SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant |X|
Filed by a Party other than the Registrant |_|
Check the appropriate box:
| X| Preliminary Proxy Statement
| | Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Under Rule 14a-12
|_| Confidential, For Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
GoAmerica, Inc.
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
|X| No fee required.
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
|_| Fee paid previously with preliminary materials:
|_| Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
GOAMERICA, INC.
433 Hackensack Avenue
Hackensack, New Jersey 07601
February __ 2004
To Our Stockholders:
You are cordially invited to attend a Special Meeting of Stockholders of
GoAmerica, Inc. at 10:00 a.m. local time, on March 10, 2004, at Continental
Plaza, 411 Hackensack Avenue, Lower Level, Hackensack, New Jersey.
Over the past several months, your management team has worked hard to attract
the capital necessary for GoAmerica to re-establish our business model. On
December 19, 2003, we entered into a series of agreements with multiple
investors to issue 96,666,667 shares of our common stock, as well as warrants to
purchase an additional 1,353,333 shares of common stock, in exchange for an
aggregate payment of $14.5 million. At the closing of this private placement
transaction, we will also be required to issue shares of common stock in lieu of
paying interest on a bridge loan we received in December 2003. Assuming that the
closing occurs on March 10, 2004, we will be obligated to issue an additional
154,130 shares of common stock in lieu of paying interest. As of February 11,
2004, we had 55,696,868 shares of common stock outstanding. Thus, as of February
11, 2004, and assuming that the transaction closes as of March 10, 2004, such
96,666,667 shares represent approximately 175.6% of our outstanding common
stock, the shares underlying these warrants represent approximately 2.4% of our
outstanding common stock and the shares issuable in lieu of interest payments
represent approximately 0.28% of our outstanding common stock. These percentages
do not give effect to shares reserved for issuance upon exercise of outstanding
stock options and upon exercise of other warrants granted by us, including
warrants issued and issuable to the placement agent for the private placement
transaction, and do not give effect to shares of our common stock which the
placement agent may elect to receive in lieu of cash fees payable at the closing
of our private placement. These percentages also do not reflect any additional
shares of common stock that we may or will be required to issue in connection
with delays in effecting the registration of the shares issuable in this private
placement. Since the shares issuable in this private placement transaction
exceed the number of shares currently outstanding, this private placement may be
deemed to constitute a change in control for purposes of the federal securities
laws.
None of the investors in this private placement transaction were affiliates of
GoAmerica at the time that we negotiated the transaction. Sunrise Equity
Partners, L.P., one of the investors in the private placement, may be deemed an
affiliate of the placement agent. Assuming that the private placement closes on
March 10, 2004, Sunrise Equity Partners, L.P. will be issued (i) 6,000,000
shares of our common stock, (ii) warrants to purchase 84,000 shares of our
common stock (iii) an additional 9,567 shares of our common stock in lieu of
interest on its portion of the bridge loan we received in December 2003 and (iv)
an additional 182,807 shares of our common stock due to a delay in filing a
registration statement. Sunrise Equity Partners, L.P. will participate in the
private placement on the same financial terms as all other investors. As
described below, designees of the placement agent will receive 4,654,970 shares
of our common stock as partial payment for the placement agent's services in the
private placement. In addition, the placement agent and its designees will be
issued warrants to purchase an aggregate of 9,413,179 shares of our common
stock. Of those warrants to purchase 9,413,179 shares, warrants to purchase
6,090,007 shares of our common stock will be immediately exercisable and
warrants to purchase 3,323,172 shares of our common stock will not be
exercisable until eighteen months after of the closing of the private placement.
Another investor, Special Situations Fund III, L.P., will beneficially own
approximately 13.29% of our outstanding common stock upon completion of the
transaction. Special Situations Fund III, L.P. will also have the right to
designate one individual to serve on our board of directors.
Closing of the private placement transaction is subject to several conditions,
including approval of the proposal to be considered at the Special Meeting with
respect the issuance of shares representing more than 20% of our outstanding
common stock, which requires shareholder approval under two separate NASDAQ
rules.
The other proposals to be presented at the meeting are:
o an amendment to our restated certificate of incorporation, in order
to increase the number of shares of common stock we are authorized
to issue, which requires shareholder approval under Delaware law;
and
i
o authorization for a reverse stock split if necessary to maintain
GoAmerica's listing on The Nasdaq SmallCap Market.
The Notice of Meeting and Proxy Statement on the following pages describe the
three proposals to be voted on at the Special Meeting and explains the reasons
why GoAmerica's Board of Directors recommends that you vote in favor of them.
It is important that your shares be represented at this meeting to ensure the
presence of a quorum. Whether or not you plan to attend the meeting, we urge you
to have your shares represented by taking a moment to vote by phone, via the
Internet or by using the enclosed proxy card, at your earliest opportunity.
Unless the proxy is validly revoked by you, your shares will be voted in
accordance with the instructions you have given in your proxy.
Thank you for your continued support.
Sincerely,
/s/ Aaron Dobrinsky
Executive Chairman
/s/ Daniel R. Luis
Chief Executive Officer
ii
GOAMERICA, INC.
433 Hackensack Avenue
Hackensack, New Jersey 07601
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
To Be Held On March 10, 2004
A Special Meeting of Stockholders, referred to herein as the "Meeting", of
GoAmerica, Inc., a Delaware corporation, will be held at Continental Plaza, 411
Hackensack Avenue, Lower Level, on March 10, 2004, at 10:00 a.m. local time, to
consider and act upon:
(1) a proposal to approve, for purposes of NASD Marketplace Rules
4350(i)(1)(B) and 4350(i)(1)(D)(ii), the issuance of shares of our
common stock, including shares underlying any related warrants or other
rights to purchase additional shares of our common stock, in an amount
greater than 19.99% of our outstanding shares of common stock as of the
date of such issuance, upon the closing of a contemplated private
placement of more than 96.7 million shares of our common stock, and
warrants to purchase an additional 1.4 million shares of common stock,
which may be deemed to result in a change of control under applicable
NASD rules;
(2) a proposal to authorize our Board of Directors to amend our
restated certificate of incorporation to effect a reverse stock split
at one of five different ratios, if required to maintain our listing on
the Nasdaq SmallCap Market;
(3) a proposal to authorize our Board of Directors to amend our
restated certificate of incorporation to increase the number of shares
of common stock we are authorized to issue from 200,000,000 to
350,000,000 shares, which will result in an increase in the total
number of authorized shares of capital stock from 204,351,943 to
354,351,943; and
(4) such other business as may properly come before the Meeting or any
adjournment or adjournments thereof.
Holders of common stock of record at the close of business on February 11, 2004
are entitled to notice of and to vote at the Meeting or any adjournment(s)
thereof. A complete list of such stockholders will be open to the examination of
any stockholder at GoAmerica's principal executive offices at 433 Hackensack
Avenue, Hackensack, New Jersey for a period of ten days prior to the Meeting as
well as on the day of the Meeting. The Meeting may be adjourned from time to
time without notice other than by announcement at the Meeting.
YOUR VOTE IS IMPORTANT REGARDLESS OF THE NUMBER OF SHARES THAT YOU OWN. WHETHER
OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON, KINDLY SIGN, DATE AND RETURN
THE ENCLOSED PROXY CARD AND MAIL IT PROMPTLY IN THE ENCLOSED RETURN ENVELOPE, OR
FOLLOW THE INSTRUCTIONS PROVIDED FOR VOTING BY PHONE OR THE INTERNET. THE PROMPT
RETURN OF PROXIES OR VOTE BY PHONE OR THE INTERNET WILL ENSURE A QUORUM AND SAVE
GOAMERICA THE EXPENSE OF FURTHER SOLICITATION. EACH PROXY GRANTED MAY BE REVOKED
BY THE STOCKHOLDER APPOINTING SUCH PROXY AT ANY TIME BEFORE IT IS VOTED. IF YOU
RECEIVE MORE THAN ONE PROXY CARD BECAUSE YOUR SHARES ARE REGISTERED IN DIFFERENT
NAMES OR ADDRESSES, EACH SUCH PROXY CARD SHOULD BE SIGNED AND RETURNED TO ENSURE
THAT ALL OF YOUR SHARES WILL BE VOTED. IF YOU ELECT TO VOTE BY PHONE OR THE
INTERNET, THE LAST VOTE YOU SUBMIT CHRONOLOGICALLY BY ANY MEANS WILL SUPERSEDE
YOUR PRIOR VOTE(S). ALSO, IF YOU VOTE BY PHONE OR THE INTERNET, AND LATER DECIDE
TO ATTEND THE MEETING, YOU MAY CANCEL YOUR PREVIOUS VOTE AND VOTE IN PERSON AT
THE MEETING.
Hackensack, New Jersey By Order of the Board of Directors
February __, 2004 /s/ Daniel R. Luis
Daniel R. Luis
Chief Executive Officer
iii
GOAMERICA, INC.
433 Hackensack Avenue
Hackensack, New Jersey 07601
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation by the
Board of Directors of GoAmerica, Inc. of proxies to be voted at a Special
Meeting of GoAmerica's stockholders to be held on March 10, 2004, at Continental
Plaza, 411 Hackensack Avenue, Lower Level, Hackensack, New Jersey, and at any
adjournment or adjournments thereof. Holders of record of shares of our common
stock, $0.01 par value as of the close of business on February 11, 2004, will be
entitled to notice of and to vote at the Meeting and any adjournment or
adjournments thereof. In this proxy statement, we refer to our common stock as
the "Common Stock". As of the February 11, 2004 record date, there were
55,696,868 shares of Common Stock issued and outstanding and entitled to vote.
Each share of Common Stock is entitled to one vote on any matter presented to
stockholders at the Meeting. As of February 11, 2004, there were approximately
[___] holders of record and approximately [______] beneficial owners of our
Common Stock.
This Proxy Statement, together with the related proxy card, is being mailed to
GoAmerica's stockholders on or about February 11, 2004. We will bear the entire
cost of this proxy solicitation, including preparation, proxy solicitation,
assembly, printing and mailing of this Proxy Statement, the proxy card, and any
additional materials furnished to stockholders. In addition, we have retained
Georgeson Shareholder Communications, Inc. to aid in the solicitation of
proxies. We estimate that the fees to be paid to Georgeson Shareholder
Communications, Inc. for its role as proxy solicitor will be approximately
$10,000, plus the reimbursement of reasonable out-of-pocket expenses. You may
vote by completing and returning the enclosed proxy or by phone or via the
Internet as described below. You may also vote in person at the Meeting, even if
you have previously voted your shares by any of the means that we identified in
the immediately preceding sentence.
Overview
On December 19, 2003, we entered into a private placement transaction described
in detail in Proposal 1 below. At the closing of the private placement, we will
be obligated to issue the following securities:
o We will issue to the investors 89,900,000 shares of our Common Stock
in exchange for a cash payment of $13,485,000.
o We will issue to the investors an additional 6,766,667 shares of our
Common Stock upon the mandatory conversion of $1,015,000 aggregate
principal amount of convertible notes that we issued at a closing held
in December 2003. We refer to these 6,766,667 shares, together with
the above-mentioned 89,900,000 shares, as the "Private Placement
Shares".
o The convertible notes bear interest from the first closing in December
2003 at the rate of 10% per annum. At the private placement closing,
we will pay the accrued interest by delivering to the investors one
share of our Common Stock for each $0.15 of interest that has accrued
from the date of the first closing. We refer to these shares as the
"Interest Shares". If the private placement closes on March 10, 2004,
we will be obligated to issue a total of 154,130 Interest Shares.
o At the first closing, we issued to the investors certain warrants to
purchase 1,353,333 shares of our Common Stock at an exercise price of
$0.15 per share. We refer to the shares of Common Stock underlying
these warrants as the "Investors' Warrant Shares" and we refer to
these warrants as the "Investors' Warrants".
1
o We will issue to the placement agent, or its designees, warrants to
purchase 9,413,179 shares of our Common Stock at an exercise price of
$0.15 per share. At the first closing, we issued to the placement
agent, and a designee of the placement agent, warrants to purchase an
aggregate of 812,000 shares of our Common Stock at an exercise price
of $0.15 per share. We refer to the shares of Common Stock underlying
all of these warrants as the "Agent's Warrant Shares" and we refer to
all of these warrants as the "Agent's Warrants". Of those Agent's
Warrants to purchase 9,413,179 shares, warrants to purchase 6,090,007
shares of our common stock will be immediately exercisable and
warrants to purchase 3,323,172 shares of our common stock will not be
exercisable until eighteen months after of the closing of the private
placement.
o At the closing of the private placement, we will be obligated to
deliver to the placement agent, at its option, either (i) a cash fee
of approximately $1.35 million, (ii) a number of shares of Common
Stock equal to 11% of the aggregate number of fully diluted and/or
converted shares of Common Stock that are purchased by the investors
in the private placement or (iii) a combination of cash and stock. We
refer to the shares that we may issue to the placement agent in lieu
of cash fees as the "Agent's Shares". Based on information provided by
the placement agent, at the closing, we expect to pay the placement
agent approximately $713,731 in cash and to issue to the placement
agent's designees approximately 4,654,970 Agent's Shares.
o At the first closing, we executed a registration rights agreement
which obligates us to issue certain additional shares of Common Stock
in the event that we are delayed in effecting the registration of the
shares issuable in this private placement. We refer to the shares that
we may be required to issue in such event as the "Additional Shares".
Our registration rights agreement provides that the maximum number of
shares that we may be required to issue as Additional Shares is 12% of
the total shares of Common Stock then owned by each investor or which
each investor then has the right to acquire.
As of the record date, there were 55,696,868 shares of Common Stock outstanding.
The following table shows the relative percentage of the Private Placement
Shares, the Interest Shares, the Investors' Warrant Shares, the Agent's Warrants
Shares and the Agent Shares to the 55,696,868 shares of Common Stock outstanding
as of the record date. For purposes of calculating the number of Interest Shares
and Agent Shares, we have assumed that the private placement will close on March
10, 2004.
- ------------------------------------------------------------ ---------------------------------------------------------
Shares of Common Stock Issuable Percentage of Outstanding Shares
- ------------------------------------------------------------ ---------------------------------------------------------
96,666,667 Private Placement Shares 173.56%
- ------------------------------------------------------------ ---------------------------------------------------------
154,130 Interest Shares 0.28%
- ------------------------------------------------------------ ---------------------------------------------------------
1,353,333 Investors' Warrant Shares 2.43%
- ------------------------------------------------------------ ---------------------------------------------------------
10,225,179 Agent's Warrant Shares (1) 18.36%
- ------------------------------------------------------------ ---------------------------------------------------------
4,654,970 Agent's Shares 8.36%
- ------------------------------------------------------------ ---------------------------------------------------------
- ---------------
(1) Includes 812,000 shares covered by the Agent's Warrants issued in December
2003. Of these 10,225,179 Agent's Warrants Shares, Agent's Warrants to purchase
6,902,007 Agent's Warrants Shares will be immediately exercisable and Agent's
Warrants to purchase 3,323,172 Agent's Warrants Shares will not be exercisable
until eighteen months after the closing of the private placement.
Proxy Voting
Whether or not you plan to attend the Meeting, please take the time to vote as
it is important that we receive sufficient votes to satisfy statutory
requirements. Votes may be cast:
o by traditional paper proxy card;
o by phone;
o via the Internet; or
o in person at the Meeting.
Please take a moment to read the instructions, choose the way to vote that you
find most convenient and cast your vote as soon as possible.
2
Voting by Proxy Card. If proxies in the accompanying form are properly executed
and returned, the shares of Common Stock represented thereby will be voted in
the manner specified therein. If not otherwise specified, the shares of Common
Stock represented by the proxies will be voted:
o FOR Proposal 1, to approve, for purposes of NASD Marketplace Rules
4350(i)(1)(B) and 4350(i)(1)(D)(ii), the issuance of shares of our
Common Stock, including shares underlying any related warrants or
other rights to purchase additional shares of our Common Stock, in
an amount greater than 19.99% of our outstanding shares of Common
Stock as of the date of such issuance, upon the closing of a
contemplated private placement of:
o 96,666,667 Private Placement Shares;
o Interest Shares which will amount to 154,130 shares of Common
Stock if we close on March 10, 2004; and
o the Investors' Warrants to purchase 1,353,333 Investors'
Warrant Shares.
Such closing potentially represents a change in control under
applicable NASD Rules. In addition to the above-mentioned shares, at
the closing of the private placement, GoAmerica will be obligated to
issue Agent's Warrants covering 9,413,179 Agent's Warrant Shares and
4,654,970 Agents' Shares as partial compensation for the placement
agent's services in the transaction. We will be obligated to issue a
minimum of 2,945,224 Additional Shares and a maximum of 11,780,896
Additional Shares in connection with delays in effecting the
registration of certain securities.
o FOR Proposal 2, to authorize our Board of Directors to amend our
restated certificate of incorporation to effect a reverse stock
split at one of five ratios described in this document if required
to maintain our listing on the Nasdaq SmallCap Market;
o FOR Proposal 3, to authorize our Board of Directors to amend our
restated certificate of incorporation to increase the number of
shares of Common Stock we are authorized to issue from 200,000,000
to 350,000,000 shares, which will result in an increase in the total
number of authorized shares of capital stock from 204,351,943 to
354,351,943; and
o In the discretion of the persons named in the enclosed form of
proxy, on any other proposals which may properly come before the
Meeting or any adjournment or adjournments thereof.
Any stockholder who has submitted a proxy may revoke it at any time before it is
voted, by written notice addressed to and received by GoAmerica's Acting
Secretary, by submitting a duly executed proxy bearing a later date or by
electing to vote in person at the Meeting. The mere presence at the Meeting of
the person appointing a proxy does not, however, revoke the appointment.
Voting by Phone or via the Internet. If you are a stockholder of record -- that
is, if your stock is registered with GoAmerica in your own name -- you may vote
by phone, or through the Internet, by following the instructions included with
your proxy card. If your shares are registered in the name of a broker or other
nominee, your nominee may be participating in a program provided through ADP
Investor Communication Services that allows you to vote by phone or the
Internet. If so, the voting form your nominee sent you will provide phone and
Internet voting instructions. The last vote you submit chronologically by any
means will supersede your prior vote(s). Also, if you vote by phone or the
Internet, and later decide to attend the Meeting, you may cancel your previous
vote and vote in person at the Meeting.
The deadline for voting by phone or through the Internet as a stockholder of
record is 11:59 p.m., EST, on March 9, 2004. For stockholders whose shares are
registered in the name of a broker or other nominee, please consult the voting
instructions provided by your broker for information about the deadline for
voting by phone or through the Internet.
3
Voting in Person. If you attend the Meeting, you may deliver your completed
proxy card in person or you may vote by completing a ballot, which will be
available at the Meeting.
Attendance at the Meeting will not, by itself, result in the revocation of a
previously submitted proxy. Even if you are planning to attend the Meeting, we
encourage you to submit your proxy in advance to ensure the representation of
your shares at the Meeting.
We have fixed the close of business on February 11, 2004 as the record date for
determining the stockholders entitled to notice of, and to vote at, the Meeting.
As of the close of business on February 11, 2004, there were 55,696,868 shares
of Common Stock outstanding and entitled to vote. Each holder of Common Stock is
entitled to one vote per share on all matters on which such stockholder is
entitled to vote.
The presence, in person or by proxy, of the holders of a majority of the
outstanding shares of our Common Stock is necessary to constitute a quorum at
the Meeting. Votes of stockholders of record who are present at the Meeting in
person or by proxy, abstentions, and broker non-votes are counted as present or
represented at the meeting for purposes of determining whether a quorum exists.
If you hold your shares of Common Stock through a broker, bank or other
representative, generally the broker or your representative may only vote the
Common Stock that it holds for you in accordance with your instructions.
However, if it has not timely received your instructions, the broker or your
representative may vote on certain matters for which it has discretionary voting
authority. If a broker or your representative cannot vote on a particular matter
because it does not have discretionary voting authority, this is a "broker
non-vote" on that matter.
For Proposal 1, to approve the issuance of greater than 19.99% of our Common
Stock as of the date of such issuance, in connection with our private placement
of Private Placement Shares, Interest Shares, Agent's Shares, Investors'
Warrants to purchase Investors' Warrant Shares and Agent's Warrants to purchase
Agent's Warrant Shares, we require the affirmative vote of a majority of the
shares of Common Stock present or represented by proxy and entitled to vote on
the matter. Broker non-votes are not deemed to be present and represented and
are not entitled to vote, and therefore will have no effect on the outcome of
the vote on this proposal. Abstentions are treated as shares present or
represented and entitled to vote and have the same effect as a vote against
these proposals.
For Proposal 2, to approve a potential reverse stock split of our Common Stock,
and for Proposal 3, to approve an increase in the number of shares of our
authorized capital stock, we require the affirmative vote of holders of at least
a majority of the outstanding shares of our Common Stock. Abstentions and broker
non-votes, because they are not affirmative votes, will have the same effect as
votes against these proposals.
Forward Looking Statements
Statements contained in this Proxy Statement that are not based on historical
fact are "forward-looking statements" within the meaning of Section 21E of the
Securities Exchange Act of 1934, as amended. Forward-looking statements may be
identified by the use of forward-looking terminology such as "may," "will,"
"expect," "estimate," "anticipate," "continue," or similar terms, variations of
such terms or the negative of those terms. Such forward-looking statements
involve risks and uncertainties, including, but not limited to: (i) our limited
operating history; (ii) our reduced capital resources and need for additional
liquidity; (iii) our ability to fund our operating needs through available cash
reserves; (iv) our ability to raise additional equity and renegotiate
liabilities before our cash resources are fully depleted; (v) the impact on our
business from our receiving a "going concern" opinion from our independent
auditors; (vi) our ability to successfully implement our strategic alliance with
EarthLink; (vii) our dependence on EarthLink to provide billing, customer and
technical support to our subscribers; (viii) our ability to respond to the rapid
technological change of the wireless data industry and offer new services; (ix)
our dependence on wireless carrier networks; (x) our ability to respond to
increased competition in the wireless data industry; (xi) our ability to
integrate acquired businesses and technologies; (xii) our ability to leverage
strategic alliances to generate revenue growth; (xiii) our ability to increase
or maintain gross margins, profitability, liquidity and capital resources; (xiv)
our ability to manage our remaining operations; and (xv) difficulties inherent
in predicting the outcome of regulatory processes. As a result of such risks and
others expressed from time to time in our filings with the Securities and
Exchange Commission, our actual results could differ materially from the results
discussed in or implied by the forward-looking statements contained herein.
4
PROPOSAL 1
EQUITY FINANCING
References in this Proposal 1 to share amounts and per share prices do not take
into account the proposed potential reverse stock split described in Proposal 2
to this Proxy Statement. If the issuances contemplated by this Proposal 1 occur
following the reverse stock split, if any, all such share amounts and per share
prices shall be deemed adjusted to account for such reverse stock split.
General
We are seeking your approval of the issuance of shares of Common Stock, or
securities which are convertible into or exercisable for shares of Common Stock,
representing greater than 19.99% of our Common Stock outstanding as of the date
of such issuance, in connection with a contemplated private placement of our
securities. In this proxy statement, we refer to this private placement as the
"Financing".
On December 19, 2003, we entered into a series of agreements with multiple
investors to effect the Financing. Pursuant to these agreements and an agreement
with our placement agent:
o We agreed to issue 89,900,000 Private Placement Shares to the
investors at a purchase price of $0.15 per share, for a total cash
payment at closing of $13,485,000.
o We issued to the investors $1,015,000 aggregate principal amount of
promissory notes due March 19, 2004. At the private placement
closing, these notes will automatically convert, at a rate of $0.15
per share, into a total of 6,766,667 Private Placement Shares.
o We issued to the investors certain Investors' Warrants to purchase
1,353,333 Investors' Warrant Shares at an exercise price of $0.15
per share.
o At the private placement closing, we will be required to pay to the
investors interest on their notes from December 19, 2003 through the
date of closing. The notes accrue interest at a rate of 10% per
annum. The interest payments are to be in the form of Interest
Shares, issuable at a rate of one share for each $0.15 of accrued
interest. If the private placement occurs on March 10, 2004, we will
be required to issue a total of 154,130 Interest Shares.
o On December 19, 2003, we issued to our placement agent, Sunrise
Securities Corporation, and a designee of the placement agent,
Agent's Warrants to purchase an aggregate of 812,000 Agent's Warrant
Shares. At the private placement closing, we expect that will be
required to issue to our placement agent and its designees Agent's
Warrants to purchase an additional 9,413,179 Agent's Warrant Shares.
