STOCK OPTION AGREEMENT
This Agreement, is made as of the 19th day of January, 1999, by and
between CAI Wireless Systems, Inc. (the "Company"), and the undersigned
individual (the "Optionee"), pursuant to the CAI Wireless Systems, Inc. 1998
Stock Option Plan (the "Option Plan"; defined terms used herein and not defined
herein shall have the meanings ascribed to such terms in the Option Plan).
Whereas, Optionee has been granted options previously under the Option
Plan pursuant to Paragraph 4(a) of that certain Initial Option Agreement between
the Company and Optionee, which options (the "Initial Options") Optionee has
agreed to surrender to the Company; and
Whereas, the Committee has approved the grant of Options evidenced hereby,
which options shall be granted under Paragraph 4(b) of the Option Plan to
Optionee and issued upon the surrender of the Initial Options; and
Whereas, Optionee has surrendered the Initial Options to the Company.
Now, Therefore, in consideration of the terms and conditions of this
Agreement and pursuant to the Option Plan, the parties agree as follows:
1. Grant of Options. The Company hereby grants to the Optionee the right
and option to purchase from the Company, at the exercise price set forth in
Section 3 below, all or any part of the aggregate number of common shares of the
Company, as such common shares are presently constituted (the "Common Shares"),
set forth in said Section 3. The issuance of the Options evidenced hereby is
conditioned upon the surrender to the Company of the Initial Options.
2. Terms and Conditions. It is understood and agreed that the Options
evidenced hereby are subject to the provisions of the Option Plan (which are
incorporated herein by reference) and the following terms and conditions:
(A) Vesting: The Options evidenced hereby will become vested and
exercisable on the earlier to occur of: (i) a Change of Control, as
defined on Exhibit A attached hereto; (ii) the consummation of (a) a
material third party acquisition or merger, (b) a material equity
investment in the Company, (c) a material joint venture, and/or a
take-or-pay arrangement, (d) any other material third party transaction
with respect to the use of the Company's spectrum, and/or (e) any other
material third party transaction having a substantially similar economic
effect as the foregoing, as determined by the Committee, in its good
faith, reasonable judgment; and further provided that, in the case of an
event described in (c), (d) or (e) above, when considered together with
any other such event in which the Company is participating, such event(s)
taken together, in the good faith judgment of the Committee, based upon
the advice of the Company's financial advisors, would permit the financing
of the Company's business plan; and (iii)(a) to the extent of one-half
(1/2) of the number of Options evidenced hereby from and after a Trading
Event Date; and (b) in their entirety when the average trading price of
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the Company's common stock has been at or above 150% of the Bondholder
Recovery Price for forty-five consecutive trading days.
(B) Exercise of Options: From and after the vesting of the Options
evidenced hereby such Options shall be exercisable from time to time by
submitting the appropriate Notice of Exercise form referred to below ten (10)
days prior to the date of exercise specifying the number of shares for which the
Options are being exercised, addressed as follows:
CAI Wireless Systems, Inc.
18 Corporate Woods Boulevard
Third Floor
Albany, New York 12211
Attention: Chief Financial Officer
and either
(i) Cash Only Exercise -- submitting a "Notice of Cash Exercise" (in
the form attached hereto, or as modified by the Company from time to
time), accompanied by the full cash purchase price of the exercised
shares; or
(ii) Cashless Exercise -- provided the Company has adopted such a
procedure at this time, submitting an "Notice of Cashless Exercise " (in
the form attached hereto, or as modified by the Company from time to time)
authorizing the delivery for sale of the exercised Common Shares, or
(iii) Combination -- tendering a combination of (i) or (ii) above.
(C) Withholding Taxes. Without regard to the method of exercise and
payment, the Optionee shall pay to the Company, upon notice of the amount due,
any withholding taxes payable with respect to such exercise.
(D) Expiration of Options. Notwithstanding anything in the Option Plan to
the contrary, the Options evidenced hereby shall not expire prior to the tenth
(10) anniversary of the date of grant of the Options evidenced hereby, provided
that all or a portion of such Options shall lapse and expire earlier as follows:
(i) Timed Lapse. The unvested portion of the Options evidenced
hereby shall lapse and cease to be exercisable in their entirety after the
twenty-four (24) month anniversary of the date of grant of the Options
evidenced hereby.
(ii) Employment Termination. (a) Prior to July 14, 1999. In the
event of a termination of Optionee's employment prior to July 14, 1999
other than for Cause or in the event of a voluntary termination for Good
Reason (as such terms are defined in the Employment Agreement of the
Optionee with the Company), the Optionee's Options will
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continue unaffected by the termination and remain subject to the terms of
this Agreement and the Option Plan; provided that, without regard to
whether such Options are vested, fifty-percent (50%) of such Options shall
lapse and cease to be exercisable, if not exercised (to the extent
exercisable) within six (6) months of the effective date of the
termination of Optionee's employment.
(iii) For Cause. All unvested Options shall lapse and cease to be
exercisable upon the effective date of a termination of Optionee's
employment for Cause or a voluntary termination other than for Good Reason
(as such terms are defined in the Employment Agreement).
(iv) After July 14, 1999. If the Optionee's employment has not
terminated on or before July 14, 1999, all of that Optionee's Options will
continue unaffected by any subsequent termination of employment and will
remain subject to the provisions of Paragraphs 2(A) and 2(D)(i) and the
other terms of this Agreement.
(E) Compliance with Laws and Regulations. The Options evidenced hereby are
subject to restrictions imposed at any time on the exercise or delivery of
shares in violation of the By-Laws of the Company or of any law or governmental
regulation that the Company may find to be valid and applicable.
(F) Interpretation. Optionee hereby acknowledges that this Agreement is
governed by the Option Plan, a copy of which Optionee hereby acknowledges having
received, and by such administrative rules and regulations relative to the
Option Plan and not inconsistent therewith as may be adopted and amended from
time by the Committee (the "Rules"). Optionee agrees to be bound by the terms
and provisions of the Option Plan and the Rules to the extent not inconsistent
with the terms of this Agreement.
(G) Transfer Restrictions. In addition to the restrictions on
transferability imposed by the Option Plan, the Options evidenced hereby are not
transferable other than by will or the laws of descent and distribution.
3. Option Data Optionee's Name: James P. Ashman
Number of Common Shares
Subject to Options: 150,000
Grant Date: January 19, 1999
Exercise Price per Share: $0.875
Expiration Date: January 19, 2009
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IN WITNESS WHEREOF, the Company has caused this instrument to be executed
by its authorized officer, as of the 19th day of January, 1999.
Agreed to: CAI Wireless Systems, Inc.
/s/ James P. Ashman By: /s/ Jared E. Abbruzzese
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Optionee: James P. Ashman Name: Jared E. Abbruzzese
Title: Chairman and Chief Executive
Officer
Exhibit A
For purposes hereof, a `Change of Control" of the Company shall be deemed
to have occurred if, after the date hereof, (i) any person or two or more
persons acting in concert, other than the Company or any employee benefit plan
sponsored by the Company, acquires beneficial ownership (within the meaning of
Rule 13d-3 promulgated under the Securities Exchange Act of 1934, as amended
(the "'34 Act") directly or indirectly of thirty-five percent (35%) or more of
the total voting power represented by the Company's then outstanding voting
securities (calculated as provided in paragraph (d) of Rule 13d-3 under the '34
Act in the case of rights to acquire voting securities); or (ii) any person or
two or more persons acting in concert, other than the Company or any employee
benefit plan sponsored by the Company, shall purchase shares of the Company
pursuant to a tender offer or exchange offer to acquire any voting securities of
the Company (or securities convertible into such voting securities) for cash,
securities or any other consideration, provided that after the consummation of
the offer, the person or persons in question has beneficial ownership directly
or indirectly of thirty-five percent (35%) or more of the total voting power
represented by the Company's then outstanding voting securities (all as
calculated under clause (i) above)); or (iii) the shareholders of the Company
shall approve (A) any consolidation or merger of the Company in which the
Company is not the continuing or surviving corporation (other than a merger of
the Company in which holder of the Common Shares of the Company immediately
prior to the merger have the same proportionate ownership of common stock of the
surviving corporation immediately after the merger as immediately before), or
pursuant to which Common Shares of the Company would be converted into cash,
securities or other property, or (B) any sale, lease, exchange or other transfer
(in one transaction or a series of related transactions) of all or substantially
all of the assets of the Company; or (iv) a change in control of a nature that
would be required to be reported in response to Item 6(e) of Schedule 14A of
Regulation 14A promulgated under the '34 Act, whether or not the Company is then
subject to such reporting requirement; or (v) there shall have been a change in
the composition of the Board of Directors of the Company at any time during any
consecutive twenty-four (24) month period such that "continuing directors" cease
for any reason to constitute at least a 70% majority of the Board. For purposes
of this clause, "continuing directors" means those members of the Board who
either were directors at the beginning of such twenty-four month period or were
elected by or on the nomination or recommendation of at least a 70% majority of
the then-existing "continuing directors." So long as there has not been a
"change of control" within the meaning of clause (v), the Board of Directors may
adopt by a 70% majority of the "continuing directors" a resolution to the effect
that an event described in clauses (i) or (ii) shall not constitute a "change of
control."