EXIHIBIT 10.24
MCImetro Access Transmission Services, Inc.
0000 Xxxxxxxxxxxx Xxxxxx X, Xxxxx 000
Xxxxxxxxxx XX 00000
Adelphia Communications Corporation
Main at Water Street
Coudersport PA 16915
Attention: Xxxxxxx X. Xxxxx
Gentlemen:
This letter of understanding (the "Letter") dated April 10, 1998, is by and
among Hyperion Telecommunications, Inc. a Delaware Corporation ("Hyperion"), MCI
Metro Access Transmission Services, Inc., a Delaware Corporation ("MCI") and
Adelphia Communications Corporation, a Delaware Corporation (together with its
affiliates "Adelphia"). Unless otherwise indicated, all capitalized terms
herewith have the meaning assigned to them in that certain Warrant Agreement
(the "Warrant Agreement"), dated as of June 13, 1997 by and between Hyperion and
MCI. Hyperion, XXX and Xxxxxxxx agree that the terms of this Letter shall be
binding obligations upon the parties.
On March 18, 1998, Hyperion filed a Form S-1 Equity Registration Statement
(the "S-1") in connection with its Initial Public Offering ("IPO") of Class A
Common Stock, a copy of which has been provided to MCI. It is currently
expected that the gross proceeds from the sale of Class A Common Stock (the "IPO
Stock") to the public in the IPO will be approximately $150 million (the
"Primary Proceeds"), plus up to an additional $22.5 million if the underwriters
exercise their over-allotment option (the "Over-allotment Proceeds"). Hyperion
expects the red xxxxxxx price range to be $14 to $16 per share after issuance of
a 3.25 for 1 stock split to be issued in the form of a stock dividend just prior
to the IPO closing date. In addition, in a private placement of Class A Common
Stock to close on or about the date of the consummation of the IPO, Xxxxxxxx has
agreed to purchase for total consideration currently expected to be
approximately $104.5 million, (i) 3,875,556 shares of Class
MCImetro Access Transmission Services, Inc.
Adelphia Communications Corporation
Page Two
_____________________________________
A Common Stock of Hyperion in connection with the Adelphia Note Contribution (as
defined in the S-1), currently estimated to be approximately $54.5 million at a
price per share equal to the IPO Price, less the underwriters' discount, and
(ii) 3,555,556 shares of Class A Common Stock of Hyperion in connection with the
Adelphia Share Purchase (as defined in the S-1), currently estimated to be
approximately $50 million at a price per share equal to the IPO Price, less the
underwriters' discount, (the shares of Class A Common Stock referred to in
clauses (i) and (ii) together to be known as the "Adelphia Stock"). "IPO Price"
shall have the same definition as clause (i) of the definition of Initial Public
Offering Price in the Warrant Agreement.
MCI and Hyperion are entering into this Letter to settle and resolve
disagreements they have under the Warrant Agreement, and Adelphia is entering
into this Letter to facilitate such settlement and resolution within the context
of the IPO.
In connection with the IPO, XXX has expressed a desire to sell, and
Xxxxxxxx has expressed a willingness to purchase any and all Initial Warrants
and all Additional Initial Warrants issued or issueable in accordance with the
Warrant Agreement at a mutually agreeable price as set forth below. Accordingly,
Xxxxxxxx, XXX and Xxxxxxxx each mutually agree to the following terms in
settlement of the matters set forth herein, and as an amendment to the Warrant
Agreement.
In connection with and immediately upon consummation of the (i) sale of the
IPO Stock relating to the Primary Proceeds (the "Primary Offering"), Hyperion
agrees to issue to MCI Additional Initial Warrants representing 2.5641% of the
IPO Stock shares sold in the Primary Offering in accordance with the terms set
forth in the Warrant Agreement, and (ii) the sale of the IPO Stock relating to
the Over-allotment Proceeds (the "Over-allotment Offering"), Xxxxxxxx agrees to
issue to MCI Additional Initial Warrants representing 2.5641% of the IPO Stock
shares sold in the Over-allotment Offering in accordance with and upon the terms
set forth in the Warrant Agreement. In addition, in connection with and
immediately upon the consummation of the Adelphia Note Contribution and the
Adelphia Share Purchase (collectively, the "Adelphia Stock Purchase"), Xxxxxxxx
agrees to issue to MCI Additional Initial Warrants representing 2.5641% of the
Adelphia Stock shares in accordance with the terms set forth in the Warrant
Agreement. Concurrently with the
MCImetro Access Transmission Services, Inc.
Adelphia Communications Corporation
Page Three
_____________________________________
issuances of the Additional Initial Warrants relating to the Primary Offering
and relating to the Adelphia Stock Purchase, MCI shall sell to Adelphia and
Adelphia shall purchase from MCI all of its Initial Warrants and such Additional
Initial Warrants at a price (the "Warrant Purchase Price") equal to the number
of Class A Common Shares issueable under said Warrants times the IPO Price minus
the underwriting discount of no more than 6.25% thereon, less the adjusted
aggregate strike price of said Warrants as calculated in accordance with the
Warrant Agreement (the "Adelphia Warrant Purchase"). In addition, concurrently
with the issuance of the Additional Initial Warrants relating to the Over-
allotment Offering, MCI shall sell and Adelphia shall purchase from MCI all such
Additional Initial Warrants at a price equal to the Warrant Purchase Price (the
"Additional Adelphia Warrant Purchase").
Furthermore, concurrent with the Adelphia Warrant Purchase, Xxxxxxxx agrees
to pay to Xxxxxxxx, in consideration of the obligations undertaken by Xxxxxxxx
to facilitate the agreements between MCI and Hyperion hereunder, (A) a fee of
$500,000 and (B) a warrant (the "Adelphia Warrant") which expires three years
from its issuance, to purchase 200,000 shares of Class A Common Stock at an
exercise price equal to the IPO Price. In addition, Hyperion acknowledges and
agrees that upon exercise of the Adelphia Warrant, Hyperion shall issue to MCI
Adjustment Warrants in accordance with the terms set forth in the Warrant
Agreement.
Hyperion, MCI and Xxxxxxxx agree that the transaction described above
represents the entire transaction as it relates to the warrant issuances
required by the Warrant Agreement in connection with the equity issuances
described herein, and Hyperion shall not be obligated to issue any other
Warrants under the Warrant Agreement to MCI or Adelphia as a result of the IPO,
the Adelphia Note Contribution or the Adelphia Share Purchase. The issuance of
the Warrants to MCI and Adelphia, the Adelphia Warrant Purchase and the
Additional Adelphia Warrant Purchase and related transactions described herein
shall be conditioned upon, and shall become effective simultaneously with, the
closing of the IPO, and shall be subject to the execution of definitive
documentation reflecting the foregoing with customary representations and
warranties. XXX and Xxxxxxxx each mutually agree
MCImetro Access Transmission Services, Inc.
Adelphia Communications Corporation
Page Four
_____________________________________
that, except as expressly set forth herein, the terms and conditions of the
Warrant Agreement, including the obligation of Hyperion to issue Adjustment
Warrants and Performance Warrants, shall remain in full force and effect.
Yours truly,
Hyperion Telecommunications, Inc.
By: /s/ Xxxxxxx X. Xxxxx
--------------------
Intending to be legally bound hereby,
agreed to and accepted:
MCImetro Access Transmission Services, Inc.
By: /s/ Xxxx Xxxxx
--------------
Adelphia Communications Corporation
By: /s/ Xxxxxxx X. Xxxxx
--------------------
