EXHIBIT 10.
MODIFICATION AGREEMENT
MODIFICATION AGREEMENT dated as of December 12, 1996 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").
RECITALS
. The Company and BANX are parties to a Securities Purchase
Agreement dated as of March 28, 1995, as amended (the "SECURITIES
PURCHASE AGREEMENT"; capitalized terms defined therein and used but not
defined herein being used as therein defined), pursuant to which CAI
issued and sold and BANX purchased (i) CAI's Term Notes due 2005 (the
"NOTES") in an aggregate original principal amount of $30,000,000, (ii)
7,000 shares of CAI's 14% Senior Preferred Stock, par value $10,000 per
share (the "SENIOR PREFERRED STOCK"), and (iii) warrants (the "WARRANTS")
to purchase CAI's Series C Convertible Preferred Stock. The Notes, the
Senior Preferred Stock and the Warrants are referred to herein
collectively as the "PURCHASED SECURITIES".
. The Company, NYNEX MMDS and MMDS Holdings are parties to a
Business Relationship Agreement dated as of March 28, 1995, as amended
(the "BR AGREEMENT"), pursuant to which the Company has, among other
things, granted to NYNEX MMDS and MMDS Holdings options, on a market by
market basis, to cause the Company to provide wireless cable transmission
services to NYNEX MMDS and MMDS Holdings using the Company's transmission
systems in specified markets in their respective service areas.
. The parties desire to 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. OPTION TO PURCHASE SECURITIES. BANX and its partners,
NYNEX MMDS Holding and MMDS Holdings II, hereby grant to CAI or its designee
the right and option, exercisable for a period of twelve (12) months following
the date of this Agreement, to purchase 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 to BANX, NYNEX MMDS and MMDS
Holdings II in accordance with the Securities Purchase Agreement, which notice
shall identify any designee and shall provide information in reasonable detail
with respect to the creditworthiness of any designee and of the expected source
of funds for the purchase. If the designee (which for purposes of this
sentence shall include the ultimate parent or entity which controls the
designee) is not required to file reports pursuant to the Securities Exchange
Act of 1934, then CAI shall have thirty (30) days from the date of the notice
to provide the financial information (including the expected source of funds)
required under the immediately preceding sentence. If the 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 on
the date, not later than ninety (90) days following the date of the notice of
exercise, as shall be specified by CAI in such notice of exercise, 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 in immediately available funds, 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 90-day 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 90-day period, the full Purchase Price may be deposited in an interest
bearing account 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. The Purchase Price for
the Purchased Securities shall equal the amount specified below opposite the
applicable number of days following the date of this Agreement on which the
notice of exercise is delivered by CAI to BANX, NYNEX MMDS Holding and MMDS
Holdings II:
NOTICE OF OPTION EXERCISE PURCHASE PRICE
up to 120 days $121,000,000
after 120 days up to 240 days $100,000,000 plus payment in full of all
accrued interest and dividends under the
Notes and Senior Preferred Stock as of the
date of notice plus $10,000,000.
after 240 days up to 365 days $100,000,000 plus payment in full of all
accrued interest and dividends under the
Notes and Senior Preferred Stock as of the
date of notice plus $20,000,000.
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 the option to purchase
pursuant to this Section 1 is not exercised in accordance herewith on or before
the 270th day following the date of this Agreement, 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 2. EXERCISE AND CONVERSION PRICES.
(a) Effective upon the execution and delivery of this Agreement,
(i) the Initial Tier I Conversion Price and the Initial Tier I Exercise Price
for the Senior Preferred Stock and the Warrants, respectively, shall be reduced
to an amount equal the product of the Preferred Conversion Ratio (as defined in
the Purchased Securities) multiplied by $3.86, and (ii) the Initial Tier 2
Exercise Price, the Initial Tier 3 Exercise Price and the Initial Tier 4
Exercise Price shall be reduced by multiplying such amounts by a fraction, the
numerator of which is equal to the Initial Tier I Exercise Price immediately
after giving effect to the reduction pursuant to clause (i) of this Section
2(a) and the denominator of which is equal to the Initial Tier I Exercise Price
immediately prior to giving effect to such reduction.
