Document:

<PAGE>   1
                                                                  Exhibit 10(cc)

                             MODIFICATION AGREEMENT

         BY THIS MODIFICATION AGREEMENT, made and entered into as of the 1st day
of February, 2001, THREE-FIVE SYSTEMS, INC., a Delaware corporation (the
"Company"), all present and future Subsidiaries of the Company (with the
Company, the "Borrower"), the banks listed from time to time in the Credit
Agreement (defined below) (the "Banks"), and IMPERIAL BANK, a California banking
corporation, as administrative agent for the Banks (in such capacity, the
"Agent") and as Issuing Bank, confirm and agree as follows:

SECTION 1. RECITALS.

         1.1 Borrower, the Banks and the Agent entered into a Credit Agreement
dated January 21, 2000 (as amended from time to time, the "Credit Agreement"),
which provides for a revolving line of credit (the "RLC") by the Banks to
Borrower in the amount of $25,000,000.00 upon the terms and conditions contained
therein. All undefined capitalized terms used herein shall have the meaning
given them in the Credit Agreement.

         1.2 The RLC is evidenced by two Revolving Promissory Notes executed by
Borrower, each payable to the order of a Bank, in the aggregate principal amount
of $25,000,000.00 (the "RLC Notes").

         1.3 Borrower, the Banks and the Agent desire to modify the Credit
Agreement and the other Credit Documents as set forth herein.

SECTION 2. MODIFICATION OF CREDIT DOCUMENTS.

         2.1 The following definitions in Section 1.1 of the Credit Agreement
are hereby amended to read as follows:

                  "Maximum LC Commitment" means Three Million And No/100 Dollars
         ($3,000,000.00).

                  "RLC Commitment" means Fifteen Million And No/100 Dollars
         ($15,000,000.00).

                  "RLC Maturity Date" means January 31, 2002.

                  "Tangible Net Worth Minimum" means the sum of $225,000,000.00
         as of March 31, 2001, plus for each fiscal quarter thereafter fifty
         percent (50.0%) of its positive Net Income, less commencing January 1,
         2001 any new treasury stock up to $50,000,000.00.

         2.2 Schedule 1.1 of the Credit Agreement is hereby amended to read as
attached hereto.
<PAGE>   2
         2.3 All references in the RLC Notes to January 19, 2001 as the RLC
Maturity Date are hereby amended to read as January 31, 2002.

SECTION 3. OTHER MODIFICATIONS, RATIFICATIONS AND AGREEMENTS.

         3.1 All references to the Credit Agreement and the RLC Notes in the
Credit Documents and the other Credit Documents are hereby amended to refer to
the Credit Agreement and the RLC Notes as hereby amended.

         3.2 Borrower acknowledges that the indebtedness evidenced by the RLC
Notes is just and owing, that the aggregate balance thereof in the amount of
$____________ as of ______________, 2001 is correctly shown in the records of
the Banks as of the date hereof, and Borrower agrees to pay the indebtedness
evidenced by the RLC Notes, according to the terms thereof, as herein modified.

         3.3 Borrower hereby reaffirms to the Banks each of the representations,
warranties, covenants and agreements of Borrower set forth in the RLC Notes, the
Credit Agreement and all other Credit Documents, with the same force and effect
as if each were separately stated herein and made as of the date hereof.

         3.4 Borrower hereby ratifies, reaffirms, acknowledges, and agrees that
the RLC Notes, the Credit Agreement and the other Credit Documents represent
valid, enforceable and collectible obligations of Borrower, and that there are
no existing claims, defenses, personal or otherwise, or rights of setoff
whatsoever with respect to any of these documents or instruments. In addition,
Borrower hereby expressly waives, releases and absolutely and forever discharges
the Agent, the Banks and their present and former shareholders, directors,
officers, employees and agents, and their separate and respective heirs,
personal representatives, successors and assigns, from any and all liabilities,
claims, demands, damages, action and causes of action, whether known or unknown
and whether contingent or matured, that Borrower may now have, or has had prior
to the date hereof, or that may hereafter arise with respect to acts, omissions
or events occurring prior to the date hereof and, without limiting the
generality of the foregoing, from any and all liabilities, claims, demands,
damages, actions and causes of action, known or unknown, contingent or matured,
arising out of, or in any way connected with, the RLC. Borrower further
acknowledges and represents that, except as acknowledged above, no event has
occurred and no condition exists that, after notice or lapse of time, or both,
would constitute a default under this Agreement, the RLC Notes, the Credit
Agreement or any other Credit Document. The preceding representation shall be to
the actual knowledge of Borrower with respect to default by the Banks.

         3.5 All terms, conditions and provisions of the RLC Notes, the Credit
Agreement and the other Credit Documents are continued in full force and effect
and shall remain unaffected and unchanged except as specifically amended hereby.
The RLC Notes, the Credit Agreement and the other Credit Documents, as amended
hereby, are hereby ratified and reaffirmed by Borrower, and Borrower
specifically acknowledges the validity and enforceability thereof.

                                      -2-
<PAGE>   3
SECTION 4. GENERAL.

         4.1 This Agreement in no way acts as a release or relinquishment of
those rights securing payment of the RLC.

         4.2 The modifications contained herein shall not be binding upon the
Agent and the Banks until the Agent shall have received all of the following:

                  (a) An original of this Agreement fully executed by the
         Borrower and the Banks;

                  (b) A renewal fee of $1,000.00 to the Agent; and

                  (c) Such other documents as the Agent and the Banks may
         reasonably require.

         4.3 Borrower shall execute and deliver such additional documents and do
such other acts as Lender may reasonably require to fully implement the intent
of this Agreement.

         4.4 Borrower shall pay all costs and expenses, including, but not
limited to, reasonable attorneys' fees incurred by the Agent and the Banks in
connection herewith, whether or not all of the conditions described in Paragraph
4.2 above are satisfied. The Banks, at their option, but without any obligation
to do so, may advance funds to pay any such costs and expenses that are the
obligation of the Borrower, and all such funds advanced shall bear interest at
the highest rate provided in the RLC Notes, shall be due and payable upon
demand.

         4.5 Notwithstanding anything to the contrary contained herein or in any
other instrument executed by Borrower, the Banks or the Agent, or in any other
action or conduct undertaken by Borrower, the Banks or the Agent on or before
the date hereof, the agreements, covenants and provisions contained herein shall
constitute the only evidence of the Banks' consent to modify the terms and
provisions of the RLC Notes, the Credit Agreement or any other Credit Documents.
Accordingly, no express or implied consent to any further modifications
involving any of the matters set forth in this Agreement or otherwise shall be
inferred or implied by the Banks' or the Agent's execution of this Agreement.
Further, the Banks' execution of this Agreement shall not constitute a waiver
(either express or implied) of the requirement that any further modification of
the RLC or of the RLC Notes, the Credit Agreement or any other Credit Document
shall require the express written approval of the Banks; no such approval
(either express or implied) has been given as of the date hereof.

         4.6 Notwithstanding any prior forbearance, actual or implied, of any
nature by the Banks, time is hereby declared to be of the essence hereof, of the
RLC, of the RLC Notes, of the Credit Agreement and of all Credit Documents, and
the Banks require, and Borrower agrees to, strict performance of each and every
covenant, condition, provision and agreement hereof, of the RLC Notes, of the
Credit Agreement and of all other Credit Documents.

                                      -3-
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         4.7 This Agreement shall be binding upon, and shall inure to the
benefit of, the parties hereto and their heirs, personal representatives,
successors and assigns.

         4.8 This Agreement is made for the sole protection and benefit of the
parties hereto, and no other person or entity shall have any right of action
hereon.

         4.9 This Agreement shall be governed by and construed according to the
laws of the State of Arizona.

         IN WITNESS WHEREOF, these presents are executed as of the date
indicated above.

                                       THREE-FIVE SYSTEMS, INC., a Delaware
                                       corporation

                                       By: /s/ Jack L. Saltich
                                          --------------------------------------
                                       Name: Jack L. Saltich
                                            ------------------------------------
                                       Title: President, Chief Executive Officer
                                             -----------------------------------

                                                                         COMPANY

                                       THREE-FIVE SYSTEMS, (BEIJING), LTC., a
                                       wholly foreign owned enterprise organized
                                       under the laws of the People's Republic
                                       of China.

