SECURITIES & EXCHANGE COMMISSION
Washington, D.C. 20549
______________________
SCHEDULE 13D
(Rule 13d-101)
INFORMATION TO BE INCLUDED IN STATEMENTS FILED
PURSUANT TO RULE 13d-1(a) AND
AMENDMENTS THERETO FILED PURSUANT TO RULE 13d-2(a)
CellularVision USA, Inc.
(Name of Issuer)
Common Stock, $.01 par value
(Title of Class of Securities)
151176104
(CUSIP Number)
Joseph Pike
Akcess Pacific Group, LLC
4370 La Jolla Village Drive, Suite 960,
San Diego, CA 92122 (619)642-7545
(Name, address and telephone number of person
authorized to receive notices and communications)
October 19, 1998
(Date of event which requires filing of this statement)
If the filing person has previously filed a statement on Schedule 13G
to report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check
the following box [ ].
NOTE: Schedules filed in paper format shall include a signed original
and five copies of the schedule, including all exhibits. See Rule 13d-7
for other parties to whom copies are to be sent.
(Continued on following pages)
(Page 1 of 28 Pages)
CUSIP No. 151176104 13D Page 2 of 28 Pages
________________________________________________________________________
(1) NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS.
OF ABOVE PERSONS (ENTITIES ONLY)
Akcess Pacific Group, LLC
________________________________________________________________________
(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP *
(a) [x]
(b) [ ]
________________________________________________________________________
(3) SEC USE ONLY
________________________________________________________________________
(4) SOURCE OF FUNDS *
AF See Item 3.
________________________________________________________________________
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
________________________________________________________________________
(6) CITIZENSHIP OR PLACE OF ORGANIZATION
California
________________________________________________________________________
NUMBER OF (7) SOLE VOTING POWER
3,702,140
SHARES ________________________________________________________
BENEFICIALLY (8) SHARED VOTING POWER
-0-
OWNED BY ________________________________________________________
EACH (9) SOLE DISPOSITIVE POWER
3,702,140
REPORTING ________________________________________________________
PERSON WITH (10) SHARED DISPOSITIVE POWER
-0-
_______________________________________________________________________
(11) AGGREGATE AMOUNT BENEFICIALLY OWNED
BY EACH REPORTING PERSON
3,711,140 See Item 5.
_______________________________________________________________________
(12) CHECK BOX IF THE AGGREGATE AMOUNT
IN ROW (11) EXCLUDES CERTAIN SHARES * [x]
_______________________________________________________________________
(13) PERCENT OF CLASS REPRESENTED
BY AMOUNT IN ROW (11)
17.8% See Item 5.
_______________________________________________________________________
(14) TYPE OF REPORTING PERSON *
OO limited liability company
_______________________________________________________________________
* SEE INSTRUCTIONS BEFORE FILLING OUT!
CUSIP No. 151176104 13D Page 3 of 28 Pages
________________________________________________________________________
(1) NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS.
OF ABOVE PERSONS (ENTITIES ONLY)
Joseph Pike
________________________________________________________________________
(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP *
(a) [x]
(b) [ ]
________________________________________________________________________
(3) SEC USE ONLY
________________________________________________________________________
(4) SOURCE OF FUNDS *
PF
________________________________________________________________________
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [x]
________________________________________________________________________
(6) CITIZENSHIP OR PLACE OF ORGANIZATION
United States
________________________________________________________________________
NUMBER OF (7) SOLE VOTING POWER
3,702,140
SHARES ________________________________________________________
BENEFICIALLY (8) SHARED VOTING POWER
-0-
OWNED BY ________________________________________________________
EACH (9) SOLE DISPOSITIVE POWER
3,702,140
REPORTING ________________________________________________________
PERSON WITH (10) SHARED DISPOSITIVE POWER
-0-
________________________________________________________________________
(11) AGGREGATE AMOUNT BENEFICIALLY OWNED
BY EACH REPORTING PERSON
3,711,140 See Item 5.
________________________________________________________________________
(12) CHECK BOX IF THE AGGREGATE AMOUNT
IN ROW (11) EXCLUDES CERTAIN SHARES * [x]
________________________________________________________________________
(13) PERCENT OF CLASS REPRESENTED
BY AMOUNT IN ROW (11)
17.8% See Item 5.
________________________________________________________________________
(14) TYPE OF REPORTING PERSON *
IN
________________________________________________________________________
* SEE INSTRUCTIONS BEFORE FILLING OUT!
CUSIP No. 151176104 13D Page 4 of 28 Pages
________________________________________________________________________
(1) NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS.
OF ABOVE PERSONS (ENTITIES ONLY)
James Plante
________________________________________________________________________
(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP *
(a) [x]
(b) [ ]
________________________________________________________________________
(3) SEC USE ONLY
________________________________________________________________________
(4) SOURCE OF FUNDS *
PF
________________________________________________________________________
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
________________________________________________________________________
(6) CITIZENSHIP OR PLACE OF ORGANIZATION
United States
________________________________________________________________________
NUMBER OF (7) SOLE VOTING POWER
9,000
SHARES ________________________________________________________
BENEFICIALLY (8) SHARED VOTING POWER
-0-
OWNED BY ________________________________________________________
EACH (9) SOLE DISPOSITIVE POWER
9,000
REPORTING ________________________________________________________
PERSON WITH (10) SHARED DISPOSITIVE POWER
-0-
________________________________________________________________________
(11) AGGREGATE AMOUNT BENEFICIALLY OWNED
BY EACH REPORTING PERSON
3,711,140 See Item 5.
________________________________________________________________________
(12) CHECK BOX IF THE AGGREGATE AMOUNT
IN ROW (11) EXCLUDES CERTAIN SHARES * [x]
________________________________________________________________________
(13) PERCENT OF CLASS REPRESENTED
BY AMOUNT IN ROW (11)
17.8% See Item 5.
________________________________________________________________________
(14) TYPE OF REPORTING PERSON *
IN
________________________________________________________________________
* SEE INSTRUCTIONS BEFORE FILLING OUT!
CUSIP No. 151176104 13D Page 5 of 28 Pages
Item 1. Security and Issuer.
The class of equity securities to which this Statement relates is the
Common Stock, par value $.01 per share (the "Shares"), of CellularVision USA,
Inc., a Delaware corporation (the "Issuer"). The principal executive offices
of the Issuer are located at 140 58th Street, Suite 7E, Brooklyn, New York
11220.
Item 2. Identity and Background.
(a) The persons filing this statement are Akcess Pacific Group, LLC, a
California limited liability company ("APG"), with respect to the Shares
directly owned by it, Joseph Pike ("Mr. Pike"), with respect to the Shares
directly owned by APG, and James Plante ("Mr. Plante"), with respect to the
Shares owned directly by him.