(b) In the event CAI shall not have exercised its option to
purchase the Purchased Securities on or prior to 180 days after the date of
this Agreement, (i) the Initial Tier I Conversion Price and the Initial Tier I
Exercise Price for the Senior Preferred Stock and the Warrants, respectively,
in each case shall be further reduced by an amount equal to 15% of the Initial
Tier 1 Exercise Price immediately prior to any and all such adjustments, and
(ii) in each case the Initial Tier II Exercise Price, the Initial Tier III
Exercise Price and the Initial Tier IV shall be reduced by multiplying such
price by a fraction, the numerator of which is equal to the Initial Tier I
Exercise Price immediately after giving effect to the reduction pursuant to
clause (i) of this Section 2(b) and the denominator of which is equal to the
Initial Tier I Exercise Price immediately prior to giving effect to such
reduction.
(c) Each reduction pursuant to this Section 2 shall be cumulative
with and in addition to any other reductions or adjustments to the applicable
prices pursuant hereto or under the other applicable documents governing the
Purchased Securities and each adjustment pursuant hereto shall be affected
prior to any adjustments pursuant to such other documents.
(d) The reduction provided for in Section 2(b) above shall not
apply in the event of an exercise of the conversion rights of the Notes or
Senior Preferred Stock or an exercise of the Warrants by BANX or its
affiliates.
Section 3. SUSPENSION OF BR AGREEMENT. Effective upon the
execution and delivery of this Agreement, the right of NYNEX MMDS and MMDS
Holdings to exercise the options, and the obligations of the Company to perform
by the specified dates, under the BR Agreement shall be suspended and the
running of all other time periods thereunder shall be tolled. If CAI shall
purchase all of the Purchased Securities pursuant to the exercise of its option
in accordance with Section 1 of this Agreement, the BR Agreement and all rights
and obligations of the parties thereunder shall terminate. If CAI shall fail
to provide notice of the exercise of its option to purchase the Purchased
Securities pursuant to Section 1 hereof on or prior to the first anniversary of
the date of this Agreement and consummate a purchase transaction pursuant to
Section 1 hereof, the BR Agreement and the rights and obligations of the
parties shall be reinstated automatically and without further action of the
parties, 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 the suspension of the BR Agreement pursuant to this Section 3,
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 Agreement shall not constitute a consent to any
modification of such rights, obligations or claims except as expressly provided
hereunder.
Section 4. CS CONSENT RIGHTS; CONVEYANCE OF STOCK. (a) All rights
of BANX and its affiliates to consent to the exercise by CAI of its right to
approve or disapprove of the taking of any actions by CS Wireless Systems, Inc.
pursuant to the terms of the Consent dated February 23, 1996 (the "CS Consent")
among CAI, BANX and its affiliates shall be terminated effective upon the
execution and delivery of this Agreement.
During the option period, BANX and its affiliates party hereto
agree to xxxxx XXX a proxy for the purposes of voting their respective shares
of CS Wireless Systems, Inc. ("CS") common stock; PROVIDED, HOWEVER, that with
respect to votes regarding the following matters, CAI must vote the shares of
CS held by BANX and its affiliates as directed by such parties:
any shareholder approval sought in connection with a public
offering of CS equity securities in the event that CAI proposes to vote against
such a transaction;
any shareholder approval in connection with a merger, business
combination, sale of all or substantially all of CS' assets or any similar
transaction, other than a transaction in which the holders of CS common stock
would become the holders of tradable securities in a publicly traded entity,
unless CAI has notified BANX that it proposes to vote in favor of such
transaction;
any shareholder approval in connection with a transaction between
CS and CAI and/or any of their respective affiliates;
any shareholder approval in connection with a redemption or
repurchase of CS' equity securities or the declaration of any dividends; and
any transaction, other than a sale of CS equity securities for
cash, that would dilute the interest of BANX and its affiliates in CS or grant
any entity greater voting rights.
CAI will inform BANX if it proposes to exercise the proxy granted hereunder.
If the proxy would be voted in connection with one or more of the items listed
in this Section 4(b), CAI will describe the action to be approved and CAI's
intention to exercise the proxy for or against such matter, and the notice
containing the foregoing shall be delivered as soon as possible, but in no
event less than ten (10) business days prior to the date of the vote. Unless
BANX notifies CAI prior to the actual vote that it objects to CAI's proposed
vote, CAI shall exercise the proxy as indicated in the notice.