                                       By: /s/ Jeffrey D. Buchanan
                                          --------------------------------------
                                       Name: Jeffrey D. Buchanan
                                            ------------------------------------
                                       Title: Executive Vice President
                                             -----------------------------------

                                       THREE-FIVE SYSTEMS PACIFIC, INC., a
                                       Philippine corporation

                                       By: /s/ Jack L. Saltich
                                          --------------------------------------
                                       Name: Jack L. Saltich
                                            ------------------------------------
                                       Title: President, Chief Executive Officer
                                             -----------------------------------

                                      -4-
<PAGE>   5
                                        THREE-FIVE SYSTEMS LIMITED, a
                                        corporation organized under the laws of
                                        the United Kingdom.

                                        By:  /s/Jeffrey D. Buchanan
                                           ------------------------------------
                                        Name:  Jeffrey D. Buchanan
                                             ----------------------------------
                                        Title:  Executive Vice President, Chief
                                                Financial Officer
                                              ---------------------------------

                                                                    CO-BORROWERS

                                        IMPERIAL BANK, California banking
                                        corporation

                                        By: /s/ Kevin C. Halloran
                                           ------------------------------------
                                        Name:  Kevin C. Halloran
                                             ----------------------------------
                                        Title:  Senior Vice President
                                              ---------------------------------

                                                                  AGENT AND BANK

         The undersigned is a Bank as defined in this Agreement, hereby consents
to this Agreement and agrees to deliver its RLC Note to the Agent for
cancellation.

                                        MELLON BANK, N.A.

                                        By:   /s/ William R. Murray
                                           ------------------------------------
                                        Name:  William R. Murray
                                             ----------------------------------
                                        Title:  Vice President
                                              ---------------------------------

                                      -5-
<PAGE>   6
                                  SCHEDULE 1.1.

                 PRO RATA SHARE AND NOTICE ADDRESS OF EACH BANK

                      Pro Rata Share:           Imperial

                      RLC Commitment            $15,000,000

Notice Address:

         Imperial:                  Imperial Bank
                                    400 East Van Buren
                                    Suite 900
                                    Phoenix, Arizona  85004
                                    Attention:  Kevin Halloran
                                    Telecopier:  (602) 261-7881EXHIBIT 4.9

THE  WARRANTS  OF THE  COMPANY  EVIDENCED  BY THIS  CERTIFICATE  HAVE  NOT  BEEN
REGISTERED  WITH  THE  SECURITIES  AND  EXCHANGE  COMMISSION  OR THE  SECURITIES
COMMISSION  OF ANY  STATE IN  RELIANCE  UPON  EXEMPTIONS  FROM THE  REGISTRATION
REQUIREMENTS  OF THE SECURITIES  ACT OF 1933, AS AMENDED,  AND PARAGRAPH (13) OF
CODE SECTION  10-5-9 OF THE GEORGIA  SECURITES ACT OF 1973. THE WARRANTS MAY NOT
BE SOLD,  TRANSFERRED,  PLEDGED  OR  ASSIGNED  OR A  SECURITY  INTEREST  CREATED
THEREIN, UNLESS THE PURCHASER,  TRANSFEREE,  ASSIGNEE, PLEDGEE OR HOLDER OF SUCH
SECURITY INTEREST COMPLIES WITH ALL STATE (INCLUDING THE GEORGIA  SECURITIES ACT
OF 1973) AND FEDERAL  SECURITIES  LAWS (I.E.,  SUCH SHARES ARE REGISTERED  UNDER
SUCH LAWS  (INCLUDING  THE GEORGIA  SECURITIES ACT OF 1973) OR AN EXEMPTION FROM
REGISTRATION  IS  AVAILABLE  THEREUNDER)  AND  UNLESS  THE  SELLER,   TRANFEROR,
ASSIGNOR,  PLEDGOR OR GRANTOR OF SUCH SECURITY  INTEREST  PROVIDES AN OPINION OF
COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT THE TRANSACTION CONTEMPLATED
WOULD NOT BE IN  VIOLATION OF THE  SECURITIES  ACT OF 1933,  AS AMENDED,  OR ANY
APPLICABLE STATE SECURITIES LAWS.  TRANSFERABILITY  OF THE WARRANTS IS THEREFORE
LIMITED AND  INVESTORS  MUST BEAR THE ECONOMIC RISK OF THEIR  INVESTMENT  FOR AN
INDEFINITE PERIOD OF TIME;