The foregoing persons are hereinafter sometimes collectively
referred to as the "Filing Persons." Any disclosures herein with respect to
persons other than the Filing Persons are made on information and belief
after making inquiry to the appropriate party or in reliance on the Issuer's
publicly available documents. Attached as Exhibit A hereto and incorporated
by reference herein is an agreement between the Filing Persons that this
Statement is filed on behalf of each of them.
(b) The address of the principal business and principal office of
APG, and the business address of Mr. Pike and of Mr. Plante is 4370 La Jolla
Village Drive, Suite 960, San Diego, CA 92122.
(c) The principal business of APG is to participate in investments
and to rehabilitate failing companies. Mr. Pike is Chairman of APG and is
the sole owner of APG. Mr. Plante is Vice-President of APG. Attached as
Schedule I hereto and incorporated by reference herein is a list of all
executive officers and directors of APG. Schedule I also sets forth the
address, principal occupation or employment and citizenship of each person
listed thereon.
(d) On May 30, 1996, Mr. Pike was convicted of misdemeanor forgery
in the Eastern District Court of North Carolina located in Raleigh, North
Carolina. He received a suspended sentence and paid a $300 fine.
Except as set forth above in this Item 2(d), none of the
Filing Persons nor the persons set forth on Schedule I hereto has, during
the last five years, been convicted in a criminal proceeding (excluding
traffic violations and similar misdemeanors).
(e) None of the Filing Persons or the persons set forth on Schedule I
hereto has, during the last five years, been a party to a civil proceeding of
a judicial or administrative body of competent jurisdiction and, as a result
of such proceeding, was, or is subject to, a judgment, decree or final order
enjoining future violations of, or prohibiting or mandating activitie
CUSIP No. 151176104 13D Page 6 of 28 Pages
subject to, Federal or state securities laws or finding any violation with
respect to such laws.
(f) APG is a limited liability company organized under the laws of
the State of California. Each of Mr. Pike and Mr. Plante is a United States
citizen.
Item 3. Source and Amount of Funds and Other Consideration.
The 3,702,140 of the Shares beneficially owned by the Filing Persons are
those issuable upon conversion of the Convertible Secured Promissory Note
(the "Note") of the Issuer acquired by APG in a privately negotiated
transaction at a cost of $1,019,896.25. The funds for the purchase of the
Note were contributed to APG by Mr. Pike. Mr. Plante used his personal funds
to purchase the 9,000 Shares owned by him. It is expected that funds to be
used by the Filing Persons to purchase additional Shares (see Items 4 and 5
hereof) will come from a combination of margin borrowings and general funds
on hand and from additional capital contributions to be made by Mr. Pike.
Item 4. Purpose of the Transaction.
APG has acquired the Note in order to obtain a substantial equity
position in the Issuer. The Filing Persons may acquire additional Shares or
other securities of the Issuer in the open market, in privately negotiated
transactions or otherwise, including a controlling interest in the Issuer,
and may contact the Issuer, its representatives or other persons interested
in the Issuer, or persons interested in financing the Filing Persons, for the
purpose of discussing the Issuer and other matters concerning the Issuer.
Subject to certain conditions and as more fully described in Item 6 hereof,
APG has agreed to purchase the Shares issuable upon conversion of 3,463
shares of the Issuer's Series A Convertible Preferred Stock after the
conversion thereof has been effected. Alternatively, while it is not the
Filing Persons' present intention to do so, the Filing Persons reserve the
right to dispose of some or all of the Shares held by them in the open market
or in privately negotiated transactions to third parties or otherwise,
depending upon the course of action that the Filing Persons and the Issuer
pursue, market conditions and other factors. Although the foregoing
represents the range of activities presently contemplated by the Filing
Persons with respect to the Shares, it should be noted that the possible
activities of the Filing Persons are subject to change at any time.
In connection with its investment in the Issuer, APG has reviewed and
considered a variety of alternative business and financial strategies that it
could pursue upon its acquisition of control of the Issuer. The Issuer
serves the 1,100 square mile New York Primary Metropolitan Statistical Area
and provides wireless high-speed Internet access and multichannel
subscription television service to its customers. Based upon a review of
information available to date, APG presently intends to influence the Issuer
to implement its Wireless Local Multipoint Distribution Service ("LMDS") and
utilize its position as the first LMDS provider licensed by the Federal
CUSIP No. 151176104 13D Page 7 of 28 Pages
Communication Commission to implement a bi-directional high-speed data system
in New York City, one of the most important LMDS development sites, as a
course of action following such acquisition of control. Furthermore, APG
intends to seek to prevent the Issuer from ceasing all operations and
believes that portions of the original business premise of the Issuer remain
valid, and the Issuer should be invested in and developed. However, a
detailed review of the Issuer's assets, operations, structure, policies,
management and personnel could lead to a different conclusion as to which of
the Issuer's assets might be developed or sold.
Except as set forth in this Item 4 and elsewhere in this Statement, none
of the Filing Persons nor, to the best of their knowledge, any of the
individuals named in Schedule I hereto, has any plans or proposals which
relate to or would relate to or would result in any of the actions specified
in clauses (a) through (j) of Item 4 of Schedule 13D.
Item 5. Interest in Securities of the Issuer.
(a) APG has agreed to purchase the Note, as more fully described
in Item 6 hereof. Assuming conversion of the entire Note (and based on a
market price of the Shares, upon which the number of Shares issuable upon
conversion of the Note depends, equal to the current market price of the
Shares), the Filing Persons will hold 3,711,140 Shares, representing
approximately 17.8% of the Shares to be outstanding following such conversion
(including the 3,702,140 Shares issuable upon conversion of the Note and the
17,094,361 Shares outstanding on September 30, 1998 as reported in the
Issuer's Definitive Solicitation Statement on Schedule 14A filed on October
7, 1998, the "Outstanding Shares").
As of the close of business on October 28, 1998, Mr. Plante
directly owned 9,000 Shares, representing approximately 0.1% of the
Outstanding Shares.
Mr. Pike may, by virtue of being the sole owner of APG, be
deemed to own beneficially (as that term is defined in Rule 13d-3 under the
Securities Exchange Act of 1934 (the "Act")) the Shares of which APG
possesses direct beneficial ownership.
Subject to certain conditions and as more fully described in
Item 6 hereof, APG has agreed to purchase the Shares issuable upon
conversions of 3,463 shares of the Issuer's Series A Convertible Preferred
Stock after such conversions have been effected, as more fully described in
Item 6 hereof. Pursuant to the Certificate of Designation of the Series A
Convertible Preferred Stock (the "Certificate of Designation"), the
effectiveness of each conversion will be contingent upon the occurrence of
one or more of various events such as submission of a Conversion Notice to
the transfer agent and shareholder approval. Assuming the conversion of all
of the Convertible Preferred Shares, the Filing Persons would thus
beneficially own an aggregate of 40,649,807 Shares, representing
approximately 70.4% of the Shares to be outstanding following such conversion
as well as the conversion of the Note (including 36,938,667 Shares issuable
CUSIP No. 151176104 13D Page 8 of 28 Pages
upon conversion of the Series A Convertible Preferred Stock, the 3,702,140
Shares issuable upon conversion of the Note, and the 17,094,361 Outstanding
Shares). See Item 6 hereof.