In the event CAI exercises the proxy granted hereunder other than at the
express direction of BANX, 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.
(c) Upon the consummation of a purchase by CAI or its designee in
accordance with the provisions of Section 1 hereof, BANX and its partners will
transfer to CAI, for no additional consideration, the shares of CS common stock
conveyed to them pursuant to the CS Consent. CAI shall pay any and all taxes
(other than income tax) or other costs and expenses payable to third parties as
a result of such transfer.
Section 5. MODIFICATION OF COVENANTS. The covenants of CAI in the
Securities Purchase Agreement and in the Purchased Securities shall be modified
(i) to permit the Company to sell, transfer or otherwise dispose of assets
having a fair market value not in excess of $2,000,000 in any one transaction
or series of related transactions from time to time to the extent permitted
under the terms of the Indenture governing CAI's 12-1/4% Senior Notes due 2002
as in effect on the date of this Agreement and (ii) to suspend during the term
of the suspension of the BR Agreement pursuant to Section 3 hereof the right of
BANX and its affiliates to approve of the Business Plan of CAI and the
following covenants in the Stage II Warrants (and the corresponding provisions
of the Stage I Warrants, the Term Notes and the Senior Preferred Stock):
Section 7.8 (other than the last sentence thereof), 7.10(b), 7.19(d),, clause
(iii) of 7.24 and 7.25. Actions taken by CAI during the one-year 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 one-year period in furtherance of the actions taken by
CAI during the one-year period, which actions shall not be deemed to be a
breach of such covenants following the termination of the suspension period.
Section 6. REMOVAL OF EQUIPMENT. Until the expiration of the
options under the BR Agreement with respect to the Virginia Beach and Boston
markets, the Company will maintain the transmission systems in Virginia Beach
and Boston intact and will not, unless consented to in writing by NYNEX MMDS or
MMDS Holdings, as applicable, sell, transfer or otherwise dispose of or remove
from the site any of the fixed assets or equipment located at or utilized in
the transmission systems in Virginia Beach or Boston, provided that CAI may
remove and utilize for other purposes (i) booster transmitters and associated
equipment in Boston, other than any equipment located at or used for the main
transmitter and associated systems at One Financial in Boston and (ii) booster
transmitters and associated equipment in Virginia Beach, other than equipment
used at the Virginia Beach main transmitter.
Section 7. COOPERATION. The parties shall provide reasonable
cooperation to each other in connection with facilitating the sale of the
Purchased Securities; PROVIDED, HOWEVER, that such cooperation shall not
require the parties to make any representations, warranties or statements or
incur any obligations other than those set forth in Section 1.
Section 8. FCC MATTERS. For a period of one year from the date
hereof, each of BANX and its affiliates party hereto agrees that it shall not
oppose any FCC filing or application by CAI solely for the purpose of: (i)
transferring any of its MMDS, MDS or ITFS leases or licenses; or (ii) modifying
its authority to use such spectrum for uses other than that permitted under
existing law or regulations, PROVIDED, HOWEVER, that BANX and its affiliates
party hereto will not be restricted from opposing any application or filing
described in clause (ii) where such application or filing, if granted, could
reasonably be expected to have the effect of restricting the conduct of their
business. Nothing in this Agreement shall have the effect of limiting the
ability of BANX and its affiliates to respond to any communication to the FCC
which they determine makes false, misleading and/or negative reference
(directly or indirectly) to BANX or any of its affiliates.
Section 9.PUBLICITY. The parties will make reasonable efforts to
consult with each other prior to the issuance of a press release regarding this
Agreement. Following the dissemination of an initial press release, the
parties' obligations with respect to the disclosure of the details of this
Agreement shall be governed by the applicable provisions of the agreements
which this Agreement modifies.
Section 10. NO WAIVER. Failure by either party to insist on strict
performance or observance of any provision of this Agreement 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 Agreement 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 Agreement 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, including with respect to the Company by express
Board of Directors authorization, and (c) this Agreement (i) has been duly
executed and delivered by such party and (ii) subject to the due execution and
delivery of this Agreement by the other party hereto, this Agreement
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). Notwithstanding anything to the contrary herein, the
effectiveness of Section 1 hereof shall be contingent on the approval of this
Agreement to the extent required by the Boards of Directors of Xxxx Atlantic
Corporation and NYNEX Corporation, which if required BANX and its affiliates
agree to seek promptly following the date hereof.
Section 12. EFFECT ON AGREEMENTS. The provisions of this Agreement
shall be narrowly construed in accordance with the express provisions hereof
and except as expressly amended or modified herein, the Stock Purchase
Agreement, the Purchased Securities and the BR Agreement and each of the
provisions thereof shall remain in full force and effect in accordance with
their respective terms.
Section 13. MISCELLANEOUS.
() ENTIRE AGREEMENT. This Agreement 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.
() GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the law of the State of New York.
() SEVERABILITY. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validly or enforceability of
any other provisions of this Agreement, each of which shall remain in full
force and effect.
() NO THIRD PARTY BENEFICIARIES. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns. Nothing in this Agreement shall create or
be deemed to create any third party beneficiary rights in any person not party
to this Agreement.
() AMENDMENTS. This Agreement may be amended, supplemented or
modified, and any provision hereof may be waived, only pursuant to a written
instrument making specific reference to this Agreement signed by each of the
parties hereto.
() COUNTERPARTS. This Agreement 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 13. EXPENSES AND INDEMNIFICATION. Without limitation to
Section 7.1 and 7.2 of the Securities Purchase Agreement:
(i) each party will pay its own costs and expenses (including
reasonable fees, charges and disbursements of counsel) incurred in connection
with the preparation, negotiation and execution of this Agreement; and
(ii) the Company agrees to indemnify BANX and its affiliates and
their respective directors, officers, employees and agents (each such Person
being an "INDEMNITEE") against, and to hold each Indemnitee harmless from, any
and all losses, claims, damages, liabilities, penalties and related costs and
expenses (collectively, "Claims"), including counsel fees, charges and
disbursements, incurred by or asserted against any Indemnitee arising out of,
in any way in connection with, or as a result of (i) the execution, delivery or
performance of this Agreement or of any document contemplated hereby or the
consummation of any of the transactions contemplated hereby, (ii) any exercise
by any Indemnitee of its rights and remedies hereunder, or (iii) any claim
litigation, investigation or proceeding relating to any of the foregoing,
whether or not any Indemnitee is a party thereto; PROVIDED, HOWEVER, that such
indemnity shall not, as to any Indemnitee, apply to any such losses, claims,
damages, liabilities, penalties or related costs and expenses or portion
thereof arising exclusively from the material breach, gross negligence or
wilful misconduct of such Indemnitee, or from any act or failure to act of an
Indemnitee under any other agreement or legal obligation of such Indemnitee
where the Indemnitee was under a legal obligation to act or abstain from
acting, in any such case, as determined by final order of a court of competent
jurisdiction.
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:
Name:
Title:
ROCHESTER CHOICE TELEVISION, INC.
By:
Name:
Title:
HAMPTON ROADS WIRELESS, INC.
By:
Name:
Title:
EASTERN NEW ENGLAND TV, INC.
By:
Name:
Title:
CONNECTICUT CHOICE TELEVISION, INC.
By:
Name:
Title:
COMMONWEALTH CHOICE TELEVISION, INC.
By:
Name:
Title:
ATLANTIC MICROSYSTEMS, INC.
By:
Name:
Title:
HOUSATONIC WIRELESS, INC.
SYSTEMS, INC., d/b/a
CAPITAL CHOICE TELEVISION
By:
Name:
Title:
NISAKAYUNA ASSOCIATES, INC.
By:
Name:
Title:
ONTEO ASSOCIATES, INC.
By:
Name:
Title:
NEW YORK CHOICE TELEVISION, INC.
By:
Name:
Title:
CAI TRANSACTIONS P, INC.
By:
Name:
Title:
CAI TRANSACTIONS W, INC.
By:
Name:
Title:
CAI VA TRANSACTIONS, INC.
By:
Name:
Title:
CAI CT HOLDINGS CORP.
By:
Name:
Title:
BANX PARTNERSHIP
By: MMDS Holdings Inc.
By:
Name:
Title:
By: NYNEX MMDS Company
By:
Name:
Title:
MMDS HOLDINGS INC.
By:
Name:
Title:
MMDS HOLDINGS II INC.
By:
Name:
Title:
NYNEX MMDS COMPANY
By:
Name:
Title:
NYNEX MMDS HOLDING COMPANY
By:
Name:
Title:
