EXHIBIT 1
RECAPITALIZATION AGREEMENT
December 31, 2003
VIA FACSIMILE AND FIRST CLASS MAIL
To the holders of Series B Convertible Preferred Stock listed on Schedule A
attached hereto
RE: RECAPITALIZATION AGREEMENT
Ladies and Gentlemen:
Pursuant to our communication dated November 28, 2003 and subsequent discussions
with SPEEDCOM Wireless Corporation's (the "COMPANY" or "SPEEDCOM") majority
holders of the Company's outstanding demand notes and the Company's Series B
Convertible Preferred Stock (the "SERIES B PREFERRED"), we propose the
recapitalization transaction described herein pursuant to which all outstanding
shares of Series B Preferred shall be exchanged for shares of the Company's
common stock.
As you are aware, the Company does not have the financial resources needed to
pay its outstanding liabilities. Now that the sale of substantially all of the
operating assets of the Company to P-Com, Inc. ("P-COM") has closed, the
Company's assets consist of approximately $75,000 in cash and 63,500,000 shares
of P-Com common stock (having a value of approximately $9,525,000 as of December
15, 2003) and, in addition to liabilities associated with the Series B
Preferred, the Company has liabilities of approximately $2,100,000. Inclusive in
the Company's liabilities are accrued financial advisory and financing fees in
the amount of $300,000, which is reduced by $35,600 from the total amount owed.
These fees were calculated using the following remuneration guideline formula:
(($12,260,000 (reported gain on sale) X 2%) + ($4,523,000 (financings) X 2%)
= $335,660
SPEEDCOM plans to contact all of its creditors and offer to settle its
outstanding liabilities by issuing shares of common stock at a value of $.12 per
share in exchange for and in full satisfaction of such liabilities.
The Series B Preferred is senior to the Company's common stock and restricts the
ability of the Company to engage in certain transactions that the Company
believes to be in its best interests. Thus, in addition to eliminating all
outstanding debt and trade liabilities of the Company, the Company wishes to
eliminate all liabilities and obligations in respect of the Series B Preferred
by exchanging all of the outstanding Series B Preferred for 76,868,961 shares of
the Company's common stock in the aggregate as described below.
Schedule B attached hereto shows the capitalization of the Company assuming that
all of the foregoing liabilities are so exchanged for the Company's common
stock.
Based on the following assumptions we propose to you as follows:
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Assumptions
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SPEEDCOM Share Price $.12
(debt conversion price versus market price)
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Dividend Yield 14%
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Days Accrued (ending December 31, 2003) 130
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Existing Liquidation Payout
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No. of Pf. Shares Liq. Price Dollar Value No. of Common Shares*
------------------------- ---------------------- ----------------------- ---------------------- ----------------------
Liquidation Preference 3,835,554 $4.50 $17,259,993 143,833,275
------------------------- ---------------------- ----------------------- ---------------------- ----------------------
No. of Pf. Shares Div. Yield Dollar Value No. of Common Shares
------------------------- ---------------------- ----------------------- ---------------------- ----------------------
Dividend Accrual 3,835,554 14.00% $860,635 7,171,958
------------------------- ---------------------- ----------------------- ---------------------- ----------------------
Late Fee $163,970 1,366,417
(S-3 Reg.)
------------------------- ---------------------- ----------------------- ---------------------- ----------------------
Total 152,371,650
------------------------- ---------------------- ----------------------- ---------------------- ----------------------
* Note: Rather than using market price, this figure was reached using the higher
debt conversion price (e.g. $.12).
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Proposed Payout
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Pf. Face ($) Share Price Dollar Value No. of Common Shares
------------------------- ---------------------- ----------------------- ---------------------- ----------------------
Liquidation Preference $8,629,988 $0.12 $8,629,988 71,916,567
------------------------- ---------------------- ----------------------- ---------------------- ----------------------
Pf. Face ($) Div. Yield Dollar Value No. of Common Shares
------------------------- ---------------------- ----------------------- ---------------------- ----------------------
Dividend Accrual $8,629,988 14.00% $430,317 3,585,977
------------------------- ---------------------- ----------------------- ---------------------- ----------------------
Late Fee $163,970 1,366,417
(S-3 Reg.)
------------------------- ---------------------- ----------------------- ---------------------- ----------------------
Total 76,868,961
------------------------- ---------------------- ----------------------- ---------------------- ----------------------
Note: The late fee shares are included in the "other debt" line item in the
capitalization table attached as Schedule B.
After conversion of all outstanding obligations into SPEEDCOM common stock,
SPEEDCOM will have approximately 116,500,000 common shares outstanding. The
Company plans to distribute approximately 62,500,000 common shares of P-Com
(OTCBB: PCOM), which equals approximately .552 P-Com, Inc. common shares for
each common share of SPEEDCOM (see Schedule C attached).