(b) APG has the direct power (and by virtue of his ownership and
position as set forth in Item 5(a) hereof, Mr. Pike may be deemed to have the
indirect power) to vote or direct the vote and to dispose or direct the
disposition of Shares with respect to all the Shares stated to be owned by it
in Item 5(a). Mr. Plante has the power to vote or direct the vote and to
dispose or direct the disposition of Shares with respect to all the Shares
stated to be owned by him in Item 5(a).
(c) The trading dates, number of Shares purchased and the price
per Share for all transactions in Shares by the Filing Persons within the
last 60 days, which were all in the open market, are set forth in Schedule II
hereto and are incorporated herein by reference.
(d) Not applicable.
(e) Not Applicable.
Item 6. Contracts, Arrangements, Understandings or
Relationships with Respect to Securities of the Issuer.
On October 19, 1998, APG entered into a letter agreement with Newstart
Factors, Inc. ("Newstart") to purchase the Note dated April 1, 1998 of the
Issuer, held by Newstart, in the principal face amount of $815,917.00 (the
"Newstart Agreement"). The purchase price for the Note is $1,019,896.25
and is payable within 45 days of the date of the letter agreement. The
conversion price of the Note is 91% of the average of the lowest trading
price (as defined) on the four (4) days immediately prior to the date of
conversion notice. The Note provides that the holder thereof shall convert
not more than $500,000 in principal amount in a calendar month.
On October 13, 1998, APG entered into an agreement (the "APG/MCM
Agreement") with Marshall Capital Management, Inc. ("MCM"). MCM holds 3,463
shares of the Issuer's Series A Convertible Preferred Stock (the "Convertible
Preferred Shares") which are convertible into Shares (the "Conversion
Shares"). APG has agreed to purchase the Conversion Shares after the
conversions have been effective. Pursuant to the Certificate of Designation,
the effectiveness of conversions will be contingent upon the occurrence of
one or more of various events such as submission of Conversion Notice to the
transfer agent and shareholder approval.
Pursuant to the APG/MCM Agreement, MCM agreed it would use its best
efforts to convert as promptly as practicable, all of the Preferred Shares
into Conversion Shares at the Conversion Price (as defined) and deliver such
Conversion Shares. APG acknowledged that MCM's ability to convert the
Preferred Shares is governed and, in certain circumstances, limited, by the
terms of the Certificate of Designation and provisions of applicable law and
regulation and therefore, MCM's agreement to convert the Preferred Shares is
CUSIP No. 151176104 13D Page 9 of 28 Pages
made on a best efforts basis consistent with those limitations.
MCM is limited by the Certificate of Designation from converting the
Preferred Shares in excess of 19.99% of the number of Conversion Shares
outstanding as of the date on which the Preferred Shares were originally
issued without shareholder approval.
There can be no assurance as to the timing, or the effectiveness, of any
such conversions and therefore whether any such purchases will occur.
Pursuant to the agreement, upon delivery by MCM to the Escrow Agent (as
defined) of the Conversion Shares and the delivery by the Escrow Agent of the
purchase price allocable to such Conversion Shares, MCM shall be deemed to
have transferred to APG the sole power to vote or direct the voting of such
Conversion Shares and sole investment power over such shares, including the
power to dispose, or to direct the disposition of, such Conversion Shares,
and that only upon delivery would APG be deemed for all purposes to be the
sole beneficial owner of such Conversion Shares.
Accordingly, until such delivery the Filing Persons disclaim beneficial
ownership of any Shares to be issued upon such conversions. A copy of the
APG/MCM Agreement is filed herewith as Exhibit C and incorporated by
reference herein.
Except as set forth in this Statement and the Joint Filing Agreement
attached as Exhibit A hereto, there are no contracts, arrangements,
understandings or relationships (legal or otherwise) among the persons named
in Item 2 hereof and between such persons and any person with respect to any
securities of the Issuer, including but not limited to transfer or voting of
any other securities, finder's fees, joint ventures, loan or option
arrangements, puts or calls, guarantees of profits, divisions of profits or
loss, or the giving or withholding of proxies.
Item 7. Materials to be Filed as Exhibits.
Exhibit A - Written agreement relating to the filing of joint
acquisition statements as required by Rule 13d-1(k)
under the Securities Exchange Act of 1934, as amended.
Exhibit B - Letter Agreement, dated October 19, 1998, by and
between Newstart and APG.
Exhibit C - Agreement, dated October 13, 1998, by and between MCM
and APG.
CUSIP No. 151176104 13D Page 10 of 28 Pages
SIGNATURES
After reasonable inquiry and to the best of his or her knowledge and
belief, each of the undersigned certifies that the information set forth in
this statement is true, complete and correct.
DATED: October 28, 1998
/s/ JOSEPH PIKE
------------------------------
Joseph Pike
/s/ JAMES PLANTE
------------------------------
James Plante
AKCESS PACIFIC GROUP, LLC
By: /s/ JOSEPH PIKE
--------------------------
Chairman
CUSIP No. 151176104 13D Page 11 of 28 Pages
SCHEDULE I
AKCESS PACIFIC GROUP, LLC
Executive Officers and Directors
The address of each of the persons named below is 4370 La Jolla Village
Drive, Suite 960, San Diego, CA 92122. Each such person is a citizen of
the United States.
Position with APG;
Name Present Principal Occupation
Joseph Pike Chairman
Mark Livingston President
James Plante Vice-President
CUSIP No. 151176104 13D Page 12 of 28 Pages
SCHEDULE II
Filing Date of Number of Shares
Person Transaction Purchased Price Per Share
James Plante 9/14/98 2,500 $3/16
James Plante 9/17/98 1,200 3/16
James Plante 9/18/98 5,300 3/16
CUSIP No. 151176104 13D Page 13 of 28 Pages
EXHIBIT A
JOINT FILING AGREEMENT
PURSUANT TO RULE 13D-1(k)
Akcess Pacific Group, LLC, Joseph Pike and James Plante
(hereinafter collectively referred to as the "Filing Persons") each hereby
agrees to file jointly a Schedule 13D and any amendments thereto relating
to the Common Stock, par value $.01 per share, of CellularVision USA, Inc.,
a Delaware corporation, as permitted by Rule 13d-1 of the Securities
Exchange Act of 1934, as amended. Each of the Filing Persons agrees that
the information set forth in such Schedule 13D and any amendments thereto
with respect to such person will be true, complete and correct as of the
date of such Schedule 13D or such amendment to the best of such Person's
knowledge and belief after reasonable inquiry. Each of the Filing Persons
makes no representation as to the accuracy or adequacy of the information
set forth in such Schedule 13D and any amendments thereto with respect to
any other Filing Person. Each of the Filing Persons shall promptly notify
the other Filing Persons if any of the information set forth in such
Schedule 13D shall be or become inaccurate in any material respect or if he
or it learns of information which would require an amendment to such
Schedule 13D.
IN WITNESS WHEREOF, the parties hereto have set forth their hand
as of the 28th day of October, 1998.
/s/ JOSEPH PIKE
------------------------------
Joseph Pike
/s/ JAMES PLANTE
------------------------------
James Plante
AKCESS PACIFIC GROUP, LLC.
By: /s/ JOSEPH PIKE
--------------------------
Chairman
CUSIP No. 151176104 13D Page 14 of 28 Pages
EXHIBIT B
NEWSTART AGREEMENT
NEWSTART FACTORS, INC.
Monday, October 19, 1998
Joseph Pike
Akcess Pacific Group, LLC
4370 La Jolla Village Drive, Suite #960
San Diego, CA 92122
Via Fax: 619-295-0779
RE: Sale of CellularVision/Logimetrics Note
Dear Mr. Pike:
This letter shall confirm that on October 19, 1998, Newstart Factors, Inc.
("Seller") committed to sell, and Akcess Pacific Group, LLC ("Buyer")
committed to buy the Secured Convertible Promissory Note (the "Note") dated
April 1, 1998, which the Seller holds against Cellular Vision of New York,
L.P., in the principal face amount of $815,917.00 (the "Face Amount"). The
terms of this commitment are subject to the following condition:
1. The purchase price for the Note will be 125% of the Face Amount of
the Note, which equals $1,019,896.25 plus all accrued and unpaid interest
up to the date payment is received by Seller;
2. The purchase price will be paid within 45 days of the date of this
agreement;
3. The Seller will use its best efforts to revoke its vote "for" the
Winstar transaction and replace it with a vote "against" the transaction
before 5 P.M. Eastern Daylight Time on Monday October 19, 1998.
The purchase price is binding on both parties and not subject to any other
conditions or terms other than those outlined above. In further
consideration for revoking Seller's vote under 3 above, the Buyer
acknowledges and agrees that money damages and other remedies at law may be
inadequate to protect against breach of this agreement and the Buyer hereby
agrees in advance to the granting of injunctive or other equitable relief
in the Seller's favor without proof of actual damages in connection with
Seller's enforcement of the terms and conditions hereof, including the
reimbursement to Seller of losses, costs and expenses, including reasonable
attorney's fees, and costs incurred by Seller as a result of Buyer's breach
of this agreement.
This agreement and the purchase is irrevocably and personally guaranteed by
Joseph Pike.
Please evidence your agreement to the foregoing by signing a copy of this
letter in the space provided and faxing a copy back to 203-353-3113.
CUSIP No. 151176104 13D Page 15 of 28 Pages
Sincerely,
/s/ JAMES D. BENNETT
James D. Bennett
President
ACCEPTED AND AGREED: ACCEPTED AND AGREED:
AKCESS PACIFIC GROUP, LLC GUARANTOR
By: /s/ JOSEPH PIKE By: /s/ JOSEPH PIKE
Chairman As an individual
CUSIP No. 151176104 13D Page 16 of 28 Pages
EXHIBIT C
APG/MCM AGREEMENT
PURCHASE AGREEMENT
This Agreement, dated as of October 13, 1998, is by and between
Marshall Capital Management, Inc. (formerly Proprietary Convertible
Investment Group, Inc.)(the "Seller") and Akcess Pacific Group, LLC (the
"Purchaser").
WHEREAS, the Seller is a party to a Securities Purchase Agreement,
dated April 1, 1998 (the "Securities Purchase Agreement"), between the
Seller and CellularVision USA, Inc. (the "Company") pursuant to which the
Seller has purchased shares of the Company's Series A Preferred Stock (the
"Preferred Stock") from the Company, and to the related Registration Rights
Agreement, dated April 1, 1998 (the "Registration Rights Agreement"); and
WHEREAS, the Preferred Stock is convertible into shares (the
"Conversion Shares") of the Company's common stock (the "Common Stock")
pursuant to the terms of the Certificate of Designation that established
and governs the rights, privileges and preferences of the Preferred Stock
(the "Certificate of Designation")(the Securities Purchase Agreement, the
Registration Rights Agreement and the Certificate of Designation are
collectively referred to herein as the "Transaction Documents"); and
WHEREAS, the Purchaser wishes to buy and the Seller wishes to sell all
of the Conversion Shares into which the shares of Preferred Stock owned by
the Seller as of the date of this Agreement are convertible;
WHEREAS, the Seller is a party to an agreement with the Company, dated
October 12, 1998 (the "Standstill Agreement"), whereby the Seller has
agreed not to convert Preferred Shares held by it subject to the
satisfaction of the conditions set forth in the Standstill Agreement (each,
a "Standstill Condition") and that, therefore, the obligations of the
parties set forth in this Agreement will not become effective until the
date on which the Seller regains its right to convert Preferred Shares as a
result of the failure by the Company to fulfill a Standstill Condition (the
"Effective Date");
The parties agree as follows:
1. Purchase and Sale. The Purchaser agrees to purchase, and the
Seller agrees to sell, from and after the Effective Date and in accordance
with the terms and subject to the conditions set forth herein, all of the
Conversion Shares into which the Preferred Shares currently owned by the
Seller are convertible pursuant to the terms of the Certificate of
Designation. The Seller represents and warrants to the Purchaser that, as
of the date of this Agreement, it owns 3,463 Preferred Shares and that on
the Effective Date it will own no less than 3,413 Preferred Shares. Upon
CUSIP No. 151176104 13D Page 17 of 28 Pages
the conversion of Preferred Shares into Conversion Shares by the Seller,
the Seller shall deliver or cause to be delivered such Conversion Shares to
the Escrow Agent (as defined below), either endorsed for transfer to the
Purchaser or with attached stock powers endorsed in blank, as provided more
specifically herein.
