Exhibit 10.36
CHADMOORE WIRELESS GROUP, INC.
0000 Xxxx Xxxxxxx Xxxx, Xxxxx X
Xxx Xxxxx, Xxxxxx 00000
November 16, 2001
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"). The Letter Agreement provides, in part, that REI
will, following approval by the shareholders of Chadmoore of the Reorganization
and a plan of liquidation, exercise the Warrant, represented by Certificate No.
1, dated May 1, 1998, issued by Chadmoore to REI ("Warrant No. 1").
In order to induce REI to enter into an amended letter agreement relating to its
support of the Amended Agreement and the Reorganization (for purposes hereof,
each of the Amended Agreement and the Reorganization shall mean such Agreement
or Reorganization as in effect or as provided for, as applicable, as of the date
hereof and as subsequently amended with REI's prior written consent) and to
resolve issues arising out of the Investment Agreement, dated as of May 1, 1998,
between REI and Chadmoore (the "Investment Agreement") and agreements related
thereto, Chadmoore and REI agree that the Letter Agreement is hereby amended and
restated in its entirety as follows:
1. In connection with the approval of the Reorganization by the shareholders
of Chadmoore, Chadmoore shall adopt a plan of liquidation (the "Plan"), which
Plan shall be adopted by Chadmoore's Board of Directors and recommended by such
Board for approval by Chadmoore's shareholders entitled to vote thereon. The
Plan shall provide for the liquidation of Chadmoore and distribution of the
Nextel Shares or cash, in part, as follows:
(A) At a time determined in accordance with the Plan and the
liquidating trusts, if any, created thereunder, REI shall be entitled to
receive, in exchange for the surrender of all of the shares of Series C
Preferred Stock of Chadmoore then owned by REI and the Warrant, represented by
Certificate No. 3, dated May 1, 1998, issued by Chadmoore to REI ("Warrant No.
3"), an aggregate number of Nextel Shares or cash equal to the sum of (x) the
number of Nextel Shares or cash that REI would be entitled to receive under the
Plan had it exercised the Warrant in full (using the portion of the aggregate
Stated Value (as defined in the Certificate of Designation of the Rights,
Preferences and Privileges of the Series C Preferred Stock (the "Certificate of
Designation")) of all of the shares of Series C Preferred Stock of Chadmoore
then owned by REI which equals the Aggregate Exercise Price (as defined in
Warrant No. 3)) and received shares of common stock, par value $.001 per share,
of Chadmoore ("Common Stock") upon such exercise (with both the number of shares
of Common Stock which would have been acquirable under Warrant No. 3 and the
Aggregate Exercise Price being as agreed to by REI and Chadmoore as of the day
prior to the Closing, and based on the anticipated total amount per share to be
distributed to holders of Common Stock pursuant to the Plan) and (y) the number
of Nextel Shares (based on the average of the daily closing price of a Nextel
Share for the twenty (20) consecutive Trading Days immediately prior to the
Closing Date (the "Nextel Share Price")) or cash reflecting by value the amount
equal to the sum of (i) the difference between the aggregate Stated Value of all
of the shares of Series C Preferred Stock of Chadmoore then owned by REI and the
portion thereof used to satisfy the exercise of Warrant No. 3 described in
clause (x) above and (ii) the amount of all accrued and unpaid dividends on the
Series C Preferred Stock as provided in the Certificate of Designation through
and including the date of the filing of the articles of dissolution of Chadmoore
with the Colorado Secretary of State (and Chadmoore shall not declare or pay any
dividends on such shares of Series C Preferred Stock);
(B) At a time determined in accordance with the Plan and the
liquidating trusts, if any, created thereunder, REI shall be entitled to
receive, in exchange for the surrender of the Warrant, represented by
Certificate No. 2, dated May 1, 1998, issued by Chadmoore to REI ("Warrant No.
2"), an aggregate number of Nextel Shares or cash equal to the number of Nextel
Shares or cash that REI would be entitled to receive under the Plan had it
exercised the Warrant in full, net of the Aggregate Exercise Price (as defined
in Warrant No. 2), and received shares of Common Stock upon such exercise (with
both the number of shares of Common Stock which would have been acquirable under
Warrant No. 2 and the Aggregate Exercise Price being as agreed to by REI and
Chadmoore as of the day prior to the Closing, and based on the anticipated total
amount per share to be distributed to holders of Common Stock pursuant to the
Plan); and
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(C) Unless otherwise approved by REI with respect to the treatment of
it as a holder of Common Stock, all holders of Common Stock are treated the same
under the Plan.
In addition, if the shareholders of Chadmoore approve the Reorganization, but
not the Plan, any distribution of the consideration received by Chadmoore in
connection with the Reorganization shall be effected in a manner consistent with
this Section 1.
2. Warrant No. 1 had an expiration date of 5:00 p.m., Nevada time, May 1,
2001 (the "Expiration Date"). Effective as of the Expiration Date, REI's
obligation to exercise Warrant No. 1 as provided in Section 2 of the second
paragraph of the Letter Agreement terminated and was of no further force or
effect.