                          WAVERIDER COMMUNICATIONS INC.
                 Organized under the laws of the State of Nevada

                      CLASS M COMMON STOCK PURCHASE WARRANT

No.WM-1                    WARRANTS TO PURCHASE          ** 25,000 COMMON SHARES

THIS  CERTIFIES  that,  for value  received  Avondale  Capital  Partners Inc. Or
registered  assigns  ("Warrantholder")  is entitled to purchase  from  WAVERIDER
COMMUNICATIONS INC., a Nevada corporation ("Company"), at any time from the date
of issuance and during the period (the "Exercise  Period")  expiring on December
8th, 2005 (the "Expiration  Date"),  unless extended,  the number of fully paid,
nonassessable  shares shown above of the Company's common stock. $.001 par value
(the "Common  Shares"),  in the manner  stated below,  at the purchase  price of
US$3.05 (three dollars five cents) per Common Share (the "Exercise Price").

          EXERCISE. Subject to the provisions of the Warrant Terms, this Class M
Warrant may be  exercised  in whole or in part at any time  during the  Exercise
Period for a whole number of shares,  by  surrendering it with the Exercise Form
on the  reverse  side duly  completed  at the  offices  of the  Company,  or any
successor,  and by paying in full the Exercise Price for all Common Shares being
purchased,  together  with  all  transfer  fees and  transfer  taxes  and  other
governmental  charges due, if any.  Payment shall be made in lawful money of the
United States of America, in cash or by bank check,  cashier's check,  certified
check,  or  postal or  express  money  order  made  payable  to the order of the
Company. Upon partial exercise hereof, a new Class M Warrant of like tenor shall
be issued to the registered holder hereof evidencing the number of Common Shares
not purchased.  No fractional shares or scrip certificate  evidencing fractional
shares will be issued upon exercise hereof, nor will any cash be paid in lieu of
any fractional share not issued.
         ASSIGNMENT.  This Class M Warrant may be assigned or transferred by the
registered  holder or by attorney  duly  authorized  in writing,  in whole or in
part, at the offices of the Company with the Assignment Form on the reverse side
duly completed, upon payment of the applicable transfer fee and any transfer tax
or other governmental charges due, if any. Upon any such assignment or transfer,
a new Class M Warrant Certificate or certificates of like tenor and representing
in the aggregate the right to purchase a like number of Common  Shares,  subject
to any adjustments  made in accordance with the provisions of the Warrant Terms,
will be issued in accordance with the registered holder's lawful instructions.
         EXCHANGE. This Class M Warrant Certificate may at any time be exchanged
for one or more Class M warrant  Certificates of like tenor and  representing in
the aggregate the right to purchase a like number of Common  Shares,  subject to
any  adjustments  made in accordance  with the  provisions of the Warrant Terms,
upon presentation therefor at the offices of the Company and upon payment of the
requisite fees.
         TRANSFER AND ASSIGNMENT FEES. Whenever this Class M Warrant Certificate
is exercised for Common Shares, is assigned or transferred,  or is exchanged for
one or more like  certificates,  there shall be paid to the Company  therewith a
fee for every Class M Warrant  Certificate  or Common  Share  certificate  to be
issued, in accordance with the Company's fee schedule.
         ADJUSTMENTS.  Under the Warrant Terms, the Exercise Price is subject to
adjustment if the Company effects any stock split or combination  (reverse stock
split) or  recapitalization  with  respect to the  Common  Shares and in certain
other  circumstances.  Any adjustment of the Exercise Price probably will result
in a  corresponding  adjustment  of the  number  of  Common  Shares  purchasable
hereunder. Further, the Exercise Price may be reduced, irrespective of whether a
stock split,  combination  or other  adjustment is effected,  and the Expiration
Date may be  extended  one or more time,  from time to time,  for an  indefinite
period at the Company's discretion upon giving at least two days' notice thereof
to registered holders of the Class M Warrants.
         STATUS OF HOLDER.  The Company may deem and treat the registered holder
of this  Class M  Warrant  Certificate  as the  absolute  owner  hereof  for all
purposes, notwithstanding any notation of ownership or other writing made hereon
by any  person,  and the  Company  shall not be  affected  by any  notice to the
contrary.  No  registered  holder of Class M Warrants,  as such,  shall have any
rights as a  shareholder  of the  Company,  either at law or at equity,  and the
rights of each such registered  holder,  as such, are limited to those expressly
provided in the Warrant Terms and this Certificate.
         WITNESS the facsimile seal of the Company and the facsimile  signatures
of its duly authorized officers.