2. Purchase Price. The purchase price to be paid by the Purchaser
for Conversion Shares purchased by it hereunder shall be equal to the
number of Preferred Shares that are converted by the Seller into such
Conversion Shares times $1,309.87 (the "Purchase Price"). The Purchaser
acknowledges and agrees that the number of Conversion Shares to be received
by the Seller pursuant to the conversion of Preferred Shares by the Seller
will vary depending on the price at which such Preferred Shares are
converted (the "Conversion Price"), and that the Purchaser's obligation
hereunder to pay the Purchase Price to the Seller with respect to the
number of Preferred Shares converted by the Seller hereunder will apply
regardless of the number of Conversion Shares into which such Preferred
Shares are converted, as long as such Conversion Shares are delivered to
the Escrow Agent (as defined below) in accordance with the terms hereof;
provided, however, that if, after giving effect to a conversion of
Preferred Shares, the average Conversion Price for all conversions of
Preferred Shares effected hereunder (including such conversion)(the
"Average Conversion Price") would exceed such price as may be agreed
between the parties in writing from time to time (the "Conversion Price
Limit"), (i) the Purchaser will not be obligated to purchase the Conversion
Shares issuable upon such conversion and (ii) the Seller will not be
obligated to convert the Preferred Shares or, if a Conversion Notice has
been delivered with respect to such Preferred Shares, to deliver to the
Escrow Agent or to the Purchaser the underlying Conversion Shares, relating
to such conversion; and provided, further, that if a conversion would cause
the Average Conversion Price to exceed the Conversion Price Limit (a "Non-
Qualifying Conversion"), such Non-Qualifying Conversion will not affect the
parties' obligations hereunder with respect to any conversion that occurs
after such Non-Qualifying Conversion and that does not cause the Average
Conversion Price to exceed the Conversion Price Limit.
3. Agreement to Convert and Deliver. The Seller agrees that, from
and after the Effective Date, it will use its best efforts to convert, as
promptly as practicable, all of the Preferred Shares into Conversion Shares
at the Conversion Price or Prices applicable pursuant to the terms of the
Certificate of Designation and that it will deliver or cause to be
delivered such Conversion Shares to the Escrow Agent (as defined below) in
accordance with the terms hereof as soon as practicable following its
receipt of such Conversion Shares from the Company. The Purchaser
acknowledges that (i) the Seller's ability to convert Preferred Shares is
governed and, in certain circumstances limited, by the terms of the
Certificate of Designation and provisions of applicable law and regulation
and that, therefore, the Seller's agreement to convert Preferred Shares is
made on a best efforts basis consistent with the terms of the Certificate
of Designation and such law and regulation, and (ii) except as specifically
provided herein, the Seller shall not have any liability or obligation to
the Purchaser for the failure by the Company to convert Preferred Shares
CUSIP No. 151176104 13D Page 18 of 28 Pages
and/or issue Conversion Shares in accordance with the Certificate of
Designation.
4. Escrow Arrangement. The Purchaser agrees that (i) on the
Effective Date, it will place in escrow with a third party escrow agent
mutually acceptable to the parties (the "Escrow Agent") cash in the amount
of $353,665 (the "Initial Purchase Price"), which amount represents the
aggregate Purchase Price to be paid by the Purchaser for the Conversion
Shares to be received by the Seller upon the conversion of 270 Preferred
Shares (the "Initial Tranche") and (ii) for all conversions occurring
subsequent to the Initial Tranche (such conversions being collectively
referred to herein as the "Subsequent Tranche"), upon delivery to the
Purchaser of a notice from the Seller that the Seller intends to submit a
Conversion Notice to the Company (a "Notice of Proposed Conversion"), the
Purchaser will deliver to the Escrow Agent, on the first (1st) business day
occurring immediately following the date on which the Seller delivers such
Notice of Proposed Conversion to the Purchaser, cash in the amount of the
Purchase Price times the number of Preferred Shares specified in such
Notice of Proposed Conversion, it being understood that the Seller shall
have no obligation to convert such Preferred Shares unless and until the
Purchaser deposits cash in such amount with the Escrow Agent. The parties
acknowledge that, with respect to both the Initial Tranche and the
Subsequent Tranche, the conversion of Preferred Shares into Conversion
Shares by the Seller and the delivery of such Conversion Shares to the
Purchaser will occur in multiple transactions (each, a "Conversion
Transaction") and that the Seller shall be solely responsible, consistent
with its obligation to convert Preferred Shares as described in paragraph 3
above, for determining the number of Preferred Shares to be converted by it
with respect to, and the timing of, each Conversion Transaction. The
Purchaser and Seller will transmit joint instructions in writing to the
Escrow Agent in the form attached hereto as Annex A which will state that,
with respect to any Conversion Transaction, upon receipt by the Escrow
Agent of the certificates representing Conversion Shares received by the
Seller pursuant to the conversion of Preferred Shares, such certificates to
be in the form specified in paragraph 1 above, the Escrow Agent will
deliver simultaneously (x) such Conversion Shares to the Purchaser and (y)
the Purchase Price relating to such Preferred Shares to the Seller in
immediately available funds; it being understood that, with respect to any
Conversion Transaction relating to the Subsequent Tranche, the Escrow Agent
will not deliver Conversion Shares to the Purchaser unless the Escrow Agent
has on deposit funds in an amount at least equal to the Purchase Price
relating to such Conversion Shares .
5. Registration Rights. The Seller agrees that it will assign its
rights under the Registration Rights Agreement to the Purchaser in
accordance with the terms thereof with respect to all Conversion Shares
delivered to the Purchaser hereunder.
6. Remedies.
(a) The Seller agrees that (I) if, upon the submission of a
Conversion Notice to the Company, the Company fails to issue and deliver to
CUSIP No. 151176104 13D Page 19 of 28 Pages
the Seller or its nominee the number of Conversion Shares specified in such
Conversion Notice, the Seller will pursue any and all remedies that may be
reasonably available to it under the Certificate of Designation in order to
ensure that the Company issues and delivers the number of Conversion Shares
which the Seller is entitled to receive at the Conversion Price or Prices
applicable pursuant to the terms of the Certificate of Designation and such
Conversion Notice and (II) if (i) the transactions contemplated by this
Agreement trigger any preemptive or antidilutive rights or rights of first
refusal, first offer or any other shareholder rights with respect to the
securities of the Company (a "Triggering Event"), (ii) the Purchaser
delivers a notice to the Seller stating that the Purchaser has incurred
monetary damages as a result of such Triggering Event and describing the
circumstances in which such damages have arisen and the amount thereof, and
(iii) the Seller reasonably determines that the Triggering Event represents
a material breach by the Company of the representations made by it in
paragraph 3.7 of the Securities Purchase Agreement, the Seller will pursue
a claim against the Company for the amount of the damages claimed by the
Purchaser in such notice; provided, however, that (A) the Seller shall not
be required to pursue any of the remedies described in clauses (I) or (II)
above (collectively, the "Remedies") to the extent that the aggregate
amount of the expenses incurred by the Seller in connection with pursuing
the Remedies (including without limitation legal fees and
expenses)(collectively, "Expenses") exceeds $25,000 (the "Expense
Limitation"), unless and until the Purchaser (a) has agreed in writing to
reimburse the Seller for all Expenses incurred by it in excess of the
Expense Limitation and (b) has deposited, and maintains on deposit, with
the Escrow Agent cash in an amount which represents the Seller's reasonable
estimate of Expenses to be incurred by it during a period of three (3)
months (such estimate to be based on the rate at which the Seller incurred
Expenses prior to exceeding the Expense Limitation)(the conditions
specified in clauses (a) and (b) above being referred to herein as the
"Expense Reimbursement Conditions"), and (B) nothing contained herein shall
be deemed to limit any right or remedy available to the Seller under the
Transaction Documents, including without limitation, the Seller's right to
demand that the Company redeem the Preferred Shares held by the Seller if a
Mandatory Redemption Event (as defined in the Certificate of Designation)
occurs or is continuing, in which case the Seller would have no further
obligation to the Purchaser hereunder with respect to the Preferred Shares
so redeemed.
