Exhibit 10.19
BRIDGE LOAN AGREEMENT
THIS BRIDGE LOAN AGREEMENT (this "Agreement") is made this 24th day of
January, 2003, by and among AIRNET COMMUNICATIONS CORPORATION, a Delaware
corporation ("Borrower"), TECORE, INC., a Texas corporation ("Tecore") and SCP
PRIVATE EQUITY PARTNERS II, L.P., a Delaware limited partnership ("SCP" and,
together with Tecore, the "Lenders" and each a "Lender").
W I T N E S S E T H:
WHEREAS, the Lenders and Borrower have agreed upon the terms and conditions
of an investment (the "Investment") by the Lenders in Borrower, as set forth in
the Term Sheet attached hereto as Exhibit A (the "Term Sheet"); and
WHEREAS, to provide Borrower with sufficient working capital while the
Lenders and Borrower prepare the documentation necessary and appropriate to
consummate the Investment and obtain all necessary approvals from stockholders
and third parties, the Lenders have agreed to provide Borrower with a temporary
loan;
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Borrower and the Lenders, intending to be legally bound, agree as
follows:
ARTICLE I - LOANS
1.1. Each of the Lenders, severally, and not jointly and severally, agrees,
on the terms and conditions of this Agreement, to make loans to Borrower in an
amount up to Three Million Dollars ($3,000,000) (the "Commitment"), subject to
the further terms hereof. Upon the execution and delivery of this Agreement,
each Lender shall loan to Borrower the amount of $800,000 (the "Initial
Amount"). The balance of the Commitment may be drawn down by Borrower (in equal
amounts from each Lender), in its discretion, upon compliance with the
conditions set forth in Exhibit B.
1.2. Borrower has authorized the issuance of promissory notes made in favor
of each Lender by Borrower, which shall be in the form set forth in Exhibit C
attached hereto, and are herein referred to individually as a "Note" and
collectively as the "Notes". The loans made by the Lenders shall be repaid, by
cash payments, with simple interest thereon at the annual rate of two percent
(2%) plus the "Prime Rate" (defined below) in effect from time to time, in
accordance with the terms and provisions in the Notes or otherwise set forth
herein, and payable to the order of each Lender 120 days after the date hereof
or such other date as may be agreed upon in a written instrument signed by all
parties. For the purposes hereof, the "Prime Rate" shall be the "Prime Rate"
quoted in the "Money Rates" section of The Wall Street Journal from time to
time.
ARTICLE II - SECURITY
As collateral security for Borrower's obligations hereunder and under the
Notes, Borrower will grant and pledge a security interest in all of its assets
to the Lenders, upon the terms and conditions of a Security Agreement in the
form set forth in Exhibit D attached hereto, which is being executed and
delivered simultaneously herewith.
ARTICLE III - REPRESENTATIONS AND WARRANTIES OF BORROWER
Borrower represents and warrants as follows:
3.1. Organization. Borrower is a corporation duly existing under the laws
of its state of incorporation and qualified and licensed to do business in any
state in which the conduct of its business or its ownership of property requires
that it be so qualified.
3.2. Authorization. All corporate action on the part of Borrower and its
officers, directors and stockholders necessary for the authorization, execution,
delivery and performance of all obligations of Borrower under this Agreement,
the Notes, and the Security Agreement have been taken. This Agreement, the
Notes, and the Security Agreement, when executed and delivered by Borrower shall
constitute legal, valid and binding obligations of Borrower, enforceable against
Borrower in accordance with their terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, moratorium or similar laws
affecting creditors' rights and the enforcement of debtors' obligations
generally and by general principles of equity, regardless of whether enforcement
is pursuant to a proceeding in equity or at law.
3.3. Absence of Conflicts. The execution, delivery and performance of this
Agreement is not in conflict with nor constitutes a breach of any provision
contained in Borrower's organizational documents, nor will it constitute an
event of default under any material agreement to which Borrower is a party or by
which Borrower is bound.
3.4. Consents and Approvals. Borrower has obtained all consents, approvals
and authorizations of, made all declarations or filings with, and given all
notices to, all governmental authorities and agencies that are necessary for the
continued operation of Borrower's business as currently conducted, or are
required by law.
