Exhibit 1
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SECURITIES PURCHASE AGREEMENT
dated as of June 5, 2003
by and among
TECORE, INC.
and
SCP PRIVATE EQUITY PARTNERS II, LP
and
AIRNET COMMUNICATIONS CORPORATION
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SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT (this "Agreement") is made as of June
5, 2003, by and among TECORE, INC., a Texas corporation ("TECORE"), SCP PRIVATE
EQUITY PARTNERS II, LP, a Delaware limited partnership ("SCP"), and AIRNET
COMMUNICATIONS CORPORATION, a Delaware corporation ("AIRNET"). TECORE and SCP
are sometimes referred to herein collectively as the "INVESTORS," and
individually as an "INVESTOR."
RECITALS
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A. AIRNET desires to issue and sell to INVESTORS and INVESTORS, severally,
desire to subscribe for and purchase from AIRNET, the Notes, as defined in
Section 1 of this Agreement, for the consideration, and on the terms, set forth
in this Agreement.
B. SCP desires to convert its shares of AIRNET Series B Preferred Stock
into shares of AIRNET Common Stock.
C. Unless the context otherwise requires, capitalized terms used in this
Agreement or in any schedule or exhibit attached hereto and not otherwise
defined herein shall have the following meanings for all purposes of this
Agreement:
"Affiliate" means a Person that directly or indirectly through one or more
intermediaries, controls or is controlled by, or is under common control with, a
specified Person. For the purposes hereof, the term "control" (including the
terms "controlling," "controlled by" and "under common control with") means the
possession, direct or indirect, of the power to direct or cause the direction of
the management and policies of a Person, whether through the ownership of voting
securities, by contract or otherwise.
"AIRNET" has the meaning set forth in the first paragraph of this
Agreement.
"AIRNET Amended Certificate" shall mean the Eighth Amended Certificate of
Incorporation of AIRNET, in the form attached hereto as Exhibit A.
"AIRNET Charter Documents" has the meaning set forth in Section 2.1.
"AIRNET Closing Deliveries" has the meaning set forth in Section 1.5(b).
"AIRNET Common Stock" means the Common Stock, par value $.001 per share of
AIRNET.
"Allonges" means the Allonges to the Bridge Loan Promissory Notes described
in Section 1.1(d).
"Amended Bonus Program" means the Amended Bonus Program to be adopted by
AIRNET at or before Closing in the attached hereto as Exhibit B.
"Amended Stock Option Plan" shall mean the amended Stock Option Plan, in
the form to be agreed upon among AIRNET and the INVESTORS at or before Closing,
which will permit AIRNET to issue stock options to employees for exercise prices
which may be as low as $0.01 per share.
"Balance Sheet Date" means March 31, 2003.
"Benefit Plan" means any Plan, existing at the Closing Date or prior
thereto, established or to which contributions have at any time been made by
AIRNET, or any ERISA Affiliate, under which any employee or former employee of
AIRNET, or any beneficiary thereof, is covered, is eligible for coverage or has
benefit rights.
"Bridge Loan Promissory Notes" means the Bridge Loan Promissory Notes, each
in the principal amount of Three Million Dollars ($3,000,000), issued by AIRNET
to SCP and TECORE, respectively, on or about January 24, 2003.
"CERCLA" means the Comprehensive Environmental Response, Compensation and
Liability Act of 1980.
"Closing" means the consummation of the transactions contemplated by this
Agreement on the Closing Date.
"Closing Date" has the meaning set forth in Section 1.4.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collateral" shall have the meaning set forth in the Security Agreement.
"Copyrights" shall have the meaning set forth in the Security Agreement.
"Environmental Laws" means any and all applicable Laws and Permits issued,
promulgated or entered into by any Governmental Entity relating to the
environment, the protection or preservation of human health or safety, including
the health and safety of employees (other than OSHA), the preservation or
reclamation of natural resources, or the management, release or threatened
release of Hazardous Materials.
"Environmental Permit" means any permit, approval, identification number,
license or other authorization required under or issued pursuant to any
applicable Environmental Law.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" means any Person who is, or at any time was, a member of
a controlled group (within the meaning of Section 412(n)(6) of the Code) that
includes, or at any time included, AIRNET or any predecessor of AIRNET.
"Expiration Date" has the meaning set forth in Section 2.
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"First Amendment to Security Agreement" shall mean the amendment to that
certain Security Agreement dated January 24, 2003, by and among AIRNET, TECORE
and SCP, in the form attached hereto as Exhibit C.
"First Amendment to Registration Rights Agreement" shall mean the amendment
(or other appropriate documentation) to that certain Second Amended and Restated
Agreement Among Series E, Series F and Series G Preferred Stockholders and
Senior Registration Rights Agreement, dated September 7, 1999 as amended through
May 16, 2001, by and among AIRNET, SCP and others, in the form to be agreed upon
among the parties at or before Closing.
"GAAP" means generally accepted accounting principles of the United States.
"Governmental Authority" means any governmental, regulatory or
administrative body, agency, subdivision or authority, any court or judicial
authority, or any public, private or industry regulatory authority, whether
national, federal, state, local or otherwise.
"Hazardous Materials" means those materials, substances or wastes that are
regulated by, or form the basis of liability under, any Environmental Law,
including PCBs, pollutants, solid wastes, explosive or regulated radioactive
materials or substances, wastes or chemicals, petroleum (including crude oil or
any fraction thereof) or petroleum distillates, asbestos or asbestos containing
materials, materials listed in 49 C.F.R. Section 172.101 and materials defined
as hazardous substances pursuant to Section 101(14) of CERCLA.
"HSR Act" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976,
as amended (15 U.S.C. Section 18a) and the rules and regulations promulgated
thereunder.
"Indebtedness" means indebtedness for borrowed money, other than trade debt
incurred in the ordinary course of AIRNET's business.
"Intellectual Property" has the meaning set forth in the Security
Agreement.
"INVESTORS" has the meaning set forth in the first paragraph of this
Agreement.
"Knowledge," "knowledge," "the best knowledge of," "known to" or words of
similar import used herein with respect to AIRNET shall mean the actual
knowledge of a director or officer of AIRNET of a particular fact or
circumstance or such knowledge as may be reasonably imputed to such person as a
result of his actual knowledge of other facts or circumstances.
"Laws" has the meaning set forth in Section 2.18.
"Lien" means any mortgage, charge, pledge, hypothecation, security
interest, assignment, lien (Statutory Lien or otherwise), title retention
agreement or arrangement, restrictive covenant or other encumbrance of any
nature or any other arrangement or condition which, in substance, secures
payment or performance of an obligation.
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"Marks" shall have the meaning set forth in the Security Agreement.
"Material Adverse Effect" means, with respect to any Person, any event or
occurrence which has a material adverse effect on (i) such Person's business,
condition (financial or other), properties, business prospects or financial
results, including, but not limited to, any event or occurrence which has an
adverse effect on the assets, liabilities, revenues, or financial performance of
such Person that could exceed an amount equal to seven percent (7%) of such
Person's gross revenues for the twelve (12) month period ended December 31,
2002, or (ii) such Person's ability to perform its obligations under this
Agreement, the Senior Secured Convertible Notes, the Security Agreement and the
First Amendment to the Security Agreement, the First Amendment to the
Registration Rights Agreement, and the Subordination Agreements.
"Material Contract" means any lease, instrument, agreement, license or
permit set forth on Schedule 2.9, 2.11, 2.12, 2.13, 2.14, 2.15, 2.16 or 2.21 or
any other material agreement to which AIRNET is a party or by which its
properties are bound.
"NASDAQ" shall mean the National Association of Securities Dealers
Automated Quotations Stock Market, Inc.
"Notes" or "Senior Secured Convertible Notes" means the Senior Secured
Convertible Notes to be issued by AIRNET to the INVESTORS, in the forms attached
hereto as Exhibits D and E.
"Patents" shall have the meaning set forth in the Security Agreement.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Person" means any natural person, corporation, partnership,
proprietorship, other business organization, trust, union, association or
Governmental Authority.
"Plan" means any bonus, incentive compensation, deferred compensation,
pension, profit sharing, retirement, stock purchase, stock option, stock
ownership, stock appreciation rights, phantom stock, leave of absence, layoff,
vacation, day or dependent care, legal services, cafeteria, life, health,
accident, disability, workmen's compensation or other insurance, severance,
separation or other employee benefit plan, practice, policy or arrangement of
any kind, whether written or oral, or whether for the benefit of a single
individual or more than one individual including, but not limited to, any
"employee benefit plan" within the meaning of Section 3(3) of ERISA.
"Proprietary Rights" shall mean all categories of ideas, trade secrets,
know-how, inventions (whether or not patentable and whether or not reduced to
practice), improvements, processes, procedures, drawings, specifications,
designs, plans, proposals, technical data, copyrightable works, financial,
marketing, and business data, pricing and cost information, business and
marketing plans, customer and supplier lists and information, other confidential
and proprietary information, manufacturing and production processes and
techniques, molds, dies, casts and product configurations, to the extent to
which the foregoing are non-public and subject to commercially reasonable
efforts to maintain their confidential status.
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"Returns" has the meaning set forth at the end of Section 2.19.
"SCP Closing Deliveries" shall have the meaning set forth in Section
1.5(d).
"Schedule" means each Schedule attached hereto, which shall reference the
relevant sections of this Agreement, on which parties hereto disclose
information as part of their respective representations, warranties and
covenants.
"SEC" means the United States Securities and Exchange Commission.
"Security Agreement" means that certain Security Agreement dated January
24, 2003 by and among AIRNET, SCP and TECORE.
"Statutory Liens" has the meaning set forth in Section 5.3(e).
"Stock Option Plan" is AIRNET's equity incentive Plan authorizing the
issuance of up to 30,742,986 shares of Common Stock to its employees,
consultants and directors.
"Subordination Agreement" shall mean the Subordination Agreement to be
entered into by and among AIRNET, Force Computers, Inc., Sanmina Corporation,
and Brooktrout, Inc., in the form attached hereto as Exhibit F or such other
form as shall be acceptable to the INVESTORS.
"Tag Along Allocation Agreement" shall mean the Tag Along Allocation
Agreement in the form attached hereto as Exhibit G.
"Tax" or "Taxes" has the meaning set forth at the end of Section 2.19.
"Taxing Authority" has the meaning set forth at the end of Section 2.19.
"TECORE Closing Deliveries" has the meaning set forth in Section 1.5(c).
"Third Person" has the meaning set forth in Section 11.3.
"Voting Agreement" shall mean that certain Voting Agreement to be executed
at Closing by TECORE and SCP in form and content to be agreed upon by TECORE and
SCP at or before Closing.
"1934 Act" means the Securities Exchange Act of 1934, as amended.
"1933 Act" means the Securities Act of 1933, as amended.
C. The Recitals set forth hereinabove constitute an integral part of this
Agreement.
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NOW, THEREFORE, in consideration of the premises and of the mutual
agreements, representations, warranties, provisions and covenants herein
contained, the parties hereto, intending to be legally bound, hereby agree as
follows:
1. ISSUANCE AND SALE OF AIRNET NOTES AND STOCK
1.1 Notes. Subject to the terms and conditions of this Agreement, at the
Closing, AIRNET will issue and sell to each of the INVESTORS one (1) Senior
Secured Convertible Note (a "Note"), and each INVESTOR will subscribe for and
purchase one (1) such Note from AIRNET. The Note to be issued to SCP will be in
the form of Exhibit D. The Note to be issued to TECORE will be in the form of
Exhibit E.
(a) Purchase Price for SCP's Note. The purchase price (the "SCP Note
Purchase Price") for the Note to be issued to SCP in the form of Exhibit D will
be equal to Four Million Dollars ($4,000,000). SCP shall pay the SCP Note
Purchase Price, subject to adjustment in accordance with Section 13.6, by (i)
issuing a credit memorandum to AIRNET pursuant to which the outstanding
principal balance payable to SCP under the terms of that certain Bridge Loan
Promissory Note payable to SCP shall be deemed satisfied and paid in full (but
the accrued interest thereon shall be deferred, as provided in subsection (d)
hereinbelow), and (ii) paying the unpaid balance of the SCP Note Purchase Price
by certified check, cashier's check, or wire transfer at Closing.
(b) Purchase Price for TECORE's Note. The purchase price (the "TECORE
Note Purchase Price") for the Note to be issued to TECORE in the form of Exhibit
E will be equal to Twelve Million Dollars ($12,000,000). TECORE shall pay the
TECORE Note Purchase Price in accordance with the payment schedule set forth
below:
(i) An amount equal to Four Million Dollars ($4,000,000)
shall be payable by TECORE at Closing by (i) issuing a credit memorandum to
AIRNET pursuant to which the outstanding principal balance payable to TECORE
under the terms of that certain Bridge Loan Promissory Note payable to TECORE,
shall be deemed satisfied and paid in full (but the accrued interest thereon
shall be deferred as provided in subsection (d) hereinbelow), and (ii) paying
the unpaid balance of the $4,000,000, subject to adjustment in accordance with
Section 13.6, by certified check, cashier's check, or wire transfer at Closing.
(ii) An amount equal to One Million Dollars ($1,000,000) shall
be payable on or prior to June 30, 2003, by wire transfer.
(iii) An amount equal to One Million Dollars ($1,000,000) shall
be payable on or prior to September 30, 2003, by wire transfer.
(iv) An amount equal to One Million Dollars ($1,000,000) shall
be payable on or prior to December 31, 2003, by wire transfer.
(v) An amount equal to One Million Dollars ($1,000,000) shall
be payable on or prior to March 31, 2004, by wire transfer.
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(vi) An amount equal to One Million Dollars ($1,000,000) shall
be payable on or prior to June 30, 2004, by wire transfer.
(vii) An amount equal to One Million Dollars ($1,000,000) shall
be payable on or prior to September 30, 2004, by wire transfer.
(viii) An amount equal to One Million Dollars ($1,000,000) shall
be payable on or prior to December 31, 2004, by wire transfer.
(ix) An amount equal to One Million Dollars ($1,000,000) shall
be payable on or prior to March 30, 2005, by wire transfer.
(x) Notwithstanding the foregoing, TECORE shall have the
right, exercisable at its option at any time and from time to time, to prepay
any and all of the payments scheduled above; and, as a consequence thereof, to
enjoy the rights to vote and to the accrual of interest, conversion rights, and
other rights pertaining thereto, accounting from the date of any such
prepayment.
In the event that TECORE shall fail to pay any installment of the purchase price
of TECORE's Note pursuant to paragraphs (ii)-(ix) within 20 days after the due
date, then SCP shall have the right, exercisable within 40 days after such due
date, to make the investment by paying the amount of the installment then past
due (and any subsequent installments when due and payable, to the extent set
forth by SCP in its notice of exercise) instead of TECORE, and AIRNET shall
issue a Note to SCP, in form similar to the Note issued to SCP at the Closing,
in the principal amount of the investment made by SCP. In the event that SCP
shall not exercise its right to make an investment instead of TECORE, TECORE
shall remain obligated to make the investment(s).
(c) Security for Payment of Notes. AIRNET's obligations under the
Notes shall be secured by a first lien security interest in favor of the
INVESTORS, which shall be evidenced by, and perfected pursuant to, the Security
Agreement, which shall be amended at Closing by the execution and delivery of
the First Amendment to Security Agreement.
(d) Extension of the Date and Deferral of Accrued Interest on Bridge
Loan Promissory Notes. Each of the INVESTORS hereby agrees that, notwithstanding
the provisions of the Bridge Loan Promissory Notes (i) the Maturity Date of each
such Note shall be extended to the first to occur of (A) the Closing Date, (B)
the date of the termination of this Agreement pursuant to Article 12, or (C)
July 31, 2003, and (ii) all interest that has accrued between January 24, 2003
and the Closing Date under the terms of the Bridge Loan Promissory Notes shall
be deferred and shall be payable on the due date of the Senior Secured
Convertible Notes. Said interest shall compound at the rate of twelve percent
(12%) per annum, with simple interest, accounting from and after the Closing
Date. Allonges to the Bridge Loan Promissory Notes shall be executed at Closing,
reflecting the deferral of interest, as herein provided.
1.2 AIRNET Common Stock. Subject to the terms and conditions of this
Agreement, at the Closing: (i) SCP shall surrender for conversion to AIRNET all
of SCP's shares of AIRNET Series B Preferred Stock, consisting of 318,471
shares, and as a result of the conversion, shall be issued 6,369,427 shares of
AIRNET Common Stock, and (ii) AIRNET shall issue to SCP 4,625,347 shares of
AIRNET
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Common Stock, which SCP agrees to accept in lieu of $500,000 to which SCP is
entitled as a result of the conversion of its shares of Series B Preferred
Stock.
1.3 Character of Notes and Common Stock. AIRNET, SCP and TECORE, having
adverse interests and as a result of arm's length bargaining, agree that (i)
except as set forth in this Agreement, neither SCP nor TECORE has rendered, or
agreed to render, any services or other consideration to AIRNET in connection
with this Agreement or the issuance of the Notes; (ii) the Notes, when issued,
shall be deemed to have been issued solely for the consideration set forth in
Section 1.1; (iii) SCP has not rendered, or agree to render, any services or
other consideration to AIRNET in connection with the issuance of the AIRNET
Common Stock to SCP pursuant to Section 1.2; and (iv) the AIRNET Common Stock,
when issued pursuant to Section 1.2, shall be deemed to have been issued solely
for the consideration set forth in Section 1.2. SCP, AIRNET and TECORE agree
that the aggregate fair market value of the Notes is equal to the consideration
exchanged therefor pursuant to Section 1.1. The parties agree not to take any
action that is inconsistent with such agreed value, and, without limitation,
agree to file all tax returns and reports consistent with such value.
1.4 Closing. SCP, TECORE and AIRNET will use their best efforts to close
the purchase and sale of the Notes (the "Closing") provided for in this
Agreement on or before June 30, 2003, provided the Closing will be extended as
necessary for AIRNET to obtain regulatory and stockholder approvals and the
Closing may otherwise be extended to such other date as the parties shall
mutually determine, but in no event later than July 31, 2003, unless all parties
shall agree to a further extension (the "Closing Date"). Closing shall be held
at ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ L.L.P., ▇ ▇▇. ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇.
1.5 Closing Obligations. At the Closing, or on the Closing Date, as
applicable:
(a) AIRNET shall file, or cause to be filed, with the Secretary of
State of Delaware the AIRNET Amended Certificate.
(b) AIRNET shall deliver or cause to be delivered to INVESTORS the
following: ("AIRNET Closing Deliveries"):
(i) Certified copies of resolutions of the Board of Directors
and stockholders of AIRNET, advising, approving and adopting the AIRNET Amended
Certificate, and, in the case of the resolutions of the Board of Directors of
AIRNET, (A) authorizing the issuance to SCP of the Note in the form of Exhibit
D, (B) authorizing the issuance to TECORE of the Note in the form of Exhibit E,
(C) authorizing the issuance to SCP of 6,369,427 shares of AIRNET Common Stock
upon the surrender by SCP of its 318,471 shares of Series B Preferred Stock, (D)
authorizing the issuance to SCP of 4,625,347 shares of AIRNET Common Stock in
lieu of $500,000 to which SCP is entitled as a result of its conversion of its
shares of Series B Preferred Stock, and (E) authorizing and/or approving the
execution of such other documents or instruments, and the performance of such
other acts as may be reasonably requested by TECORE and/or SCP for the purpose
of carrying out and perfecting the transactions contemplated by this Agreement.
(ii) Certificates representing the AIRNET Common Stock, duly
issued to SCP, as contemplated in Section 1.2;
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(iii) An employment agreement (the "Employment Agreement") in
the form of Exhibit 1.5(b)(iii) executed by ▇▇. ▇▇▇▇▇ ▇▇▇▇▇;
(iv) The Allonges to the Bridge Loan Promissory Notes, duly
executed by AIRNET;
(v) The Notes, duly executed by AIRNET;
(vi) The First Amendment to Security Agreement, duly executed
by AIRNET;
(vii) A certificate executed by AIRNET to the effect that (A)
except as otherwise stated in such certificate, AIRNET's representations and
warranties in this Agreement were accurate in all respects as of the date of
this Agreement and are accurate in all respects as of the Closing Date as if
made on the Closing Date; (B) AIRNET has performed and complied with all
covenants and conditions required to be performed or complied with by AIRNET
prior to or at the Closing; and attesting to the incumbency of officers
executing documents on behalf of AIRNET;
(viii) A Good Standing Certificate of AIRNET as of a recent date
from the Secretary of State of Delaware and similar certificates from all states
in which AIRNET is authorized to do business;
(ix) Documentation, in form and content satisfactory to
INVESTORS, duly executed by all holders of Series B Preferred Stock of AIRNET
(including SCP), converting their Series B Preferred Stock into shares of AIRNET
Common Stock, and releasing, waiving and relinquishing all claims or rights in
and to any accrued but unpaid dividends with respect to the Series B Preferred
Stock;
(x) The Amended Bonus Program modifying and amending that
certain Amended and Restated AirNet Bonus Program, dated and effective August
12, 2002, together with the Tag Along Allocation Agreement, duly executed by
AIRNET;
(xi) The First Amendment to the Registration Rights Agreement,
duly executed by AIRNET, which contains reference to the shares of Common Stock
to be issued to TECORE at Closing, shares of AIRNET Common Stock underlying the
Notes, shares of Common Stock to be issued to SCP at Closing, and shares of
Common Stock to be issued to other Series B Preferred Stockholders at Closing
upon the conversion of their Series B Preferred Stock;
(xii) A certified copy of the Amendment to the Stock Option
Plan, which increases the number of shares that may be issued under the Stock
Option Plan to up to 30,742,986 shares, subject to certain conditions set forth
therein; and
(xiii) A duly executed Subordination Agreement from Force
Computers, Inc., Sanmina Corporation, and Brooktrout, Inc. (the "Junior Secured
Creditors"), pursuant to which the Junior Secured Creditors will subordinate
their existing liens on AIRNET's assets to the lien and security interest of
INVESTORS.
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(c) TECORE shall deliver or cause to be delivered the following
("TECORE Closing Deliveries"):
(i) To AIRNET and SCP, a certificate executed by TECORE to
the effect that (A) except as otherwise stated in such certificate, TECORE's
representations and warranties in this Agreement were accurate in all material
respects as of the date of this Agreement and are accurate in all material
respects as of the Closing Date as if made on the Closing Date; (B) TECORE has
performed and complied with all covenants and conditions required to be
performed or complied with by it prior to or at the Closing; (C) attesting to
the incumbency of officers executing documents on behalf of TECORE;
(ii) To AIRNET, the portion of the Note Purchase Price
described in Section 1.1(b)(i);
(iii) To AIRNET and SCP, good standing certificates for TECORE
from the State of Texas and the State of Maryland;
(iv) To AIRNET, TECORE's credit memorandum acknowledging
satisfaction of the outstanding principal balance of the Bridge Loan Promissory
Note payable to TECORE, and TECORE's countersignature on the Allonge to its
Bridge Loan Promissory Note;
(v) To SCP, TECORE's executed counterpart to the Voting
Agreement; and
(vi) To AIRNET and SCP, TECORE's executed counterpart of the
Tag Along Allocation Agreement.
(d) SCP shall deliver or cause to be delivered the following ("SCP
Closing Deliveries"):
(i) To AIRNET and TECORE, a certificate executed by SCP to
the effect that (A) except as otherwise stated in such certificate, SCP's
representations and warranties in this Agreement were accurate in all material
respects as of the date of this Agreement and are accurate in all material
respects as of the Closing Date as if made on the Closing Date; (B) SCP has
performed and complied with all covenants and conditions required to be
performed or complied with by it prior to or at the Closing; (C) attesting to
the incumbency of officers executing documents on behalf of SCP;
(ii) To AIRNET, the portion of the Note Purchase Price
described in Section 1.1(a)(i);
(iii) To AIRNET, certificates for 318,471 shares of AIRNET
Series B Preferred Stock, duly endorsed for transfer;
(iv) To AIRNET and TECORE, a good standing certificate for SCP
from the State of Delaware;
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(v) To AIRNET, that certain Common Stock Purchase Warrant,
dated May 15, 2001, issued by AIRNET to SCP Private Equity Partners, LP, for
955,414 shares, which shall be duly endorsed for cancellation by SCP
(vi) To AIRNET, SCP's credit memorandum acknowledging
satisfaction of the outstanding principal balance of the Bridge Loan Promissory
Note payable to SCP, and SCP's countersignature on the Allonge to its Bridge
Loan Promissory Note; and
(vii) To TECORE, SCP's executed counterpart of the Voting
Agreement; and
(viii) To TECORE and AIRNET, SCP's executed counterpart of the
Tag Along Allocation Agreement.
(e) INVESTORS on the one hand, and AIRNET on the other hand, shall
also deliver such other documents, instruments, certificates, and opinions as
may be required by this Agreement or as otherwise necessary to consummate the
transactions contemplated hereby.
2. REPRESENTATIONS AND WARRANTIES OF AIRNET
AIRNET represents and warrants to INVESTORS that all of the following
representations and warranties in this Section 2 are true and correct at the
date of this Agreement and shall be true and correct at the time of the Closing
Date. It is understood and agreed that such representations and warranties shall
survive the Closing Date for a period of eighteen (18) months (the last day of
such period being the "Expiration Date").
2.1 Due Organization. AIRNET is a corporation duly incorporated, validly
existing and in good standing under the laws of its state of its incorporation,
and is duly authorized and qualified to do business under all applicable laws,
regulations, ordinances and orders of public authorities to carry on its
business in the places and in the manner as now conducted, to own or hold under
lease the properties and assets it now owns or holds under lease, and to perform
all of its obligations under the Material Contracts; AIRNET is duly qualified to
do business in the jurisdictions listed in Schedule 2.1 and there are no other
jurisdictions in which the conduct of AIRNET's business or activities or its
ownership of assets requires any other qualification under applicable law. True,
complete and correct copies of the Certificate of Incorporation and By-laws,
each as amended, of AIRNET (the "Charter Documents") will be delivered to
INVESTORS pursuant to Section 6.4 hereof. The minute books and stock records of
AIRNET, as heretofore made available to INVESTORS, are correct and complete in
all material respects.
2.2 Authorization. AIRNET has the authority to execute and deliver this
Agreement and to perform its obligations hereunder. This Agreement constitutes
the valid and binding obligation of AIRNET, enforceable in accordance with its
terms.
2.3 Capital Stock of AIRNET.
(a) The authorized capital stock of AIRNET is as set forth in
Schedule 2.3. All of the issued and outstanding shares of capital stock of
AIRNET are owned as set forth in Schedule 2.3. All of
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the issued and outstanding shares of capital stock of AIRNET have been duly
authorized and validly issued, are fully paid and nonassessable, are owned of
record and beneficially by the stockholders set forth in Schedule 2.3, and were
offered, issued, sold and delivered by AIRNET in compliance with all applicable
state and federal laws concerning the issuance of securities. None of such
shares were issued in violation of the preemptive rights, or other rights, of
any past or present stockholders, option holders, creditors or other Persons.
(b) AIRNET has never issued any shares of its Series A Junior
Participating Preferred Stock, nor has AIRNET issued or entered into any option,
warrant or other agreement or arrangement, concerning the future issuance of any
shares of Series A Junior Participating Preferred Stock.
2.4 Capital Structure of AIRNET. Except as set forth on Schedule 2.4: (i)
no option, warrant, call, conversion right or commitment of any kind exists
which obligates AIRNET to issue any of its authorized but unissued capital stock
or its treasury stock; and (ii) AIRNET has no obligation (contingent or
otherwise) to purchase, redeem or otherwise acquire any of its equity securities
or any interests therein or to pay any dividend or make any distribution in
respect thereof. Schedule 2.4 includes a complete listing of all stock option or
stock purchase plans, including a list of all outstanding options, warrants or
other rights to acquire shares of AIRNET capital stock and a description of the
material terms of such outstanding options, warrants or other rights, true,
correct and complete copies of which have been supplied to INVESTORS.
2.5 Other Interests. Except as set forth on Schedule 2.5, AIRNET does not
presently own, of record or beneficially, or control, directly or indirectly,
any capital stock, securities convertible into capital stock or any other equity
interest in any corporation, association or business entity nor is AIRNET,
directly or indirectly, a participant in any joint venture, partnership or other
non-corporate entity.
2.6 Financial Statements. AIRNET has delivered to each of INVESTORS
copies of the following financial statements: Balance Sheets, Income Statements
and Statements of Cash Flow, at and for (A) each of the years ended December 31,
2002, 2001, and 2000 which have been audited and certified by Deloitte & Touche,
and (B) and the three (3) month period ended March 31, 2003, prepared internally
by AIRNET. (All of such financial statements collectively are referred to as the
"Financial Statements".) Each of the Financial Statements is consistent with the
books and records of AIRNET (which, in turn, are accurate and complete in all
material respects) and fairly presents AIRNET's financial condition, assets and
liabilities as of their respective dates and the results of operations and cash
flows for the periods related thereto in compliance with GAAP, consistently
applied among the periods which are the subject of the Financial Statements
(except as stated in the Financial Statements or in the footnotes thereto).
2.7 Liabilities and Obligations. AIRNET has delivered to each of
INVESTORS an accurate list (which is set forth on Schedule 2.7) as of the
Balance Sheet Date of (i) all liabilities of AIRNET in excess of $10,000 which
are not reflected in the AIRNET Financial Statements at the Balance Sheet Date,
and (ii) all loan agreements, indemnity or guaranty agreements, bonds,
mortgages, liens, pledges or other security agreements to which AIRNET is a
party. Except as set forth on Schedule 2.7, since the Balance Sheet Date, AIRNET
has not incurred any material liabilities of any kind, character and
description, whether accrued, absolute, secured or unsecured, contingent or
otherwise, other than liabilities incurred in
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the ordinary course of business. AIRNET has also set forth on Schedule 2.7, in
the case of those contingent liabilities related to pending or threatened
litigation, or other liabilities which are not fixed or are being contested, the
following information:
(a) a summary description of the liability, together with: (i) copies
of all relevant documentation relating thereto; (ii) amounts claimed and any
other action or relief sought; and (iii) name of claimant and all other parties
to the claim, suit or proceeding;
(b) the name of each court or agency before which such claim, suit or
proceeding is pending;
(c) the date such claim, suit or proceeding was instituted; and
(d) a good faith and reasonable estimate of the maximum amount, if
any, which is likely to become payable with respect to each such liability. If
no estimate is provided, the estimate shall for purposes of this Agreement be
deemed to be zero.
2.8 Accounts and Notes Receivable. AIRNET has delivered to each of
INVESTORS an accurate list (which is set forth on Schedule 2.8) of the accounts
and notes receivable of AIRNET as of the Balance Sheet Date, including any such
amounts which are not reflected in the Financial Statements as of the Balance
Sheet Date, and including receivables from and advances to employees of AIRNET.
Except to the extent reflected on Schedule 2.8 the accounts, notes and other
receivables shown on Schedule 2.8 are and shall be, and AIRNET have no reason to
believe that any such receivable is not or shall not be, collectible in the
amounts shown (in the case of the accounts and notes receivable set forth on
Schedule 2.8, net of reserves reflected in the balance sheet calculated
consistent with the reserves as of the Balance Sheet Date).
2.9 Intellectual Property; Permits and Intangibles.
(a) AIRNET has delivered to each of INVESTORS an accurate list (which
is set forth on Schedule 2.9(a)) of all Intellectual Property. Without limiting
the generality of the foregoing, Schedule 2.9(a) includes the following with
respect to all Patents, Copyrights and Marks that are Intellectual Property: (A)
a complete and accurate list of all such Patents, Copyrights and Marks, (B) an
accurate description by country, type or category, and indication of status
(namely, for Patents whether each is unfiled, filed and pending, or issued, and
all dates of maintenance fees paid, if applicable; for Copyrights and Marks,
whether each is completed or in process, registered or unregistered, and all
renewal dates, if applicable), and (C) the name of the owner or licensor and
each licensee and sub-licensee of each Patent, Copyright and ▇▇▇▇. Except as
otherwise indicated in Schedule 2.9(a), no information exists indicating that
any of such Patents, Copyrights or Marks is invalid or has expired.
(b) AIRNET owns or holds the right to use all the Intellectual
Property necessary to provide, produce, sell and license the services and
products currently provided, produced, sold and licensed by AIRNET, and to
conduct AIRNET's business as presently conducted, and to satisfy and perform the
existing contracts, commitments, arrangements and understandings with customers
of AIRNET.
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(c) Except as set forth on Schedule 2.9(c), AIRNET is the sole record
and beneficial owner of, and holds all right, title and interest in, each item
of Intellectual Property, free and clear of all Liens and any obligation to pay
any license, royalty or other compensation to any Person or to obtain any
approval or consent for use of any of the Intellectual Property, and AIRNET has
the right to freely convey and assign such Intellectual Property in AIRNET's own
name and, including the right to create derivatives. Except as set forth on
Schedule 2.9(c), each item of Intellectual Property which is licensed,
sublicensed, distributed or otherwise used by AIRNET is licensed by AIRNET from
the appropriate third party pursuant to the terms of a written license agreement
which is valid and in full force and effect.
(d) None of the Intellectual Property owned by AIRNET, and to
AIRNET's Knowledge none of the Intellectual Property licensed, sublicensed,
distributed or otherwise used by AIRNET nor any product or service offered for
sale, sold, leased, licensed, sublicensed or otherwise distributed or provided
by AIRNET, or any other conduct of AIRNET, infringes upon, misappropriates or
otherwise violates any intellectual property rights of any other Person, and to
AIRNET's Knowledge, no Intellectual Property owned by AIRNET or exclusively
licensed by AIRNET from a third Person is infringed upon, misappropriated or
otherwise violated by any other entity. Except as set forth on Schedule 2.9(d),
AIRNET has not received any charge, complaint, claim, demand, or notice alleging
that any item of Intellectual Property owned, licensed, sublicensed, distributed
or otherwise used by AIRNET nor any product or service offered for sale, sold,
leased, licensed, sublicensed or otherwise distributed or provided by AIRNET, or
any other conduct of AIRNET, infringes upon, misappropriates or otherwise
violates any intellectual property rights of any other Person.
(e) No Intellectual Property owned by AIRNET and, to AIRNET's
Knowledge, no product, process or service practiced, offered, licensed or sold
or under development by AIRNET, infringes or otherwise violates any right of
publicity or right of privacy of any Person, or would, except as set forth on
Schedule 2.9(e), 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.
(f) No breach or default (or event which with notice or lapse of time
or both would result in a breach or default) by AIRNET exists or has occurred
under any licenses or other contracts by which AIRNET has received from a Person
a license, lease or other grant of any interest or rights to any Intellectual
Property.
(g) No current or former employees, principals, investors or
independent contractors of AIRNET 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 AIRNET have
executed nondisclosure agreements substantially in the form set forth in
Schedule 2.9(g) and either (A) have been a party to a "work-for-hire" and/or
other arrangement or agreements with AIRNET in accordance with applicable law
that has accorded AIRNET 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 AIRNET as assignee that have irrevocably conveyed to
AIRNET effective and exclusive ownership of all tangible and intangible property
rights thereby arising and related thereto.
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(h) To AIRNET's knowledge, the Proprietary Rights included in the
Intellectual Property (A) have at all times been maintained in strict
confidence, (B) have been disclosed by AIRNET only to employees, directors,
board observers, and consultants who work with directors or observers
representing stockholders of AIRNET who have a "need to know" the contents
thereof in connection with the performance of their duties to AIRNET or to such
stockholders and who have executed nondisclosure agreements or were subject to
nondisclosure obligations, and (C) have not been disclosed to any third party,
except those third parties specifically identified in Schedule 2.9(h) on a
"need-to-know" basis who have executed nondisclosure agreements with AIRNET.
Neither AIRNET nor any other third party has taken any action nor, to the
Knowledge of AIRNET failed to take any action that directly or indirectly caused
any of such Proprietary Rights to enter the public domain or in any way
adversely affect its value to AIRNET or its ownership thereof.
(i) Except as specifically provided in Schedules 2.9(a) or 2.9(c),
the transactions contemplated by this Agreement will not (i) to AIRNET's
Knowledge, result in the infringement, misappropriation or other violation by
AIRNET of any intellectual property rights of any other Person, (ii) infringe,
misappropriate or otherwise violate any intellectual property rights listed on
Schedule 2.9(j), (iii) alter or impair any of AIRNET's rights in any
Intellectual Property, or (iv) result in a default under or a breach or
violation of, or adversely affect the rights and benefits afforded to AIRNET by,
any license, sublicense, nondisclosure agreement or other agreement or
instrument relating to the Intellectual Property, or any licenses, franchises,
permits or government authorizations listed on Schedule 2.9(b). Except with
respect to any Intellectual Property identified on Schedule 2.9(a) as having
been "abandoned", AIRNET has taken all necessary and desirable action to
maintain and protect each item of Intellectual Property set forth on Schedule
2.9(a).
(j) AIRNET 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 AIRNET's business,
as presently conducted and as conducted at any time since January 1, 1999.
AIRNET has delivered to each of INVESTORS an accurate list and description
(which is set forth on Schedule 2.9(j)) of all such licenses, franchises,
permits and other governmental authorizations, including permits, titles,
licenses, franchises and certificates. The licenses, franchises, permits and
other governmental authorizations listed on Schedule 2.9(j) are valid and
current, and AIRNET 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. AIRNET has conducted and is conducting its
business in compliance with the requirements, standards, criteria and conditions
set forth in the licenses, franchises, permits and other governmental
authorizations listed on Schedule 2.9(j), and all laws and regulations
applicable thereto, and is not in violation of any of the foregoing. Except as
set forth on Schedule 2.9(j), the consummation of the transactions contemplated
hereunder will not alter or impair or require changes to any such license,
franchise, permit or other governmental authorization.
2.10 Environmental Matters. To AIRNET's Knowledge, AIRNET is, and its
operations and activities are, and have at all times been, in compliance in all
material respects with all applicable Environmental Laws and all Environmental
Permits. To AIRNET's Knowledge, all past noncompliance of AIRNET with
Environmental Laws or Environmental Permits (if any) has been completely
resolved without any pending, ongoing or future obligation, cost or liability.
To AIRNET's Knowledge, AIRNET has not
15
released a Hazardous Material at, or transported a Hazardous Material to or
from, any real property currently or formerly owned, leased or occupied by
AIRNET in amounts that violate, or would require remediation under, any
Environmental Law. To AIRNET's Knowledge, AIRNET has not received any notice,
demand, suit or information request pursuant to any Environmental Law, and has
no reason to believe any such notice, demand, suit or information request will
be forthcoming. To AIRNET's Knowledge, no property to which AIRNET or any Person
on behalf of AIRNET sent waste is listed on any regulatory list of contaminated
properties, including but not limited to the National Priorities List
promulgated pursuant to CERCLA, the Comprehensive Environmental Response,
Compensation and Liability Information System or CERCLIS or any federal, state
or local counterpart.
2.11 Personal Property. AIRNET has delivered to each of INVESTORS an
accurate list (which is set forth on Schedule 2.11) of (a) all personal property
with a net book market value individually in excess of $50,000 which is included
(or that will be included) in "depreciable plant, property and equipment" (or
similarly named line item) on the balance sheet of AIRNET as of the Balance
Sheet Date, (b) all other personal property owned by AIRNET with a value
individually in excess of $50,000 (i) as of the Balance Sheet Date and (ii)
acquired since the Balance Sheet Date and (c) all leases and agreements in
respect of personal property with a value individually in excess of $50,000,
including, in the case of each of (a), (b) and (c), (1) true, complete and
correct copies of all such leases which have been provided to each of INVESTORS'
respective legal counsel and (2) a listing of the capital costs of all such
assets which are subject to capital leases. Except as set forth on Schedule
2.11, (i) all personal property with a value individually in excess of $50,000
used by AIRNET in its business is either owned by AIRNET or leased by AIRNET
pursuant to a lease included on Schedule 2.11, (ii) all of the personal property
listed on Schedule 2.11 is in good working order and condition, ordinary wear
and tear excepted, and (iii) all leases and agreements included on Schedule 2.11
are in full force and effect and constitute valid and binding agreements of
AIRNET, and to AIRNET's Knowledge, of the other parties (and their successors)
thereto in accordance with their respective terms.
2.12 Significant Customers; Material Contracts and Commitments. AIRNET has
delivered to each of INVESTORS an accurate list (which is set forth on Schedule
2.12) of all significant customers, it being understood and agreed that a
"significant customer," for purposes of this Section 2.12, means a customer (or
Person or entity) representing 5% or more of AIRNET's annual revenues as of the
Balance Sheet Date. Except to the extent set forth on Schedule 2.12, none of
AIRNET's significant customers has canceled or substantially reduced or, to the
knowledge of AIRNET, is currently attempting or threatening to cancel, a
contract or substantially reduce utilization of the services provided by AIRNET.
Schedule 2.12 also contains a list of all significant suppliers of AIRNET, it
being understood and agreed that a "significant supplier," for purposes of this
Section 2.12, means a supplier that provides materials, products, or
Intellectual Property to AIRNET that are essential to the production,
manufacture, assembly, sale, or distribution by AIRNET of any products, goods or
services sold or performed by AIRNET in the ordinary course of its business.
Except as listed or described on Schedule 2.12, as of or on the date
hereof, AIRNET is not a party to or bound by, nor do there exist any, contracts
relating to or in any way affecting the operation or ownership of AIRNET's
business that are of a type described below:
16
(a) any collective bargaining arrangement with any labor union or any
such agreement currently in negotiation or proposed;
(b) any contract for capital expenditures or the acquisition or
construction of fixed assets for or in respect of real property other than in
AIRNET's ordinary course of business in excess of $50,000;
(c) any contract with a term in excess of one year for the purchase,
maintenance, acquisition, sale or furnishing of materials, supplies,
merchandise, machinery, equipment, parts or other property or services (except
that AIRNET need not list any such contract made in the ordinary course of
business which requires aggregate future payments of less than $50,000);
(d) any contract relating to the borrowing of money, or the guaranty
of another person's borrowing of money, including, without limitation, all
notes, mortgages, indentures and other obligations, agreements and other
instruments for or relating to any lending or borrowing, including assumed
indebtedness;
(e) any contract granting any person a lien on any of the assets of
AIRNET, in whole or in part;
(f) any contract for the cleanup, abatement or other actions in
connection with Hazardous Materials, the remediation of any existing
environmental liabilities or relating to the performance of any environmental
audit or study;
(g) any contract granting to any person a first-refusal, first-offer
or similar preferential right to purchase or acquire any of the assets of
AIRNET's business other than in the ordinary course of business;
(h) any contract under which AIRNET is
(i) a lessee or sublessee of any machinery, equipment,
vehicle or other tangible personal property or real property, or
(ii) a lessor of any real property or tangible personal
property owned by AIRNET, in either case having an original value in excess of
$50,000;
(i) any contract providing for the indemnification of any officer,
director, employee or other person, where such indemnification may exceed the
sum of $50,000;
(j) any joint venture or partnership contract; and
(k) any other contract with a term in excess of one year, whether or
not made in the ordinary course of business, which involves payments to or from
AIRNET in excess of $50,000.
17
AIRNET has provided to each of INVESTORS a true and complete copy of each
written Material Contract, including all amendments or other modifications
thereto. Except as set forth on Schedule 2.12, each Material Contract is a valid
and binding obligation of AIRNET, enforceable against AIRNET in accordance with
its terms (subject to defenses that may be available to AIRNET), and is in full
force and effect. Except as set forth on Schedule 2.12, AIRNET has performed all
obligations required to be performed by it under each Material Contract and
neither AIRNET nor, to the knowledge of AIRNET, any other party to any Contract,
is (with or without the lapse of time or the giving of notice or both) in breach
or default in any material respect thereunder; and there exists no condition
which, to the knowledge of AIRNET, would constitute a breach or default
thereunder. AIRNET has not been notified that any party to any Material Contract
intends to cancel, terminate, not renew or exercise an option under any Material
Contract, whether in connection with the transactions contemplated hereby or
otherwise.
2.13 Real Property.
(a) AIRNET owns no real property.
(b) Schedule 2.13(b) includes an accurate list of real property
leases to which AIRNET is a party and an indication as to which such properties,
if any, are currently owned, or were formerly owned, by Affiliates of AIRNET.
Counsel to each of INVESTORS has been provided with true, complete and correct
copies of all leases and agreements in respect of such real property leased by
AIRNET. Except as set forth on Schedule 2.13(b), all of such leases included on
Schedule 2.13(b) are in full force and effect and constitute valid and binding
agreements of AIRNET and, to AIRNET's knowledge, of the parties (and their
successors) thereto in accordance with their respective terms.
2.14 Insurance.
(a) AIRNET has delivered to each of INVESTORS:
(i) true and complete copies of all policies of insurance to
which AIRNET is a party or under which AIRNET, or any director of AIRNET, is or
has been covered at any time within two years preceding the date of this
Agreement;
(ii) true and complete copies of all pending applications for
policies of insurance; and
(iii) any statement by the auditor of AIRNET's financial
statements with regard to the adequacy of such entity's coverage or of the
reserves for claims.
* (b) Schedule 2.14(b) describes:
(i) any self-insurance arrangement by or affecting AIRNET,
including any reserves established thereunder; any contract or arrangement,
other than a policy of insurance, for the transfer or sharing of any risk by
AIRNET; and
18
(ii) all obligations of AIRNET to third parties with respect
to insurance (including such obligations under leases and service agreements),
and identifies the policy under which such coverage is provided.
(c) Schedule 2.14(c) sets forth, by year, for the current policy year
and each of the preceding two policy years:
(i) a summary of the loss experience under each policy;
(ii) a statement describing each claim under an insurance
policy for an amount in excess of $5,000, which sets forth:
(A) the name of the claimant;
(B) a description of the policy by insurer, type of
insurance and period of coverage; and
(C) the amount and a brief description of the claim
(excluding any confidential information relating to
the medical or dental condition of any claimant);
and
(iii) a statement describing the loss experience for all claims
that were self-insured, including the number and aggregate cost of such claims.
(d) Except as set forth on Schedule 2.14(d):
(i) All policies to which AIRNET is a party or that provide
coverage to AIRNET:
(A) are valid, outstanding and enforceable;
(B) are sufficient for compliance with all legal
requirements and Material Contracts to which AIRNET
is a party or by which it is bound; and
(C) will be in full force and effect upon the Closing in
accordance with their respective terms;
(ii) AIRNET has not received:
(A) any refusal of coverage or any notice that a defense
will be afforded with reservation of rights, or
(B) any notice of cancellation or any other indication
that any insurance policy is no longer in full force
or effect or will not be renewed or that the issuer
of any policy is not willing or able to perform its
obligations thereunder;
(iii) AIRNET has paid all premiums due, and has otherwise
performed all of its obligations, under each policy to which it is a party or
that provides coverage to it or any director thereof
19
(iv) AIRNET has given notice to the insurer of all claims
known by it to be insured thereby.
2.15 Compensation; Employment Agreements; Organized Labor Matters.
(a) AIRNET has delivered to each of INVESTORS an accurate list (which
is set forth on Schedule 2.15) showing all officers, directors and key employees
of AIRNET, listing all employment agreements with such officers, directors and
key employees and the rate of compensation (and the portions thereof
attributable to salary, bonus and other compensation, respectively) of each of
such Persons as of (i) the Balance Sheet Date, and (ii) if different, the date
hereof. AIRNET has provided to each of INVESTORS true, complete and correct
copies of any employment agreements for persons listed on Schedule 2.15. Since
the Balance Sheet Date, there have been no increases in the compensation payable
or any special bonuses to any officer, director, key employee or other employee,
except ordinary salary increases implemented on a basis consistent with past
practices.
(b) Except as set forth on Schedule 2.15, there is no, and within the
last three (3) years AIRNET has not experienced any, strike, picketing, boycott,
work stoppage or slowdown, other labor dispute, union organizational activity,
allegation, charge or complaint of unfair labor practice, employment
discrimination or other matters relating to the employment of labor, pending or,
to AIRNET's knowledge, threatened against AIRNET; nor is there, to the knowledge
of AIRNET, any basis for any such allegation, charge or complaint. There is no
request directed to AIRNET for union or similar representation pending and, to
AIRNET's knowledge, no question concerning representation has been raised. To
AIRNET's knowledge, no key employee and no group of employees has any plans to
terminate employment with AIRNET. AIRNET has complied in all material respects
with all applicable laws relating to the employment of labor, including
provisions thereof relating to wages, hours, equal opportunity, collective
bargaining and the payment of social security and other taxes. AIRNET is not
liable for any arrearages of wages or any taxes or penalties for failure to
comply with any such laws, ordinances or regulation.
2.16 Employee Plans. AIRNET has delivered to each of INVESTORS an accurate
listing (which is set forth on Schedule 2.16) showing all Benefit Plans of
AIRNET, together with true, complete and correct copies of such Benefit Plans,
agreements and any trusts related thereto, and classifications of employees
covered thereby as of the Balance Sheet Date. AIRNET is not required to
contribute to any Benefit Plan pursuant to the provisions of any collective
bargaining agreement establishing the terms and conditions of employment of any
of AIRNET's employees.
2.17 Compliance with ERISA. All Benefit Plans that are intended to qualify
under Section 401(a) of the Code are and have been so qualified and have been
determined by the Internal Revenue Service to be qualified in form, and copies
of such determination letters have been delivered to INVESTOR's counsel. All
reports and other documents required to be filed with any Governmental Authority
or distributed to plan participants or beneficiaries (including, without
limitation, Form 5500) have been timely filed or distributed, and copies thereof
have been provided to INVESTORS. To AIRNET's Knowledge, neither AIRNET, any such
Benefit Plan, nor any "disqualified person" or "party in interest" as such terms
are defined in Section 4975 of the Code or Section 3(14) of ERISA has engaged in
any material transaction prohibited under the provisions of Section 4975 of the
Code or Section 406 of ERISA.
20
No Benefit Plan has incurred an accumulated funding deficiency, as defined in
Section 412(a) of the Code and Section 302(1) of ERISA, and AIRNET has not
incurred any liability for excise tax or penalty due to the Internal Revenue
Service nor any liability to the PBGC. AIRNET further represent that:
(a) There have been no terminations, partial terminations or any
discontinuance of contributions to any such Benefit Plan intended to qualify
under Section 401 (a) of the Code without notice to and approval by the Internal
Revenue Service;
(b) No such Benefit Plan subject to the provisions of Title IV of
ERISA has been terminated;
(c) There have been no "reportable events" (as that phrase is defined
in Section 4043 of ERISA) with respect to any Benefit Plan;
(d) AIRNET has not incurred liability under Section 4062 of ERISA;
(e) No circumstances exist pursuant to which AIRNET could have any
material direct or indirect liability whatsoever (including, but not limited to,
any liability to any multi-employer plan or the PBGC under Title IV of ERISA or
to the Internal Revenue Service for any excise tax or penalty, or being subject
to any statutory lien to secure payment of any such liability) with respect to
any Benefit Plan now or heretofore maintained or contributed to by any entity
other than AIRNET that is, or at any time was, a member of a "controlled group"
(as defined in Section 412(n)(6)(B) of the Code) that includes AIRNET;
(f) AIRNET is not now, nor can it as a result of its past activities
become, liable to the PBGC or to any multi-employer employee pension benefit
plan under the provisions of Title IV of ERISA;
(g) All Benefit Plans and the administration thereof are in
substantial compliance with their terms and all applicable provisions of ERISA
and the regulations issued thereunder, as well as with all other applicable
federal, state and local statutes, ordinances and regulations;
(h) All accrued contribution obligations of AIRNET with respect to
any Benefit Plan have either been fulfilled in their entirety or are fully
reflected on the balance sheet of AIRNET as of the Balance Sheet Date.
(i) No claim, lawsuit, arbitration or other action has been
threatened, asserted, or instituted against any Benefit Plan or related trust,
any trustee or fiduciaries thereof, AIRNET, or any director, officer or employee
thereof;
(j) No Benefit Plan is under audit or investigation by any
Governmental Authority and no such completed audit, if any, has resulted in the
imposition of any tax or penalty;
(k) Each Benefit Plan intended to meet requirements for tax-favored
treatment under Sections 79, 106, 117, 120, 125, 127, 129 or 132 of the Code
satisfies the applicable requirements under the Code;
21
(l) With respect to each Benefit Plan that is funded fully or
partially through an insurance policy, AIRNET has no material liability in the
nature of retroactive rate adjustment, loss sharing arrangement or other actual
or contingent liability arising wholly or partially out of events occurring on
or before the Balance Sheet Date;
(m) The consummation of the transactions contemplated by this
Agreement will not give rise to any liability, including, without limitation,
liability for severance pay, unemployment compensation or termination pay, or
accelerate the time of payment or vesting or increase the amount of compensation
or benefits due to any current, former, or retired employee or their
beneficiaries solely by reason of such transactions;
(n) Except as set forth on Schedule 2.17(n), neither AIRNET nor any
member of a "controlled group" which includes AIRNET maintains, contributes to,
or in any way provides for any benefits of any kind whatsoever (other than under
Section 4980B of the Code or Title I, Subtitle B, Part 6 of ERISA, the federal
Social Security Act or a plan qualified under Section 401(a) of the Code) to any
current or future retiree or terminated employee;
(o) Neither AIRNET nor any officer or employee thereof, has made any
promises or commitments, whether legally binding or not, to create any
additional plan, agreement or arrangement, or to modify or change any existing
Benefit Plan; and
(p) AIRNET has complied in all material respects with the
requirements of Section 4980B of the Code and Title I, Subtitle B, Part 6 of
ERISA.
2.18 Conformity with Law; Litigation. Except as set forth on Schedule
2.18, AIRNET has complied with all laws, rules, regulations, writs, injunctions,
decrees, and orders applicable to it or to the operation of its business
(collectively, "Laws") and has not received any notice of any alleged claim or
threatened claim, violation of, liability or potential responsibility under, any
such Law which has not heretofore been cured and for which there is no remaining
liability. Without limiting the generality of the foregoing, AIRNET has complied
with all applicable federal, state and local Laws relating to the sale,
distribution or registration of securities, or to any Laws relating to antitrust
and trade regulation.
Except to the extent set forth on Schedule 2.7 or as set forth on Schedule
2.18 (which shall disclose the parties to, nature of, and relief sought for each
matter to be disclosed on Schedule 2.18):
(a) There is no suit, action, proceeding, claim, order or, to
AIRNET's Knowledge, investigation pending or, to AIRNET's Knowledge, threatened
against either AIRNET or any Benefit Plan, or any fiduciary of any such Benefit
Plan or, to the Knowledge of AIRNET, pending or threatened against any of the
officers, directors or employees of AIRNET with respect to its business or
proposed business activities or to which AIRNET is otherwise a party, which
would have a Material Adverse Effect on AIRNET, before any court, or before any
Governmental Authority (collectively, "Claims"); nor, to AIRNET's Knowledge, is
there any basis for any such Claims.
(b) AIRNET is not subject to any judgment, order or decree of any
court or Governmental Authority; AIRNET has not received any opinion or
memorandum from legal counsel to the
22
effect that it is exposed, from a legal standpoint, to any liability or
disadvantage which may be material to its business. AIRNET is not engaged in any
legal action to recover monies due it or for damages sustained by it.
(c) AIRNET's current insurance is adequate to cover all pending or
threatened Claims, AIRNET has given all required notice of such Claims to its
appropriate insurance carrier(s) and/or all such claims have been fully reserved
for on the Financial Statements. Schedule 2.18 lists the insurer for each Claim
covered by insurance or designates each Claim, or portion of each Claim, as
uninsured and the individual and aggregate policy limits for the insurance
covering each insured Claim and the applicable policy deductibles for each
insured Claim.
Schedule 2.18 sets forth all closed litigation matters to which AIRNET was a
party during the three (3) years preceding the Closing, the date such litigation
was commenced and concluded, and the nature of the resolution thereof (including
amounts paid in settlement or judgment).
2.19 Taxes. Except as set forth on Schedule 2.19:
(a) To AIRNET's Knowledge, all Returns required to have been filed by
or with respect to AIRNET have been duly filed, and each such Return correctly
and completely reflects the Tax liability and all other information required to
be reported thereon. All Taxes with respect to items or periods covered by all
such Returns (whether or not shown on any Return) owed by AIRNET have been paid.
(b) To AIRNET's Knowledge, the provisions for Taxes due by AIRNET in
the Financial Statements are sufficient for all unpaid Taxes, being current
taxes not yet due and payable, of AIRNET.
(c) AIRNET is not a party to any agreement extending the time within
which to file any Return. No claim has ever been made by any Taxing Authority in
a jurisdiction in which AIRNET does not file Returns that it is or may be
subject to taxation by that jurisdiction that is unresolved or if adversely
determined would have a Material Adverse Effect on AIRNET.
(d) AIRNET has withheld and paid all Taxes required to have been
withheld and paid in connection with amounts paid or owing to any employee,
creditor, independent contractor or other third party.
(e) There is no dispute or claim concerning any Tax liability of
AIRNET either (i) claimed or raised by any Taxing Authority or (ii) otherwise
known to AIRNET. No issues have been raised in any examination by any Taxing
Authority with respect to AIRNET which, by application of similar principles,
reasonably could be expected to result in a proposed deficiency for any other
period not so examined. Schedule 2.19(e) lists all federal, state, local and
foreign income Tax Returns filed by AIRNET for all taxable periods ended on or
after January 1, 1999, indicates those Returns, if any, that have been audited,
and indicates those Returns that currently are the subject of audit. AIRNET has
delivered to INVESTORS complete and correct copies of all federal, state, local
and foreign income Tax Returns filed by, and all Tax examination reports and
statements of deficiencies assessed against or agreed to by, AIRNET since
January 1, 1999.
23
(f) AIRNET has not waived any statute of limitations, the waiver of
which remains in effect on the date hereof, in respect of Taxes or agreed to any
extension of time with respect to any Tax assessment or deficiency.
(g) AIRNET has not made any payments, and, except for certain
payments that might be made pursuant to the terms of AIRNET's employment
agreement with ▇▇▇▇▇ ▇▇▇▇▇, is not obligated to make any payments, and is not a
party to any agreement that under certain circumstances could require it to make
any payments, that are not deductible (i) under Section 280G of the Code or (ii)
as compensation under Section 162(m) of the Code or any similar provision under
state and/or local law.
(h) AIRNET is not a party to any Tax allocation or sharing agreement.
(i) AIRNET is not a party to any joint venture, partnership or other
arrangement that is treated as a partnership for federal income Tax purposes.
(j) To AIRNET's Knowledge, the Internal Revenue Service has not
proposed or threatened accounting method changes of AIRNET that could give rise
to an adjustment under Section 481 of the Code for periods after the Closing
Date.
(k) AIRNET has not received any written ruling of a Taxing Authority
related to Taxes or entered into any written and legally binding agreement with
a Taxing Authority relating to Taxes.
(l) AIRNET has disclosed (in accordance with Section
6662(d)(2)(B)(ii) of the Code) on its federal income Tax Returns all positions
taken therein that could give rise to a substantial understatement of federal
income Tax within the meaning of Section 6662(d) of the Code.
For purposes of this Section 2.19, the following definitions shall
apply:
"Returns" means any returns, reports or statements (including any
information returns) required to be filed for purposes of a particular Tax with
any Taxing Authority or Governmental Authority.
"Tax" or "Taxes" means all federal, state, local or foreign net or
gross income, gross receipts, net proceeds, sales, use, ad valorem, value added,
franchise, bank shares, withholding, payroll, employment, excise, property,
deed, stamp, alternative or add-on minimum, environmental or other taxes,
assessments, duties, fees, levies or other governmental charges similar to
taxes, whether disputed or not, together with any interest, penalties, additions
to tax or additional amounts with respect thereto.
"Taxing Authority" means any Governmental Authority, board, bureau,
body, department or authority of any United States federal, state or local
jurisdiction or any foreign jurisdiction, having jurisdiction with respect to
any Tax.
2.20 No Violations. AIRNET is not in violation of any AIRNET Charter
Document nor is AIRNET in default under any Material Contract; and, except as
set forth on Schedule 2.20, (a) the rights and benefits of AIRNET under the
Material Contracts will not be adversely affected by the transactions
24
contemplated hereby, and (b) the execution of this Agreement and the performance
by AIRNET of their obligations hereunder and the consummation by AIRNET of the
transactions contemplated hereby will not (i) result in any violation or breach
of, or constitute a default under, any of the terms or provisions of the
Material Contracts or the AIRNET Charter Documents, or (ii) require the consent,
approval, waiver of any acceleration, termination or other right or remedy or
action of or by, or make any filing with or give any notice to, any other party.
Except as set forth on Schedule 2.20, none of the Material Contracts requires
notice to, or consent or approval of, any Governmental Authority or other third
party with respect to any of the transactions contemplated hereby in order to
remain in full force and effect and consummation of the transactions
contemplated hereby will not give rise to any right to termination, cancellation
or acceleration or loss of any material right or benefit. None of AIRNET's
Material Contracts with customers prohibits the use or publication by AIRNET or
INVESTORS of the name of any other party to such Material Contracts. Except as
set forth on Schedule 2.20, none of the Material Contracts prohibits or
restricts AIRNET from freely providing services to any other customer or
potential customer of AIRNET.
2.21 Business Conduct. Except as set forth on Schedule 2.21,
since January 1, 2002, AIRNET has conducted its business only in the ordinary
course consistent with past custom and practices and has incurred no liabilities
other than in the ordinary course of business consistent with past custom and
practices. Except as forth on Schedule 2.21, since January 1, 2002, there has
not been any:
(a) Material adverse change in AIRNET's operations, condition
(financial or otherwise), operating results, assets, liabilities, employee,
customer or supplier relations or business prospects;
(b) Damage, destruction or loss of any property owned by AIRNET or
used in the operation of the business, whether or not covered by insurance,
having a replacement cost or fair market value in excess of $10,000 affecting
AIRNET's property, financial status or the business;
(c) Voluntary or involuntary sale, transfer, surrender, abandonment
or other disposition of any kind by AIRNET of any assets or property rights
(tangible or intangible), having a replacement cost or fair market value in
excess of $10,000, except in each case the sale of inventory and collection of
accounts in the ordinary course of business consistent with past custom and
practices;
(d) Loan or advance by AIRNET to any party other than sales to
customers on credit in the ordinary course of business consistent with past
custom and practices;
(e) Declaration, setting aside, or payment of any dividend or other
distribution in respect to AIRNET's capital stock, any direct or indirect
redemption, purchase, or other acquisition of such stock, or the payment of
principal or interest on any note, bond, debt instrument or debt to any
Affiliate;
(f) Incurrence of debts, liabilities or obligations except current
liabilities incurred in connection with or for services rendered or goods
supplied in the ordinary course of business consistent with past custom and
practices, liabilities on account of taxes and governmental charges but not
penalties, interest or fines in respect thereof, and obligations or liabilities
incurred by virtue of the execution of this Agreement;
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(g) Issuance by AIRNET of any notes, bonds, or other debt securities
or any equity securities or securities convertible into or exchangeable for any
equity securities;
(h) Cancellation, waiver or release by AIRNET of any debts, rights or
claims, except in each case in the ordinary course of business consistent with
past custom and practices;
(i) Amendment of AIRNET's Certificate of Incorporation or By-Laws;
(j) Amendment or termination of any Material Contract, other than
expiration of such contract in accordance with its terms;
(k) Change in accounting principles, methods or practices (including,
without limitation, any change in depreciation or amortization policies or
rates) utilized by AIRNET;
(l) Discharge or satisfaction of any material liability, encumbrance
or payment of any material obligation or liability, other than current
liabilities paid in the ordinary course of business consistent with past custom
and practices or cancellation of any debts or claims;
(m) Sale or assignment by AIRNET of any tangible assets other than in
the ordinary course of business;
(n) Capital expenditures or commitments therefor by AIRNET other than
in the ordinary course of business in excess of $10,000 in the aggregate;
(o) Charitable contributions or pledges by AIRNET in excess of $5,000
in the aggregate;
(p) Mortgage, pledge or other encumbrance of any asset of AIRNET
other than in the ordinary course of business;
(q) Adoption, amendment or termination of any Benefit Plan;
(r) Increase in the benefits provided under any Benefit Plan; or
(s) An occurrence or event not included in clauses (a) through (r)
that has resulted or might be expected to have a Material Adverse Effect on
AIRNET.
2.22 Deposit Accounts; Powers of Attorney. AIRNET has delivered to each of
INVESTORS an accurate schedule (which is set forth on Schedule 2.22) as of the
date of this Agreement of:
(a) the name of each financial institution in which AIRNET has
accounts or safe deposit boxes;
(b) the names in which the accounts or boxes are held;
26
(c) the type of account and account number; and
(d) the name of each person authorized to draw thereon or have access
thereto.
Schedule 2.24 also sets forth the name of each person, corporation, firm or
other entity holding a general or special power of attorney from AIRNET and a
description of the terms of such power of attorney.
2.23 Relations with Governments. AIRNET has not made, offered or agreed to
offer anything of value to any governmental official, political party or
candidate for government office nor has it otherwise taken any action which
would cause AIRNET to be in violation of the Foreign Corrupt Practices Act of
1977, as amended, or any law of similar effect.
2.24 Disclosure. The representations and warranties of AIRNET contained in
this Agreement, the schedules to this Agreement provided by AIRNET, the
certificates and the other documents furnished by AIRNET to INVESTORS pursuant
hereto, taken as a whole, present fairly the business and operations of AIRNET
for the time periods with respect to which such information was requested.
AIRNET's rights under the documents delivered pursuant hereto would not be
materially adversely affected by, and no statement made herein would be rendered
untrue in any material respect by, any other document to which AIRNET is a
party, or to which its properties are subject, or to AIRNET's Knowledge, by any
other fact or circumstance regarding AIRNET (which fact or circumstance was, or
should reasonably, after due inquiry, have been known to AIRNET) that is not
disclosed pursuant hereto or thereto.
2.25 Prohibited Activities. Except as set forth on Schedule 2.25, AIRNET
has not, between the Balance Sheet Date and the date hereof, taken any of the
actions set forth in Section 5.3.
2.26 Affiliate Transactions. Schedule 2.26 sets forth the parties to and
the date, nature and amount of (a) each transaction or series of similar
transactions (other than payments of salary and bonus which are reflected as
line items in the Financial Statements) involving the transfer of any cash,
property or rights in which the amount involved individually or collectively
exceeded $5,000 to or from AIRNET from, to, or for the benefit of any
stockholder, former stockholder, Affiliate or former Affiliate of AIRNET
("Affiliate Transactions") during the period commencing December 6, 1999 through
the date hereof, and (b) any existing commitments of AIRNET to engage in the
future in any Affiliate Transactions. Each Affiliate Transaction was effected on
terms equivalent to those which would have been established in an arm's-length
negotiation, except as disclosed on Schedule 2.26 or as disclosed in SEC
filings.
2.27 HSR Compliance. The Company has fully complied with the requirements
of the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended (the
"HSR Act") and no additional step are required to be taken under the HSR Act in
connection this Agreement or the transactions contemplated by this Agreement.
2.28 Misrepresentation. None of the representations and warranties set
forth in this Agreement, the certificates and the other documents furnished to
INVESTORS pursuant hereto, taken as a whole, contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
contained herein or therein not misleading.
27
2.29 Delivery of Documents; Securities Law Matters. AIRNET has made
available to each of INVESTORS its (a) 2001 Annual Report on Form 10-K, and (b)
Quarterly Report on Form 10-Q for the quarter ended September 30, 2002
(collectively, the "AIRNET SEC Reports"). As of their respective dates, the
AIRNET SEC Reports did not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading. Since November 29, 1999, AIRNET has filed all forms,
reports and documents with the SEC required to be filed by it pursuant to the
1933 Act and the 1934 Act and the rules and regulations promulgated thereunder,
each of which complied as to form, at the time such form, document or report was
filed, in all material respects with the applicable requirements of the 1933 Act
and the 1934 Act and the applicable rules and regulations promulgated
thereunder.
2.30 The Nasdaq Stock Market Listing. Except as set forth on Schedule
2.30, All necessary filings have been made as required, all listing requirements
have been met and all filing fees have been paid to effect the continued listing
of the AIRNET Common Stock on The Nasdaq Stock Market prior to and after the
Closing Date.
2.31 Business Plan. AIRNET has provided to INVESTORS an updated business
plan, dated January 18, 2003 (the "Business Plan"). Except as disclosed on
Schedule 2.31, to AIRNET's Knowledge, the factual assumptions underlying the
Business Plan are correct, and the assumptions in the Business Plan with respect
to future operations are reasonable.
3. REPRESENTATIONS OF TECORE
TECORE represents and warrants to AIRNET that all of the following
representations and warranties in this Section 3 are true and correct at the
date of this Agreement and shall be true and correct on the Closing Date, and
that such representations and warranties shall survive the Closing Date for a
period of twenty-four (24) months.
3.1 Due Organization. TECORE is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Texas, and is duly
authorized and qualified to do business under all applicable laws, regulations,
ordinances and orders of public authorities to carry on its business in the
places and in the manner as now conducted, to own or hold under lease the
properties and assets it now owns or holds under lease, and to perform all of
its obligations under any material agreement to which it is a party or by which
its properties are bound.
3.2 Authorization. The representatives of TECORE executing this Agreement
have the authority to execute and deliver this Agreement and to bind TECORE to
perform its obligations hereunder. The execution and delivery of this Agreement
by TECORE and the performance by TECORE of its obligations under this Agreement
and the consummation by TECORE of the transactions contemplated hereby have
been, or will have been on or before the date of the Closing, duly authorized by
all necessary corporate action in accordance with applicable law and the
Certificate of Incorporation and By-Laws of TECORE. This Agreement constitutes
the valid and binding obligation of TECORE, enforceable in accordance with its
terms.
28
3.3 Securities Laws.
(a) This Agreement is made with AIRNET's reliance upon TECORE's
representations to AIRNET, which by the acceptance hereof TECORE hereby
confirms, that the Warrants, the Notes and the shares of Common Stock underlying
the Notes (the "Note Shares", and together with the Warrants and Notes, the
"Securities") will be acquired for investment for its own account, not as a
nominee or agent, and not with a view to the sale or distribution of all or any
part thereof absent the registration of such Securities under the 1933 Act or
pursuant to a valid exemption from such registration requirements, and each
Investor has no present intention of selling, granting participation in, or
otherwise distributing the same. By executing this Agreement, TECORE further
represents that it does not have any contract, undertaking, agreement or
arrangement with any person to sell, transfer or grant participation to such
person, or to any third person, with respect to any of the Securities.
(b) TECORE understands that the Securities are not registered under
the 1933 Act on the ground that the sale provided for in this Agreement and the
issuance of the Securities hereunder are being made in reliance upon an
exemption from the registration requirements of the Act pursuant to Section 4(2)
thereof as a transaction by an issuer not involving a public offering, and is
similarly exempt under any other applicable securities laws, and that AIRNET's
reliance on such exemptions is predicated on TECORE's representations set forth
herein.
(c) TECORE represents that it has such knowledge and experience in
financial and business matters as to be capable of evaluating the merits and
risks of its investment, and has the ability to bear the economic risks of its
investment. TECORE further represents that it has had access, during the course
of the transaction and prior to the purchase of the Securities, to information
concerning AIRNET and that it has had during the course of the transaction and
prior to the purchase of the Securities, the opportunity to ask questions of,
and receive answers from, AIRNET concerning the terms and conditions of the
offering and AIRNET's business, management and financial affairs, and to obtain
additional information (to the extent AIRNET possessed such information or could
acquire it without unreasonable effort or expense) necessary to verify the
accuracy of any information furnished to it or to which it had access.
(d) TECORE represents that it is an "accredited investor" as defined
in Rule 501 of Regulation D promulgated under the Act.
(e) TECORE understands that the Securities may not be sold,
transferred or otherwise disposed of without registration under the 1933 Act and
any applicable state securities laws absent an exemption therefrom, and that in
the absence of an effective registration statement covering the Securities, or
an available exemption from registration under the 1933 Act and any applicable
state securities laws, the Securities must be held indefinitely. In particular,
TECORE is aware that the Securities may not be sold pursuant to SEC Rule 144
unless all the conditions of that Rule are met. Among the conditions for use of
Rule 144 may be the availability of current and adequate information to the
public about AIRNET. TECORE represents that, in the absence of an effective
registration statement covering the Securities, it shall not sell, transfer or
otherwise dispose of the Securities except in a manner consistent with the
representations set forth herein and pursuant to an available exemption.
29
(f) TECORE agrees that in no event will it sell, transfer or
otherwise dispose of any of the Securities (other than pursuant to an effective
registration statement under the 1933 Act and any applicable state securities
laws), unless and until TECORE or its proposed transferee has complied with any
restrictions on transfer in the Registration Rights Agreement. TECORE
acknowledges that it will be subject to AIRNET's ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Policy.
4. REPRESENTATIONS OF SCP
SCP represents and warrants to AIRNET that all of the following
representations and warranties in this Section 4 are true and correct at the
date of this Agreement and shall be true and correct on the Closing Date, and
that such representations and warranties shall survive the Closing Date for a
period of twenty-four (24) months.
4.1 Due Organization. SCP is a limited partnership duly formed and
validly existing under the laws of the State of Delaware, and is duly authorized
and qualified to do business under all applicable laws, regulations, ordinances
and orders of public authorities to carry on its business in the places and in
the manner as now conducted, to own or hold under lease the properties and
assets it now owns or holds under lease, and to perform all of its obligations
under any material agreement to which it is a party or by which its properties
are bound.
4.2 Authorization. The representatives of SCP executing this
Agreement have the authority to execute and deliver this Agreement and to bind
SCP to perform its obligations hereunder. The execution and delivery of this
Agreement by SCP and the performance by SCP of its obligations under this
Agreement and the consummation by SCP of the transactions contemplated hereby
have been, or will have been on or before the date of the Closing, duly
authorized by all necessary action in accordance with applicable law and the
limited partnership agreement of SCP. This Agreement constitutes the valid and
binding obligation of SCP, enforceable in accordance with its terms.
4.3 Securities Laws.
(a) This Agreement is made with AIRNET's reliance upon SCP's
representations to AIRNET, which by the acceptance hereof of SCP hereby
confirms, that the Notes and Note Shares to be acquired by SCP and all shares of
AIRNET's Common Stock to be acquired by SCP pursuant to the terms of this
Agreement will be acquired for investment for its own account, not as a nominee
or agent, and not with a view to the sale or distribution of all or any part
thereof absent the registration of such Notes and Note Shares under the 1933 Act
or pursuant to a valid exemption from such registration requirements, and each
Investor has no present intention of selling, granting participation in, or
otherwise distributing the same. By executing this Agreement, SCP further
represents that it does not have any contract, undertaking, agreement or
arrangement with any person to sell, transfer or grant participation to such
person, or to any third person, with respect to any of the Notes or Note Shares.
(b) SCP understands that the Notes and Note Shares may not be
registered under the 1933 Act on the ground that the sale provided for in this
Agreement and the issuance of the Notes and Note Shares hereunder are being made
in reliance upon an exemption from the registration requirements of the Act
pursuant to Section 4(2) thereof as a transaction by an issuer not involving a
public offering, and
30
is similarly exempt under any other applicable securities laws, and that
AIRNET's reliance on such exemptions is predicated on SCP's representations set
forth herein.
(c) SCP represents that it is experienced in evaluating and investing
in companies such as AIRNET, is able to fend for itself in the transactions
contemplated by this Agreement, has such knowledge and experience in financial
and business matters as to be capable of evaluating the merits and risks of its
investment, and has the ability to bear the economic risks of its investment.
SCP further represents that it has had access, during the course of the
transaction and prior to the purchase of the Notes and Note Shares, to
information concerning AIRNET and that it has had during the course of the
transaction and prior to the purchase of the Notes, the opportunity to ask
questions of, and receive answers from, AIRNET concerning the terms and
conditions of the offering and AIRNET's business, management and financial
affairs, and to obtain additional information (to the extent AIRNET possessed
such information or could acquire it without unreasonable effort or expense)
necessary to verify the accuracy of any information furnished to it or to which
it had access.
(d) SCP represents that it is an "accredited investor" as defined in
Rule 501 of Regulation D promulgated under the Act.
(e) SCP understands that the Notes and Note Shares may not be sold,
transferred or otherwise disposed of without registration under the 1933 Act and
any applicable state securities laws absent an exemption therefrom, and that in
the absence of an effective registration statement covering the Notes and Note
Shares, or an available exemption from registration under the 1933 Act and any
applicable state securities laws, the Notes and Note Shares must be held
indefinitely. In particular, SCP is aware that the Notes and Note Shares may not
be sold pursuant to SEC Rule 144 promulgated under the 1933 Act unless all the
conditions of that Rule are met. Among the conditions for use of Rule 144 may be
the availability of current and adequate information to the public about AIRNET.
SCP represents that, in the absence of an effective registration statement
covering the Notes and Note Shares, it shall not sell, transfer or otherwise
dispose of the Notes and Note Shares except in a manner consistent with the
representations set forth herein and pursuant to an available exemption.
(f) SCP agrees that in no event will it sell, transfer or otherwise
dispose of any of the Notes and Note Shares (other than pursuant to an effective
registration statement under the 1933 Act and any applicable state securities
laws), unless and until SCP or its proposed transferee has complied with any
restrictions on transfer in the Registration Rights Agreement. SCP acknowledges
that it will be subject o AIRNET's ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Policy.
5. COVENANTS PRIOR TO CLOSING
5.1 Access and Cooperation; Due Diligence.
(a) Between the date of this Agreement and the Closing Date, AIRNET
will afford to the officers and authorized representatives of each of INVESTORS
access during business hours to all of AIRNET's sites, properties, books and
records and will furnish each of INVESTORS with such additional financial and
operating data and other information as to the business and properties of AIRNET
as either of INVESTORS may from time to time reasonably request. AIRNET will
cooperate with each of
31
INVESTORS and their representatives, including each INVESTOR'S auditors and
counsel, in the preparation of any documents or other materials which may be
required in connection with the transactions contemplated by this Agreement.
INVESTORS and AIRNET will treat all information obtained in connection with the
negotiation and performance of this Agreement as confidential in accordance with
the provisions of Section 14.
(b) INVESTORS will cooperate with AIRNET, its representatives,
auditors and counsel in the preparation of any documents or other material which
may be required in connection with the transactions contemplated by this
Agreement. AIRNET will cause all information obtained in connection with the
negotiation and performance of this Agreement to be treated as confidential in
accordance with the provisions of Section 14.
5.2 Conduct of Business Pending Closing. Between the date of this
Agreement and the Closing Date, AIRNET will:
(a) carry on its business in the ordinary course substantially as
conducted heretofore and not introduce any new method of management, operation
or accounting;
(b) maintain its properties and facilities, including those held
under leases, in as good working order and condition as at present, ordinary
wear and tear excepted;
(c) perform in all material respects its obligations under agreements
relating to or affecting its assets, properties or rights;
(d) keep in full force and effect present insurance policies or other
comparable insurance coverage;
(e) 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 relations with AIRNET;
(f) maintain compliance with all permits, laws, rules and
regulations, consent orders, and all other orders of applicable courts,
regulatory agencies and similar Governmental Authorities; and
(g) maintain present debt and lease instruments in accordance with
their respective terms and not enter into new or amended debt or lease
instruments, provided that debt and/or lease instruments may be replaced if such
replacement instruments are on terms at least as favorable to AIRNET as the
instruments being replaced.
(h) exercise its best efforts to ensure AIRNET's continued inclusion
in, and the continued eligibility of the AIRNET Common Stock for listing on, The
Nasdaq Stock Market under all applicable listing requirements prior to and after
the Closing Date.
(i) file an additional shares notification with The Nasdaq Stock
Market to approve for listing, subject to official notice of its issuance, all
the shares of AIRNET Common Stock issuable upon the
32
conversion of the Series B Preferred Stock, the purchase of shares by SCP, and
the conversion of the Notes and Warrants issued in connection herewith; and
AIRNET shall cause the shares of AIRNET Common Stock issuable upon the
conversion of the Series B Preferred Stock, the purchase of shares by SCP, and
the conversion of the Notes and Warrants to be approved for listing on The
Nasdaq Stock Market, subject to official notice of issuance, prior to the
Closing Date.
5.3 Prohibited Activities. Between the date hereof and the Closing Date,
except as specifically contemplated hereby, including but not limited to,
Section 5.4, AIRNET will not, without the prior written consent of INVESTORS:
(a) make any change in its Certificate or Articles of Incorporation
or By-laws;
(b) grant or issue any securities, options, warrants, calls,
conversion rights or commitments of any kind relating to its securities of any
kind, other than as provided for, or contemplated by, this Agreement;
(c) declare or pay any dividend, or make any distribution in respect
of its stock whether now or hereafter outstanding, or purchase, redeem or
otherwise acquire or retire for value any shares of its stock;
(d) enter into any contract or commitment or incur or agree to incur
any liability or make any capital expenditure, except if it is in the ordinary
course of business (consistent with past practice) and involves an amount not in
excess of $50,000;
(e) create, assume or permit to exist any mortgage, pledge or other
lien or encumbrance upon any assets or properties whether now owned or hereafter
acquired, except with respect to the following "Permitted Liens": (i) purchase
money liens incurred in connection with the acquisition of equipment with an
aggregate cost not in excess of $50,000 necessary or desirable for the conduct
of the business of AIRNET, (ii)(A) liens for Taxes either not yet due or being
contested in good faith and by appropriate proceedings (and for which adequate
reserves have been established and are being maintained) or (B) materialmen's,
mechanics', workers', repairmen's, employees' or other like liens arising in the
ordinary course of business (the liens set forth in clause (ii) being referred
to herein as "Statutory Liens"), or (iii) liens set forth on Schedule 2.7
hereto;
(f) sell, assign, lease or otherwise transfer or dispose of any
property or equipment except in the ordinary course of business;
(g) negotiate for the acquisition of any business or the start-up of
any new business;
(h) merge or consolidate or agree to merge or consolidate with or
into any other corporation;
(i) waive any material right or claim of AIRNET, provided that AIRNET
may negotiate and adjust bills in the course of good faith disputes with
customers in a manner consistent with past
33
practice, provided, further, that such adjustments shall not be deemed to be
included on Schedule 2.8 unless specifically listed thereon;
(j) commit a material breach, materially amend or terminate any
Material Contract;
(k) enter into any other transaction outside the ordinary course of
its business or prohibited hereunder; or
(l) except in the ordinary course of business or as required by Law
or contractual obligations, AIRNET will not (i) increase in any manner the base
compensation of, or enter into any new bonus or incentive agreement or
arrangement with, any of the employees engaged in AIRNET's business, (ii) pay or
agree to pay any additional pension, retirement allowance or other employee
benefit to any such employee, whether past or present, (iii) enter into any new
employment, severance, consulting, or other compensation agreement with any
existing employee engaged in AIRNET's business, (iv) amend or enter into a new
Plan (except as required by Law) or amend or enter into a new collective
bargaining agreement, or (v) engage in any Affiliate Transaction.
5.4 No Shopping.
(a) In consideration of the substantial expenditure of time, effort
and expense undertaken by each of the INVESTORS in connection with its due
diligence review and the preparation and execution of this Agreement, AIRNET
agrees that, except to the extent that, pursuant to an unsolicited proposal,
AIRNET's Board of Directors must honor their fiduciary responsibilities to
AIRNET's stockholders to achieve the alternative for raising working capital or
closing a strategic transaction for all of the assets of AIRNET, or for a
controlling interest in AIRNET's equity securities, in the best interest of the
AIRNET stockholders, neither they nor their representatives, agents, employees
or affiliates will, after the execution of this Agreement until the earlier of
(a) the termination of this Agreement, or (b) the Closing, directly or
indirectly, solicit, encourage, negotiate or discuss with any third party
(including by way of furnishing any information concerning AIRNET) any
acquisition proposal relating to or affecting AIRNET or any part of it, or any
direct or indirect interests in AIRNET, whether by purchase of assets or stock,
purchase of interests, merger or other transaction ("Acquisition Transaction").
AIRNET will (a) immediately instruct its investment bankers and financial
advisors to cease all activities described in the preceding sentence, and (b)
promptly advise INVESTORS of the terms of any communications AIRNET may receive
or become aware of relating to any bid for all or any part of AIRNET.
Notwithstanding the foregoing, if a third party interested in an Acquisition
Transaction with AIRNET presents or submits a proposal after the execution of
this Agreement, any discussions held between such party and AIRNET prior to
execution of this Agreement shall not cause such a presentation or submission to
be characterized as proposal solicited by AIRNET.
(b) If AIRNET's Board of Directors, pursuant to its fiduciary
responsibilities, authorizes AIRNET to enter into a binding agreement concerning
an Acquisition Transaction with a Person other than INVESTORS, AIRNET shall
provide written notice to INVESTORS (which shall contain a description of all
material terms of the proposed agreement) that it intends to enter into such an
agreement. Upon such notification INVESTORS shall have thirty (30) days within
which to elect, in writing, to consummate the transaction described in the
aforesaid written notice in the place and stead of such Person. If INVESTORS
fail to make such election within the thirty (30) day period, this Agreement may
be terminated by AIRNET
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and (A) AIRNET shall pay to each of the INVESTORS, as that INVESTOR'S exclusive
remedy and from immediately available funds, a termination fee equal to
INVESTOR'S documented and reasonable expenses incurred in connection with the
transactions contemplated by this Agreement up to but not to exceed Two Hundred
Fifty Thousand Dollars ($250,000), and (B) each INVESTOR shall have the right to
demand payment from AIRNET of all amounts owing to that Investor pursuant to
that certain Bridge Loan Promissory Note, dated January 24, 2003, in the
original principal amount of $3,000,000, which shall become immediately due and
payable upon such demand.
5.5 Notification of Certain Matters. AIRNET shall give prompt notice to
INVESTORS of (a) the occurrence or non-occurrence of any event of which AIRNET
has knowledge, the occurrence or non-occurrence of which would cause any
representation or warranty of AIRNET contained herein to be untrue or inaccurate
in any material respect at or prior to the Closing, and (b) any material failure
of AIRNET to comply with or satisfy any covenant, condition or agreement to be
complied with or satisfied hereunder. Each INVESTOR shall give prompt notice to
AIRNET of (a) the occurrence or non-occurrence of any event of which that
INVESTOR has knowledge, the occurrence or non-occurrence of which would cause
any representation or warranty of that INVESTOR contained herein to be untrue or
inaccurate in any material respect at or prior to the Closing, and (b) any
material failure of that INVESTOR to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it hereunder. The
delivery of any notice pursuant to this Section 5.5 shall not be deemed to (a)
modify the representations or warranties hereunder of the party delivering such
notice, which modification may only be made pursuant to Section 5.6, (b) modify
the conditions set forth in Sections 6, 7 or 8, or (c) limit or otherwise affect
the remedies available hereunder to the party receiving such notice.
5.6 Amendment of Schedules. Each party hereto agrees that, with
respect to the representations and warranties of such party contained in this
Agreement, such party shall have the continuing obligation until the Closing
Date to supplement or amend promptly the Schedules hereto with respect to any
matter hereafter arising or discovered which, if existing or known at the date
of this Agreement, would have been required to be set forth or described in the
Schedules. No supplement or amendment to a Schedule shall be deemed to cure any
breach of any representation and warranty by either party made in this
Agreement, provided that if the party to whom a supplemental or amending
disclosure was made proceeds to Closing, that party shall be deemed to have
waived such breach of representation and warranty and any remedies which might
have been available with respect thereto.
5.7 Final Financial Statements. AIRNET shall provide prior to the Closing
Date, and INVESTORS shall have had sufficient time prior thereto to review, the
unaudited statements of income, cash flows and retained earnings of AIRNET for
all months ended no earlier than 30 days prior to the Closing Date, disclosing
no material adverse change in the financial condition of AIRNET or the results
of its operations from the financial statements as of the Balance Sheet Date
(other than any such change that results directly from the failure of either of
the INVESTORS to make advances to AIRNET as contemplated by that certain Bridge
Loan Agreement dated January 24, 2003 by and among AIRNET and the INVESTORS).
Such financial statements shall have been prepared in accordance with GAAP
applied on a consistent basis throughout the periods indicated (except as noted
therein), but shall not include all of the footnotes and adjustments required by
GAAP for complete financial statements. Except as noted in such financial
statements, all of such financial statements will present fairly the results of
operations of AIRNET for the periods indicated thereon.
35
5.8 Shareholder Approval. AIRNET will use its best efforts to obtain the
shareholder approval required by NASDAQ in connection with the transactions
contemplated by this Agreement.
5.9 The Nasdaq Stock Market Additional Shares Notification for Listing.
AIRNET will file an additional shares notification with The Nasdaq Stock Market
to approve for listing, subject to official notice of its issuance, all the
shares of AIRNET Common Stock issuable upon the conversion of the Series B
Preferred Stock, the purchase of shares by SCP, and the conversion of the Senior
Secured Convertible Notes issued in connection herewith. AIRNET shall exercise
reasonable good faith efforts to cause the shares of AIRNET Common Stock
issuable upon the conversion of the Series B Preferred Stock, the purchase of
shares by SCP, and the conversion of the Senior Secured Convertible Notes to be
approved for listing on The Nasdaq Stock Market, subject to official notice of
issuance, prior to the Closing Date.
5.10 Securities Filings. AIRNET shall file all reports required to be
filed by it under the Securities Act of 1933 and the Securities and Exchange Act
of 1934 and the rules and regulations adopted by the SEC thereunder, and all
applicable State securities laws.