(b) The parties further agree that, in the event that the
Purchaser fulfills the Expense Reimbursement Conditions, the Seller shall
have the option to pay one-half (1/2) of the Expenses incurred in
connection with pursuing the Remedies specified in clause 6(I) above (the
"Expense Reimbursement Option"). If the Seller exercises the Expense
Reimbursement Option with respect to a conversion of Preferred Shares, and
in connection with pursuing the Remedies specified in clause 6(I) above,
the Conversion Price relating to such Preferred Shares is determined,
pursuant to a court order or other decree or a settlement agreement or
arrangement with the Company, to be lower than the Conversion Price that
the Company applied to such Preferred Shares prior to such order, decree or
settlement, and the Purchaser receives additional Conversion Shares the
CUSIP No. 151176104 13D Page 20 of 28 Pages
issuance of which reflects the application of such lower Conversion Price,
the Weighted Average Conversion Price (as defined below) shall be adjusted
downward to reflect such lower Conversion Price. If the Seller does not
exercise the Expense Reimbursement Option, the Weighted Average Conversion
Price (as defined below) shall not be adjusted in the event that a lower
Conversion Price applies as a result of pursuing the Remedies specified in
clause 6(I) above. The Seller may exercise the Expense Reimbursement Option
by delivering written notice to the Purchaser that the Seller agrees to pay
one-half (1/2) of the Expenses incurred in connection with pursuing the
Remedies specified in clause 6(I) above. Notwithstanding the foregoing, if
the Purchaser does not fulfill the Expense Reimbursement Conditions, and
the Seller pursues the Remedies specified in clause 6(I) above at the
Seller's expense, the Seller shall be entitled to receive and retain any
and all Conversion Shares that the Company issues as a result of the
application of a lower Conversion Price.
(c) In connection with pursuing the Remedies, the Seller
agrees (i) to employ counsel that is reasonably acceptable to the
Purchaser, (ii) to refrain from reaching any settlement with the Company
unless such settlement is reasonably acceptable to the Purchaser, and (iii)
otherwise to consult on an ongoing basis with the Purchaser with regard to
the means by which the Remedies are pursued (including without limitation
the timing, scope and content of any legal claim brought by the Seller
against the Company).
7. Beneficial Ownership. The parties acknowledge and agree that,
upon (i) the delivery by the Seller to the Escrow Agent of the Conversion
Shares to be sold by the Seller to the Purchaser hereunder in the form
specified in paragraph 1 above, and (ii) the delivery by the Escrow Agent
of the Purchase Price allocable to such Conversion Shares, the Seller shall
be deemed to have transferred to the Purchaser (i) the sole power to vote
or direct the voting of such Conversion Shares and (ii) sole investment
power over such shares, including the power to dispose, or to direct the
disposition of, such Conversion Shares, and that, upon the deliveries
specified in clauses 7(i) and (ii) above, the Purchaser shall be deemed for
all purposes (including those under Sections 13 and 16 under the Securities
Exchange Act of 1934, as amended, and the rules and regulations thereunder)
to be the sole beneficial owner of such Conversion Shares. Notwithstanding
the foregoing, nothing contained herein shall be deemed to constrain in any
way the ability or capacity of the Purchaser to transfer beneficial
ownership of the shares of Common Shares acquired by the Purchaser to any
party (including the Seller) at any time subsequent to the submission of
such Conversion Notice by the Seller.
8. Seller's Representations, Warranties and Covenants. The Seller
hereby represents and warrants to, and agrees with the Purchaser that:
(a) The Seller is duly and validly organized, validly existing
and in good standing under the laws of the jurisdiction of its
incorporation. The Seller has full legal capacity, power and authority to
execute and deliver this Agreement and to perform its obligations
hereunder;
CUSIP No. 151176104 13D Page 21 of 28 Pages
(b) This Agreement constitutes the Seller's legal, valid and
binding obligation, enforceable against the Seller in accordance with its
terms, except as such enforcement may be limited by bankruptcy, insolvency
or other laws affecting the rights of creditors generally, or by general
principles of equity;
(c) Except as set forth in or contemplated by the Transaction
Documents, no consent, approval or authorization of, or filing with, any
persons or entities on the Seller's part is required in connection with the
execution or delivery of this Agreement or the consummation of the
transactions contemplated hereby;
(d) The Seller is the sole record holder and beneficial owner of
the Preferred Shares; and the Preferred Shares are owned by the Seller free
and clear of any and all liens, pledges, charges, agreements, options,
security interests or other encumbrances or claims of any kind whatsoever
imposed by or through the Purchaser ("Liens");
(e) Upon its purchase of Conversion Shares from the Seller
hereunder, the Purchaser will acquire good and valid title to such
Conversion Shares, free and clear of all Liens;
(f) No person or entity acting on the Seller's behalf was or is
entitled to any fee, commission or broker's or finder's fees from the
parties hereto in connection with this Agreement or the transactions
contemplated hereby;
(g) The Seller (i) is a sophisticated party with respect to the
sale of the Conversion Shares to the Purchaser hereunder and has
independently and without reliance upon the Purchaser or upon any
representation or recommendation made by the purchaser (other than any
representation made by the Purchaser herein), and based on such information
as it has deemed adequate and appropriate, made its own analysis with
respect to such sale, and (ii) is fully satisfied with the Purchase Price
and acknowledges that, except as otherwise specifically provided herein,
the Purchase Price is all that the Seller is or will be entitled to receive
as consideration for the sale of the Shares to the Purchaser;
(h) The execution, delivery and performance by the Seller of
this Agreement and the consummation by it of the transactions contemplated
hereby will not (i) violate in any material respect any provision of law or
any rule or regulation to which the Seller or its assets or business are
subject, (ii) conflict with or violate any order, judgment, injunction,
award or decree binding upon the Seller or its assets or business, (iii)
conflict with or violate the Certificate of Incorporation, Bylaws or other
similar governing documents of the Seller, (iv) constitute a violation of
or default or give rise to a right of termination, cancellation or
acceleration of any right or obligation of the Seller, under any provision
of any agreement, contract or other instrument binding upon the Seller or
its assets or business or any license, franchise, permit or other similar
authorization held by the Seller, (v) result in the creation or imposition
of any Lien upon any of the assets of the Seller or the Preferred Shares,
CUSIP No. 151176104 13D Page 22 of 28 Pages
or (vi) trigger any preemptive or antidilutive rights or rights of first
refusal, first offer or any other shareholder rights with respect to the
securities of the Company, except for any such violation, conflict,
default, Lien or right that would not have a material adverse effect on the
ability of the Seller to consummate the transactions contemplated hereby
and provided that the Seller shall be liable to the Purchaser in the event
of a breach of the representation contained in clause (vi) above only to
the extent that the Company is finally adjudicated to be liable to the
Seller for such breach and only in the amount of damages actually collected
by the Seller from the Company in connection therewith; and
(i) The execution, delivery and performance by the Seller of this
Agreement and the consummation of the transactions contemplated hereby do
not require any consent from, or filing with, any governmental or
regulatory authority, except for (a) any action, consent or filing that the
Seller or the Company is required to obtain or make, and (b) consents and
filings which, if not obtained or made, will not, individually or in the
aggregate, have a material adverse effect on the ability of the Seller to
consummate the transactions contemplated hereby.
9. Purchaser's Representations, Warranties and Covenants. The
Purchaser hereby represents and warrants to, and agrees with the Seller
that:
(a) The Purchaser is duly and validly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation, and is an "accredited investor" as that term is used in
Regulation D under the Securities Act of 1933, as amended. The Purchaser
has full legal capacity, power and authority to execute and deliver this
Agreement and to perform its obligations hereunder;
(b) This Agreement constitutes the Purchaser's legal, valid and
binding obligation, enforceable against the Purchaser in accordance with
its terms, except as such enforcement may be limited by bankruptcy,
insolvency or other laws affecting the rights of creditors generally, or by
general principles of equity;
(c) Except as set forth in or contemplated by the Transaction
Documents, no consent, approval or authorization of, or filing with, any
persons or entities on the Purchaser's part is required in connection with
the execution or delivery of this Agreement or the consummation of the
transactions contemplated hereby;
(d) No person or entity acting on the Purchaser's behalf was or
is entitled to any fee, commission or broker's or finder's fees from the
parties hereto in connection with this Agreement or the transactions
contemplated hereby;
(e) The Purchaser is a sophisticated party with respect to the
purchase of the Conversion Shares by the Purchaser hereunder and has
independently and without reliance upon the Seller, and based on such
information as it has deemed adequate and appropriate, made its own
CUSIP No. 151176104 13D Page 23 of 28 Pages
analysis with respect to such purchase, including without limitation with
respect to the respective provisions of the Transaction Documents and the
extent to which such provisions may affect such purchase or the Purchaser's
ownership of Conversion Shares;
(f) The execution, delivery and performance by the Purchaser of
this Agreement and the consummation by it of the transactions contemplated
hereby will not (i) violate in any material respect any provision of law or
any rule or regulation to which the Purchaser or its assets or business are
subject, (ii) conflict with or violate any order, judgment, injunction,
award or decree binding upon the Purchaser or its assets or business, (iii)
conflict with or violate the Certificate of Incorporation, Bylaws or other
similar governing documents of the Purchaser, (iv) constitute a violation
of or default or give rise to a right of termination, cancellation or
acceleration of any right or obligation of the Purchaser, under any
provision of any agreement, contract or other instrument binding upon the
Purchaser or its assets or business or any license, franchise, permit or
other similar authorization held by the Purchaser, or (v) result in the
creation or imposition of any Lien upon any of the assets of the Purchaser;
(g) The execution, delivery and performance by the Purchaser of
this Agreement and the consummation of the transactions contemplated hereby
do not require any consent from, or filing with, any governmental or
regulatory authority, except for (a) any action, consent or filing that the
Purchaser or the Company is required to obtain or make, and (b) consents
and filings which, if not obtained or made, will not, individually or in
the aggregate, have a material adverse effect on the ability of the
Purchaser to consummate the transactions contemplated hereby;
(h) The Purchaser agrees that the Seller has the right,
exercisable for a period of 30 days following the first date on which the
Seller has converted all of the Preferred Shares previously owned by the
Seller, to purchase from the Purchaser, at a purchase price of $250,000, a
number of shares of Common Stock that is equal to $250,000 divided by the
average Conversion Price (calculated on a weighted- average basis) at which
the Seller actually converted Preferred Shares in connection with the sale
of Conversion Shares to the Purchaser hereunder (the "Weighted Average
Conversion Price");
(i) The Purchaser will comply with all requirements of
applicable law and regulation with respect to the purchase and ownership by
it of Conversion Shares hereunder, including without limitation those that
may arise under Section 13 or Section 16 under the Securities Exchange Act
of 1934, as amended;
(j) In the event that a meeting of the Company's stockholder's
is held at which such stockholders are entitled to vote on a proposal to
approve either or both of (i) the issuance by the Company of Conversion
Shares in excess of 19.99% of the number of shares outstanding as of the
date on which the Preferred Shares were originally issued, or (ii) an
increase in the authorized number of shares of Common Stock issuable by the
Company (each such proposal being referred to herein as a "Proposal") or if
CUSIP No. 151176104 13D Page 24 of 28 Pages
the Purchaser, as a stockholder of the Company, is requested to provide a
written consent with respect to a Proposal, the Purchaser agrees to vote
all of the Conversion Shares owned by it, or to provide its consent, as the
case may be, in favor of such Proposal; and
(k) The Purchaser represents and warrants to the Seller that, as
of the date of this Agreement, the Purchaser has not established a "short
position" in the Common Stock or entered into any agreement or arrangement
pursuant to which the Purchaser will benefit, directly or indirectly, by a
decline in the market price of the Common Stock, and agrees that it will
not establish any such "short position" or enter into any such agreement or
arrangement until the earlier to occur of (i) the date on which the Seller
converts all of Preferred Shares and delivers the Conversion Shares
issuable thereby to the Purchaser and (ii) the date on which this Agreement
terminates or is terminated in accordance with its terms.
10. Survival. Each of the undersigned acknowledges and agrees that
the representations, warranties, covenants and agreements made and
contained in this letter agreement shall survive the consummation of the
transactions contemplated hereby, notwithstanding any investigation made
by or on behalf of either of the undersigned.
11. Best Efforts. Except as may be specifically provided herein,
each of the parties hereto shall use its reasonable best efforts to
consummate the transactions contemplated hereby, as contemplated herein.
12. Governmental Filings. The parties agree that they will
cooperate in connection with, and coordinate their efforts with respect to,
any discussions, correspondence, other communications or filings with
governmental or regulatory authorities (or representatives thereof).
13. Expenses. Except as specifically provided herein, each party
hereto shall be responsible for its own fees and expenses incurred in
connection with the matters contemplated hereby.
