SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 11, 1998
CELLULARVISION USA, INC.
(Exact name of registrant as specified in charter)
Delaware
(State or other 000-27582 13-3853788
jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
140 58th Street, Loft 7E 11220
Brooklyn, New York (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code: (718) 489-1200
Not Applicable
(Former name or former address, if changed from last report)
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Item 5. Other Events
Series A Convertible Preferred Stock
Waiver of Subsequent Financings and Financing Limitations. As previously
reported, on April 1, 1998, CellularVision USA, Inc. (the "Company") entered
into a financing agreement with Proprietary Convertible Investment Group, Inc.
("Proprietary"), which is an affiliate of CS First Boston. Proprietary's legal
name has been changed to Marshall Capital Management, Inc. ("MCM").
Pursuant to a Securities Purchase Agreement, dated April 1, 1998, between
the Company and MCM (the "MCM Purchase Agreement"), on April 6, 1998 the Company
issued 3,500 shares of its Series A Convertible Preferred Stock ("Convertible
Preferred Stock") to MCM for $3.5 million. Subject to certain conditions,
including the registration under the Securities Act of 1933, as amended, of the
underlying shares of the Company's Common Stock, par value $.01 ("Common
Stock"), the MCM Purchase Agreement provides for the issuance, at the Company's
option, of an additional 3,500 shares of Convertible Preferred Stock at a
purchase price of $1,000 per share at any time on or after June 15, 1998 and
prior to December 31, 1998 (the "Company Option"). The MCM Purchase Agreement
also provides for the issuance, at MCM's option, of an additional 3,000 shares
of Convertible Preferred Stock at a purchase price of $1,000 per share during
the three year period following April 6, 1998 (the "MCM Option").
Pursuant to a letter agreement dated July 11, 1998 (the "Letter
Agreement"), the Company and MCM have agreed to waive the Company Option and the
MCM Option, respectively, provided that the other party does not willfully
breach any material covenant contained in (i) the MCM Purchase Agreement, (ii)
the certificate of designation of the Convertible Preferred Stock or (iii) the
registration rights agreement (the "Registration Rights Agreement") relating to
the registration of the underlying shares of Common Stock into which MCM's
shares of Convertible Preferred Stock are convertible ("MCM Common Stock"). In
addition, MCM's waiver of the MCM Option is subject to the condition that
certain shareholders of the Company not willfully breach their respective voting
agreements entered into pursuant to the MCM Purchase Agreement.
In addition, pursuant to the Letter Agreement, MCM has waived the capital
raising limitations contained in the MCM Purchase Agreement that precluded
certain equity-linked financing transactions in excess of $6 million for a
period of one year following the final issuance of Convertible Preferred Stock.
Repricing Event. As the result of the pendency of certain ongoing
negotiations with third parties during the month of July, 1998 that ultimately
resulted in the Company's agreement with WinStar Communications, Inc. to sell
850 MHz of LMDS spectrum $32.5 million in cash, MCM has advised the Company of
its view that the certain securites law matters have resulted in an adjustment
to the conversion price of the Convertible Preferred Stock (a "Repricing Event")
under the terms of the Registration Rights Agreement. If MCM's view is correct,
the conversion price would equal to the lesser of (i) the lowest reported sale
price occurring during the period between the date on which the Repricing Event
first occurred and the date on which such Repricing Event was no longer
continuing and (ii) the formula otherwise applicable for determining the
conversion price described in the paragraph below. Based on that formula, the
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applicable conversion price would be $0.375 per share of Common Stock. MCM has
converted 10 shares of the Convertible Preferred Stock into shares of Common
Stock, which it has sold under a registration statement. Therefore, if a
Repricing Event is deemed to have occurred, MCM's remaining 3,490 shares of
Convertible Preferred Stock would be convertible, subject to certain conditions
and restrictions, into a minimum of 9,306,667 shares of Common Stock,
representing approximately 35.35% of the Company's outstanding shares of Common
Stock, after giving effect to such conversion.
The Convertible Preferred Stock may be converted into Common Stock at any
time at the option of the holder thereof at a conversion price equal to the
lesser of (i) $5.25 and (ii) 88% of the lesser of (A) the average of the lowest
sale prices for the Common Stock on each of any three trading days during the
twenty two trading days occurring immediately prior to (but not including) the
applicable conversion date and (B) the average of the three lowest closing bid
prices for the Common Stock during the twenty two trading days occurring
immediately prior to (but not including) the applicable conversion date. In
addition, the Company has the right to redeem all the Convertible Preferred
Stock outstanding in the event that the closing bid price for the Common Stock
is above $10 for twenty two consecutive trading days at a price equal to 130% of
(i) the stated value of the Convertible Preferred Stock ($1,000 per share) plus
(ii) accrued and unpaid dividends thereon. The Convertible Preferred Stock is
subject to mandatory redemption upon the occurrence of certain events of
default.
Item 7. Financial Statements and Exhibits
(c) Exhibits:
None.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CELLULARVISION USA, INC.
By: /s/ Shant S. Hovnanian
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Name: Shant S. Hovnanian
Title: Chief Executive Officer
July 31, 1998
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EXHIBIT INDEX
Exhibit
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None