DATED:  December 8, 2000                    WAVERIDER COMMUNICATIONS INC.

                                            ------------------------------------
                                            Assistant Secretary

<PAGE>
The following  abbreviations,  when used in the  inscription on the face of this
certificate,  shall  be  construed  as  though  they  were  written  out in full
according to applicable laws or regulations:

TEN COM - as tenants in common  UNIFORM GIFTS TO MINORS ACT
TEN ENT - as tenants by the  entireties
JT TEN -  as joint  tenants with right of  ___________ Custodian _____________
          survivorship and not as tenants (Custodian)          (Minor)
          in common and not as community property under the Uniform
          Gifts of Minors Act of the State of ___________________

EXERCISE

         I or we hereby  irrevocably  elect to  exercise  the right of  purchase
represented by this  certificate to purchase ______ Common Shares of the Company
and  hereby  make  payment  of  _______________   (number  of  shares  purchased
multiplied by US$3.05) payable to the order of WAVERIDER  COMMUNICATIONS INC. in
payment of the exercise price for such shares, and request that certificates for
the Common Shares shall be issued in the name of:

Please insert social security or EIN number
or other identifying number: ______________

(Insert name address, including zip code):

----------------------------------------

----------------------------------------

And, if such number of Common Shares shall not be all of the shares  purchasable
hereunder,  that a new Class M Warrant Certificate or like tenor for the balance
of the  remaining  Common  Shares  purchasable  hereunder  be  delivered  to the
undersigned at the address above.

The undersigned agrees not to offer, sell,  transfer or otherwise dispose of any
Common  Stock  obtained on exercise of the Warrant,  except under  circumstances
that will not result in a violation of the  Securities  Act of 1933, as amended,
or any state securities laws.

IMPORTANT:  The name of the person  exercising this warrant must correspond with
the name of the  Warrantholder  written on the face of this Certificate in every
particular,  without  alteration  or any  change  whatever,  unless  it has been
assigned by completing the Assignment form below.

DATED:  __________________ 20___      X_______________________________________
                                       Signature of Registered Holder

                                     X_______________________________________
                                       Signature of Registered Holder

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto:

Please insert social security or EIN number
or other identifying number: _____________________

(Insert name and address, including zip code):

----------------------------------------

----------------------------------------

The right to purchase  _____________  Common Shares of the Company  evidenced by
this Class M Warrant,  and does hereby  irrevocably  constitute  and appoint any
officer of the Company or its transfer agent and registrar as lawful Attorney to
transfer such right on the books of the Company with full power of  substitution
in the premises.

The undersigned agrees not to offer, sell,  transfer or otherwise dispose of any
Common  Stock  obtained on exercise of the Warrant,  except under  circumstances
that will not result in a violation of the  Securities  Act of 1933, as amended,
or any state securities laws.

DATED:  _______________, 20_____        X_______________________________________
                                         Signature of Registered Holder

                                        X_______________________________________
                                         Signature of Registered Holder

IMPORTANT:  Every registered owner of this Certificate must sign it to assign or
otherwise  transfer  Class M Warrants.  The above  signature or signatures  must
correspond  with the name or names  written on the face of this  Certificate  in
every particular,  without alteration,  enlargement or any change whatever. Each
signature should be "medallion"  guaranteed by an eligible guarantor institution
(Banks,  Stockbrokers,  Savings and Loan  Associations  and Credit  Unions) with
membership in an approved signature guarantee Medallion Program pursuant to Rule
17Ad-15 of the Securities and Exchange Commission.

SIGNATURE GUARANTEE:

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