The exercise price of the Agent's Warrant is $0.15 per share. Of
these Agent's Warrants, Agent's Warrants to purchase 6,902,007
Agent's Warrants Shares will be immediately exercisable and Agent's
Warrants to purchase 3,323,172 Agent's Warrants Shares will not be
exercisable until eighteen months following to closing of the
private placement.
o At the private placement closing, we will be obligated to deliver to
the placement agent, at its option, either (i) a cash fee of
approximately $1.35 million, (ii) a number of shares of Common Stock
equal to 11% of the aggregate number of fully diluted and/or
converted shares of Common Stock that are purchased by the investors
in the private placement, or (iii) a combination of cash and stock.
Based on information provided by the placement agent, at the
closing, we expect to pay the placement agent approximately $713,731
in cash and to issue to designees of the placement agent
approximately 4,654,970 Agent's Shares.
o We are required to issue Additional Shares in connection with delays
in effecting the registration of the shares issuable in the private
placement. The maximum number of Additional Shares that we may be
required to issue is 12% of the total shares of Common Stock then
owned by each investor or which each investor then has the right to
acquire. Inasmuch as the closing of the private placement cannot
occur until March 10, 2004, the minimum number of Additional Shares
that we will be required to issue is 3% of the total shares of
Common Stock then owned by each investor or which each investor then
has the right to acquire.
5
See "Overview" for a percentage comparison of the shares of Common Stock which
we expect to issue in the Financing to the shares of Common Stock outstanding on
February 11, 2004.
Dilutive Impact
The issuance of the shares of Common Stock issuable pursuant to the Financing
will be dilutive to existing shareholders. Assuming that (i) the private
placement closing occurs on March 10, 2004, (ii) the placement agent receives
its fees in part in cash and in part by the issuance of 4,654,970 Agent's Shares
to the placement agent's designees and (iii) a total of 2,945,224 Additional
Shares are required to be issued, a holder of 100,000 shares of Common Stock on
February 11, 2004 will experience the share ownership and voting dilution set
forth in the first line of the table set forth below. Making the same
assumptions and then also assuming that all warrants issued to the investors and
6,902,007 warrants issued to the placement agent or its designees are
immediately exercised, a holder of 100,000 shares of Common Stock on February
11, 2004 will experience the share ownership and voting dilution set forth in
the second line of the table set forth below.
- ---------------------------------------- -------------------------------------- --------------------------------------
Assumption Percentage Ownership at 2/11/04 Percentage Ownership Upon
Consummation of the Private
Placement Closing
- ---------------------------------------- -------------------------------------- --------------------------------------
Excludes exercise of the warrants 0.18 0.062
- ---------------------------------------- -------------------------------------- --------------------------------------
Includes exercise of the warrants 0.18 0.059
- ---------------------------------------- -------------------------------------- --------------------------------------
As of September 30, 2003, our net tangible book value was ($597,000), or ($0.1)
per share of Common Stock. Net tangible book value per share represents the
amount of our total tangible assets reduced by the amount of our total
liabilities, divided by the number of shares of Common Stock outstanding. As of
September 30, 2003, our net tangible book value, as further adjusted for the
sale of 96,666,667 Private Placement Shares, the assumed issuance of 154,130
Interest Shares and the assumed issuance of 2,945,224 Additional Shares in
accordance with the terms described above, and after deducting estimated legal
fees paid and payable by GoAmerica to its counsel and counsel for the investors
in connection with the Financing, would have been $0.07 per share of Common
Stock. This represents an immediate increase of $0.08 per share to existing
stockholders and an immediate decrease of $0.08 per share to new investors from
a price of $0.15 per share payable in the Financing. Such dilution calculation
does not measure the dilutive impact applicable upon exercise of the Investors'
Warrants and the Agent's Warrants or the issuance of Additional Shares beyond
the assumed 2,945,224 Additional Shares or the consequences in the event that
the placement agent elects to receive its fees in Common Stock rather than in
cash.
The Warrants
The warrants to be issued to the investors and the warrants issued and to be
issued to the placement agent and its designees are or will be subject to
weighted-average anti-dilution adjustments in the event that GoAmerica
subsequently issues shares of Common Stock at a price less than the then
existing warrant exercise price, subject to certain customary exceptions set
forth in the warrants. By the term "weighted average anti-dilution adjustments",
we refer to an adjustment mechanism in which the effect of any subsequent
issuance at a price lower than the then existing price will result in an
adjustment only to the extent that the holder of the warrants has been
proportionately impacted by such issuance. The warrants issuable in connection
with the Financing are or will be exercisable for five years, provided that,
with respect to the warrants issued to the investors, if (i) the Common Stock
trades above $0.60 per share for five consecutive trading days and (ii) the
registration statement described below is effective, we may demand that these
warrants be exercised within a 30-day period and any such warrants not exercised
within such period will be void.
6
The Closings
The Financing consists of two separate closings. At the first closing, which
occurred on December 19, 2003, the investors purchased 10% Senior Secured
Convertible Promissory Notes, or "Notes", in an aggregate principal amount of
$1,015,000 and were issued Investors' Warrants to purchase a total of 1,353,333
shares of our Common Stock at an exercise price of $0.15 per share. The Notes
were purchased by the investors at their par value in proportional amounts to
their aggregate investment commitments in the Financing. The principal on the
Notes and accrued interest are due and payable 90 days following their issuance,
subject to extension for up to another 30 days upon the consent of GoAmerica and
the holders of a majority-in-interest of the Notes. At the second closing, which
will only occur if this Proposal 1 is approved, the Notes and all accrued
interest will automatically convert into 6,766,667 Private Placement Shares and
Interest Shares at a price of $0.15 per share. Payment of the Notes' principal
and interest is secured by a pledge of the stock of our Wynd Communications
subsidiary. In the event that this Proposal is not approved by our stockholders
and the private placement is not consummated, GoAmerica presently does not have
the funds necessary to repay the principal and interest that would be due upon
maturity of the Notes. In the event of a default under the Notes, the holders of
the Notes may seek to recover on the subsidiary stock pledge that we made, which
would likely have materially adverse consequences for GoAmerica.
At the second closing, the investors will purchase approximately 89,900,000
Private Placement Shares -- in addition to the shares of Common Stock issuable
upon the conversion of the Notes -- at a price of $0.15 per share. Further, at
the second closing, we will issue the above-mentioned Agent Warrants to purchase
8,990,000 shares of Common Stock at an exercise price of $0.15 per share to the
placement agent and its designees for the Financing, which are identical to the
Agent's Warrants to purchase 812,000 shares of Common Stock issued to the
placement agent at the first closing.
The investors consist of funds, other professional investors and private
investors. At the time that the Financing was negotiated, none of the investors
or the placement agent were affiliates of GoAmerica or our officers and
directors. To our knowledge, the only investor that is an affiliate of the
placement agent is Sunrise Equity Partners, L.P., which has agreed to purchase a
total of 6,000,000 Private Placement Shares. In addition, at the initial closing
of the Private Placement, Sunrise Equity Partners, L.P. was issued Investors'
Warrants to purchase 84,000 Investors' Warrants Shares. Assuming the private
placement closes of March 10, 2004, Sunrise Equity Partners, L.P. will also be
issued 9,567 Interest Shares and 182,807 Additional Shares.
Upon consummation of the private placement, we expect that Smithfield Fiduciary
LLC and Special Situations Fund III, L.P. will beneficially own more than five
percent of our outstanding common stock. Assuming that the private placement
closing occurs on March 10, 2004 and that the placement agent receives its fees
part in cash and in part by the issuance of 4,654,970 Agent's Shares to
designees of the placement agent, the following table shows, to GoAmerica's
knowledge, the beneficial ownership of our Common Stock by Smithfield Fiduciary
LLC and Special Situations Fund III, L.P, as of November 30, 2003 -- a date
prior to the first closing -- and as adjusted to give effect to the Financing.
All shares subject to warrants issued pursuant to the Financing are deemed to be
beneficially owned by the applicable stockholder, since such warrants are
immediately exercisable. As of November 30, 2003, there were 54,783,468 shares
of Common Stock outstanding.
- ---------------------------------------- -------------------------------------- --------------------------------------
Shareholder Shares of Common Stock Beneficially Shares of Common Stock Beneficially
Owned as of 11/30/03 Owned Upon Consummation of the
Second Closing
- ---------------------------------------- -------------------------------------- --------------------------------------
Smithfield Fiduciary LLC -- 13,456,122 shares, or 8.55% (1)
- ---------------------------------------- -------------------------------------- --------------------------------------
Special Situations Fund III, L.P. -- 20,921,246 shares, or 13.29% (2)
- ---------------------------------------- -------------------------------------- --------------------------------------
(1) Consists of 12,866,667 Private Placement Shares, 20,196 Interest Shares
177,333 Investors' Warrant Shares and 391,926 Additional Shares.
(2) Consists of 20,000,000 Private Placement Shares, 31,889 Interest Shares
280,000 Investors' Warrant Shares and 609,357 Additional Shares.
7
In connection with the Financing, we entered into a Registration Rights
Agreement that requires us to file, not later than February 27, 2004, a
registration statement covering the Common Stock sold in the Financing, shares
issued or issuable to certain of our creditors, pursuant to agreements executed
in advance of the first closing, in settlement of certain historical
liabilities, and shares underlying Investors' Warrants, Agent's Warrants, and
Notes, as applicable. In the event that the registration statement is not (a)
timely filed and/or (b) declared effective by the Securities and Exchange
Commission by April 27, 2004, then each investor will be entitled to receive
additional shares of Common Stock equal in value to 3% of the shares then owned
by such investor, or which the investor then has the right to acquire, for each
30-day period or pro rata portion of such period following the date of the
applicable deadline until the applicable condition is met. Such Additional
Shares will be valued at their aggregate market price as of the date of their
issuance. The Additional Shares issuable by us for failure to meet the
registration requirements will not exceed 12% of the total shares then owned by
each investor or which each investor then has the right to acquire. Since we
will not be able to file the registration statement until after we close the
private placement, we know that we will be required to issue at least 3% of the
total shares then owned by each investor or which each investor then has the
right to acquire
The issuance of Common Stock to purchasers in the Financing will be made in
reliance upon an available exemption from registration under the Securities Act
of 1933, by reason of Section 4(2) thereof or other appropriate exemptions, to
persons who are "accredited investors," as defined in Regulation D promulgated
under the Securities Act and who meet other suitability requirements established
for the Financing.
The Placement Agent
The fees payable to the placement agent for the Financing, assuming shareholder
approval of Proposal 1 and the consummation of the second closing, include (i)
the Agent's Warrants and (ii) at the placement agent's option, either (a)
approximately $1.35 million in cash, (b) Agent's Shares equal to 11% of the
aggregate number of fully diluted and/or converted shares of Common Stock that
are purchased by the investors in the Financing, valued at $0.15 per share, or
(c) a combination of cash and stock. Based on information provided by the
placement agent, at the closing, we expect to pay the placement agent
approximately $713,731 in cash and to issue to designees of the placement agent
approximately 4,654,970 Agent's Shares. In the event that the second closing
does not occur, the placement agent's fee shall be the pro rated portion of the
above referenced fee based on the proceeds received by us, as well as the
warrants issued in the first closing that the placement agent has already
received.
As described above, Sunrise Equity Partners, L.P., one of the investors in the
private placement, may be deemed an affiliate of the placement agent. Assuming
that the private placement closes on March 10, 2004, Sunrise Equity Partners,
L.P. will be issued (i) 6,000,000 shares of our Common Stock, (ii) warrants to
purchase 84,000 shares of our Common Stock (iii) an additional 9,567 shares of
our Common Stock in lieu of interest on its portion of the bridge loan we
received in December 2003 and (iv) an additional 182,807 shares of our Common
Stock due our inability to meet the registration statement filing deadline.
Sunrise Equity Partners, L.P. will participate in the private placement on the
same financial terms as all other investors. As described above, designees of
the placement agent will receive 4,654,970 shares of our Common Stock as partial
payment for the placement agent's services in the private placement. In
addition, the placement agent and its designees will be issued warrants to
purchase an aggregate of 9,413,179 shares of our Common Stock. Of those warrants
to purchase 9,413,179 shares, warrants to purchase 6,090,007 shares of our
common stock will be immediately exercisable and warrants to purchase 3,323,172
shares of our common stock will not be exercisable until eighteen months after
of the closing of the private placement.
The placement agent has advised us that a portion of the Agent's Shares and
Agent's Warrants it is entitled to receive for its services as placement agent
will be issued to persons who are employees of the placement agent and may be
deemed to control Sunrise Equity Partners, L.P., an investor in the offering
which may be deemed an affiliate of the placement agent. Specifically, based on
information provided by the placement agent, we believe that (i) 876,513 of the
Agent's Shares and (ii) 3,931,527 of the Agent's Warrants will be issued to
persons or entities that control Sunrise Equity Partners, L.P., in that two of
such persons, including the president of Sunrise, are managing members of the
general partner of Sunrise Equity Partners, L.P. and one such person - the
president of Sunrise -- is a managing member of Sunrise Equity Partners, L.P. Of
the 3,931,527 Agent's Warrants to be issued to such persons and entities,
Agent's Warrants to purchase 608,355 Agent's Warrants Shares will be immediately
exercisable and Agent's Warrants to purchase 3,323,172 Agent's Warrants Shares
will not be exercisable until eighteen months after the closing of the private
placement.
8
Reason for the Financing
The principal purpose of the Financing is to obtain funds needed to support our
current business plan and to continue our operations. Over the past twelve
months, our available cash has decreased substantially. We announced in November
2003 that our available cash resources would be sufficient to fund our operating
needs only through January 2004. For us to remain in business beyond such
period, we will require additional cash. At this time, we do not have any bank
credit facility or other working capital credit line under which we may borrow
funds for working capital or other general corporate purposes. As a result of
these and related considerations, our independent auditors issued a going
concern opinion in connection with our 2002 financial statements. Although we
received funds at the first closing, those funds, after payment of deal-related
expenses, are not expected to provide sufficient liquidity to extend our ability
to remain in business substantially beyond the second closing date for the
Financing.
As a condition for the first closing of the Financing, we were required to
reduce our historical and contingent liabilities with respect to our largest
creditors (none of which are affiliates of GoAmerica), with cash and/or
GoAmerica securities, to a maximum aggregate cash obligation of $1.5 million. In
order to meet that requirement, we entered into agreements with a number of our
creditors as described below.
On November 14, 2003, GoAmerica and our GoAmerica Communications Corporation
subsidiary entered into two agreements with Stellar Continental LLC, the lessor
of our corporate headquarters at 433 Hackensack Avenue and office at 401
Hackensack Avenue, both located in Hackensack, New Jersey. The agreements
consisted of a Surrender Agreement and a new Lease Agreement as well as a Common
Stock purchase warrant. These agreements enabled us and our subsidiary to cure
all prior defaults under the previous lease, which we refer to below as the
"Original Lease", and terminated all parties' rights and obligations under the
Original Lease, in exchange for (i) the lessor's right to retain $555,755
previously drawn on a letter of credit from our GoAmerica Communications
Corporation subsidiary's letter of credit that secured the Original Lease, (ii)
our issuing a warrant to the lessor that allows it to acquire up to 1,000,000
shares of Common Stock at an exercise price of $0.46 per share at any time prior
to the close of business on November 13, 2008, and (iii) the execution of a new
lease, between our GoAmerica Communications Corporation subsidiary and Stellar
for approximately 4,130 square feet of office space at 433 Hackensack Avenue,
Hackensack, New Jersey, on a month-to-month basis, at Stellar's option, for up
to 24 months. These agreements relieved us of approximately $8.1 million of
future minimum payments on operating lease obligations. The new lease provides
us with significantly reduced monthly rent expenses for our corporate
headquarters. These agreements also require us to rent from Stellar any new
office space in New Jersey that we require during the term of the new lease, on
terms no less favorable than the new lease.
On December 23, 2003, we entered into a settlement agreement with Eastern
Computer Exchange, Inc. with respect to certain payment obligations pursuant to
two equipment leases by agreeing to pay Eastern Computer $350,000 upon closing
the second closing of the Financing in exchange for a full release of GoAmerica
and our affiliates. Eastern Computer had filed suit against us on July 2, 2003
seeking monetary amounts of up to approximately $800,000 and dismissed the
action without prejudice in October 2003 pending settlement discussions. In the
event that the Financing does not close and we do not secure alternate financing
by March 22, 2004, GoAmerica has acknowledged and agreed to the entry of a
judgment against GoAmerica for the full amount of the original debt pursuant to
the litigation.
We entered into settlements with wireless carriers Cingular, Motient, Verizon
Wireless and Metricom, which reduced our combined liability to them from
approximately $3.3 million to $490,000 in cash and an aggregate of 775,000
shares of our Common Stock. We also entered into settlements with two former
outsource service providers, Precision Response Corporation and EDS, reducing
our combined liability to them of approximately $535,000 by our agreement to
make a series of payments equaling $125,000 and our transfer of title to EDS of
certain inventory that is not essential to our continuing business.
As of September 30, 2003, we had only $842,000 in cash and cash equivalents and
a working capital deficit of $2.7 million, as compared with $10.2 million in
cash and cash equivalents and $5.0 million of working capital as of September
30, 2002. While we received $1.0 million in cash at the first closing, a
significant portion of that cash was promptly utilized. We incurred deal-related
expenses attributable to the first closing of approximately $215,000. As of
January 22, 2004, our cash and cash equivalents amounted to $475,000.
9
On December 19, 2003, we announced plans for a strategic re-focusing premised on
the consummation of the private placement. Our strategy is centered on the
pursuit of three priorities, centered on our Wynd Communications subsidiary: (a)
growth of Wynd Communications' core wireless services business; (b) development
and marketing of new communications services, including branded Internet
protocol and video relay services; and (c) streamlined operations to enable
superior customer support. We expect that we will require substantially all of
the net proceeds from the private placement in order to implement this strategy.
We expect that the net proceeds we will receive from the private placement will
be approximately $12,000,000, after deducting the $713,731 cash payment we will
make to the placement agent and offering expense such as professional fees.
Approximately $300,000 of the net proceeds will be used to repay existing
indebtedness, consisting of $120,000 to Verizon Wireless, $100,000 to Metricom
and $80,000 to Motient. In addition, $600,000 of the net proceeds will support a
letter of credit in favor of Cingular. We anticipate that the remainder of the
net proceeds will be used (i) to grow the business of our Wynd Communications
subsidiary, (ii) for development and marketing of new services offerings and
(iii) for working capital and general corporate purposes. We expect that such
net proceeds will support GoAmerica's operation for at least twelve months after
the closing of the private placement. This forward looking statement is subject
to numerous risks and uncertainties, including uncertainties associated with the
implementation of new corporate initiatives which could require more new capital
than we have anticipated.
Necessity of Stockholder Approval
Marketplace Rule 4350(i)(1)(D)(ii) of the NASD requires each company listed on
the Nasdaq SmallCap Market to obtain stockholder approval prior to the issuance
by the company, in a private financing, of common stock, or securities
convertible into or exercisable for common stock, equal to 20% or more of the
common stock or 20% or more of the voting power outstanding before the issuance
at a price less than the greater of book or market value of the stock. We refer
to this rule as the "20% Rule". The $0.15 issuance price in the Financing was
less than our market price on December 19, 2003. At the close of business on
December 18, 2003, our closing sale price was $0.47 on the Nasdaq Stock Market's
SmallCap Market.
Assuming that the private placement is consummated on March 10, 2004, that the
placement agent is paid as described above and that the minimum amount of
Additional Shares are issued, the following shares are issuable at, or as a
result of, the second closing:
o 96,666,667 Private Placement Shares
o 154,130 Interest Shares
o 4,654,970 Agent's Shares
o 1,353,333 shares issuable upon the exercise of the Investors'
Warrants;
o 2,945,224 Additional Shares; and
o 9,413,179 shares issuable upon the exercise of the Agent's Warrant
--including 3,323,172 Agent's Warrants that will not be exercisable
until eighteen months after the second closing of the private
placement,
for a total of 115,187,503 shares, excluding any other Additional Shares that
may be issuable as a result of further delays in the registration process. Such
115,187,503 shares represent approximately 207%, or well in excess of 20%, of
our currently outstanding Common Stock, based on 55,696,868 shares outstanding
as of February 11, 2004. Therefore, we must obtain stockholder approval for the
issuance of such shares to avoid violating the 20% Rule.
In addition, Marketplace Rule 4350(i)(1)(B) of the NASD requires that companies
listed on the Nasdaq SmallCap Market obtain stockholder approval prior to the
issuance of securities that could result in the change of control of the issuer.
We refer to this rule as the "Change of Control Rule". The NASD, however, does
not define when a change of control of an issuer may be deemed to have occurred.
We believe that the securities issued and issuable in connection with the
Financing will be deemed by Nasdaq to result in a change of control of GoAmerica
for purposes of the Change of Control Rule, even though the Financing may not
constitute an actual change of control for corporate governance, contract or
statutory purposes. We are seeking stockholder approval to ensure compliance
with the Change of Control Rule.
10
We are, therefore, now asking our stockholders to approve the issuance by us of
the Private Placement Shares, the Interest Shares, the Investors' Warrants, the
Additional Shares, the Agent's Warrants and the Agent's Shares, if applicable,
representing an aggregate of approximately 124,835,175 shares, in connection
with the Financing. The calculation of such 124,835,175 share figure assumes
that the private placement closing occurs on March 10, 2004, that the placement
agent elects to receive its compensation in part in cash and in part by the
issuance of 4,654,970 Agent's Shares to designees of the placement agent, and
that we ultimately are obligated to issue the maximum amount of Additional
Shares. The shares issuable consist of:
o 96,666,667 shares issuable directly in the private placement;
o 1,353,333 shares underlying the warrants issued to investors
in the private placement;
o 154,130 shares issuable to the investors in lieu of the
payment of cash interest on the Notes;
o 11,780,896 Additional Shares;
o 10,225,179 shares underlying the Agent's Warrants -- including
3,323,172 Agent's Warrants that will not be exercisable until
eighteen months after the second closing of the private
placement; and
o 4,654,970 shares representing the Agent's Shares.
Voting Agreement
Aaron Dobrinsky, our Executive Chairman, and Joseph Korb, our Executive Vice
Chairman, who, collectively, currently hold Common Stock representing
approximately 8.1% of our outstanding Common Stock, have agreed to vote all
shares of Common Stock over which they exercise voting power as of the close of
business on February 11, 2004 in favor of approval of this proposal.
Required Vote
To be approved by the stockholders, the proposal to approve the issuance of the
securities in connection with the Financing must receive the affirmative votes
of a majority of the votes cast, in person or by proxy, at the Meeting.
Abstentions are treated as shares present or represented and entitled to vote at
the Meeting and will have the same effect as a vote against this proposal.
Broker non-votes are not deemed to be present and represented and are not
entitled to vote, and therefore will have no effect on the outcome of this
proposal.
Recommendation
The Board of Directors believes that it is in GoAmerica's best interests
that the stockholders authorize such issuance.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE
"FOR" PROPOSAL 1 TO APPROVE THE ISSUANCE OF THE SHARES OF OUR COMMON STOCK
ISSUABLE IN CONNECTION WITH THE FINANCING, INCLUDING SHARES TO BE ISSUED UPON
EXERCISE OF ANY WARRANTS ISSUED IN CONNECTION WITH THE FINANCING.
11
PROPOSAL 2
PROPOSAL TO AMEND GOAMERICA'S AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
TO EFFECT A REVERSE STOCK SPLIT AT ONE OF FIVE RATIOS, IF REQUIRED TO MAINTAIN
NASDAQ LISTING.
General
Our Board of Directors, which we refer to in this proxy statement as the
"Board", has considered, deemed advisable, and adopted a resolution approving,
and recommends to the stockholders for their approval, a series of proposed
amendments to our restated certificate of incorporation to authorize the Board,
in its discretion based on the factors described below, to effect a reverse
stock split. The purpose of any such reverse stock split would be to increase
the per-share market price of our Common Stock in order to maintain its listing
on The Nasdaq Stock Market's SmallCap Market and for other purposes as described
below in this proxy statement. Under these proposed amendments, each outstanding
4, 6, 8, 10 or 12 shares of our Common Stock would be combined, converted and
changed into one share of Common Stock with the effectiveness of one such
amendment and the abandonment of the other amendments, or the abandonment of all
such amendments, to be determined by the Board in its discretion following the
Meeting. In this proxy statement, we refer to all of the possible reverse stock
splits as the "Reverse Stock Splits" and we refer to the Reverse Stock Split
that is actually effected, if applicable, as the "Effective Reverse Stock
Split".
If approved by our stockholders, the Board would have discretion to implement
the Effective Reverse Stock Split for one time only, prior to our 2004 annual
meeting of stockholders, in any of the following ratios: 1:4, 1:6, 1:8, 1:10 or
1:12. The Board believes that stockholder approval of these various ratios, as
opposed to approval of a single specified exchange ratio, provides the Board
with sufficient flexibility to achieve the purposes of the Effective Reverse
Stock Split and, therefore, is in the best interests of GoAmerica and its
stockholders. The actual timing for implementation of the Effective Reverse
Stock Split would be determined by the Board based upon its evaluation as to
when such action would be most advantageous to GoAmerica and its stockholders.
Furthermore, notwithstanding stockholder approval, the Board also would have the
discretion to abandon the Reverse Stock Splits.
If the Board elects to implement the Effective Reverse Stock Split, the Board
will set the exchange ratio using one of the ratios approved by the
stockholders. The Board would base such a determination upon the then current
trading price of our Common Stock, among other things. If this proposal is not
approved by the stockholders, GoAmerica may face delisting from the Nasdaq
SmallCap Market, as more fully described below under the heading "Purpose of the
Effective Reverse Split".
The text of the form of amendment to our restated certificate of incorporation
that would be filed with the Secretary of State of the State of Delaware to
effect the Effective Reverse Stock Split is set forth in Appendix B to this
proxy statement; provided, however, that such text is subject to amendment to
include such changes as may be required by the office of the Secretary of State
of the State of Delaware and as the Board deems necessary and advisable to
effect the Effective Reverse Stock Split. If the Reverse Stock Splits are
approved by the stockholders and following such approval the Board determines
that an Effective Reverse Stock Split is in the best interest of GoAmerica and
its stockholders, our restated certificate of incorporation would be amended
accordingly.
Purpose of the Effective Reverse Stock Split
We believe that there are two reasons for the Effective Reverse Split: to
maintain our listing on the SmallCap Market and to increase investor interest in
our company. Nasdaq Marketplace Rule 4450(a)(5) requires that, as a condition to
the continued listing of a company's securities on the Nasdaq SmallCap Market,
the company must satisfy certain requirements, including maintaining a minimum
bid price equal to or greater than $1.00 per share. We refer to this regulatory
requirement as the "Minimum Bid Price Requirement". A company's failure to meet
the Minimum Bid Price Requirement for 30 consecutive trading days normally
results in delisting proceedings, unless the company can demonstrate compliance
with the Minimum Bid Price Requirement for ten consecutive trading days during a
90 calendar day grace period that immediately follows the initial 30 trading day
period of non-compliance or unless Nasdaq grants the company one or more
additional grace periods to regain compliance, during which time the company
must continue to meet all other Nasdaq listing requirements.
12
Our Common Stock was listed on the Nasdaq National Market from the date of our
initial public offering in April 2000 until August 28, 2002, at which point our
Common Stock became listed on the Nasdaq SmallCap Market. Due to the bid price
of our Common Stock closing at less than $1.00 per share during the 30
consecutive trading days prior to May 31, 2002 as well as throughout
substantially all of the initial grace period provided by Nasdaq, GoAmerica
elected to move the listing of its Common Stock to the Nasdaq SmallCap Market
and receive the balance of a longer grace period, through November 27, 2002,
that was available on that market.
On November 27, 2002, Nasdaq granted us an additional grace period, until May
27, 2003, to regain compliance with the Minimum Bid Price Requirement; however,
our share price did not close at a minimum of $1.00 per share for 10 consecutive
trading days prior to the end of that grace period. On May 28, 2003, Nasdaq
granted us a 90 day grace period, until August 25, 2003, due to the fact that we
met the other initial listing criteria for the Nasdaq SmallCap Market under
Marketplace Rule 4310(c)(2)(A). Following subsequent discussions with Nasdaq, on
October 21, 2003, we were granted a temporary exception to the Minimum Bid Price
Requirement through at least December 1, 2003 due to, among other things, the
fact that we were in compliance with all other listing requirements and to allow
for further developments in the Securities and Exchange Commission's rule-making
process with respect to a Nasdaq proposal -- which we refer to as the "Nasdaq
Proposal" -- to provide Nasdaq with more flexibility as to its minimum bid price
requirements and grace periods for regaining compliance. On December 12, 2003,
due to the fact that we remained in compliance with all other listing
requirements, and to allow for further developments in the Securities and
Exchange Commission's rule-making process with respect to the Nasdaq Proposal,
Nasdaq extended our temporary exception through January 30, 2004. On December
23, 2003, the Nasdaq Proposal was approved. As a result, we were granted an
additional extension through May 31, 2004. There can be no assurance that our
grace period will extend beyond May 31, 2004.
Our Board believes that a delisting could adversely affect our ability to
attract the interest of investors and to maximize shareholder value. In
addition, the Board believes that the delisting may result in decreased
liquidity for the holders of outstanding shares of our Common Stock and the
holders of warrants exercisable for shares of our Common Stock. We believe that,
if the Reverse Stock Splits are approved, and the Effective Reverse Stock Split
is effected, there is a greater likelihood that the minimum bid price of our
Common Stock will be maintained at a level over $1.00 per share after the
initial increase in share price above $1.00 upon implementing the Effective
Stock Split.
A sustained higher per share price of our Common Stock, which we expect as a
result of the Effective Reverse Stock Split, may heighten the interest of the
financial community in our company and broaden the pool of investors that may
consider investing in our company, potentially increasing the trading volume and
liquidity of our Common Stock. As a matter of policy, many institutional
investors are prohibited from purchasing stocks below certain minimum price
levels. For the same reason, brokers often discourage their customers from
purchasing such stocks. To the extent that the price per share of our Common
Stock remains at a higher per share price as a result of the Effective Reverse
Stock Split, some of these concerns may be ameliorated. However, many investors
will not invest in securities that have a trading price below $5.00 per share,
and there can be no assurance that the Effective Reverse Stock Split, if
approved and effected, will increase the per share price of our Common Stock
above that level.
If our Common Stock were delisted from Nasdaq, this could adversely affect the
liquidity of our Common Stock and our ability to raise capital. In the event of
delisting, our Common Stock would probably be traded in the over-the-counter
market maintained by the NASD Electronic Bulletin Board and the spread between
the bid price and asked price of the shares of our Common Stock would likely be
greater than at present. Stockholders may also experience a greater degree of
difficulty in obtaining accurate, timely information concerning pricing and
trading volume and in executing trades of our Common Stock. In addition, if our
Common Stock were to be delisted from trading on Nasdaq and the per share price
of our Common Stock were to remain below $5.00 per share, trading in our Common
Stock would be subject to the requirements of certain rules promulgated under
the Securities Exchange Act of 1934, as amended, which require additional
disclosure by broker-dealers in connection with any trades involving a stock
defined as a "penny stock". The additional burdens imposed upon broker-dealers
by such requirements could discourage broker-dealers from executing transactions
in our Common Stock, which could limit the market liquidity of our Common Stock
and the ability of investors to trade our Common Stock. There is no guarantee
that the Effective Reverse Stock Split will result in compliance with Nasdaq's
Minimum Bid Price Requirement or that we will continue to meet all of the other
requirements for continued listing. Consequently, our securities may be delisted
even after the Effective Reverse Stock Split.
13
Possibility that the Effective Reverse Stock Split Will Fail to Achieve the
Desired Effects; Other Possible Consequences
Stockholders should note that the effect of the Effective Reverse Stock Split
upon the market price for our Common Stock cannot be accurately predicted. In
particular, we cannot assure you that prices for shares of our Common Stock
after the Effective Reverse Stock Split will be four, six, eight, ten or twelve
times, as applicable, the prices for shares of our Common Stock immediately
prior to the Effective Reverse Stock Split. Furthermore, we cannot assure you
that the market price of our Common Stock immediately after the Effective
Reverse Stock Split will be maintained for any period of time. Even if an
increased per-share price can be maintained, the Effective Reverse Stock Split
may not achieve the desired results that have been outlined above. Moreover,
because some investors may view the Effective Reverse Stock Split negatively, we
cannot assure you that the Effective Reverse Stock Split will not adversely
impact the market price of our Common Stock or, alternatively, that the market
price following the Effective Reverse Stock Split will either exceed or remain
in excess of the current market price.
While we expect the Effective Reverse Stock Split to be sufficient to prevent
Nasdaq from delisting our Common Stock, it is possible that, even if the
Effective Reverse Stock Split results in a bid price for our Common Stock that
exceeds $1.00 per share, we may not be able to continue to satisfy the
additional criteria for continued listing of our Common Stock on the Nasdaq
SmallCap Market. These criteria include that:
o we have (i) stockholders' equity of at least $2,500,000, or
(ii) $35,000,000 market value of listed securities or (iii)
$500,000 of net income from continuing operations for the most
recently completed fiscal year, or two of the three most
recently completed fiscal years;
o the market value of the public float of our Common Stock be at
least $1,000,000; the term "public float" is defined under
Nasdaq's rules as the shares held by persons other than
officers, directors and beneficial owners of greater than 10%
of our total outstanding shares;
o there be at least 300 round lot holders, which are defined as
persons who own at least 100 shares of our Common Stock;
o there be at least two market makers for our Common Stock; and
o we comply with certain corporate governance requirements.
We believe that we satisfy all of these other maintenance criteria as of the
mailing date of these proxy materials. However, we cannot assure you that we
will be successful in continuing to meet all requisite maintenance criteria.
If the Effective Reverse Stock Split is implemented, some stockholders may
consequently own less than 100 shares of our Common Stock. A purchase or sale of
less than 100 shares, known as an "odd lot" transaction, may result in
incrementally higher trading costs through certain brokers, particularly "full
service" brokers. Therefore, those stockholders who own less than 100 shares
following the Effective Reverse Stock Split may be required to pay higher
transaction costs if they sell their shares of our Common Stock.
We believe that the Effective Reverse Stock Split may result in greater
liquidity for our stockholders. However, it is also possible that such liquidity
could be adversely affected by the reduced number of shares outstanding after
the Effective Reverse Stock Split.
14
Board Discretion to Implement Effective Reverse Stock Split
If the Reverse Stock Splits are approved by our stockholders at the Meeting, the
Effective Reverse Stock Split will be effected, if at all, only upon a
determination by the Board that one of the Reverse Stock Splits, with an
exchange ratio determined by the Board as described above, is in the best
interests of GoAmerica and its stockholders. If any such determination is made,
such determination shall be made prior to our 2004 annual meeting of
stockholders and be based upon various factors, including meeting and responding
to changes in Nasdaq's listing requirements for the SmallCap Market, GoAmerica's
growth, existing and expected marketability and liquidity of our Common Stock,
and prevailing market conditions. Notwithstanding approval of the Reverse Stock
Splits by the stockholders, the Board may, in its sole discretion, abandon all
of the proposed amendments and determine prior to the effectiveness of any
filing with the Delaware Secretary of State not to effect any of the Reverse
Stock Splits, as permitted under Section 242(c) of the Delaware General
Corporation Law.
Effect of the Effective Reverse Stock Split on Voting Rights and Certain other
Matters
Our Common Stock is currently registered under Section 12(g) of the Exchange Act
and we are subject to the periodic reporting and other requirements of the
Exchange Act. The Effective Reverse Stock Split would not affect the
registration of our Common Stock or our reporting obligations under the Exchange
Act.
Proportionate voting rights and other rights of the holders of our Common Stock
would not be affected by the Effective Reverse Stock Split, other than as a
result of the payment of cash in lieu of fractional shares as described below.
For example, subject to the treatment of fractional shares, a holder of 2% of
the voting power of the outstanding shares of our Common Stock immediately prior
to the effective time of the Effective Reverse Stock Split would continue to
hold 2% of the voting power of the outstanding shares of our Common Stock after
the Effective Reverse Stock Split. Although the Effective Reverse Stock Split
would not affect the rights of stockholders or any stockholder's proportionate
equity interest in GoAmerica other than with respect to the treatment of
fractional shares, the number of authorized shares of our Common Stock would not
be reduced and would increase significantly the ability of the Board to issue
such authorized and unissued shares without further stockholder action. The
number of stockholders of record would not be affected by the Effective Reverse
Stock Split, except to the extent that any stockholder holds only a fractional
share interest and receives cash for such interest after the Effective Reverse
Stock Split.
Effect of the Effective Reverse Stock Split on the Authorized but Unissued
Shares of Our Stock
The Effective Reverse Stock Split would affect all of our issued and outstanding
shares of Common Stock but would not affect the number of shares of Common Stock
that we are authorized to issue.. Upon the effectiveness of the Effective
Reverse Stock Split, the number of authorized shares of our Common Stock that
are not issued or outstanding would increase due to the reduction in the number
of shares of our Common Stock issued and outstanding based on the reverse stock
split ratio selected by the Board. As of February 11, 2004, we had 200,000,000
shares of authorized Common Stock and 55,696,868 shares of Common Stock issued
and outstanding. As of February 11, 2004, we will continue to have 4,351,943
authorized shares of preferred stock but no shares of preferred stock issued and
outstanding.
The number of authorized but unissued shares of our Common Stock effectively
will be increased significantly by the Effective Reverse Stock Split. We have
set forth two tables below which illustrate the effect of the proposed ratios.
Table I below assumes that neither Proposal 1 nor Proposal 3 are adopted or
implemented and illustrates the effect, as of February 11, 2004, of each of the
proposed ratios, and no Effective Reverse Stock Split, on our (i) shares of
Common Stock outstanding, (ii) authorized shares of Common Stock which are
reserved for issuance pursuant to options, warrants, contractual commitments or
other arrangements that are independent of the Financing, and (iii) our shares
of Common Stock which are neither outstanding nor reserved for issuance and are
therefore available for issuance. The table does not take into account
fractional shares.
Table II below assumes that all of the Proposals are adopted and implemented and
illustrates the effect, as of February 11, 2004, of each of the proposed ratios,
and no Effective Reverse Stock Split, on our (i) shares of Common Stock
outstanding following the closing of the Financing, assuming that the Financing
closes on March 10, 2004, designees of the placement agent receive 4,654,970
Agent's Shares as partial compensation for the placement agent's services and
that we are obligated to issue the maximum number of Additional Shares, (ii)
authorized shares of Common Stock which are reserved for issuance pursuant to
options, warrants, contractual commitments or other arrangements, including
those reserved for issuance in connection with securities issued in the
Financing, and (iii) our shares of Common Stock which are neither outstanding
nor reserved for issuance and are therefore available for issuance. The table
does not take into account fractional shares.
15
Table I
- ------------------------- ---------------------------- ----------------------------- --------------------------------
(i) (ii) (iii)
Shares of Common Stock Shares of Common Stock Authorized Shares of
Reverse Split Ratio Outstanding Reserved for Issuance Common Stock
Available for Issuance
- ------------------------- ---------------------------- ----------------------------- --------------------------------
No Reverse Split 55,696,860 18,257,458 126,045,674
- ------------------------- ---------------------------- ----------------------------- --------------------------------
1:4 13,924,217 4,564,364 181,511,418
- ------------------------- ---------------------------- ----------------------------- --------------------------------
1:6 9,282,811 3,042,909 187,674,279
- ------------------------- ---------------------------- ----------------------------- --------------------------------
1:8 6,962,108 2,282,182 190,755,709
- ------------------------- ---------------------------- ----------------------------- --------------------------------
1:10 5,569,686 1,825,745 192,604,567
- ------------------------- ---------------------------- ----------------------------- --------------------------------
1:12 4,641,405 1,521,454 193,837,139
- ------------------------- ---------------------------- ----------------------------- --------------------------------
Table II
- ------------------------- ---------------------------- ----------------------------- --------------------------------
(i) (ii) (iii)
Shares of Common Stock Shares of Common Stock Authorized Shares of
Reverse Split Ratio Outstanding Reserved for Issuance Common Stock
Available for Issuance
- ------------------------- ---------------------------- ----------------------------- --------------------------------
No Reverse Split 168,953,530 27,670,637 153,375,832
- ------------------------- ---------------------------- ----------------------------- --------------------------------
1:4 42,238,382 6,917,659 300,843,958
- ------------------------- ---------------------------- ----------------------------- --------------------------------
1:6 28,158,921 4,611,772 317,229,305
- ------------------------- ---------------------------- ----------------------------- --------------------------------
1:8 21,119,191 3,458,829 325,421,979
- ------------------------- ---------------------------- ----------------------------- --------------------------------
1:10 16,895,353 2,767,063 330,337,583
- ------------------------- ---------------------------- ----------------------------- --------------------------------
1:12 14,079,460 2,305,886 333,614,652
- ------------------------- ---------------------------- ----------------------------- --------------------------------
The issuance in the future of additional authorized shares may have the effect
of diluting the earnings per share and book value per share, as well as the
stock ownership and voting rights, of the currently outstanding shares of Common
Stock. In addition, the effective increase in the number of authorized, but
unissued, shares of our Common Stock may be construed as having an anti-takeover
effect. Although we are not proposing the Reverse Stock Splits for this purpose,
we could, subject to the Board's fiduciary duties and applicable law, issue such
additional authorized shares to purchasers who might oppose a hostile takeover
bid or any efforts to amend or repeal certain provisions of our restated
certificate of incorporation or bylaws. Such a use of these additional
authorized shares could render more difficult, or discourage, an attempt to
acquire control of us through a transaction opposed by the Board.
Effect of the Effective Reverse Stock Split on Stock Options, Warrants and Par
Value
The Effective Reverse Stock Split would reduce the number of shares of our
Common Stock available for issuance under our stock option plans in proportion
to the exchange ratio of the Effective Reverse Stock Split. The total number of
shares of Common Stock currently authorized for issuance but unissued at
February 11, 2004 under these plans is approximately 4,659,789, prior to giving
effect to the Effective Reverse Stock Split.
We have outstanding certain stock options and warrants to purchase shares of
Common Stock. Under the terms of the outstanding stock options and warrants, the
Effective Reverse Stock Split will effect a reduction in the number of shares of
Common Stock issuable upon exercise of such stock options and warrants in
proportion to the exchange ratio of the Effective Reverse Stock Split and will
effect a proportionate increase in the exercise price of such outstanding stock
options and warrants.
16
Holders of our Common Stock who would otherwise receive a fractional share of
Common Stock pursuant to the Effective Reverse Stock Split will receive cash in
lieu of the fractional share as explained more fully below.
The par value of our Common Stock would remain at $0.01 per share following the
effective time of the Effective Reverse Stock Split. This would have the effect
of reducing the aggregate par value of our outstanding shares.
Effective Date
If the proposed Reverse Stock Splits are approved at the Meeting and the Board
elects to proceed with the Effective Reserve Stock Split, the Effective Reverse
Stock Split would become effective as of 5:00 p.m. Eastern time on the date of
filing of the applicable certificate of amendment to our restated certificate of
incorporation with the office of the Secretary of State of the State of
Delaware. We refer to this time and date as the "Effective Date". Except as
explained below with respect to fractional shares, on the Effective Date, shares
of Common Stock issued and outstanding immediately prior thereto will be,
automatically and without any action on the part of the stockholders, combined,
converted and changed into new shares of Common Stock in accordance with the
Effective Reverse Stock Split ratio determined by the Board within the limits
set forth in this proposal.
Exchange of Stock Certificates
Shortly after the Effective Date, each holder of an outstanding certificate
theretofore representing shares of Common Stock will receive from our Exchange
Agent for the Effective Reverse Stock Split, instructions for the surrender of
such certificate to the Exchange Agent. Such instructions will include a form of
transmittal letter to be completed and returned to the Exchange Agent. As soon
as practicable after the surrender to the Exchange Agent of any certificate that
prior to the Effective Reverse Stock Split represented shares of Common Stock,
together with a duly executed transmittal letter and any other documents the
Exchange Agent may specify, the Exchange Agent shall deliver to the person in
whose name such certificate had been issued certificates registered in the name
of such person representing the number of full shares of Common Stock into which
the shares of Common Stock previously represented by the surrendered certificate
shall have been reclassified and a check for any amounts to be paid in cash in
lieu of any fractional share. Until surrendered as contemplated herein, each
certificate that immediately prior to the Effective Reverse Stock Split
represented any shares of Common Stock shall be deemed at and after the
Effective Date to represent the number of full shares of Common Stock
contemplated by the preceding sentence. Each certificate representing shares of
Common Stock issued in connection with the Effective Reverse Stock Split will
continue to bear any legends restricting the transfer of such shares that were
borne by the surrendered certificates representing the shares of Common Stock.
No service charges, brokerage commissions or transfer taxes shall be payable by
any holder of any certificate that prior to the Effective Date represented any
shares of Common Stock, except that if any certificates of Common Stock are to
be issued in a name other than that in which the certificates for shares of
Common Stock surrendered are registered, it shall be a condition of such
issuance that:
o The person requesting such issuance pay to us any transfer
taxes payable by reason of such issuance or any prior transfer
of such certificate, or establish to our satisfaction that
such taxes have been paid or are not payable;
o Such transfer complies with all applicable federal and state
securities laws; and
o Such surrendered certificate be properly endorsed and
otherwise be in proper form for transfer.
No Appraisal Rights
Under Delaware law, our stockholders would not be entitled to dissenter's or
appraisal rights with respect to the Effective Reverse Stock Split.
17
Cash Payment in Lieu of Fractional Shares
In lieu of any fractional shares to which a holder of Common Stock would
otherwise be entitled as a result of the Effective Reverse Stock Split, we will
pay cash equal to such fraction multiplied by the daily average of the high and
low trading prices of our Common Stock during regular trading hours for the five
trading day period ending on the sixth business day immediately preceding the
Effective Date.
Federal Income Tax Consequences
The following description of the material federal income tax consequences of the
Effective Reverse Stock Split is based on the Internal Revenue Code of 1986, as
amended, applicable Treasury regulations promulgated thereunder, judicial
authority and current administrative rulings and practices as in effect on the
date of this proxy statement. Changes to the laws could alter the tax
consequences described below, possibly with retroactive effect. We have not
sought and will not seek an opinion of counsel or a ruling from the Internal
Revenue Service regarding the federal income tax consequences of the Effective
Reverse Stock Split.
This discussion is for general information only and does not discuss the tax
consequences that may apply to particular classes of taxpayers, such as:
o a partnership or other pass-through entity;
o a stockholder that is not a citizen or resident of the United
States, including without limitation certain United States
expatriates;
o a financial institution or insurance company;
o a mutual fund;
o a tax-exempt organization;
o a dealer or broker in securities or foreign currencies;
o a trader in securities that elects the mark-to-market method;
o a stockholder that holds Common Stock as part of a hedge, straddle,
conversion transaction or other integrated investment;
o a stockholder whose functional currency is not the United States
dollar; and
o a stockholder that acquired Common Stock through the exercise of an
employee stock option or otherwise as compensation.
This summary does not discuss any aspect of state, local or foreign taxation, or
any aspect of United States federal tax laws other than the United States
federal income tax. Because this discussion does not address tax consequences
that may vary with a stockholder's individual circumstances, we strongly urge
our stockholders to consult with their own tax advisors as to the specific
United States federal, state, local or foreign income or other tax consequences
of the Effective Reverse Stock Split to them, including without limitation
changes in tax laws and tax return reporting requirements.
This discussion is limited to stockholders holding shares of Common Stock as
capital assets. Such shares are held as capital assets unless the stockholder
holds the stock as stock in trade or other property of a kind which would
properly be included in the stockholder's inventory if on hand at the close of
the taxable year, or primarily for sale to customers in the ordinary course of
the stockholder's trade or business.
In general, the federal income tax consequences of the Effective Reverse Stock
Split will vary among stockholders depending upon whether they receive cash for
fractional shares or solely a reduced number of shares of Common Stock in
exchange for their old shares of Common Stock. We believe that because the
Effective Reverse Stock Split is not part of a plan to increase periodically a
stockholder's proportionate interest in our assets or earnings and profits, the
Effective Reverse Stock Split likely will have the federal income tax effects
described below.
A stockholder who receives solely a reduced number of shares of Common Stock
will not recognize gain or loss. In the aggregate, such a stockholder's basis in
the reduced number of shares of Common Stock will equal the stockholder's basis
in its old shares of Common Stock and the holding period of the post-Effective
Reverse Stock Split shares received will include the holding period of the
pre-Effective Reverse Stock Split shares exchanged.