3.5. Capitalization. The authorized and outstanding capital of Borrower is
described on Schedule 3.5 attached hereto. Except as set forth on Schedule 3.5,
there are no subscriptions, convertible securities, options, warrants or other
rights (contingent or otherwise) currently outstanding to purchase any of the
authorized but unissued capital stock of Borrower. Except as set forth in
Schedule 3.5, Borrower has no obligation to issue shares of its capital stock,
or subscriptions, convertible securities, options, warrants, or other rights
(contingent or otherwise) to purchase any shares of its capital stock or to
distribute to holders of any of its equity securities, any evidence of
indebtedness or asset. The stockholders of Borrower, the holders of any
outstanding
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subscriptions, convertible securities, options, warrants and other similar
rights and the number of shares of Common Stock, Preferred Stock, subscriptions,
convertible securities, options and warrants held by each are accurately and
completely set forth in Schedule 3.5.
3.6. Litigation. Except as disclosed on Schedule 3.6, there are no actions,
suits, claims, investigations, arbitrations or other legal or administrative
proceedings, to the Knowledge of Borrower, threatened against Borrower at law or
in equity, and to Borrower's Knowledge, there is no basis for any of the
foregoing. Except as disclosed on Schedule 3.6, there are no unsatisfied
judgments, penalties or awards against or affecting Borrower or its businesses,
properties or assets. Except as disclosed on Schedule 3.6, Borrower is not in
default, and no event has occurred which with the passage of time or giving of
notice or both would constitute a default by Borrower with respect to any order,
writ, injunction or decree known to or served upon Borrower of any court or of
any foreign, federal, state, municipal or other governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign.
Except as disclosed on Schedule 3.6, there is no action or suit by Borrower
pending or threatened against others. Except as disclosed on Schedule 3.6,
Borrower has complied with all laws, rules, regulations and orders applicable to
its current business, operations, properties, assets, products and services the
violation of which would have a material adverse effect. There is no existing
law, rule, regulation or order, and Borrower has no Knowledge of any proposed
law, rule, regulation or order, whether foreign, federal or state, that would
prohibit or materially restrict Borrower from, or otherwise materially adversely
affect Borrower in, conducting its businesses in any jurisdiction in which it is
now conducting business. As defined in this Agreement, "Knowledge" of Borrower
means the actual knowledge by a director or officer of Borrower of a particular
fact or circumstance or such knowledge as may reasonably be imputed to such
person as a result of his actual knowledge of other facts or circumstances.
3.7. Business Plan. Borrower has provided to the Lenders an updated
business plan, dated January 18, 2003 (the "Plan"). To Borrower's Knowledge, the
factual assumptions underlying the Plan are correct, and the assumptions in the
Plan with respect to future operations are reasonable.
3.8. SEC Reports and Financial Statements. Borrower's Common Stock, $0.001
par value per share (the "Common Stock"), is registered under Section 12(g) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
Borrower is in compliance with its reporting and filing obligations under the
Exchange Act. Borrower has made available to the Lenders (a) its annual reports
to stockholders and its Annual Reports on Form 10-K for its last two fiscal
years and (b) all of its Quarterly Reports on Form 10-Q and each other report,
registration statement or definitive proxy statement filed with the Securities
and Exchange Commission since the beginning of such two fiscal years
(collectively, the "SEC Reports"). The SEC Reports do not (as of their
respective dates) contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading. The audited and unaudited financial statements of Borrower
included in the SEC Reports have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis (except as stated
in such Financial Statements or the notes thereto) and fairly present the
financial position
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of Borrower and its consolidated subsidiaries as of the dates thereof and the
results of their operations and changes in financial position for the periods
then ended. Except as disclosed by Borrower in the SEC Reports or on Schedule
3.8, since the end of the most recent of such fiscal years, to the Borrower's
Knowledge, nothing has occurred, nor is there an existing condition, event or
series of events which reasonably would be expected to have a material adverse
effect on the business, operations, condition (financial or otherwise), property
or prospects of Borrower or the ability of Borrower carry out its obligations
under this Agreement, the Notes or the Security Agreement ("Material Adverse
Effect").
3.9. Title to Property and Assets. Borrower does not own any real
property. Except as set forth on Schedule 3.9, Borrower has good and marketable
title to all of its personal property and assets free and clear of any material
restriction, mortgage, deed of trust, pledge, lien, security interest or other
charge, claim or encumbrance which would have a material adverse effect. Except
as set forth on Schedule 3.9, with respect to properties and assets it leases,
Borrower is in material compliance with such leases and holds a valid leasehold
interest free of any liens, claims or encumbrances which would have a material
adverse effect.
3.10. Intellectual Property.
(a) As used in this Agreement, the following terms have the following
meanings:
"Copyrights" means United States or foreign registered or unregistered
works of authorship, regardless of the availability of copyright
protection, but including all copyrights and moral rights recognized by law
and any applications for United States or foreign registration or renewal
therefor.
