Average Stock Price without including any trades for common stock that the
Investor executed on the day utilized in determining the Conversion Date Market
Price.
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Board of Directors
Geotek Communications, Inc.
December 1997
Page 2
3. Convertible Percentage. Unless the Company and holders of at least
66 2/3% of the Series O 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
Disposition Transaction (as defined in the Certificate of Designation), the
immediately Convertible Percentage shall be one hundred percent (100%):
Holder Conversion Date
(Number of Days after Original Issue Date) Percentage of all Preferred Shares
------------------------------------------ ----------------------------------
0 to 90 0%
91 to 180 20%
181 to 365 50%
366 to 540 80%
541 and thereafter 100%
4. Except as permitted in Section 13 of the Certificate of Designation
for the Preferred Stock, during any Conversion 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
converting any Preferred Stock or trading any Common Stock; provided however,
that each holder, individually, may convert or trade that amount of Preferred
Stock or Common Stock, as the case may be, held by such holder as may be
necessary to cover short positions created prior to the commencement of the
relevant Conversion Restriction Period or Stand-Off Period.
5. The Investor shall not 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.
Board of Directors
Geotek Communications, Inc.
December 1997
Page 3
6. For so long as the Investor owns any Preferred Stock, on the last
day of each quarterly calendar period beginning March 31, 1997, the 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. The Investor's failure to deliver any such certificate under this
Section 6 shall not constitute a violation of this letter agreement for purposes
of Section 7 unless such failure continues for a period of ten (10) business
days after its receipt of notice from the Company of such failure.
7. In the event the 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 the Investor an amount equal to the greater of
(i) all profits derived by the Investor in the transactions conducted by the
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.
8. 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.
9. 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
Board of Directors
Geotek Communications, Inc.
December 1997
Page 4
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:
Its:
Agreed and accepted on December 31, 1996
GEOTEK COMMUNICATIONS, INC.
By:
Title:
