EXHIBIT 99.7
AMENDMENT NO. 1 TO
MODIFICATION AGREEMENT
AMENDMENT NO. 1 TO MODIFICATION AGREEMENT dated as of April 29,
1997 (this "Amendment") among CAI Wireless Systems, Inc., a Connecticut
corporation ("CAI"), the subsidiaries of CAI listed on the signature pages
hereto (collectively with CAI, the "Company"), BANX PARTNERSHIP, a Delaware
general partnership ("BANX"), MMDS HOLDINGS, INC., a Delaware corporation
("MMDS Holdings"), MMDS HOLDINGS II, INC., a Delaware corporation ("MMDS
Holdings II"), NYNEX MMDS COMPANY, a Delaware corporation ("NYNEX MMDS"), and
NYNEX MMDS HOLDING COMPANY, a Delaware corporation ("NYNEX MMDS Holding";
capitalized terms used herein and not otherwise defined herein shall have the
meanings ascribed to such terms in the Modification Agreement).
RECITALS
1. The Company and BANX, MMDS Holdings, MMDS Holdings II, NYNEX
MMDS and NYNEX MMDS Holding are parties to the Modification Agreement dated as
of December 12, 1996, pursuant to which the parties modified their contractual
arrangements under the Securities Purchase Agreement and the BR Agreement and
with respect to the Purchased Securities.
2. The Company and BANX, MMDS Holdings, MMDS Holdings II, NYNEX
MMDS and NYNEX MMDS Holding desire to further modify their contractual
arrangements under the Securities Purchase Agreement and the BR Agreement and
with respect to the Purchased Securities, as set forth herein.
Accordingly, the parties hereby agree as follows:
Section 1. LAPSE AND SUSPENSION OF BUSINESS RELATIONSHIP
AGREEMENT.
(a) Effective upon the execution and delivery of this Amendment:
(i) the right of NYNEX MMDS and MMDS Holdings to exercise
options, and the obligations of the Company to perform by the
specified dates, under the BR Agreement among the Company and NYNEX
MMDS and MMDS Holdings shall lapse and terminate with no further
force or effect, and each of the parties thereto shall be relieved
from their obligations thereunder with the same effect and as if
the parties to the BR Agreement had never entered into such
agreement with respect to, solely, the Boston, Pittsburgh, Albany,
Syracuse and Buffalo Service Areas (the "Lapsed Service Areas").
The lapse and termination of the BR Agreement with respect to the
Lapsed Service Areas pursuant hereto supersedes the suspension of
the BR Agreement contemplated by Section 3 of the Modification
Agreement; and
(ii) the right of NYNEX MMDS and MMDS Holdings to exercise
options, and the obligations of the Company to perform by the
specified dates, under the BR Agreement among the Company and NYNEX
MMDS and MMDS Holdings shall be suspended and the running of all
other time periods thereunder shall be tolled with respect to all
remaining Service Areas contemplated by the BR Agreement (the
"Suspended Service Areas"). If CAI shall fail to consummate a
purchase transaction pursuant to Section 1 of the Modification
Agreement, as amended, the BR Agreement and the rights and
obligations of the parties, solely with respect to the Suspended
Service Areas, shall be reinstated automatically and without
further action of the parties on March 1, 1998, and all time
periods for performance or the exercise of any rights or
obligations thereunder, including the right to exercise the options
by NYNEX MMDS and MMDS Holdings thereunder shall be extended by a
period equal to the period of suspension of the BR Agreement
pursuant hereto; provided, that, following the end of the
suspension period, the parties agree to negotiate in good faith to
amend the BR Agreement; provided, further, however, that the
parties are under no obligation to agree to any amendments,
modifications or waivers of the BR Agreement other than with
respect to the elimination of the existing "Fulfillment Dates" (as
defined in the BR Agreement). The suspension of the BR Agreement,
and any reinstatement thereof, shall not effect a waiver of any
rights, obligations or claims of the parties thereto for any period
prior to such suspension or after such reinstatement and this
Amendment shall not constitute a consent to any modification of
such rights, obligations or claims, except as expressly provided
hereunder.
(b) In the event that CAI consummates a purchase transaction
pursuant to Section 1 of the Modification Agreement, as amended, the BR
Agreement shall lapse and terminate with no further force or effect, and each
of the parties thereto shall be relieved from their obligations thereunder with
the same effect and as if the parties to the BR Agreement had never entered
into such agreement with respect to the Suspended Service Areas upon
consummation of such purchase of the Purchased Securities.
(c) This Section 1 shall supersede Section 3 of the Modification
Agreement in all respects; provided, however, that for purposes of determining
the period of suspension of the BR Agreement for purposes of Section 1(a)(ii)
above, such period of suspension shall be deemed to have commenced on December
12, 1996.
Section 2. SUSPENSION OF COVENANTS; LIMITATION ON ADDITIONAL
INDEBTEDNESS.
(a) Effective upon the execution and delivery of this Amendment,
the covenants contained in Sections 6.2(b) and 6.4(b), (c), (d) and (f) of the
Securities Purchase Agreement, and in Sections 8.5, 8.9, 8.10, 8.19 through
8.22, inclusive, 8.25, 8.27, 8.28, 8.29 and 8.31 of the terms of CAI's Senior
Preferred Stock, together with the corresponding covenants contained in the
Term Notes and the Warrants, shall be suspended, until the earlier to occur of
(A) the consummation of the purchase of the Purchased Securities by CAI or its
designee pursuant to Section 1 of the Modification Agreement, as amended by
this Amendment, in which case, the Warrants shall lapse and be canceled with no
further force or effect upon such purchase, the Term Notes will be canceled by
the holders thereof and returned to CAI, and the certificates representing the
Senior Preferred Stock issued to the holders thereof will be surrendered to CAI
for cancellation, or (B) the Option Expiration Date (as defined below) without
CAI or its designee having consummated the purchase of the Purchased Securities
pursuant to Section 1 of the Modification Agreement, as amended, in which case,
the covenants suspended pursuant hereto shall be reinstated automatically with
no further action of the parties. Actions taken by CAI during the suspension
period which would otherwise have required consent under the suspended
covenants shall not be deemed to be a breach of such covenants following the
termination of such suspension; but only to the extent of actions completed or
transactions consummated as of the end of the suspension period; provided,
however, that CAI may continue to take actions, ministerial or administrative
in nature, required of CAI subsequent to the suspension period in furtherance
of the actions taken by CAI during the suspension period, which actions shall
not be deemed to be a breach of such covenants following the termination of the
suspension period.
(b) In addition to the suspension of the covenants
contained in subsection (a)(iii) above, (i) Section 6.2(a) of the
Securities Purchase Agreement shall be amended to eliminate, during
the suspension period contemplated hereby, the obligation of CAI to
provide monthly unaudited statements of income for each of its
Subsidiaries, and (ii) Section 6.5 of the Securities Purchase
Agreement shall be amended during the suspension period
contemplated hereby to read follows:
6.5. Inspection. From and after the date on which a
Notice of Default pursuant to Section 6.2(d) hereof shall
have been given by the Company to the Purchaser, the Loan
Parties shall permit representatives of the Purchaser to
visit and inspect any of their or their respective
Subsidiaries' offices or properties, to examine all of their
respective books of account, records, reports and other
papers, to make copies and extracts therefrom, and to discuss
their respective affairs, finances and accounts with their
respective officers and independent public accountants (and
by this provision each Loan Party authorizes said accountants
to discuss the affairs, finances and accounts of the Loan
Parties and their respective Subsidiaries), all at such times
and as often as may be requested until the default identified
in the Notice of Default shall have been cured.
(c) In addition to the suspension of the covenants contained in
subsection (a)(iii) above, the following covenants contained in the terms of
the Senior Preferred Stock and the corresponding covenants contained in the
Term Notes and the Warrants shall be amended during the suspension period
contemplated hereby to read as set forth herein (section references are to the
terms of the Senior Preferred Stock, however, all corresponding covenants
contained in the Term Notes and the Warrants shall be similarly amended):
(i) 7.4 PARITY OR SENIOR SHARES. The Company shall not
authorize, create, designate, issue or sell, or obligate itself to
authorize, create, designate, issue or sell, any separate class or
series of Preferred Stock or other equity securities of the
Company, whether now or hereafter authorized or any instrument
convertible into or exchangeable for such securities or security,
with rights, preferences and privileges in any respect on a parity
with or senior to the Senior Preferred Shares; increase the total
number of authorized Senior Preferred Shares; or issue Senior
Preferred Shares in excess of the total number of Senior Preferred
Shares issued and sold by the Company on the Original Issue Date or
upon the conversion of the Notes issued under the Purchase
Agreement or authorize, create, designate, issue or sell any
instrument or security convertible into or exchangeable for Senior
Preferred Shares or reclassify any shares of any debt or equity
securities into Senior Preferred Shares; provided, however, the
Company may authorize, create, issue or sell any separate class or
series of Preferred Stock or other equity securities of the Company
that do not contain the rights, preferences and privileges
described above, but that have voting rights on a parity with, but
not senior to, the Common Shares.
(ii) 8.1 MAINTENANCE OF EXISTENCE AND CONDUCT OF BUSINESS.
Solely to the extent necessary to preserve the Spectrum (as defined
in the Business Relationship Agreement) in the Suspended Service
Areas (as defined in Amendment No. 1 to the Modification Agreement)
(the "Suspended Service Area Spectrum"), the Company shall, and
shall cause each of its Subsidiaries to, (a) preserve and keep in
full force and effect such entity's corporate or partnership
existence, as the case may be, and rights and franchises material
to such entity's business and (b) comply with the provisions of all
franchises, permits, licenses or other similar authorizations
relating to such entity's business, including, without limitation,
the FCC Licenses, Channel Leases and any obligations or agreements
with respect to signal interference, certifications and permits,
and all other material agreements, licenses and sublicenses, leases
and subleases to which it is a party, and will suffer no loss or
forfeiture thereof or thereunder except for losses or forfeitures
which in the aggregate would not have a Material Adverse Effect on
the Suspended Service Area Spectrum.
(ii) 8.2. MAINTENANCE OF BUSINESS RELATIONSHIPS. Solely to
the extent necessary to preserve the Suspended Service Area
Spectrum, the Company shall, and shall cause each of its
Subsidiaries to, maintain and preserve its relationships with
lessors (including, without limitation, MMDS, MDS, POFS, and ITFS
lessors and lessors of head-end and antenna sites) and licensors
and others having business relationships with it.
(iii) 8.3 MAINTENANCE OF PROPERTIES. Solely to the extent
necessary to preserve the Suspended Service Area Spectrum, the
Company shall, and shall cause each of its Subsidiaries to,
maintain and keep, or cause to be maintained and kept, their
respective properties (including without limitation, intellectual
property and properties acquired in accordance with the terms of
the Loan Documents) in good repair, working order and condition
(other than ordinary wear and tear), and from time to time shall
make or cause to be made all appropriate repairs, renewals and
replacements thereof, so that the business carried on in connection
therewith may be properly conducted at all times, except where the
failure to do so would not have a Material Adverse Effect on the
Suspended Service Area Spectrum.
(iii) 8.4. MAINTENANCE OF LICENSES AND OTHER MATERIAL
AGREEMENTS. Solely to the extent necessary to preserve the
Suspended Service Area Spectrum, the Company shall, and shall cause
each of the Subsidiaries to, use its best efforts to keep in full
force and effect all of the FCC Licenses, Channel Leases, any
obligations or agreement with respect to signal interference,
certification and permits, and all other material agreements,
licenses and sublicenses, leases and subleases to which it or any
of the Subsidiaries is a party or to which it or any of its
Subsidiaries shall become a party hereafter, except for losses
thereof which individually or in the aggregate would not have a
Material Adverse Effect on the Suspended Service Area Spectrum.
(iv) 8.8 COMPLIANCE WITH BUSINESS RELATIONSHIP AGREEMENT.
Solely to the extent necessary to preserve the Suspended Service
Area Spectrum, the Company shall, and shall cause each of the
Subsidiaries to, comply with the Business Relationship Agreement.
(v) 8.14 OTHER AFFIRMATIVE COVENANTS. The Company shall
cause each of its Subsidiaries to comply with this SECTION 8.
(vi) Section 8.16 (INDEBTEDNESS) shall be amended by
deleting the first word of such section and substituting the
following in lieu thereof:
"Except for the Additional Indebtedness (as defined in Section 2(d)
of Amendment No. 1 to the Modification Agreement), the incurrence
of which shall preclude CAI's reliance on subsections (g) and (h)
below, but shall not be deemed to be a breach of such subsection,
and which indebtedness shall be deemed to be Indebtedness under
Section 8.16, the"
(vii) Section 8.17 (LIENS) shall be amended by deleting the
first word of such section and substituting the following in lieu
thereof:
"Except to the extent necessary to obtain the Additional Financing,
the"
(viii) 8.18 RESTRICTION ON FUNDAMENTAL CHANGES; ASSET
SALES. If required to preserve the Suspended Service Area
Spectrum, the Company shall not, nor shall it permit any of the
Subsidiaries to, enter into a Capital Reorganization, alter its
corporate, capital or legal structure or to enter into any merger,
or consolidate, or liquidate, wind-up or dissolve itself (or suffer
any liquidation or dissolution), or convey, sell, lease, sub-lease,
transfer or otherwise dispose of, in one transaction or a series of
transactions, all or any part of its business, property or assets,
whether now owned or hereafter acquired (other than in the ordinary
course of business), or acquire by purchase, lease or otherwise, in
one transaction or a series of transactions, all or any part of the
business, property or fixed assets of, or stock or other evidence
of beneficial ownership of, any Person (other than purchases or
other acquisitions of inventory, leases, materials, property and
equipment in the ordinary course of business) or agree to do any of
the foregoing at any future time following the reinstatement of the
Business Relationship Agreement.
(ix) 8.23 CONTINGENT OBLIGATIONS. The Company shall not,
nor shall it permit any of the Subsidiaries to, directly or
indirectly, create or become or be liable with respect to any
Contingent Obligation except:
(a) Contingent Obligations of the Company and the
Subsidiaries incurred pursuant to the Loan Documents;
(b) Contingent Obligations resulting from endorsement
of negotiable instruments for collection in the ordinary
course of business;
(c) Contingent Obligations in respect of operating
leases;
(d) intercompany Contingent Obligations with respect
to the Company or any other wholly-owned Subsidiary;
(e) Contingent Obligations which the Company elects
to treat as Additional Indebtedness and which could then be
incurred as Additional Indebtedness under SECTION 8.16
hereof;
(f) Contingent Obligations of the Company in respect
of assisting the Subsidiaries in providing goods and services
in the ordinary course of their respective businesses.
For purposes of this SECTION 8.23, the term "Contingent
Obligations" shall mean any direct or indirect liability,
contingent or otherwise (i) with respect to any indebtedness,
lease, dividend or other obligation of another if the primary
purpose or intent thereof is to provide assurance to the obligee of
such obligation of another that such obligation of another will be
paid or discharged, or that any agreements relating thereto will be
complied with, or that the holders of such obligations will be
protected (in whole or in part) against loss in respect thereof and
(ii) with respect to any letter of credit. Contingent Obligations
shall include with respect to the Company or any of the
Subsidiaries, without limitation, (A) the direct or indirect
guaranty, endorsement (otherwise than for the collection or deposit
in the ordinary course of business), co-making, discounting with
recourse or sale with recourse by the Company or any of the
Subsidiaries, (B) the obligation to make take-or-pay or similar
payments if required regardless of non-performance by any other
party or parties to an agreement, and (C) any liability of the
Company or any of the Subsidiaries for the obligations of another
through any agreement (contingent or otherwise) (x) to purchase,
repurchase or otherwise acquire such obligation or any security
therefor, or to provide funds for the payment or discharge of such
obligation (whether in the form of loans, advances, stock
purchases, capital contributions or otherwise), and (y) to maintain
the solvency or any balance sheet item, level of income or
financial condition of another (except as expressly provided in
herein), if in the case of any agreement described under subclause
(x) or (y) of this sentence, the primary purpose or intent thereof
is as described in the preceding sentence.
(x) 8.24 CONDUCT OF BUSINESS. Except as expressly
provided in the Loan Documents, the Company shall not, nor shall it
permit any of the Subsidiaries to, engage in any line of business
except those described in the Company's Transition Report on Form
10-K for the period ended March 31, 1994 and the activities
described in Note 2 to the Company's financial statements contained
in the Company's Quarterly Report on Form 10-Q for the quarter
ended September 30, 1994 which, in the sole judgment of the
Purchaser Group, do not violate the MFJ; provided, however, that
prior to the time that the BR Percentage first exceeds 30%, the
Company and its Subsidiaries may engage in other business
activities related to the use of the MMDS Spectrum if (i) they are
in compliance with all of their obligations hereunder, under the
other Loan Documents and the documents related to the Anticipated
Financing, and (ii) such activities will not have a Material
Adverse Effect on the ability of the Company and the Subsidiaries
to perform their obligations under the Business Relationship
Agreement solely to the extent necessary to preserve the Suspended
Service Area Spectrum.
(d) The Company and its Subsidiaries shall be permitted to incur
indebtedness, contingent or otherwise (the "Additional Indebtedness"), in
addition to any and all Indebtedness currently issued and outstanding on the
Stage II Closing Date by the Company and its Subsidiaries, in an aggregate
principal amount not to exceed $50,000,000. During the period of suspension
contemplated hereby, the Company and its Subsidiaries shall not be permitted to
incur any Indebtedness in excess of the Additional Indebtedness.
(e) This Section 2 shall be in addition to Section 5 of the
Modification Agreement, which provides CAI with a limited modification of
certain covenants contained in the Purchased Securities during the period from
December 12, 1996 and ending on the date hereof. Any actions permitted to be
taken by CAI pursuant to Section 5 of the Modification Agreement during such
period shall not be deemed to be a breach of any of the covenants contemplated
by Section 5 of the Modification Agreement. Actions taken by CAI during the
suspension period contemplated hereunder which would otherwise have required
consent under the suspended covenants shall not be deemed to be a breach of
such covenants following the termination of such suspension; but only to the
extent of actions completed or transactions consummated as of the end of the
suspension period, provided, however, that CAI may continue to take actions,
ministerial or administrative in nature, required of CAI subsequent to the
suspension period hereunder in furtherance of the actions taken by CAI during
the suspension period hereunder, which actions shall not be deemed to be a
breach of such covenants following the termination of the suspension period.
Section 3. OPTION TO PURCHASE SECURITIES. Section 1 of the
Modification Agreement is hereby amended by deleting it in its entirety and
inserting the following in lieu thereof:
Section 1. OPTION TO PURCHASE SECURITIES.
(a) BANX and its partners, NYNEX MMDS Holding and MMDS
Holdings II, hereby grant to CAI or its designee the right and
option to purchase, at any time through February 28, 1998 (the
"Option Expiration Date"), all (but not less than all) of the
Purchased Securities, including all accrued and unpaid dividends
thereon, for an aggregate purchase price equal to the Purchase
Price specified below. The option shall be exercised by written
notice (the "Option Exercise Notice") to BANX, NYNEX MMDS and MMDS
Holdings II in accordance with the Securities Purchase Agreement,
which notice shall identify any designee. If the Option Exercise
Notice from CAI includes a request to keep the identity of the
designee (if any) confidential, the sellers will not publicly
disclose the designee's identity, until such time as the identity
of the designee as the purchaser of the Purchased Securities is
otherwise made public, except as may otherwise be required by any
applicable law, rule, regulation, court order or requirement of a
government entity, including without limitation, the rules or
regulations of any securities exchange. Upon such exercise, the
purchase and sale of the Purchased Securities shall occur at the
offices of NYNEX MMDS Holding in New York City (the "Closing") on
the date, not later than February 28, 1998, as shall be specified
by CAI in the Option Exercise Notice, at which closing BANX, NYNEX
MMDS Holding and MMDS Holdings II shall deliver the certificates or
other instruments representing the Purchased Securities to CAI or
its designee (without representation or warranty except as to
title) against payment of the Purchase Price as provided below, and
CAI shall deliver such legal opinions, opinions of financial
advisors and officers' certificates as may reasonably be requested
by the sellers or as may be customary for transactions of such
nature, provided that if CAI or its designee is unable to close
within such period solely due to the document deliveries required
pursuant to this sentence, then at the election of CAI in writing
to sellers not less than 2 business days prior to the expiration of
such period, the cash portion of the Purchase Price may be
deposited in an interest bearing account and the Junior Preferred
Stock (as defined below) shall be delivered to Day, Berry & Howard,
to be held in escrow, for a period of up to thirty (30) days in
order to permit the purchaser to satisfy such delivery requirements
and the Closing shall be deemed timely if consummated within such
30-day period provided the sellers shall be paid all interest
accrued on such funds during such period in addition to the
Purchase Price. The parties will use reasonable efforts to agree
upon the form of such documents within forty five (45) days after
the execution of this Agreement; provided, however, that the
failure of the parties to so agree shall not relieve any party of
its obligation to deliver the required documents in a form
reasonably satisfactory to the receiving parties.
(b) PURCHASE PRICE. (i) The Purchase Price for the
Purchased Securities shall consist of (A) $40 million payable in
immediately available funds at the Closing, and (B) 100,000 shares
of the Company's Junior Convertible Preferred Stock (the "Junior
Preferred Stock"). The Junior Preferred Stock will be non-voting
equity of CAI, having no covenants or governance rights, other than
as required by the Connecticut Business Corporation Act. The
Junior Preferred Stock will be fully participating with, and have
no dividend preference over, the CAI common stock. It will have a
liquidation preference equal to $30 million, in the aggregate.
Each share of Junior Preferred Stock will be convertible into 25
shares of CAI common stock (i) at any time from and after the
transfer of the Junior Preferred Stock by BANX to a third party
unrelated to BANX or any of its affiliates, or (ii) at any time by
BANX or its affiliated holders from and after the third anniversary
of the issuance of the Junior Preferred but only in connection with
an underwritten sale of the CAI common stock into which the Junior
Preferred Stock is convertible, for which CAI will grant one demand
registration right. At no time shall BANX or any of its affiliates
be permitted to hold the shares of CAI common stock into which the
Junior Preferred Stock is convertible; provided, however, BANX may
hold the CAI common stock contemplated by subsection (ii)(B) below.
The foregoing summary of the terms of the Junior Preferred Stock is
qualified in its entirety by the terms of the Junior Preferred
Stock set forth on Exhibit 3(b)(i) attached hereto.
(ii) CAI further agrees that, so long as BANX is the holder
of the Junior Preferred Stock, to the extent the market value of
the CAI common stock into which the Junior Preferred Stock is
convertible on the Conversion Date (as defined in the terms of the
Junior Preferred Stock) is less than $14.00 per share (calculated
as the 20-day trading average immediately prior to the Conversion
Date), it shall issue to BANX, on the Conversion Date and at CAI's
sole discretion, either (A) a 10-year subordinated promissory note
(the "Subordinated Note"), substantially in the form of Exhibit
3(b)(ii) attached hereto, in a principal amount equal to the
difference between $35 million and the then market value of the CAI
common stock into which the Junior Preferred Stock is convertible
(calculated as set forth above)(such difference, the "Additional
Consideration"); provided, however, that such principal amount
shall not exceed $15 million, or (B) that number of shares of CAI
common stock having a then aggregate market value (calculated as
set forth above) equal to the Additional Consideration; provided,
however, that such number of shares shall not exceed 1 million.
The 10-year Subordinated Note shall bear simple interest at the
rate of 8 percent per annum, which interest shall be payable in
kind for the first five years after issuance of the Subordinated
Note, and payable in cash for years six through ten. The entire
principal and any unpaid interest is payable in full at the end of
year ten. Default under the Subordinated Note would limited to
payment defaults, with no cross-default provisions relating to any
other existing or future CAI indebtedness. The foregoing summary
of the terms of the Subordinated Note is qualified in its entirety
by Exhibit 3(b)(ii). The parties hereto agree that the provisions
of this Section 3(b)(ii) are solely for the benefit of BANX, may
not be assigned or transferred to any other party, and lapse upon
the transfer of the Junior Preferred Stock by BANX to a third party
unrelated to BANX.
Notwithstanding anything to the contrary herein, (i) in the event CAI
shall fail to consummate the purchase of the Purchased Securities in
accordance with the terms of this Agreement and without limitation to any
other remedies of BANX, NYNEX MMDS or MMDS Holdings occasioned by such
failure, the option to purchase pursuant to this Section 1 shall
terminate automatically and without further action of the parties, and
(ii) in the event that an Option Exercise Notice is not delivered on or
before November 21, 1997, BANX, NYNEX MMDS Holding and MMDS Holdings II
shall have the right to sell the Purchased Securities free and clear of
the option granted hereby and the rights of the Company pursuant hereto
upon twenty (20) days' prior notice to CAI, provided that CAI or its
designee does not exercise the option in accordance herewith within a
period of ten (10) days following the date of such notice to CAI. During
the option period, CAI shall make commercially reasonable efforts to
secure the funds required to exercise the option or to otherwise find a
purchaser for the Purchased Securities. If CAI engages in discussions or
negotiations with entities which have an interest in investing in the
Company, it shall offer such entities the option of acquiring the
Purchased Securities. CAI agrees that it shall take no action, (other
than actions in the ordinary course of its business) the effect of which
could reasonably expected to make the acquisition of the Purchased
Securities less attractive to a prospective purchaser. If CAI obtains
funds sufficient to acquire the Purchased Securities, it shall use
commercially reasonable efforts to obtain any consents or other
authorizations required to permit it to exercise the option hereunder.
Section 4. AMENDED COVENANTS. The parties hereto acknowledge that
any reference in the Senior Preferred Stock, Warrants or Term Notes to any of
the covenants contained therein shall refer to such covenants, as amended
hereby, during the suspension period.
Section 5. Any Common Shares or any stock or securities convertible
into or exchangeable for Common Shares or any other securities having voting
rights equal to the voting rights associated with the Common Shares or any
instrument convertible into or exchangeable for such securities or security
issued during the suspension period that CAI would otherwise be prohibited from
issuing pursuant to the terms of Section 8.20 of the Senior Preferred Stock
(and the corresponding covenant in each of the Warrants and Term Notes) shall
be deemed to have been outstanding immediately after consummation of the Stage
II Closing for purposes of the definitions of Fully-Diluted Common Shares and
Initial Target Share Number, and shall be included in any adjustment to Tier
Conversion Prices (and Tier Prices, in the case of the Warrants). The
suspension of Section 8.20 shall in no way be deemed to be a suspension of the
conversion and anti-dilution provisions of the CAI Securities, and such
provisions shall apply to any issuance of equity securities having voting
rights equal to the voting rights of the Common Shares or rights to acquire
such equity securities or any instrument convertible into or exchangeable for
such securities or security by CAI during the period of suspension contemplated
hereby. The parties hereto agree that upon the exercise in full of all CAI
Securities held by BANX immediately after the consummation of the Stage II
Closing entitled, and continues to entitle BANX to acquire not less than 45% of
the common equity of CAI, on a fully-diluted basis, without the payment of
additional consideration, other than the exercise prices under the Warrants.
Section 6. CS CONSENT RIGHTS; CONVEYANCE OF STOCK. Section 4 of
the Modification Agreement is hereby amended by deleting subsection (b) thereof
in its entirety (which subsection (b) the parties agree begins with the second
full paragraph of Section 4) and inserting the following in lieu thereof:
"(b) During the option period, BANX and its affiliates party
hereto hereby grant to CAI an irrevocable proxy for the purposes of
voting their respective shares of CS Wireless Systems, Inc. ("CS
Wireless") common stock.