"Intellectual Property" means Copyrights, Patent Rights, Trademark Rights,
Internet domain names, World Wide Web sites and all pages thereof,
Know-How, Trade Secret Rights, Software, and registration rights of mask
works for circuit designs under the Semiconductor Chip Protection Act of
1984, as amended, and similar rights under corresponding foreign laws,
owned by Borrower or which any person or entity is under an obligation to
assign ownership to Borrower.
"Improvement" means any modification to the subject matter of the
Intellectual Property made by, or for, or at the request of Borrower.
"Patent Rights" means United States and foreign patent applications and
patents and other patent rights, including any and all divisions,
continuations, continuations in part, substitutions, reissues,
re-examinations, extensions and renewals thereof.
"Software" means any set of statements or instructions to be used directly
or indirectly in a computer or microprocessor to bring about a certain
result, including all software under development and all related
documentation.
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"Know-How" means all documented and undocumented research, ideas, data,
theories, conclusions, reports, drawings, designs, blueprints, schematics,
exhibits, models, prototypes, source code, object code, flow charts,
manuals, processes, specifications, formulae, product configurations,
notes, inventions (whether or not patentable and whether or not reduced to
practice) and any other information of any kind developed, in development
or maintained by Borrower or any of its employees, agents or
representatives relating to any goods or services sold or licensed or
offered for sale or license by Borrower or goods or services which Borrower
has a present intention to sell or license.
"Trademark Rights" means United States or foreign trademarks, service
marks, trade names, trade dress, domain names and corporate names, whether
registered or unregistered, and all pending United States and foreign
applications therefor associated with any goods or services sold or
licensed or offered for sale or license by Borrower or goods or services
which Borrower has a present intention to sell or license.
"Trade Secret Rights" means all documentation, Know-How, Software and other
materials owned by Borrower that is considered to be proprietary to
Borrower, is maintained on a confidential or secret basis, and is generally
not known to other persons or entities who are not subject to
confidentiality restrictions.
(b) Set forth on Schedule 3.10 is an accurate description of
Borrower's Patents, Copyrights and Trademark Rights, including (i) a complete
and accurate list of all such Patents, Copyrights and Marks, (ii) an accurate
description by country, type or category, and indication of status (namely, for
Patent Rights whether each is unfiled, filed and pending, or issued, and all
dates of maintenance fees paid, if applicable; for Copyrights and Trademark
Rights, whether each is completed or in process, registered or unregistered, and
all renewal dates, if applicable), and (iii) the name of the owner or licensor
and each licensee and sub-licensee of each Patent, Copyright and Trademark
Right. Except as otherwise indicated in Schedule 3.10 hereto, no information
exists indicating that any of such Patents, Copyrights or Marks is invalid or
has expired.
(c) Except as set forth on Schedule 3.10, Borrower is the sole and
exclusive owner of the entire right, title and interest in and to the
Intellectual Property and the Improvements free and clear of all liens, claims,
charges and encumbrances which could have a material adverse effect, and free
and clear of any obligation to pay and license, royalty or other compensation to
any person or to obtain any approval or consent for use thereof. To Borrower's
Knowledge, there are no rights or interests, matured or unmatured, fixed or
contingent, in and to the Intellectual Property or the Improvements in favor of
any other person which presently exist other than rights granted by Borrower to
its suppliers, consultants and/or customers and disclosed in Schedule 3.10.
Except as set forth on Schedule 3.10, Borrower has the right to freely convey
and assign the Intellectual Property and the Improvements in Borrower's own
name, including the right to create derivatives.
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(d) To Borrower's Knowledge, all filing, amendment, issue and
maintenance or other fees due and owing to the United States Patent and
Trademark Office and the United States Copyright Office and any fees or payments
due and owing to any governmental agency, office or department of any other
country in connection with the Intellectual Property have been paid in full on
and as of the date hereof.
(e) Except as set forth on Schedule 3.10, to Borrower's Knowledge, all
documents, deposit materials, specimens of use, drawings, statements,
declarations, affidavits, test data or other papers required to be filed in
connection with applications or proceedings involving Borrower and its employees
before the United States Patent and Trademark Office, the United States
Copyright Office, or any governmental agency, office or department of any other
country in connection with the Intellectual Property have been filed.
(f) To Borrower's Knowledge, all Intellectual Property are valid and
enforceable and Borrower does not have reasonable grounds to believe otherwise.
(g) To Borrower's Knowledge, there are no Patent Rights or pending
patent applications which, if issued in the form known to Borrower, have been,
are or would be infringed or otherwise violated by the making, use, sale or
license of any of the products or services sold or licensed, or currently
offered for sale or license by Borrower, or which Borrower has a present
intention to sell or license, or by any other conduct of Borrower.
(h) To Borrower's Knowledge, there are no copyrights or trademark
rights or other intellectual property rights, which have been, are or would be
infringed or otherwise violated by the sale or license of any of the goods or
services sold or licensed, or currently offered for sale or license by Borrower,
or which Borrower has a present intention to sell or license, or by any other
conduct of Borrower.
(i) To Borrower's Knowledge, there are no trade secrets which have
been, are, or would be misappropriated by the sale or license of any of the
goods or services sold or licensed, or currently offered for sale or license by
Borrower, or which Borrower has a present intention to sell or license, or by
any other conduct of Borrower.
(j) Except as set forth on Schedule 3.10, no Intellectual Property
owned by Borrower and, to Borrower's Knowledge, no product, process or service
practiced, offered, licensed or sold or under development by Borrower, infringes
or otherwise violates any right of publicity or right of privacy of any person,
or would give rise to an obligation to render an accounting to any Person as a
result of co-authorship, co-invention or an express or implied contract for any
use or transfer.
(k) Except as set forth on Schedule 3.10, none of the Intellectual
Property or the Improvements is the subject of an actual or, to Borrower's
Knowledge, threatened lawsuit, arbitration, interference, reissue,
re-examination, opposition, cancellation, public use proceeding, protest or any
other proceeding of any kind which could result in a material loss or diminution
of any of the Intellectual Property or the Improvements. Except as set forth on
Schedule 3.10, to the Knowledge of Borrower, no person or entity has asserted or
has threatened to assert an interest
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adverse to the interests of Borrower in the Intellectual Property or the
Improvements including, but not limited to, a claim of inventorship,
co-inventorship, authorship or co-authorship with respect thereto.
(l) Borrower owns or holds the right to use all the Intellectual
Property and Improvements necessary to provide, produce, sell and license the
services and products currently provided, produced, sold and licensed by
Borrower, and to conduct Borrower's business as presently conducted, and to
satisfy and perform the existing contracts, commitments, arrangements and
understandings with customers of Borrower. Except as set forth on Schedule 3.10,
each item of third party Intellectual Property or third party Improvement which
is licensed, sublicensed, distributed or otherwise used by Borrower is licensed
by Borrower from the appropriate third party pursuant to the terms of a written
license agreement which is valid and in full force and effect.
(m) No current or former employees, principals, investors or
independent contractors of Borrower have any claims or rights to any of the
Intellectual Property. All personnel (including employees, agents, consultants
and contractors) who have contributed to or participated in the conception
and/or development of the Intellectual Property on behalf of Borrower have
executed appropriate nondisclosure agreements and either (A) have been a party
to a "work-for-hire" and/or other arrangement or agreements with Borrower in
accordance with applicable law that has accorded Borrower full, effective,
exclusive and original ownership of all tangible and intangible property and
Intellectual Property rights thereby arising or relating thereto, or (B) have
executed appropriate instruments of assignment in favor of Borrower as assignee
that have irrevocably conveyed to Borrower effective and exclusive ownership of
all tangible and intangible property rights thereby arising and related thereto.
(n) The Trade Secret Rights of Borrower (A) have at all times been
maintained in strict confidence and (B) have been disclosed by Borrower only to
employees who have a "need to know" the contents thereof in connection with the
performance of their duties to Borrower and who have executed nondisclosure
agreements. Neither Borrower nor any other third party has taken any action nor,
to the Knowledge of Borrower failed to take any action that directly or
indirectly caused any of such Trade Secret Rights to enter the public domain or
in any way adversely affect its value to Borrower or its ownership thereof.
(o) Borrower holds all licenses, franchises, permits and other
governmental authorizations, including (without limitation) all export and FCC
licenses, which are required for the conduct of any aspect of Borrower's
business, as presently conducted and as conducted at any time since January 1,
1999. All such licenses, franchises, permits and other governmental
authorizations are valid and current, and Borrower has not received any notice
that any governmental authority intends to cancel, terminate or not renew any
such license, franchise, permit or other governmental authorization. Borrower
has conducted and is conducting its business in compliance with the
requirements, standards, criteria and conditions set forth in such licenses,
franchises, permits and other governmental authorizations, and all laws and
regulations applicable thereto, and is not in violation of any of the foregoing.