3. If prior to March 31, 2002 (x) the shareholders of Chadmoore approve both
the Reorganization and the Plan, (y) REI concludes that the Reorganization,
together with the liquidation to be effected under the Plan, conform with all
applicable requirements so as for the Reorganization, together with the
liquidation to be effected under the Plan, to be treated as a tax-free
reorganization under Section 368(a)(1)(C) of the Code for holders of both Common
Stock and Series C Preferred Stock of Chadmoore, as based on a written opinion
by KPMG, Chadmoore's independent accountants, to such effect, and (z) REI
determines, in its reasonable judgment, that the Closing will occur within no
greater than three days, REI shall loan Chadmoore $6.5 million in cash in
exchange for a promissory note of Chadmoore, payable (i) upon demand after the
Closing Date and in no event later than the seventh day immediately following
the Closing Date, and (ii) at REI's option, either (x) in cash (with interest at
10% per annum from the date of issuance to the date immediately preceding the
date of payment, if not paid after demand therefore and on or prior to the
seventh day immediately following the Closing Date), together with a facility
fee of $975,000 or (y) in such number of Nextel Shares as is equal in value to
115% of the principal amount (it being understood that such number of shares is
intended to reflect the uncertainties of the valuation of such Nextel Shares at
the time of payment and that such payment in shares shall be a distribution in
liquidation to REI as a creditor of Chadmoore pursuant to the Plan) and valued
at the Nextel Share Price: provided, however, that if the Closing does not
occur, the note shall be payable in cash and immediately upon demand (with
interest at 10% per annum from the date of issuance to the date immediately
preceding the date of payment, if not paid after demand), together with a
facility fee of $975,000. Chadmoore shall use its best efforts to insure that
such loan is secured by its assets but subordinate to debt owed by Chadmoore to
GATX Capital Corporation and Barclays Bank PLC.
4. If prior to March 31, 2002 either (x) the shareholders of Chadmoore
approve the Reorganization, but not the Plan or (y) the shareholders of
Chadmoore approve the Reorganization and the Plan prior to March 31, 2002 but
REI concludes, based on KPMG, Chadmoore's independent accountants, being unable
to provide an opinion that the Reorganization, together with the liquidation to
be effected under the Plan, conform with all applicable requirements so as for
the Reoganization, together with the liquidation to be effected under the Plan,
to be treated as a tax-free reorganization under Section 368(a)(1)(C) of the
Code for holders of both Common Stock and Series C Preferred Stock of Chadmoore,
that such Reorganization, together with the liquidation to be effected under the
Plan, will not be treated as a tax-free reorganization, REI shall be
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entitled to receive, and Chadmoore shall pay to REI, $543,716 in cash
immediately following the Closing.
5. Immediately following the consummation of the Closing, Chadmoore shall
pay REI all accrued and unpaid amounts due to date under the Advisory Agreement,
dated as of May 1, 1998, between REI and Chadmoore (the "Advisory Agreement").
Thereafter, notwithstanding the terms of the Advisory Agreement, in addition to
any continued payments required thereunder, REI shall be entitled to, and
Chadmoore shall pay to REI, an amount equal to $312,000, to be pre-paid by
Chadmoore as promptly as possible, in light of current market conditions, but in
no event later than April 30, 2003.
6. Notwithstanding Section 4.16 of the Investment Agreement, REI consents
to such amendments to the terms of the Identified Securities (as defined in the
Investment Agreement) which are stock options issued under any employee or
consulting stock option plan heretofore established by Chadmoore (collectively,
"Employee Option Identified Securities") as are necessary to permit the
distribution of cash and/or Nextel Shares to the holders of such Employee Option
Identified Securities as provided in the Plan in an amount equivalent to that
which would be received upon their cashless, "net" exercise of such Employee
Option Identified Securities, with the net amount payable thereunder being based
on the amount per share to be distributed to holders of Chadmoore Common Stock
under the Plan. REI also consents to all other amendments or modifications to
such Employee Option Identified Securities with respect to re-pricing or the
extension of the term thereof that have been adopted and approved by the Board
of Directors of Chadmoore since May 1, 1998 through the date of this letter
agreement; provided such Board approval included the unanimous approval of the
directors appointed by REI. In addition, REI consents to any other amendments or
modifications to such Employee Option Identified Securities that are approved
and adopted by the Board of Directors of Chadmoore after the date hereof;
provided such Board approval includes the unanimous approval of the directors
appointed by REI.
7. REI waives all rights under (i) Section 2F of Warrant No. 2, effective
upon receipt from Chadmoore of all the securities or cash to which REI is
entitled to with respect thereof under the Plan and in accordance with Section
1(B) hereof, and (ii) Section 2D of Warrant No. 3, effective upon receipt form
Chadmoore of all securities or cash to which REI is entitled to with respect
thereof under the Plan and in accordance with Section 1(A) hereof.
8. Assuming that holders of options under Chadmoore's various employee and
consulting stock option plans are permitted to exercise such options on a "net"
basis, as of the date hereof (i) the exercise price of Warrant No. 3 and the
number of shares of Common Stock acquirable thereunder are expected to be as set
forth in Exhibit A attached hereto and (ii) the exercise price of Warrant No. 2
and the number of shares of Common Stock acquirable thereunder are expected to
be as set forth in Exhibit B attached hereto. Both REI and Chadmoore acknowledge
that the figures set forth in Exhibits A and B hereto are solely current good
faith estimates and are not binding on either party hereto.
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
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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.
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]
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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.
By /s/XXXXXX X. XXXXX
-----------------------
Name: Xxxxxx X. Xxxxx
Title: President
Agreed and accepted this 16th day of November, 2001.
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