CAI will inform BANX if it proposes to exercise the proxy
granted hereunder. In the event that CAI does exercise the proxy
granted hereunder, CAI shall defend, indemnify and hold harmless
each Indemnitee (as hereinafter defined) from and against any and
all Claims (as hereinafter defined) arising out of, in connection
with or as a result of exercise of the proxy."
The remaining provisions of Section 4 shall remain in full force and effect.
Section 7. MUTUAL RELEASES. Upon the execution and delivery of
this Amendment, the parties hereto shall execute and deliver the Release,
substantially in the form of Exhibit 7 attached hereto.
Section 8. REMOVAL OF EQUIPMENT. Section 6 of the Modification
Agreement is hereby deleted in its entirety.
Section 9. FURTHER ASSURANCES. The parties hereto agree to take
all actions necessary or advisable, in the opinion of the party taking such
action, to effect the terms of the provisions hereof.
Section 10. NO WAIVER. Failure by either party to insist on strict
performance or observance of any provision of this Amendment or to exercise any
right or remedy shall not be construed as a waiver of any right or remedy with
respect to any existing or subsequent breach or default. This Amendment shall
not constitute a waiver, compromise or relinquishment of any claims relating to
the BR Agreement or the documentation governing the Purchased Securities.
Section 11. REPRESENTATIONS AND WARRANTIES. Each party hereto
represents and warrants to the other party that (a) such party has all
requisite legal power and authority to execute and deliver this Amendment and
to perform its obligations hereunder, (b) the execution, delivery and
performance hereof has been duly authorized by all requisite corporate action
on the part of such party, and (c) this Amendment (i) has been duly executed
and delivered by such party and (ii) subject to the due execution and delivery
of this Amendment by the other party hereto, this Amendment constitutes a
legal, valid and binding obligation of such party, enforceable against it in
accordance with its terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws or other laws affecting creditors'
rights generally and subject further to general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
Section 12. EFFECT ON AGREEMENTS. The provisions of this Amendment
shall be narrowly construed in accordance with the express provisions hereof
and except as expressly amended or modified herein, the Modification Agreement
shall remain in full force and effect in accordance with its respective terms.
Section 13. MISCELLANEOUS.
(a) ENTIRE AGREEMENT. This Amendment constitutes the entire
agreement between the parties with respect to the subject matter hereof and
supersedes any and all previous agreements, representations and understandings
between the parties hereto with respect to such matters whether oral or in
writing.
(b) GOVERNING LAW. This Amendment shall be governed by and
construed in accordance with the law of the State of New York.
(c) SEVERABILITY. The invalidity or unenforceability of any
provision of this Amendment shall not affect the validly or enforceability of
any other provisions of this Amendment, each of which shall remain in full
force and effect.
(d) NO THIRD PARTY BENEFICIARIES. This Amendment shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns. Nothing in this Amendment,
including, without limitation, the Additional Consideration set forth in
Section 3(b)(ii) hereof, shall create or be deemed to create any third party
beneficiary rights in any person not party to this Amendment, except for
certain conversion rights contained in the terms of the Junior Preferred Stock
which shall vest solely in an unrelated third party.
(e) AMENDMENTS. This Amendment may be amended, supplemented or
modified, and any provision hereof may be waived, only pursuant to a written
instrument making specific reference to this Amendment signed by each of the
parties hereto.
(f) COUNTERPARTS. This Amendment may be executed in any number
of counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
Section 14. REGISTRATION RIGHTS. The Company covenants and agrees as
follows:
(a) DEFINITIONS. For purposes of this Section 14:
(i) The terms "register," "registered," and "registration"
refer to a registration effected by preparing and filing a
registration statement or similar document in compliance with the
1933 Act, and the declaration or ordering of effectiveness of such
registration statement or document;
(ii) The term "Registrable Securities" means (1) the Common
Shares issuable or issued upon conversion of the Junior Preferred
Stock, and (2) any Common Shares of the Company issued as (or
issuable upon the conversion or exercise of any warrant, right or
other security which is issued as) a dividend or other distribution
with respect to, or in exchange for or in replacement of, such
Junior Preferred Stock or Common Shares, excluding, however, the
Common Shares issuable to BANX or its affiliates during the first
three years following the original date of issuance of the Junior
Preferred Stock to BANX and its affiliates;
(iii) The number of shares of "Registrable Securities then
outstanding" shall be determined by the number of Common Shares
outstanding which are, and the number of Common Shares issuable
pursuant to then exercisable or convertible securities which are,
Registrable Securities;
(iv) The term "Holder" means BANX or any of its affiliates
(as defined in Rule 12b-2 of the Securities Exchange Act of 1934, as
amended) then holding the Registrable Securities, or any transferee
of BANX then holding the Registrable Securities; and
(v) The term "Form S-3" means such form under the 1933 Act as
in effect on the date hereof or any registration form under the
1933 Act subsequently adopted by the Securities and Exchange
Commission ("SEC") which permits inclusion or incorporation of
substantial information by reference to other documents filed by
the Company with the SEC.
(b) REQUEST FOR REGISTRATION.
(i) If the Company shall receive at any time on or after the
third anniversary of the original issuance of the Junior Preferred
Stock, a written request from the Holder that the Company file a
registration statement under the 1933 Act covering the registration
of the Registrable Securities, then the Company shall, subject to
the limitations of subsection 14(b)(ii), effect as soon as
practicable, and in any event within 120 days of the receipt of
such request, the registration under the 1933 Act of the
Registrable Securities.
(ii) The Holder shall be permitted to initiate the
registration request hereunder only if it distributes the
Registrable Securities covered by the request by means of an
underwritten offering. The Holder shall enter into an underwriting
agreement in customary form with the underwriter(s) selected for
such underwriting by the Holder, which underwriting agreement shall
relate to all of the Registrable Securities then held by the
Holder; PROVIDED, HOWEVER, if the underwriter advises the Holder
in writing that marketing factors require a limitation of the
number of shares to be underwritten, then the Holder shall so
advise the Company of the underwriter's advice and the number of
shares of Registrable Securities covered by the request (and
therefore, the number of shares of Junior Preferred Stock then
convertible by the Holder in accordance with the terms of such
Junior Preferred Stock) shall be reduced to that number of shares
that the underwriter has determined can be underwritten. The
Holder acknowledges that such reduction will also reduce the number
of shares of Junior Preferred Stock that the Holder can convert
into Registrable Shares at the time such conversion is requested.
(iii) The Company is obligated to effect only one such
registration pursuant to this Section 14(b); provided, however,
that, in the event the underwriter has made a determination that
marketing factors require a limitation of the number of shares to
be underwritten in accordance with the provisions of subsection
(ii) above, then the Holder shall be permitted to request
registration of the remaining Registrable Securities, subject to
the provisions of this Section 14.
(iv) Notwithstanding the foregoing, if the Company shall
furnish to the Holder, a certificate signed by the President of the
Company stating that in the good faith judgment of the Board of
Directors of the Company, it would be seriously detrimental to the
Company and its shareholders for such registration statement to be
filed and it is therefore essential to defer the filing of such
registration statement, the Company shall have the right to defer
such filing for a period of not more than 60 days after receipt of
the request of the Holder; PROVIDED, HOWEVER, that the Company may
not utilize this right more than once in any twelve month period.
(c) OBLIGATIONS OF THE COMPANY. When required under this Section
14 to effect the registration of Registrable Securities, the Company
shall, as expeditiously as reasonably possible:
(i) Prepare and file with the SEC a registration statement
with respect to such Registrable Securities and use its best
efforts to cause such registration statement to become effective.
(ii) Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used
in connection with such registration statement as may be necessary
to comply with the provisions of the 1933 Act with respect to the
disposition of all securities covered by such registration
statement.
(iii) Furnish to the underwriters such numbers of copies of a
prospectus, including a preliminary prospectus, in conformity with
the requirements of the 1933 Act, and such other documents as they
may reasonably request in order to facilitate the disposition of
Registrable Securities owned by the Holder.
(iv) Use its best efforts to register and qualify the
securities covered by such registration statement under such other
securities or Blue Sky laws of such jurisdictions as shall be
reasonably requested by the Holders, PROVIDED that the Company
shall not be required to qualify to do business or to file a
general consent to service or process in any such states of
jurisdictions.
(v) Enter into and perform its obligations under an
underwriting agreement, in usual and customary form, with the
managing underwriter of such offering. Each Holder participating
in such underwriting shall also enter into and perform its
obligations under such an agreement.
(vi) Notify each Holder of Registrable Securities covered by
such registration statement at any time when a prospectus relating
thereto is required to be delivered under the 1933 Act of the
happening of any event as a result of which the prospectus included
in such registration statement, as then in effect, includes an
untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances
then existing. The Company reserves the right to suspend the use
of the registration statement during any period in which the
Company determines that the prospectus contained therein is not
true and correct in all material respects or omits to state a
material fact required to be stated therein or necessary to make
the statements therein not misleading in the light of the
circumstances then existing.
(d) FURNISH INFORMATION. It shall be a condition precedent to
the obligations of the Company to take any action pursuant to this Section 14
with respect to the Registrable Securities of any selling Holder that such
Holder shall furnish to the Company such information regarding itself, the
Registrable Securities held by it, and the intended method of disposition of
such securities as shall be required to effect the registration of such Holder's
Registrable Securities. Each holder shall enter into such agreements with the
Company with respect to the registration of the Registrable Securities
containing such reps and warranties and covenants as is customary in connection
with the registration of securities under the 1933 Act.
(e) EXPENSES OF DEMAND REGISTRATION. All expenses other than
underwriting discounts and commissions incurred in connection with the
registration, filing and qualifications pursuant to Section 14, including,
without limitation, all registration, filing and qualification fees, printers
and accounting fees, fees and disbursements of counsel for the Company, and the
reasonable fees and disbursements of one counsel for the Holder shall be borne
by the Company; PROVIDED, HOWEVER, that the Company shall not be required to
pay for any expenses of any registration proceeding begun pursuant to this
Section 14 if the registration request is subsequently withdrawn at the request
of the Holder; PROVIDED, further, HOWEVER, that if at the time of such
withdrawal, the Holder has learned of a material adverse change in the
condition, business, or prospects of the Company from that known to the Holder
at the time of its request, then the Holder shall not be required to pay any of
such expenses.
