EXHIBIT 2
CHADMOORE WIRELESS GROUP, INC.
a dissolved Colorado corporation -- 2002
0000 Xxxx Xxxxxxx Xxxx, Xxxxx X
Xxx Xxxxx, Xxxxxx 00000
July 11, 2002
Recovery Equity Investors II, L.P.
000 Xxxx Xxxxxxx Xxxxx
Xxxxxxx Xxxx, Xxxxxxxxxx 00000
Re: Agreement and Plan of Reorganization dated as of August 21, 2000
by and among Nextel Communications, Inc. ("Nextel"), Nextel
Finance Company ("Acquisition Sub") and Chadmoore Wireless
Group, Inc. ("Chadmoore") (the "Agreement"), as amended by the
First Amendment to the Agreement, dated as of August 31, 2000, by
the Second Amendment to the Agreement, dated as of February 20, 2001,
by the Third Amendment to the Agreement, dated as of June 29, 2001
and by the Fourth Amendment to the Agreement, dated as of
November 16, 2001 (the Agreement, as amended, the "Amended Agreement")
Dear Sirs:
On August 21, 2000, Chadmoore entered into the Agreement with Nextel and
Acquisition Sub pursuant to which Chadmoore agreed to transfer to Nextel the
Assets (except for the Excluded Assets) in exchange for the Nextel Shares and
the assumption of certain obligations of Chadmoore. All capitalized terms
used and not otherwise defined herein have the respective meanings assigned
to them in the Amended Agreement.
In order to induce Recovery Equity Investors II, L.P., a Delaware limited
partnership ("REI"), to enter into the letter agreement relating to its
support of the Agreement and the Reorganization as required by Nextel under
the Agreement, Chadmoore and REI entered into a letter agreement dated August
21, 2000 (the "LETTER AGREEMENT").
In order to induce REI to enter into an amended letter agreement relating to
its support of the Amended Agreement and the Reorganization and to resolve
issues arising out of the Investment Agreement, dated as of May 1, 1998,
between REI and Chadmoore and agreements related thereto, Chadmoore and REI
entered into the letter agreement, dated November 16, 2001, as amended on
December 12, 2001 (collectively, the "AMENDED LETTER AGREEMENT"), which
amended and restated the Letter Agreement.
The Amended Letter Agreement provides, in part, for the treatment of all of
the Series C Preferred Stock, par value $.001 per share, of Chadmoore owned
by REI and of two warrants, one, the warrant represented by Certificate No.
2, dated May 1, 1998, issued by Chadmoore to REI ("WARRANT NO. 2") and
another, the warrant represented by Certificate No. 3, dated May 1, 1998
issued by Chadmoore to REI ("WARRANT NO. 3"), in the plan of liquidation to
be adopted by Chadmoore's Board of Directors and approved by its stockholders.
The Board of Directors of Chadmoore adopted a Plan of Liquidation (the
"PLAN") which was approved by the Chadmoore stockholders entitled to vote
thereon on January 28, 2002. Articles of Dissolution were filed for Chadmoore
with the Colorado Secretary of State on February 23, 2002. Chadmoore
currently anticipates making a distribution under the Plan in early July 2002.
In accordance with the Amended Letter Agreement and the Plan, Chadmoore and
REI agree that:
1. For purposes of determining the number of shares of common stock,
par value $.001 per share, of Chadmoore (the "COMMON STOCK") outstanding for
purposes of determining the amount per share to be distributed to the holders
of Common Stock and the holders of Stock Options (as defined below), (i) REI
shall be deemed to be the holder of the 8,854,662 shares currently registered
in its name on the stock records of Chadmoore and the additional 19,847,951
shares of Common Stock that would have been acquirable under Warrants No. 2
and 3 and (ii) the total number of shares of Common Stock deemed outstanding
for any particular distribution shall be no more than the sum of (w) the
47,736,006 shares of Common Stock issued and outstanding on the Record Date
(as defined below), (x) the 19,847,951 shares of Common Stock that would have
been acquirable under Warrants No. 2 and 3, (y) the 513,607 shares of Common
Stock deemed acquirable under the warrants issued to Private Equity Partners
originally for 278,798 shares, 80,000 shares and 250,000 shares,
respectively, and (z) the aggregate number of shares of Common Stock deemed
to be issued upon the net exercise of the Stock Options (as defined below)
determined as provided in paragraph 2 below. The basis for the calculation of
the number of shares which would have been acquirable under Warrants Nos. 2
and 3 is as set forth under "Reserve utilization handicapped" in Exhibit A
attached hereto and on the computer disc delivered to REI hereunder. REI's
portion of any distribution made to holders of Common Stock and the holders
of Stock Options (as defined below) shall be determined by multiplying the
amount per share to be distributed as determined using the methodology set
forth on Exhibit B attached hereto and the computer disc delivered to REI
hereunder by the sum of the 8,854,662 shares of Common Stock held of record
by REI and, as provided in the Plan, the additional 19,847,951 shares of
Common Stock that would have been acquirable under Warrants No. 2 and 3.
Payments to REI on account of the 8,854,662 shares of Common Stock held of
record shall be made by the paying agent then employed by Chadmoore. No later
than the date that any payment is made by the paying agent, Chadmoore shall
pay directly to REI all other amounts payable to REI in such manner as REI
shall reasonably direct.
2. The Plan also provides for distributions to be made to the holders
of stock options, other than those who have elected not to participate in the
deemed net exercise, under the Chadmoore Wireless Group, Inc. 1995 Amended
Nonqualified Stock Option Plan, the Chadmoore Wireless Group, Inc. Employee
Benefit and Consulting Services Compensation Plan, the Chadmoore Wireless
Group, Inc. 1998 Stock Option Plan and the Chadmoore Wireless Group, Inc.