14. Termination. This Agreement shall terminate, and all
obligations of the parties hereunder shall cease, other than the obligation
of the Purchaser to pay any unpaid portion of the Purchase Price with
respect to any Conversion Shares which it received prior to such
termination, on the date that is the one-year anniversary of the date
hereof. In the event that the Company fails to deliver to the Seller or the
Seller's nominee Conversion Shares with respect to the first two Conversion
Transactions of the Subsequent Tranche within twenty (20) days of
submission to the Company by the Seller of a Conversion Notice relating to
the first such Conversion Transaction, the Purchaser shall have the option
to terminate this Agreement on such twentieth day (such option to be
exercisable by the Purchaser by delivering notice thereof to the Seller
prior to the close of business on the business day immediately following
such twentieth day), provided that, notwithstanding such termination, the
Company shall remain obligated to pay to the Seller the Purchase Price
relating to the Conversion Shares issued pursuant to each such Conversion
Transaction in accordance with the terms hereof. In addition, the Purchaser
CUSIP No. 151176104 13D Page 25 of 28 Pages
shall have the option to terminate this Agreement at any time after the
90th day following the date hereof in the event that there occurs a
material adverse change in the business or financial condition of the
Company since the date hereof (a "Material Adverse Change"); provided,
however, that a Material Adverse Change will not be deemed to occur (i)
solely as a result of the Company's failure to consummate the sale of the
License (as defined in the Securities Purchase Agreement) to Winstar
Communications, Inc. ("Winstar") pursuant to the Agreement to Purchase LMDS
License, dated July 10, 1998, between the Company and Winstar (the "License
Purchase Agreement") and is required as a result of such failure to fulfill
any remaining obligations it may have under the License Purchase Agreement
or (ii) as a result of any action or failure to act on the part of the
Purchaser as a stockholder of the Company.
15. Adjustment to Purchase Price. In the event that this Agreement
terminates or is terminated in accordance with its terms and no Conversion
Transactions relating to the Subsequent Tranche have occurred prior to the
effective date of such termination, and the Purchaser sells any Conversion
Share received by it with respect to the Initial Tranche (an "Initial
Tranche Conversion Share") in a bona fide, arms' length transaction (a
"Qualifying Sale"), the Initial Purchase Price shall be adjusted as
described in the following sentence by an amount (the "Purchase Price
Adjustment Amount") equal to one-half of the difference between (i) the
Conversion Price at which the Preferred Share relating to such Initial
Tranche Conversion Share was converted (the "Base Price") and (ii) the
price at which such Initial Tranche Conversion Share is sold in a
Qualifying Transaction, less any commissions or other fees paid to a broker
dealer in connection with such sale (the "Sale Price"). If, in connection
with a Qualifying Sale of Initial Tranche Conversion Shares, (A) the Sale
Price is less than the Base Price, the Seller shall deliver the Purchase
Price Adjustment Amount relating to such shares to the Purchaser within
five (5) business days following receipt by the Seller of written notice
from the Purchaser that such Qualifying Sale has occurred and been settled,
such notice to specify the number of Initial Tranche Conversion Shares
sold, the sale price thereof and the identity of the purchaser (a
"Qualifying Sale Notice") and (B) the Base Price is less than the Sale
Price, the Purchaser shall deliver the Purchase Price Adjustment Amount
relating to such shares to the Seller within five (5) business days of the
settlement of such Qualifying Sale. The Purchaser agrees, as a condition to
any Qualifying Sale to which clause (B) of the immediately preceding
sentence applies, to deliver a Qualifying Sale Notice to the Seller prior
to the settlement of such sale.
16. Adjustments Due to Corporate Events. In the event that the
Company declares a stock split or reverse split, a stock dividend, a
distribution of assets to holders of its securities, or a distribution to
such holders of rights to acquire Common Stock at less than the current
market value thereof, or a reorganization, exchange or other similar event
occurs with respect to the Common Stock (whether due to an Exchange
Transaction, as defined in the Certificate of Designation, or otherwise),
the Conversion Price Limit and the Base Price, respectively, shall be
proportionately reduced or increased, as the case may be. In the event of a
CUSIP No. 151176104 13D Page 26 of 28 Pages
dispute between the parties as to the amount of such reduction or increase,
the Seller shall select a nationally-recognized investment banking firm
that is reasonably acceptable to the Purchaser to determine such amount,
the cost of such determination to be shared equally by the Purchaser and
the Seller.
17. Notices. Any notice, demand or request required or permitted to
be given by either party to the other party pursuant to the terms of this
Agreement shall be in writing and shall be deemed given (i) when delivered
personally or by verifiable facsimile transmission (with an original to
follow) on or before 5:00 p.m., eastern time, on a business day or, if such
day is not a business day, on the next succeeding business day, or (ii) on
the next business day after timely delivery to a nationally-recognized
overnight courier, addressed to the parties as follows:
If to the Purchaser:
Akcess Pacific Group, LLC.
4370 La Jolla Villa Drive, Suite 960
San Diego, California 92122
Attn: Joe Pike
Tel: 619-642-7515
Fax: 619-642-0322
If to the Seller:
Marshall Capital Management, Inc.
c/o Credit Suisse First Boston Corporation
11 Madison Avenue
New York, New York 10010
Attn: Allan D. Weine
Tel: 212-325-2302
Fax: 212-325-6519
with a copy to:
Marshall Capital Management, Inc.
c/o Credit Suisse First Boston Corporation
ATT Corporate Center
227 West Monroe Street
Chicago, Illinois 60606
Attn: Allan D. Weine
Tel: 312-750-3239
Fax: 312-750-1031
18. Miscellaneous. This Agreement: (a) embodies the entire
agreement and understanding of the parties hereby and supersedes any prior
agreement or understanding between the parties with respect to the
transactions contemplated hereby; (b) has been executed and delivered in
the state of New York and shall be governed by, and construed in
accordance with, the laws of the State of New York, without reference to
principles thereof relating to conflicts of law; (c) shall be binding upon
and shall inure to the benefit of the parties hereto and their respective
successors and assigns; provided, however, that this letter agreement and
CUSIP No. 151176104 13D Page 27 of 28 Pages
all rights and obligations hereunder may not be assigned or transferred by
either party, without the prior written consent of the other party; and (d)
may be executed in any number of counterparts, each of which shall be
deemed an original, and all of which, when taken together, shall constitute
one and the same instrument. Any provisions of this Agreement which are
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
enforceability without invalidating the remaining provisions hereof.
[Remainder of Page Intentionally Left Blank]
CUSIP No. 151176104 13D Page 28 of 28 Pages
In Witness Whereof, the parties have executed this Agreement as of
the date first-above written.
AKCESS PACIFIC GROUP, LLC
By: /s/ JOSEPH PIKE
Name: Joseph Pike
Title: Chairman
MARSHALL CAPITAL MANAGEMENT, INC.
By: /s/ ALLAN WEINE
Name: Allan Weine
Title: President