(f) INDEMNIFICATION. In the event any Registrable Securities are
included in a registration statement under this Section 14:
(i) To the extent permitted by law, the Company will
indemnify and hold harmless each Holder and each person, if any,
who controls such Holder within the meaning of the 1933 Act,
against any losses, claims, damages, or liabilities (joint or
several) to which they may become subject under the 1933 Act,
insofar as such losses, claims, damages, or liabilities (or actions
in respect thereof) arise out of or are based upon any of the
following statements, omissions or violations (collectively a
"Violation"): (i) any untrue statement or alleged untrue statement
of a material fact contained in such registration statement,
including any preliminary prospectus (but only if such is not
corrected in the final prospectus) contained therein or any
amendments or supplements thereto, or (ii) the omission or alleged
omission to state therein a material fact required to be stated
therein, or necessary to make the statements therein not misleading
(but only if such is not corrected in the final prospectus);
PROVIDED, HOWEVER, that the indemnity agreement contained in this
subsection 14(f)(i) shall not apply to any such loss, claim,
damage, liability, or action to the extent that it arises out of or
is based upon a violation which occurs in reliance upon and in
conformity with written information furnished expressly for use in
connection with such registration by any such Holder or controlling
person; PROVIDED, HOWEVER, that the indemnity agreement contained
in this subsection 14(f)(i) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability or action if
such settlement is effected without the consent of the Company,
which consent shall not be unreasonably withheld;
(ii) To the extent permitted by law, each selling Holder will
indemnify and hold harmless the Company, each of its directors,
each of its officers who has signed the registration statement,
each person, if any, who controls the Company within the meaning of
the 1933 Act, any underwriter, any other Holder selling securities
in such registration statement and any controlling person of any
such underwriter or other Holder, against any losses, claims,
damages, or liabilities (joint or several) to which any of the
foregoing persons may become subject, under the 1933 Act, insofar
as such losses, claims, damages, or liabilities (or actions in
respect thereto) arise out of or are based upon any Violation, in
each case to the extent (and only to the extent) that such
Violation occurs in reliance upon and in conformity with written
information furnished by such Holder expressly for use in
connection with such registration; and each such Holder will pay,
as incurred, any legal or other expenses reasonably incurred by any
person intended to be indemnified pursuant to this subsection
14(f)(ii), in connection with investigating or defending any such
loss, claim, damage, liability, or action; PROVIDED, however, that
the indemnity agreement contained in this subsection 14(f)(ii)
shall not apply to amounts paid in settlement of any such loss,
claim, damage, liability or action if such settlement is effected
without the consent of the Holder, which consent shall not be
unreasonably withheld; PROVIDED, that, in no event shall any
indemnity under this subsection 14(f)(ii) exceed the gross proceeds
from the offering received by such Holder.
(iii) Promptly after receipt by an indemnified party under
this Section 14(f) of notice of the commencement of any action
(including any governmental action), such indemnified party will,
if a claim in respect thereof is to be made against any
indemnifying party under this Section 14(f), deliver to the
indemnifying party a written notice of the commencement thereof and
the indemnifying party shall have the right to participate in, and,
to the extent the indemnifying party so desires, jointly with any
other indemnifying party similarly noticed, to assume the defense
thereof with counsel mutually satisfactory to the parties;
PROVIDED, HOWEVER, that an indemnified party shall have the right
to retain its own counsel, with the fees and expenses to be paid by
the indemnifying party, if representation of such indemnified party
by the counsel retained by the indemnifying party would involve
actual or potential differing interests between such indemnified
party and any other party represented by such counsel in such
proceeding. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of
any such action, if prejudicial to its ability to defend such
action, shall relieve such indemnifying party of any liability to
the indemnified party under this Section 14(f), but the omission so
to deliver written notice to the indemnifying party will not
relieve it of any liability that it may have to any indemnified
party otherwise than under this Section 14(f).
(iv) The obligations of the Company and Holder under this
Section 14(f) shall survive the completion of any offering of
Registrable Securities in a registration statement under this
Section 14.
(g) ASSIGNMENT OF DEMAND REGISTRATION RIGHT. The provisions of
this Section 14 may be assigned by the Holder, but only in connection with a
transfer by the Holder of all of the Junior Preferred Stock originally issued
to BANX or its affiliates by the Company (or all of the Common Shares issued
upon conversion of all of the Junior Preferred Stock originally issued to BANX
or its affiliates).
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement through their duly authorized representatives on the day and year
first above written.
CAI WIRELESS SYSTEMS, INC.
By: /S/
Name: Jared E. Abbruzzese
Title: Chairman and CEO
ROCHESTER CHOICE TELEVISION, INC.
By: /S/
Name: John J. Prisco
Title: President
HAMPTON ROADS WIRELESS, INC.
By: /S/
Name: John J. Prisco
Title: President
EASTERN NEW ENGLAND TV, INC.
By: /S/
Name: John J. Prisco
Title: President
CONNECTICUT CHOICE TELEVISION, INC.
By: /S/
Name: John J. Prisco
Title: President
COMMONWEALTH CHOICE TELEVISION, INC.
By: /S/
Name: John J. Prisco
Title: President
ATLANTIC MICROSYSTEMS, INC.
By: /S/
Name: John J. Prisco
Title: President
HOUSATONIC WIRELESS, INC. SYSTEMS, INC., d/b/a
CAPITAL CHOICE TELEVISION
By: /S/
Name: John J. Prisco
Title: President
NISKAYUNA ASSOCIATES, INC.
By: /S/
Name: John J. Prisco
Title: President
ONTEO ASSOCIATES, INC.
By: /S/
Name: John J. Prisco
Title: President
NEW YORK CHOICE TELEVISION, INC.
By: /S/
Name: John J. Prisco
Title: President
CAI TRANSACTIONS P, INC.
By: /S/
Name: John J. Prisco
Title: President
CAI TRANSACTIONS W, INC.
By: /S/
Name: John J. Prisco
Title: President
CAI VA TRANSACTIONS, INC.
By: /S/
Name: John J. Prisco
Title: President
CAI CT HOLDINGS CORP.
By: /S/
Name: John J. Prisco
Title: President
BANX PARTNERSHIP
By: MMDS Holdings Inc.
By: /S/
Name: Philip R. Marx
Title: Assistant Secretary
By: NYNEX MMDS Company
By: /S/
Name: Melvin Meskin
Title: President
MMDS HOLDINGS INC.
By: /S/
Name: Philip R. Marx
Title: Assistant Secretary
MMDS HOLDINGS II INC.
By: /S/
Name: Philip R. Marx
Title: Assistant Secretary
NYNEX MMDS COMPANY
By: /S/
Name: Melvin Meskin
Title: President
NYNEX MMDS HOLDING COMPANY
By: /S/
Name: Melvin Meskin
Title: President