18
A stockholder who receives cash in lieu of a fractional share as a result of the
Effective Reverse Stock Split generally will recognize capital gain or loss
equal to the difference, if any, between the amount of cash received and the
stockholder's basis in the fractional share. Any such capital gain or loss
generally will be treated as long-term capital gain or loss if the holder has
held the redeemed Common Stock for more than one year; otherwise, such gain or
loss generally will be treated as short-term capital gain or loss. In the
aggregate, a stockholder's basis in the reduced number of shares of Common Stock
will equal the stockholder's basis in its old shares of Common Stock decreased
by the basis allocated to the fractional share for which such stockholder is
entitled to receive cash. The holding period of the post-Effective Reverse Stock
Split shares received will include the holding period of the pre-Effective
Reverse Stock Split shares exchanged. Under certain circumstances, a stockholder
receiving cash in lieu of a fractional share as a result of the Effective
Reverse Stock Split will be treated as having received a distribution, in which
case the amount received may be taxed as a dividend.
We will not recognize any gain or loss as a result of the Effective Reverse
Stock Split.
Vote Required and Recommendation of Board of Directors
The affirmative vote of a majority of all outstanding shares of GoAmerica Common
Stock entitled to vote on this proposal will be required for approval of this
proposal. As a result, abstentions and broker non-votes will have the effect of
votes against the proposal.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT GOAMERICA'S STOCKHOLDERS VOTE
"FOR" THIS PROPOSAL 2 TO APPROVE THE REVERSE STOCK SPLIT AT ONE OF THE FIVE
PROPOSED RATIOS FOR IMPLEMENTATION IN THE BOARD'S DISCRETION.
19
PROPOSAL 3
PROPOSAL TO AMEND THE RESTATED CERTIFICATE OF INCORPORATION OF GOAMERICA TO
INCREASE THE NUMBER OF SHARES OF AUTHORIZED COMMON AND CAPITAL STOCK
General
The Board has considered, deemed advisable, adopted a resolution approving and
recommends to the stockholders for their approval a proposed amendment to our
restated certificate of incorporation to increase the number of authorized
shares of Common Stock from 200,000,000 to 350,000,000, which will result in an
increase in the total number of authorized shares of capital stock from
204,351,943 to 354,351,943. In this proxy statement, we refer to this amendment
as the "Proposal 3 Amendment".
If approved by the stockholders, the Board would have the discretion to
implement the Proposal 3 Amendment prior to our 2004 annual meeting of
stockholders. Notwithstanding stockholder approval, the Board would have the
discretion to abandon the Proposal 3 Amendment.
The Proposal 3 Amendment would not change the number of authorized shares of
preferred stock. The proposed amendment would provide a sufficient number of
available shares of Common Stock to enable us to effect the transaction
discussed in Proposal 1 if that proposal is approved and would provide the Board
with the ability to issue additional shares of Common Stock without requiring
stockholder approval of such issuances except as otherwise may be required by
applicable law, any contractual agreements we may be subject to from time to
time, or the rules of any stock exchange or trading system on which the
securities may be listed or traded, including the Nasdaq Stock Market. Our Board
does not intend to issue any Common Stock except on terms that the Board deems
to be in the best interest of GoAmerica and our stockholders.
The text of the form of amendment to our restated certificate of incorporation
that would be filed with the Secretary of State of the State of Delaware to
effect the Proposal 3 Amendment is set forth in Appendix B to this proxy
statement; provided, however, that such text is subject to amendment to include
such changes as may be required by the office of the Secretary of State of the
State of Delaware and as the Board deems necessary and advisable to effect the
Proposal 3 Amendment. If the Proposal 3 Amendment is approved by the
stockholders and following such approval the Board determines that the Proposal
3 Amendment is in the best interest of GoAmerica and its stockholders, our
restated certificate of incorporation would be amended accordingly.
Purpose of the Proposal 3 Amendment
Of the 200,000,000 shares of Common Stock currently authorized, as of February
11, 2004, 55,696,868 shares were issued and outstanding, and 18,257,458 shares
were reserved for issuance upon the exercise of outstanding warrants and stock
options. As a result, only 126,045,674 shares of Common Stock remain available
for future issuance. It is anticipated that pursuant to the proposed Financing
described in Proposal 1 and the related equity issuance, as described in
Proposal 1, that we may issue and reserve for issuances up to an aggregate of
approximately 122,669,842 shares of our Common Stock, including the issuance of
securities that would be convertible into and/or exercisable for shares of our
Common Stock. Accordingly, we believe that an increase in the number of
authorized shares of our Common Stock is prudent in order to assure that a
sufficient number of shares of our Common Stock are available for issuance in
the future if the Board deems future issuances to be in the best interest of
GoAmerica and our stockholders.
Board Discretion to Implement the Proposal 3 Amendment
If the amendment to our restated certificate of incorporation described in this
Proposal 3 is approved by our stockholders at the Meeting, the Proposal 3
Amendment will be effected, if at all, only upon a determination by the Board
that the Proposal 3 Amendment is in the best interests of GoAmerica and its
stockholders. Such determination shall be made prior to our 2004 annual meeting
of stockholders. Notwithstanding approval of the amendment to our restated
certificate of incorporation described in this Proposal 3, the Board may, in its
sole discretion, abandon the Proposal 3 Amendment and determine prior to the
effectiveness of any filing with the Delaware Secretary of State not to effect
the Proposal 3 Amendment, as permitted under Section 242(c) of the Delaware
General Corporation Law.
20
Effect of the Proposal 3 Amendment.
Upon the effectiveness of the Proposal 3 Amendment, the number of authorized
shares of our Common Stock that are not issued or outstanding would increase. As
of February 11, 2004, we had 200,000,000 shares of authorized Common Stock and
55,696,868 shares of Common Stock issued and outstanding. We will continue to
have 4,351,943 authorized shares of preferred stock and no shares of preferred
stock issued and outstanding.
The issuance in the future of additional authorized shares may have the effect
of diluting the earnings per share and book value per share, as well as the
stock ownership and voting rights, of the currently outstanding shares of Common
Stock. In addition, the effective increase in the number of authorized but
unissued shares of our Common Stock may be construed as having an anti-takeover
effect. Although we are not proposing the Proposal 3 Amendment for this purpose,
we could, subject to the Board's fiduciary duties and applicable law, issue such
additional authorized shares to purchasers who might oppose a hostile takeover
bid or any efforts to amend or repeal certain provisions of our restated
certificate of incorporation or bylaws. Such a use of these additional
authorized shares could render more difficult, or discourage, an attempt to
acquire control of us through a transaction opposed by the Board.
The table below shows, for each of the Reverse Stock Split ratios set forth in
Proposal 2, and for no Effective Reverse Stock Split (i) the sum our outstanding
shares of Common Stock on February 11, 2004 and the 122,669,842 shares of Common
Stock which we may be required to issue in the Financing, assuming that the
private placement closes on March 10, 2004, designees of the placement agent
receive 4,654,970 Agent's Shares as partial compensation for the placement
agent's services and that we are obligated to issue the maximum number of
Additional Shares, (ii) the sum of the shares of Common Stock reserved for
issuance as of February 11, 2004 pursuant to options, warrants, contractual
commitments or other arrangements that are independent of the Financing and the
shares of Common Stock that would be reserved for issuance based upon securities
issuable in the Financing, (iii) the number of shares of Common Stock which we
will have available for issuance assuming the adoption and filing of the
Proposal 3 Amendment, taking into account the shares issued or issuable pursuant
to clauses (i) and (ii), and (iv) the number of shares of Common Stock which we
will have available for issuance without the adoption and filing of the Proposal
3 Amendment, taking into account the shares issued or issuable pursuant to
clauses (i) and (ii). The table does not take into account fractional share
issuance.
- -------------------- ---------------------- ------------------------ ------------------------- -----------------------
(i) (ii) (iii) (iv)
Shares of Common Shares of Common Stock Authorized Shares of Authorized Shares of
Reverse Split Ratio Stock Outstanding Reserved for Issuance Common Stock Common Stock
Available for Issuance Available for
Assuming Filing of Issuance Without
Proposal 3 Amendment Filing of Proposal 3
Amendment
- -------------------- ---------------------- ------------------------ ------------------------- -----------------------
No Reverse Split 168,953,530 27,670,637 153,375,832 3,375,832
- -------------------- ---------------------- ------------------------ ------------------------- -----------------------
1:4 42,238,382 6,917,659 300,843,958 150,843,958
- -------------------- ---------------------- ------------------------ ------------------------- -----------------------
1:6 28,158,921 4,611,772 317,229,305 167,229,305
- -------------------- ---------------------- ------------------------ ------------------------- -----------------------
1:8 21,119,191 3,458,829 325,421,979 175,421,979
- -------------------- ---------------------- ------------------------ ------------------------- -----------------------
1:10 16,895,353 2,767,063 330,337,583 180,337,583
- -------------------- ---------------------- ------------------------ ------------------------- -----------------------
1:12 14,079,460 2,305,886 333,614,652 183,614,652
- -------------------- ---------------------- ------------------------ ------------------------- -----------------------
Effective Date
If the amendment to our restated certificate of incorporation described in this
Proposal 3 is approved by our stockholders at the Meeting, and the Board elects
to proceed with the Proposal 3 Amendment, the Proposal 3 Amendment would become
effective as of 5:00 p.m. Eastern time on the date of filing of the applicable
certificate of amendment to our restated certificate of incorporation with the
office of the Secretary of State of the State of Delaware.
21
Voting Agreement
Aaron Dobrinsky, our Executive Chairman, and Joseph Korb, our Executive Vice
Chairman, who collectively currently hold Common Stock representing
approximately 8.1% of our outstanding Common Stock, have agreed to vote all
shares of Common Stock over which they exercise voting power as of the close of
business on February 11, 2004 in favor of approval of this proposal.
Required Vote and Recommendation
The affirmative vote of a majority of all outstanding shares of GoAmerica Common
Stock entitled to vote on this proposal will be required for approval of this
proposal. As a result, abstentions and broker non-votes will have the effect of
votes against the proposal.
The Board of Directors believes that it is in GoAmerica's best interests that
our stockholders approve the proposal to authorize the Board, in its discretion,
to amend our restated certificate of incorporation to effect the Proposal 3
Amendment.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT GOAMERICA'S STOCKHOLDERS VOTE
"FOR" THIS PROPOSAL 3 TO AUTHORIZE THE BOARD OF DIRECTORS, IN ITS DISCRETION, TO
AMEND GOAMERICA'S RESTATED CERTIFICATE OF INCORPORATION TO INCREASE THE NUMBER
OF AUTHORIZED SHARES OF CAPITAL STOCK FROM 204,351,943 TO 354,351,943 AND TO
INCREASE THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK FROM 200,000,000 TO
350,000,000 AT ANY TIME PRIOR TO GOAMERICA'S 2004 ANNUAL MEETING OF
STOCKHOLDERS.
Security Ownership of Certain Beneficial Owners and Management
Common Stock
The following table sets forth certain information, as of November 3, 2003, with
respect to holdings of our Common Stock by (i) each person known by us to
beneficially own more than 5% of the total number of shares of Common Stock
outstanding as of such date, (ii) each of our Directors and executive officers,
and (iii) all Directors and officers as a group. Unless otherwise indicated, the
address for the individuals below is GoAmerica, Inc., 433 Hackensack Avenue,
Hackensack, New Jersey 07601.
Amount and Nature of
Name and Address of Beneficial Owner Beneficial Ownership (1) Percent of Class (2)
- ------------------------------------ ------------------------ --------------------
(i) Certain Beneficial Owners
Aaron Dobrinsky 3,207,800 (3) 5.85%
(ii) Directors and Executive Officers
Not Set Forth Above
Alan Docter 421,136 (4) *
Joseph Korb 2,114,106 (5) 3.87%
Mark Kristoff 232,284 (6) *
King Lee 49,755 (7) *
Daniel R. Luis 465,563 (8) *
Jesse Odom 368,450 (9) *
(iii) All Directors and Officers as a Group 7,269,598 (10) 12.8%
(7 persons)
22
- -------------------
* Less than one percent.
(1) Except as set forth in the footnotes to this table and subject to applicable
community property law, the persons named in the table have sole voting and
investment power with respect to all shares of Common Stock shown as
beneficially owned by such stockholder.
(2) Applicable percentage of ownership is based on an aggregate of 54,788,618
shares of Common Stock outstanding on November 3, 2003, plus any then
exercisable stock options held by each such holder, and options and warrants
which will become exercisable by such holder within 60 days after November 3,
2003.