The consummation of the transactions
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contemplated hereunder will not alter or impair or require changes to any such
license, franchise, permit or other governmental authorization.
ARTICLE IV - COVENANTS OF BORROWER
So long as the Notes are outstanding, Borrower agrees that, unless both of
the Lenders shall give their prior consent in writing:
4.1. Borrower shall carry on its business in the ordinary course
substantially as conducted heretofore, and shall not engage in any transaction
outside of the ordinary course of business.
4.2. Borrower shall maintain its properties and facilities in good working
order and condition, reasonable wear and tear excepted.
4.3. Borrower shall perform all of its obligations under agreements
relating to or affecting its assets, properties or rights.
4.4. Borrower shall keep in effect all present or equivalent insurance
policies.
4.5. Borrower shall maintain and preserve its business organization intact
and use its best efforts to retain its present key employees and relationships
with suppliers, customers and others having business relationships with
Borrower.
4.6. Borrower shall maintain compliance with all permits, laws, rules and
regulations, consent orders and all other orders of applicable courts,
regulatory agencies, and similar governmental authorities.
4.7. Borrower shall maintain its present leases in accordance with their
respective terms, and shall not enter into new or amended lease instruments.
4.8. Except with respect to pre-existing payment obligations (a)
negotiated under the vendor settlement program, (b) under currently issued
purchase orders, and (c) with respect to fees due to attorneys, accountants, and
investment bankers relating to the transactions contemplated under the Bridge
Loan Agreement and the Investment, Borrower shall not make any payment, or incur
any obligation to make any payment in the ordinary course of business in excess
of $50,000 without the prior written consent of the Lenders.
4.9. Borrower shall comply in all respects with the terms of the Security
Agreement.
4.10. Borrower shall not incur any indebtedness other than: (i) trade debt
incurred in the ordinary course of business, (ii) purchase money obligations in
the ordinary course of business up to $50,000, or (iii) taxes and assessments
not delinquent or actively being contested in good faith by Borrower and for
which Borrower has adequate reserves.
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4.11. Borrower shall not permit to exist against any of its assets any
lien, mortgage, pledge, security interest, title retention device, or other
encumbrance except for (i) Permitted Liens (as defined in the Security
Agreement), (ii) taxes and assessments not delinquent or actively being
contested in good faith by Borrower and for which Borrower has adequate
reserves, or (iii) deposits or pledges for goods or services made in the
ordinary course of business.
4.12. Borrower shall not merge or consolidate with or into any other
corporation, or sell, assign, lease or otherwise dispose of or voluntarily part
with the control (whether in one transaction or in a series of related
transactions) of assets (whether now owned or hereafter acquired) having a fair
market value of more than $50,000 at the time(s) of transfer, or sell, assign or
otherwise dispose of (whether in one transaction or in a series of transactions)
any of its accounts receivable (whether now in existence or hereafter created)
at a discount or with recourse, to any person, except sales or other
dispositions of assets in the ordinary course of business.
4.13. Borrower shall not issue, or agree or commit to issue, any shares of
capital stock, or to issue or grant any option, warrant, security or other
rights (contingent or otherwise) to purchase or acquire shares of its capital
stock, or any bond, debenture or other instrument or obligation which has the
power to vote in respect to the corporate affairs and management of Borrower.
4.14. Borrower shall not make any amendment to its Certificate of
Incorporation or its By-Laws.
4.15. Borrower shall use its best efforts to obtain a Subordination
Agreement from Force Computers, Inc., Sanmina Corporation, and Brooktrout, Inc.
(the "Junior Secured Creditors") prior to the anticipated closing of the
Investment, and shall deliver, as a condition to the closing of the Investment,
Subordination Agreements executed by the Junior Secured Creditors pursuant to
which they will subordinate their existing liens on Borrower's fixtures and
tangible personal property to the lien and security interest to be granted to
the Lenders under this Loan Agreement, related Security Agreement, and other
collateral documents, and under the security and collateral agreements to be
executed in connection with the Investment.
Within three (3) business days following Borrower's request for a waiver of
any provision of this Article IV, the Lenders shall provide Borrower with their
response to such request.
ARTICLE V - CONSUMMATION OF INVESTMENT
The Lenders and Borrower agree to proceed expeditiously with the
negotiation and preparation of a definitive purchase agreement memorializing the
terms and conditions of the Investment.