Management anticipates that at some point during the First Quarter of 2004, the
Company may enter into an agreement to merge a private company into SPEEDCOM. It
is believed that post closing, SPEEDCOM shareholders would have an equity stake
in the new company ranging from 6%-9%. Thus, you would retain your SPEEDCOM
shares and remain a shareholder in the new company after the P-Com share
distribution.
By executing a counterpart of this letter agreement in the space provided below
you and the Company agree as follows:
1. Each outstanding share of Series B Preferred held by you is hereby exchanged
for 20.0411625 shares of the Company's common stock, and effective as of the
date of your execution of this letter agreement, you shall have no further
rights with respect to the Series B Preferred other than the right to be issued
such shares of the Company's common stock in accordance herewith. You agree to
deliver to the Company each stock certificate representing your shares of Series
B Preferred (or an appropriate certificate of loss and indemnity, if requested)
promptly for cancellation. The Company shall issue to you the shares of common
stock for which your Series B Preferred is exchanged hereunder promptly
following the Effective Date (defined below) upon receipt of your executed
counterpart of this letter agreement and the related stock certificates (or
certificate of loss) representing the Series B Preferred you hold.
2. You hereby represent to the Company that (i) you are an accredited investor
as defined in Rule 501(a) of Regulation D promulgated by the Securities and
Exchange Commission under the Securities Act of 1933, as amended (the
"SECURITIES ACT"), and (ii) by reason of your business and financial experience,
you have such knowledge, sophistication and experience in business and financial
matters as to be capable of evaluating the merits and risk of an investment in
the Company's common stock, and that you are effecting the transactions
contemplated by this letter agreement for your own account and not with a view
to the distribution of any common stock received hereunder or with any present
intention of distributing or selling any such common stock except in compliance
with the Securities Act. You understand and agree that the Company's common
stock issuable to you hereunder has not been registered under the Securities Act
and that such common stock may be resold only if such sale is registered
thereunder or if an exemption from the registration requirements thereof is
available.
3. The Company hereby represents to you that the shares of the Company's common
stock issuable to you hereunder, when and as issued pursuant to the terms of
this letter agreement, shall be duly authorized, validly issued, fully paid and
non-assessable, and free and clear of any liens. Except for the representations
made in this Section 3 and in Section 4 below, the Company makes no
representations or warranties to you with respect to any of the matters
described in this letter agreement.
4. The individuals who have executed this letter agreement on behalf of you and
the Company, respectively, are fully authorized to sign on behalf of the
applicable party for the purpose of duly and legally binding such party to the
agreements contained herein.
5. You hereby consent to the exchange and issuance of the Company's common stock
for all of the outstanding Series B Preferred and the other transactions
described in this letter agreement for all purposes and waive any and all
covenants restricting such transactions, including without limitation the
restrictions contained in Section 3.1(c) and 3.9 of the Series B Convertible
Stock Purchase Agreement dated as of August 23, 2001 among the Company and the
other signatories thereto.
6. This letter agreement constitutes the entire agreement and understanding of
the parties hereto with respect to the exchange of the Series B Preferred and
supersedes all prior agreements and understandings, written or oral, among the
parties with respect thereto.
NOTWITHSTANDING ANYTHING TO CONTRARY CONTAINED HEREIN, THIS LETTER AGREEMENT
SHALL BE NULL AND VOID AND OF NO FORCE OR EFFECT IF ANY HOLDER OF THE SERIES B
PREFERRED FAILS TO ENTER INTO A RECAPITALIZATION AGREEMENT WITH THE COMPANY ON
TERMS SUBSTANTIALLY SIMILAR TO THOSE CONTAINED HEREIN (THE DATE AS OF WHICH ALL
HOLDERS OF SERIES B PREFERRED HAVE ENTERED INTO SUCH AGREEMENTS IS REFERRED TO
HEREIN AS THE "EFFECTIVE DATE"). THE COMPANY SHALL NOTIFY YOU PROMPTLY OF THE
OCCURRENCE OF THE EFFECTIVE DATE.
Please review this letter agreement over the coming weeks and we look forward to
your feedback in the early New Year.
If you agree and accept the foregoing, please sign and date below.
Very truly yours,
/s/ Xxxx Xxxxxxxxxx by /s/ Xxx Xxxxxxx
Xxxx Xxxxxxxxxx
Chief Financial Officer
Accepted and agreed to as of Dec 31, 2003
S.A.C. Capital Associates, LLC
By: S.A.C. Capital Advisors, LLC
/s/ Xxxxx X. Xxxxxxxx
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Name: Xxxxx X. Xxxxxxxx
Title: General Counsel