(3) Includes 460,102 shares of Common Stock underlying options which are
exercisable as of November 3, 2003 or within 60 days after such date. Also
includes 400 shares held for the benefit of Mr. Dobrinsky's minor children. Mr.
Dobrinsky has voting and dispositive power with respect to such shares. Excludes
322,186 shares of Common Stock underlying options which become exercisable over
time after such period.
4) Includes 92,000 shares of Common Stock underlying options which are
exercisable as of November 3, 2003 or within 60 days after such date. Also
includes 329,136 shares of Common Stock underlying warrants which are
immediately exercisable. Excludes 60,000 shares of Common Stock underlying
options which become exercisable over time after such period.
(5) Includes 342,084 shares of Common Stock underlying options which are
exercisable as of November 3, 2003 or within 60 days after such date. Excludes
204,167 shares of Common Stock underlying options which become exercisable over
time after such period.
(6) Includes 92,000 shares of Common Stock underlying options which are
exercisable as of November 3, 2003 or within 60 days after such date. Also
includes 71,924 shares of Common Stock underlying warrants which are immediately
exercisable. Excludes 60,000 shares of Common Stock underlying options which
become exercisable over time after such date.
(7) Includes 46,755 shares held by the Lee Living Trust. Mr. Lee is a
co-trustee, but not a beneficiary, of the Lee Living Trust. Also includes 3,000
shares of Common Stock underlying warrants which are immediately exercisable
held by the Lee Living Trust. Excludes 90,666 shares of Common Stock underlying
options which become exercisable over time after such period.
(8) Includes 462,563 shares of Common Stock underlying options which are
exercisable as of November 3, 2003 or within 60 days after such date. Excludes
508,720 shares of Common Stock underlying options which become exercisable over
time after such period.
(9) Includes 368,450 shares of Common Stock underlying options which are
exercisable as of November 3, 2003 or within 60 days after such date. Excludes
181,900 shares of Common Stock underlying options which become exercisable over
time after such period.
(10) Includes 2,221,259 shares of Common Stock underlying options which are
exercisable as of November 3, 2003 or within 60 days after such date.
23
STOCKHOLDERS' PROPOSALS
Stockholders who intend to have a proposal considered for inclusion in
GoAmerica's proxy materials for presentation at GoAmerica's 2004 Annual Meeting
of Stockholders pursuant to Rule 14a-8 under the Exchange Act must have
submitted the proposal to GoAmerica at its offices at 433 Hackensack Avenue,
Hackensack, New Jersey 07601, not later than August 3, 2004.
Stockholders who intend to present a proposal at such meeting without inclusion
of such proposal in GoAmerica's proxy materials pursuant to Rule 14a-8 under the
Exchange Act are required to provide advanced notice of such proposal to
GoAmerica at the aforementioned address not later than October 10, 2004.
GoAmerica reserves the right to reject, rule out of order, or take other
appropriate action with respect to any proposal that does not comply with these
or other applicable requirements.
Pursuant to Rule 14a-4 under the Securities Exchange Act of 1934, if a
stockholder notifies GoAmerica in a time or manner inconsistent with GoAmerica's
by-laws of an intent to present a proposal at GoAmerica's 2004 Annual Meeting
and for any reason the proposal is voted upon at that Annual Meeting,
GoAmerica's proxy holders will have the right to exercise discretionary voting
authority with respect to the proposal, if presented at the meeting, without
including information regarding the proposal in its proxy materials.
OTHER MATTERS
The Board of Directors is not aware of any matter to be presented for action at
the Meeting other than the matters referred to above and does not intend to
bring any other matters before the Meeting. However, if other matters should
come before the Meeting, it is intended that holders of the proxies will vote
thereon in their discretion.
24
GENERAL
The accompanying proxy is solicited by and on behalf of the Board of Directors
of GoAmerica, whose notice of meeting is attached to this Proxy Statement, and
the entire cost of such solicitation will be borne by GoAmerica.
In addition to the use of the mails, proxies may be solicited by personal
interview, telephone and telegram by directors, officers and other employees of
GoAmerica who will not be specially compensated for these services. GoAmerica
will also request that brokers, nominees, custodians and other fiduciaries
forward soliciting materials to the beneficial owners of shares held of record
by such brokers, nominees, custodians and other fiduciaries. GoAmerica will
reimburse such persons for their reasonable expenses in connection therewith.
Certain information contained in this Proxy Statement relating to the security
holdings of directors and officers of GoAmerica is based upon information
received from the individual directors and officers.
GOAMERICA, INC. WILL FURNISH, WITHOUT CHARGE, A COPY OF ITS ANNUAL REPORT ON
FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2002, INCLUDING FINANCIAL STATEMENTS
AND SCHEDULES THERETO BUT NOT INCLUDING EXHIBITS, TO EACH OF ITS STOCKHOLDERS OF
RECORD ON FEBRUARY 11, 2004, AND TO EACH BENEFICIAL STOCKHOLDER ON THAT DATE
UPON WRITTEN REQUEST MADE TO INVESTOR RELATIONS DEPARTMENT, GOAMERICA, INC., 433
HACKENSACK AVENUE, HACKENSACK, NEW JERSEY 07601. A REASONABLE FEE WILL BE
CHARGED FOR COPIES OF REQUESTED EXHIBITS.
25
HOUSEHOLDING OF SPECIAL MEETING MATERIALS
Some banks, brokers and other nominee record holders may be participating in the
practice of "householding" proxy statements and annual reports. This means that
only one copy of our proxy statement may have been sent to multiple stockholders
in your household. We will promptly deliver a separate copy of either document
to you if you write us at 433 Hackensack Avenue, Hackensack, New Jersey 07601,
or call us at (201) 996-1717. If you want to receive separate copies of the
proxy statement in the future, or if you are receiving multiple copies and would
like to receive only one copy for your household, you should contact your bank,
broker, or other nominee record holder, or you may contact us at the above
address and phone number.
By Order of the Board of Directors
/s/ Daniel R. Luis
Daniel R. Luis
Chief Executive Officer
Hackensack, New Jersey
February __, 2004
26
APPENDIX A
GOAMERICA, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF GOAMERICA, INC. FOR THE SPECIAL MEETING OF STOCKHOLDERS
The undersigned hereby constitutes and appoints Daniel Luis and Wayne Smith, and
each of them, his or her true and lawful agent and proxy, with full power of
substitution in each, to represent and to vote on behalf of the undersigned, all
of the shares of common stock of GoAmerica, Inc., which the undersigned is
entitled to vote at the Special Meeting of Stockholders of GoAmerica, Inc. to be
held at Continental Plaza, 411 Hackensack Avenue, Lower Level, Hackensack, New
Jersey at 10:00 a.m., local time, on March, 10, 2004, and at any adjournment or
adjournments thereof, upon the following proposals more fully described in the
Notice of Special Meeting of Stockholders and Proxy Statement for the Meeting.
Receipt of such notice and proxy statement is hereby acknowledged.
This proxy, when properly executed, will be voted in the manner directed herein
by the undersigned stockholder. If no direction is made, this proxy will be
voted FOR Proposal 1, FOR Proposal 2 and FOR Proposal 3.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE)
1
GOAMERICA, INC.
433 HACKENSACK AVENUE
HACKENSACK, NJ 07601
VOTE BY INTERNET - WWW.PROXYVOTE.COM
Use the internet to transmit your voting instructions and for electronic
delivery of information up until 11:59 P.M. Eastern Time the day before the
meeting date. Have your proxy card in hand when you access the web site. You
will be prompted to enter your 12-digit Control Number which is located below to
obtain your records and to create an electronic voting instruction form.
VOTE BY PHONE - 1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions up until 11:59
P.M. Eastern Time the day before the meeting date. Have your proxy card in hand
when you call. You will be prompted to enter your 12-digit Control Number which
is located below and then follow the simple instructions the Vote Voice provides
you.
VOTE BY MAIL
Mark, sign, and date your proxy card and return it in the postage-paid envelope
we have provided or return it to GoAmerica, Inc., c/o ADP, 51 Mercedes Way,
Edgewood, NY 11717.
Please date, sign and mail your
proxy card back as soon as possible!
Special Meeting of Stockholders
GOAMERICA, INC.
March 10, 2004
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
GOAMR1 KEEP THIS PORTION FOR YOUR RECORDS
2
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
GOAMERICA, INC.
Vote On Proposals
For Against Abstain
1. APPROVAL OF PROPOSED EQUITY FINANCING [ ] [ ] [ ]
2. APPROVAL OF PROPOSED REVERSE STOCK SPLIT [ ] [ ] [ ]
AT ONE OF FIVE RATIOS
3. APPROVAL OF PROPOSED INCREASE IN THE NUMBER OF [ ] [ ] [ ]
AUTHORIZED SHARES OF COMMON STOCK
In his or her discretion, the proxy is authorized to vote upon other
matters as may properly come before the Meeting,
If you plan to attend the Special Meeting, please
check the box to the right. [ ]
UNLESS OTHERWISE SPECIFIED IN THE SPACES OR SQUARES PROVIDED, THIS PROXY WILL BE
VOTED FOR PROPOSAL NUMBER 1 TO APPROVE THE EQUITY FINANCING, FOR PROPOSAL NUMBER
2 TO APPROVE A REVERSE STOCK SPLIT AT ONE OF FIVE RATIOS AND FOR PROPOSAL NUMBER
3 TO INCREASE THE AUTHORIZED NUMBER OF SHARES OF COMMON STOCK.
Dated:
----------------------------------
----------------------------------------
Signature
----------------------------------------
(Signature if held jointly)
Please sign exactly as your name appears
hereon. When shares are held by joint
tenants, both should sign. When signing
as attorney, executor, administrator,
trustee or guardian, please give full
title as such. If a corporation, please
sign in full corporate name by President
or authorized officer. If a partnership,
please sign in partnership name by
authorized person.
PLEASE SIGN, DATE AND RETURN THIS PROXY CARD
PROMPTLY USING THE ENCLOSED ENVELOPE
3
APPENDIX B
FORM OF CERTIFICATE OF AMENDMENT TO
CERTIFICATE OF INCORPORATION OF GOAMERICA, INC.
It is hereby certified that:
1. The name of the Corporation (hereinafter called the "Corporation") is
GoAmerica, Inc.
2. The Restated Certificate of Incorporation of the Corporation is hereby
amended by striking out Article FOURTH (a) thereof and by substituting in lieu
of said Article the following new Article:
"FOURTH(a): The total number of shares of capital stock which the
Corporation shall have authority to issue is [insert number] shares,
consisting of: (i) [insert number in words] [(insert numerals)] shares of
Common Stock, par value $0.01 per share (the "Common Stock"); and (ii) four
million three hundred fifty one thousand nine hundred forty three
(4,351,943) shares of Preferred Stock, par value $0.01 per share (the
"Preferred Stock").
[The change above will only be made if Proposal 3 is approved by the
stockholders and the Board, in its discretion, determines to increase the
authorized number of shares]
Effective as of 5:00 p.m., Eastern time, on the date this Certificate of
Amendment is filed with the Secretary of State of the State of Delaware,
each [insert ratio number] shares of the Corporation's Common Stock, par
value $0.01 per share, issued and outstanding shall, automatically and
without any action on the part of the respective holders thereof, be
combined, converted and changed into one (1) share of Common Stock, par
value $0.01 per share, of the Corporation; provided however, that the
Corporation shall issue no fractional shares of Common Stock, but shall
instead pay to any stockholder who would be entitled to receive a
fractional share as a result of the actions set forth herein a sum in cash
equal to such fraction multiplied by the daily average of the high and low
prices of the Corporation's Common Stock as reported on the Nasdaq SmallCap
Market for the five trading-day period ending on the sixth business day
after the date this Certificate of Amendment is filed with the Secretary of
State of the State of Delaware."
[The change above will only be made if Proposal 2 is approved by the
stockholders and the Board, in its discretion, determines to effect a reverse
stock split. In that case, the ratio will be one of the five ratios approved by
the stockholders]
3. The amendment of the Certificate of Incorporation herein certified was duly
adopted in accordance with the provisions of Section 242 of the General
Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, GoAmerica, Inc. has caused this Certificate of
Amendment to be signed by its Chief Executive Officer as of ___________________.
----------------------------------
Daniel R. Luis
Chief Executive Officer
4