2000 Stock Option Plan and any other stand-alone option agreements outside
such plans with current or former officers, non-management directors or
employees of Chadmoore outstanding and vested as of the date of the filing of
Chadmoore's Articles of Dissolution (the "RECORD DATE") (such options,
collectively, being the "STOCK OPTIONS"). Chadmoore represents and warrants
to REI that the list attached hereto as Exhibit B is a true, correct and
complete list of each Stock Option outstanding and vested as of the Record
Date, the exercise price thereof and the holder thereof. Chadmoore also
agrees that, upon each distribution under the Plan, it shall use the
methodology set forth in Exhibit B attached hereto and on the computer disc
delivered to REI hereunder to determine whether the holder of a Stock Option
is entitled to any portion of such distribution and, if so entitled, the
amount to which he or she is so entitled.
3. At least five (5) business days prior to any distribution to be made
under the Plan, Chadmoore shall notify REI in writing of such distribution and
provide REI with its calculation of the amount to be received by REI and the
amount to be received by holders of Stock Options in such distribution for REI's
prior review and reasonable comment. REI hereby waives such five-day period in
connection with the initial distribution to be made under the Plan on or about
July 10, 2002; provided that such distribution is made by July 17, 2002.
4. Chadmoore acknowledges and confirms receipt of an executed IRS
Form W-9 from REI and that, based upon the certification contained therein,
all payments to be received by REI under the Plan will not be subject backup
tax withholding.
5. Chadmoore has engaged KPMG to render an opinion whether, and what
extent, the annual limitation imposed under Section 382 of the Internal Revenue
Code of 1986, as amended (the "CODE"), on the utilization of net operating loss
carryovers may be increased by the application of Section 382(h) of the Code to
certain built-in gain assets sold by Chadmoore to Nextel. Chadmoore has received
drafts of this opinion, true, correct and complete copies of which it has also
provided to REI. Chadmoore shall provide REI with a true, correct and complete
copy of the final form of opinion issued by KPMG on this subject within two (2)
business days after its receipt thereof.
6. Any notice, demand, request, waiver or other communication under
this Letter Agreement shall be in writing and shall be deemed to have been
duly given on the date of service if personally served, on the date of
transmission, if sent by facsimile, receipt confirmed, or on the fifth day
after mailing, if mailed to the party to whom notice is to be given, by first
class mail, registered, returned receipt request, postage prepaid, in each
case addressed as follows (or to such other address as shall be designated by
the applicable party to the other party in writing in compliance with this
Section):
To Chadmoore: Chadmoore Wireless Group, Inc.
0000 Xxxx Xxxxxxx Xxxx
Xxxxx X
Xxx Xxxxx, Xxxxxx 00000
Attention: President and Chief
Executive Officer
Facsimile No.: 000-000-0000
With a copy to: Xxxx Xxxx Xxxx & Freidenrich LLP
000 Xxxxxxx Xxxx
Xxxxx 0000
Xxxxxxxxxx, Xxxxxxxxxx 00000-0000
Attention: Xxxxxx Xxxxx
Facsimile No.: 000-000-0000
To REI: Recovery Equity Investors II, L.P.
000 Xxxx Xxxxxxx Xxxxx
Xxxxxxx Xxxx, Xxxxxxxxxx 00000
With a copy to: Xxxxxx, Xxxxx & Xxxxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxx
Facsimile No.: 000-000-0000
7. No failure or delay on the part of either party to this Letter
Agreement in exercising any right, power or remedy hereunder shall operate as
a waiver thereof; nor shall any single or partial exercise for any such right,
power or remedy preclude any other or further exercise thereof or the exercise
of any other right, power or remedy hereunder. The remedies herein provided are
cumulative and not exclusive of any remedies provided by law.
8. Except as hereinafter provided, changes in, termination or
amendments of or additions to this Letter Agreement may be made, and
compliance with any covenant or provision set forth herein may be omitted or
waived, if Chadmoore shall obtain REI's prior written consent thereto. Any
waiver or consent may be given subject to satisfaction of conditions stated
therein and any waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.
9. REI and Chadmoore acknowledge and agree that irreparable damage
would occur in the event that any of the provisions of this Letter Agreement
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of the provisions
of this Letter Agreement, and to enforce specifically the terms and
provisions hereof in any court of the United States or any state thereof
having jurisdiction, this being in addition to any other remedy to which they
may be entitled at law or equity.
10. This Letter Agreement shall be governed by and construed in
accordance with the domestic laws of the State of New York, without giving
effect to any choice of law or conflict of law provision or rule (whether of
the State of New York or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of New York.
11. This Letter Agreement may be executed in any number of counterparts,
each of which will be deemed an original, but all of which together will
constitute one and the same instrument.
[signature page to follow]
If you are in agreement with the foregoing, please sign the copy of this
letter enclosed and return it to the undersigned, whereupon it will become a
binding obligation between us.
Sincerely yours,
CHADMOORE WIRELESS
GROUP, INC., a dissolved Colorado
corporation - 2002
By: /s/ Xxxxxx X. Xxxxx
-------------------------------
Name: Xxxxxx X. Xxxxx
Title: President/CEO
Agreed and accepted this 11th day of July, 2002.
RECOVERY EQUITY INVESTORS II, L.P.
By: RECOVERY EQUITY PARTNERS II, L.P.
Its General Partner
By: /s/ Xxxxxx X. Xxxx-Xxxx
--------------------------------------
Name: Xxxxxx X. Xxxx-Xxxx
Title: General Partner
By: /s/ Xxxxxxx X. Xxxxxx
--------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: General Partner