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ARTICLE VI -- DEFAULTS AND REMEDIES
6.1. An "Event of Default" occurs if:
(a) Borrower defaults in the payment of any principal or interest of
the Notes when the same shall become due, either by the terms thereof or
otherwise as herein provided and the default continues for a period of five (5)
business days after notice of such default is given to Borrower; or
(b) Borrower defaults in the performance or observance of any other
agreement, term or condition contained in the Notes, the Security Agreement or
this Agreement and such default shall not have been remedied within five (5)
days after written notice of such default shall have been received by Borrower
(regardless of the source of such notice); or
(c) Borrower shall default in the payment of any principal of, or
premium, if any, or interest on, any other indebtedness in excess of $50,000 or
obligation with respect to borrowed money after expiration of any grace or cure
period or shall default in the performance of any material term of any
instrument evidencing such Indebtedness or of any mortgage, indenture or
agreement relating thereto after expiration of any grace or cure period, and the
effect of such default is to cause or to permit the holder or holders of such
obligation to cause, such Indebtedness or obligation to become due and payable
prior to its stated maturity; or
(d) Borrower pursuant to or within the meaning of any Bankruptcy Law:
(i) commences a voluntary case,
(ii) consents to the entry of an order for relief against it
in an involuntary case,
(iii) consents to the appointment of a Custodian of it or for
all or substantially all of its property,
(iv) makes a general assignment for the benefit of its
creditors, or
(v) is the debtor in an involuntary case which is not
dismissed within thirty (30) days of the commencement thereof, or
(e) A court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that:
(i) provides for relief against Borrower in an involuntary
case,
(ii) appoints a Custodian of Borrower for all or substantially
all of its property, or
(iii) orders the liquidation of Borrower,
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(f) A final judgment for the payment of money in an amount in excess
of $50,000 shall be rendered against Borrower (other than any judgment as to
which a reputable insurance company shall have accepted full liability in
writing) and shall remain undischarged for a period (during which execution
shall not be effectively stayed) of 20 days after the date on which the right to
appeal has expired;
(g) Any representation or warranty made by Borrower in this
Agreement, the Security Agreement or in any other document or instrument
furnished in connection with the transactions contemplated hereby shall prove to
be materially false or incorrect on the date as of which made; or
(h) An event shall occur or there exist facts or circumstances which
create or result in a Material Adverse Effect;
then and in any such case (x) upon the occurrence of any Event of Default
described in paragraphs (d) or (e), the unpaid principal amount of and accrued
interest on the Notes shall automatically become due and payable, without
presentment, demand, protest or notice of any kind, all of which are hereby
waived by Borrower, and (y) upon the occurrence of any other Event of Default,
in addition to any other rights, powers and remedies permitted by law or in
equity, the Lenders may, at their option, by notice in writing to Borrower,
declare the Notes to be, and the Notes shall thereupon be and become,
immediately due and payable, together with interest accrued thereon and all
other sums due hereunder, without presentment, demand, protest or other notice
of any kind, all of which are waived by Borrower.
Upon the occurrence of any Event of Default, the holders of the Notes may
proceed to protect and enforce their rights by an action at law, suit in equity
or other appropriate proceeding, whether for the specific performance of any
agreement contained herein or in the Note held by them, for an injunction
against a violation of any of the terms hereof or thereof, or for the pursuit of
any other remedy which it may have by virtue of this Agreement, the Security
Agreement or pursuant to applicable law. Borrower shall pay to the holders of
the Notes upon demand the reasonable costs and expenses of collection and of any
other actions referred to in this Article, including without limitation
reasonable attorneys' fees, expenses and disbursements.
No course of dealing and no delay on the part of the holders of the Notes
in exercising any of their rights shall operate as a waiver thereof or otherwise
prejudice the rights of such holders, nor shall any single or partial exercise
of any right, power or remedy preclude any other or further exercise thereof or
the exercise of any other right, power or remedy hereunder. No right, power or
remedy conferred hereby or by the Notes on the holders thereof shall be
exclusive of any other right, power or remedy referred to herein or therein or
now or hereafter available at law, in equity, by statute or otherwise.
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6.2. For purposes of this Article, the following definitions shall apply:
"Bankruptcy Law" means Title 11, U.S. Code or any similar federal or
state law for the relief of debtors.
"Custodian" means any receiver, trustee, assignee, liquidator or
similar official under any Bankruptcy Law.
ARTICLE VII - NOTICES
All notices, requests and demands shall be given to or made upon the
respective parties hereto in writing, such address as may be designated by it in
a written notice to the other party. All notices, requests, consents and demands
hereunder shall be effective when duly deposited in the mails (by overnight
delivery by a nationally-recognized overnight courier service or by United
States registered or certified mail, postage prepaid, return receipt requested).
Unless the parties designate otherwise, notices should be addressed as follows:
If to Borrower:
AirNet Communications Corporation
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Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇, President and Chief Executive Officer
with a copy to:
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, LLP
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Attn: ▇▇▇▇ ▇. ▇▇▇▇, Esquire
If to Tecore:
Tecore, Inc.
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▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇ ▇▇▇▇▇▇▇, President
with a copy to:
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & Preston
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Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇, Esquire
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If to SCP:
SCP Private Equity Partners, L.P.
300 Building
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▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇
with a copy to:
▇▇▇▇ ▇▇▇▇▇ LLP
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▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇., Esquire
ARTICLE VII - MISCELLANEOUS
7.1. This Agreement shall be governed by and construed in accordance with
the laws of the State of Delaware, without regard to conflicts of laws
principles thereof.
7.2. This Agreement may be amended, modified or terminated only by an
instrument in writing signed by all parties.
7.3. Neither this Agreement nor any right or obligation provided for herein
may be assigned by any party without the prior written consent of the other
parties.
7.4. The terms and provisions of this Agreement shall be binding upon and
inure to the benefit of, and be enforceable by, the respective successors and
assigns of the parties hereto.
7.5. Whenever in this Agreement an action is required or permitted to be
taken by the Lenders, it may be taken by each Lender individually, or both of
the Lenders, acting together. The Lenders may enter into a separate agreement
that specifies the obligations and responsibilities of each party relating to
the enforcement of their rights under this Agreement, or appoint an agent to act
on their behalf.
7.6. The Agreement may be executed in any number of counterparts, with the
same effect as if all parties had signed the same document. All such
counterparts shall be deemed an original, shall be construed together and shall
constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Bridge Loan
Agreement to be duly executed as of the day and year first above written.
BORROWER:
AIRNET COMMUNICATIONS CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇ (SEAL)
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Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President and Chief Executive Officer
LENDERS:
TECORE, INC.
By: /s/ ▇▇▇ ▇▇▇▇▇▇▇ (SEAL)
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Name: ▇▇▇ ▇▇▇▇▇▇▇
Title: President and Chief Executive Officer
SCP PRIVATE EQUITY PARTNERS II, L.P.
By: SCP PRIVATE EQUITY II GENERAL PARTNER,
L.P., its General Partner
By: SCP PRIVATE EQUITY II, LLC
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: a Manager
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SCHEDULES FOR BRIDGE LOAN AGREEMENT
Schedule 3.5. Capitalization
Authorized Capital:
As of December 11, 2002, the Borrower's authorized capital stock consists of (i)
50,000,000 shares of common stock, $0.001 par value per share, and (ii)
10,000,000 shares of preferred stock, $0.01 par value per share, of which 50,000
shares have been designated as Series A Junior Participating Preferred Stock.
Outstanding Capital:
The Borrower had 23,851,177 shares of common stock, par value $0.001 per share
as of December 11, 2002.
The Borrower had 955,414 shares of Series B convertible preferred stock, $0.01
par value per share, outstanding as of December 11, 2002.
On January 20, 2003 subject to the closing of the financing described in Exhibit
A of this Agreement on or before April 30, 2003, the Series B stockholders
agreed to convert and exchange all outstanding Series B convertible preferred
stock and waive all accumulated dividends in exchange for $1M and 22,545,968
shares of common stock.
As of December 11, 2002, there are common stock purchase warrants outstanding
for the purchase of up to 3,466,253 shares of common stock.
As of December 11, 2002, there were 2,398,789 shares underlying outstanding
options to purchase common stock pursuant to the Borrower's 1999 Equity
Incentive Plan and 1,500,464 shares of common stock remained available for
grant. Of the 2,398,789 shares underlying outstanding options, options to
purchase 1,454,367 shares of common stock were vested and options to purchase
944,422 shares were unvested.
Other than issuance of stock upon exercise of stock options or grant of stock
options in the ordinary course, the Company has not sold or issued any common
stock or preferred stock since December 11, 2002.
Schedule 3.6. Litigation
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▇▇▇▇▇ ▇▇▇▇▇▇▇▇ vs. AirNet, ▇▇ ▇▇ ▇▇ (▇▇▇) ▇▇▇▇▇▇ ▇▇▇▇▇▇ Securities
▇▇▇▇▇▇▇ ▇▇▇▇▇ Barney, ▇▇▇▇▇ District Court for Class Action
▇▇▇▇▇ ▇▇▇▇▇▇, H&Q, ▇▇▇▇▇▇▇▇ the Southern
and Hattori District of New
York
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AirNet v. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Case No: 18/th/ Judicial Breach of
▇▇-▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇;
▇▇-▇▇▇▇▇▇ (▇▇▇▇▇▇▇ ▇▇▇▇▇▇) Tortious
Interference
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AirNet ▇. ▇▇▇▇▇▇▇ Case No: 18/th/ Judicial Breach of
▇▇-▇▇▇▇-▇▇- ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇;
▇▇▇▇▇▇- (▇▇▇▇▇▇▇ ▇▇▇▇▇▇) Unjust
XXXX-XX Enrichment;
Promissory
Estoppel; Money
Lent; Fraud
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Creditors of the Borrower may have a basis for actions, suits, claims,
arbitrations, or other legal proceedings with respect to past due accounts
payable or other obligations due under existing agreements with the Borrower.
In connection with the cost reduction reorganization plan the Borrower intends
to lay off a certain number of employees. While the Borrower intends to attempt
to negotiate severance packages in exchange for releases from such employees,
some employees may make claims or bring actions against the Borrower for
wrongful termination including wrongful termination on the basis of age,
minority, or gender discrimination.
Schedule 3.8. SEC Reports and Financial Statements
Preliminary and unaudited results for the 4/th/ Quarter of 2002 are as follows:
Revenue: Approximately $1.9M
Ending Cash Balance: Approximately $3.2M
Since December 31, 2002, Borrower has had insufficient revenues and purchase
orders to sustain its operations in the near term and has been unable to raise
debt or equity capital and has had insufficient cash flow to pay certain
obligations.
See also the Business Plan provided pursuant to Section 3.7 of the Agreement.
Schedule 3.9. Title to Property and Assets
1. Security Agreement between AirNet Communications Corporation, Force
Computers, Inc., Sanmina Corporation and Brooktrout, Inc. dated 15
November 2001 granting a security interest in and to all fixtures and
tangible personal property of AirNet. The current amount of
indebtedness to these creditors is approximately $2M as of December
31, 2002.
Schedule 3.10. Intellectual Property.
1. InterDigital Communications Corporation ("IDC) has previously asserted
that the Company may be infringing certain TDMA patents held by IDC.
After review of this matter with Akerman Senterfit, the Company does
not believe it infringes such patents. The Company presently believes
this matter is closed with IDC, but there can be no assurance that it
will stay closed.
2. The Borrower has license agreements with ArrayComm, Inc., Comsys
Communications and Signal Processing, INTEL Corp. (fka Trillium Digital
Software) and Tesaria, Inc. for software which is or may be integrated
into the Borrower's products.
3. The Borrower has incorporated numerous widely commercially available
third party software products into its products (e.g., Wind River).
4. See attached list of Patents and Trademarksof the Borrower.
5. Copyrights:
TXu ▇-▇▇▇-▇▇▇ dated Feb. 12, 2002 entitled AirNet(R) BSS Software,
Release,
1.8.2
TXu ▇-▇▇▇-▇▇▇ dated Feb. 12, 2002 entitled AirNet(R) BSS Software, Release,
2.4.1
TXu ▇-▇▇▇-▇▇▇ dated Feb. 12, 2002 entitled AirNet(R) BSS Software, Release,
3.0.2
EXHIBIT B
Conditions to Draw Down
Borrower shall provide to Lenders notice of its intention to draw down funds,
setting forth the amount to be drawn down and the date of funding (which date
shall be at least ten days following the date of receipt by the Lenders of the
notice). The Lenders agree to advance such sums in accordance with Borrower's
notices, provided that at the time of each request, Borrower has provided
assurances acceptable to the Lenders that the following conditions have been
met:
(1) There exists no Event of Default under this Agreement;
(2) Borrower is performing within ninety percent (90%) compliance of the cash
flow projection set forth in the Plan;
(3) Borrower has taken the steps appropriate to achieve the expense reductions
contemplated by the Plan; and
(4) With respect to draws occurring on or after March 24, 2003, Borrower has
achieved a Critical Design Review milestone with respect to AirSite 5b.
The maximum amount of funds which may be drawn down by Borrower, in addition to
the Initial Amount, shall be:
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DRAW DOWN DATE AMOUNT
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Prior to February 24, 2003 0
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Prior to March 25, 2003 $1,600,000
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Prior to April 24, 2003 $3,200,000
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On or after April 24, 2003 $4,400,000
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