5.11 Further Assurances. The parties hereto agree to execute and deliver,
or cause to be executed and delivered, such further instruments or documents or
take such other action as may be reasonably necessary or convenient to carry out
the transactions contemplated hereby.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF AIRNET
The obligations of AIRNET with respect to actions to be taken on the
Closing Date are subject to the satisfaction or waiver on or prior to the
Closing Date of all of the conditions set forth in this Section 6. As of the
Closing Date, all conditions not satisfied shall be deemed to have been waived
by AIRNET unless they have objected by notifying INVESTORS in writing of such
objection on or before the consummation of the transactions on the Closing Date,
except that no such waiver shall be deemed to affect the survival of the
representations and warranties of INVESTORS contained in Sections 3 and 4
hereof.
6.1 Representations and Warranties. All representations and warranties of
INVESTORS contained in the Agreement shall be true and correct in all material
respects as of the Closing Date as though such representations and warranties
had been made on and as of that date; and a certificate to the foregoing effect
dated the Closing Date and signed by the President or any Vice President of each
INVESTOR shall have been delivered to AIRNET.
6.2 Performance of Obligations. All of the terms, covenants and
conditions of this Agreement to be complied with and performed by INVESTORS on
or before the Closing Date shall have been duly complied with and performed in
all material respects on or before the Closing Date; and certificates to the
foregoing effect dated on the Closing Date and signed by the President or any
Vice President of each INVESTOR shall have been delivered to AIRNET.
36
6.3 No Litigation. No action or proceeding before a court or any other
Governmental Authority or body shall have been instituted or threatened to
restrain or prohibit the performance of this Agreement or the consummation of
the transactions contemplated herein.
6.4 Consents and Approvals. All necessary consents of and filings
required to be obtained or made by INVESTORS with any Governmental Authority or
agency relating to the consummation of the transactions contemplated herein
shall have been obtained and made.
6.5 Good Standing Certificates. INVESTORS shall have delivered to AIRNET
certificates, dated as of a date no earlier than 10 days prior to the Closing
Date, duly issued by the Secretaries of State of Texas, Maryland and Delaware,
as applicable, showing that INVESTORS are in good standing.
6.6 Secretary's Certificate. AIRNET shall have received a certificate or
certificates, dated the Closing Date and signed by the corporate secretary (or
other authorized officer or representative) of each INVESTOR, certifying the
truth and correctness of attached copies of the INVESTORS' Certificate of
Incorporation or Certificate of Limited Partnership, as the case may be
(including amendments thereto), By-Laws, or Agreement of Limited Partnership, as
the case may be (including amendments thereto), and resolutions of the boards of
directors, or general partners, as the case may be, approving INVESTORS'
entering into this Agreement and the consummation of the transactions
contemplated hereby.
6.7 INVESTOR'S Closing Deliveries. Each of the INVESTORS shall have
delivered that INVESTOR'S Closing Deliveries.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF INVESTORS
The obligations of the INVESTORS with respect to actions to be taken on the
Closing Date are subject to the satisfaction or waiver on or prior to the
Closing Date, of all of the conditions set forth in this Section 7. As of the
Closing Date all conditions not satisfied shall be deemed to have been waived by
INVESTORS unless it has objected by notifying AIRNET in writing of such
objection on or before the consummation of the transactions on the Closing Date,
except that no such waiver shall be deemed to affect the survival of the
representations and warranties of AIRNET contained in Section 2 hereof.
7.1 Representations and Warranties. All the representations and
warranties of AIRNET contained in this Agreement shall be true and correct in
all material respects as of the Closing Date; and AIRNET shall have delivered to
INVESTORS certificates dated the Closing Date and signed by them to such effect.
7.2 Performance of Obligations. All of the terms, covenants and
conditions of this Agreement to be complied with or performed by AIRNET on or
before the Closing Date shall have been duly performed or complied with in all
material respects on or before the Closing Date and AIRNET shall have delivered
to INVESTORS certificates dated the Closing Date and signed by them to such
effect.
7.3 No Litigation. No action or proceeding before a court or any other
Governmental Authority or body shall have been instituted or threatened to
restrain or prohibit the performance of this Agreement or the consummation of
the transactions contemplated herein.
37
7.4 Certificates. INVESTORS shall have received a copy of AIRNET's
Certificate or Articles of Incorporation, and all amendments thereto, certified
by the Delaware Secretary of State, and a copy of AIRNET's By-Laws, and all
amendments thereto, certified by AIRNET's corporate secretary.
7.5 No Material Adverse Change. As of the Closing Date, no event or
circumstance shall have occurred with respect to AIRNET which would constitute a
Material Adverse Effect on AIRNET, and AIRNET shall not have suffered any
material loss or damages to any of its properties or assets, whether or not
covered by insurance, which change, loss or damage materially affects or impairs
the ability of AIRNET to conduct its business.
7.6 Opinion of Counsel. INVESTORS shall have received an opinion from
Counsel to AIRNET, dated the Closing Date, substantially in the form attached
hereto as Exhibit 7.6.
7.7 Consents and Approvals. All necessary consents of and filings
with any Governmental Authority relating to the consummation of the transactions
contemplated herein shall have been obtained and made and all necessary consents
and approvals of third parties, including those listed on Schedule 2.20, shall
have been obtained.
7.8 Good Standing Certificates. AIRNET shall have delivered to
INVESTORS a certificate, dated as of a date no earlier than ten (10) days prior
to the Closing Date, duly issued by the appropriate Governmental Authority in
AIRNET's state of incorporation and, unless waived by INVESTORS, in each state
in which AIRNET is authorized to do business, showing AIRNET is in good standing
and authorized to do business and that all state franchise and/or income tax
returns and taxes for AIRNET for all periods prior to the Closing have been
filed and paid.
7.9 ▇▇▇▇ of Materials. Within three (3) days after the date of this
Agreement, AIRNET shall have provided INVESTORS with AIRNET's ▇▇▇▇ of Materials,
prepared as at February 12, 2003, reflecting AIRNET's detailed costs of goods,
products and services with respect to all goods and services procured from its
vendors in the ordinary course of its business, together with AIRNET's revised
proposed ▇▇▇▇ of Materials reflecting projected operations after the Closing
Date, and INVESTORS shall have been satisfied with the accuracy and
completeness, of the current ▇▇▇▇ of Materials as well as with the
reasonableness and feasibility of the revised proposed ▇▇▇▇ of Materials.
7.10 The Nasdaq Stock Market Listing. Except as disclosed on Schedule
7.10, all necessary filings shall have been made as required, all listing
requirements shall have been met and all filing fees shall have been paid to
effect the continued listing of the AIRNET Common Stock on The Nasdaq Stock
Market prior to and after the Closing Date.
7.11 AIRNET Closing Deliveries. AIRNET shall have delivered the AIRNET
Closing Deliveries.
7.12 The Nasdaq Stock Market Additional Shares Notification for Listing.
All the shares of AIRNET Common Stock (A) issuable upon the conversion of the
Series B Preferred Stock issued in connection herewith, (B) issuable to the
INVESTORS upon the conversion of the Notes; and (C) issued to
38
SCP at Closing pursuant to this Agreement, shall have been approved as
additional shares of AIRNET Common Stock for listing upon notice of issuance on
The Nasdaq Stock Market.
7.13 SEC/NASDAQ Compliance. AIRNET shall have complied with all applicable
filing requirements of the SEC and NASDAQ.
7.14 Product Development. AIRNET shall have made reasonably satisfactory
progress, which shall be determined in INVESTORS' reasonable discretion, in the
development of the following products: (A) Adaptive Array; (B) Wildfire II; and
(C) AirSite 5b.
7.15 Stockholder Approvals. The stockholders of AIRNET at its annual
meeting of stockholders shall have approved the transactions contemplated under
this Agreement, the adoption of the 8th Amended and Restated Certificate of
Incorporation, and the election of the directors nominated by the Board of
Directors of AIRNET in June, 2003.
8. AFFIRMATIVE COVENANTS OF AIRNET AFTER CLOSING
AIRNET covenants and agrees with INVESTORS that, until AIRNET has satisfied
all of its obligations to the INVESTORS under the terms of the Notes, AIRNET
will:
8.1 Financial Statements.
Furnish to INVESTORS in writing:
(a) as soon as available but in no event more than 45 days after the
end of each calendar quarter, a consolidated and consolidating statement of
income and retained earnings of AIRNET for the quarter, a consolidated and
consolidating balance sheet of AIRNET as of the end of the quarter, and a
consolidated and consolidating statement of cash flows for the quarter, all with
supporting schedules, all on a consolidated and consolidating basis, including a
detailed breakout of general and administrative expenses, and a schedule of long
term debt and capital lease payments, and all in detail, format and scope
consistent with the practices of AIRNET prior to the date of this Agreement,
certified by the president or chief financial officer of AIRNET;
(b) as soon as available but in no event more than 120 days after the
end of each fiscal year of AIRNET, a consolidated and consolidating statement of
income and retained earnings of AIRNET for such year, a consolidated and
consolidating statement of cash flows of AIRNET for such year, and a
consolidated and consolidating balance sheet of AIRNET as of the end of the
year, all with supporting schedules, all on a consolidated and consolidating
basis, all in detail, format and scope consistent with the practices of AIRNET
prior to the date of this Agreement, prepared in accordance with GAAP
consistently applied and examined and audited by Deloitte & Touche, or another
firm of independent certified public accountants reasonably satisfactory to
INVESTORS, accompanied by the unqualified opinion of such independent certified
public accountants with respect to the financial statements;
39
(c) together with each report required by Subsection (a) and (b)
above, a certificate of AIRNET'S president or chief financial officer that no
Default or Event of Default then exists or if a Default or Event of Default
exists, the nature and duration thereof and AIRNET's intention with respect
thereto, and in addition, a statement from AIRNET's independent auditors,
together with the audit report described in Subsection (b) above that, in the
course of such audit, the auditors discovered no circumstances which they
believe would result in a Default or an Event of Default or if they discovered
any such circumstances, the nature and duration thereof;
(d) as soon as available, but in no event more than 45 days after the
end of each quarter, a Covenant Compliance Certificate in the form to be agreed
upon among the parties at or before Closing;
(e) as soon as available but in no event later than 30 days after
filing, AIRNET's federal and state income tax returns for the preceding fiscal
year;
(f) promptly upon transmission thereof, copies of any financial
statements, proxy statements, reports and the like which AIRNET sends to its
shareholders and copies of all registration statements (with exhibits) and all
regular, special or periodic reports which AIRNET files with the SEC (or any
governmental body or agency succeeding to the functions of the United States
Securities and Exchange Commission) or with any national stock exchange on which
AIRNET's securities are listed and copies of all press releases and other
statements made available by AIRNET to the public concerning material
developments in the business of AIRNET.
8.2 Taxes. Pay and discharge all taxes, assessments and governmental
charges upon AIRNET , its income and properties, prior to the date on which
penalties attach thereto unless and to the extent only that the same are being
diligently contested by AIRNET in good faith by appropriate proceedings,
provided, however, that (a) INVESTORS shall have been given reasonable prior
written notice of intention to contest, (b) nonpayment of the same will not, in
INVESTORS' sole discretion, materially impair any of the Collateral or
INVESTORS' rights or remedies with respect thereto or the prospect for full and
punctual payment of all of the obligations, (c) no notice of lien with respect
thereto is filed in any recording office, (d) AIRNET at all times effectively
stays or prevents any official or judicial sale of or action against any of the
Collateral by reason of nonpayment of the same, and (e) AIRNET establishes
reasonable reserves for any liabilities being contested and for expenses arising
out of such contest in accordance with GAAP.
8.3 Corporate Existence, Continuation of Business and Compliance with
Laws. Maintain its corporate existence in good standing; maintain in good
standing its qualification to do business in each jurisdiction in which such
qualification is required by law; continue its business operations as now being
conducted; and comply with all applicable federal, State and local laws, rules,
ordinances, regulations and orders (including, without limitation, ERISA and all
Environmental Laws).
8.4 Litigation. Promptly notify INVESTORS in writing of any action,
suit or proceeding at law or in equity by or before any court, governmental
agency or instrumentality which could result in any material adverse change in
the business, operations, prospects, properties or assets or in the condition,
financial or otherwise, of AIRNET.
40
8.5 Extraordinary Loss; Change in Condition. Promptly notify INVESTORS in
writing of (a) any event causing extraordinary loss or depreciation of the value
of AIRNET's assets (whether or not insured) and the facts with respect thereto,
and (b) the occurrence of any Material Adverse Change in AIRNET's business,
assets, operations, business prospects or financial condition.
8.6 Books and Records. Keep and maintain proper and current books and
records in accordance with GAAP consistently applied and permit access by
INVESTORS to, reproduction by INVESTORS, copying by INVESTORS from, and
verification (by such means, including audits, as INVESTORS may determine) by
INVESTORS of any information contained in, such books and records.
8.7 Maintenance of Properties. Maintain all properties and improvements
necessary to the conduct of its business in good working order and condition,
ordinary wear and tear excepted, and cause replacements and repairs to be made
when necessary for the proper conduct of its business.
8.8 Intellectual Property. Maintain, preserve and protect all
Intellectual Property, and rights thereto, which are necessary and material to
the conduct of the business of AIRNET as now conducted and as conducted in the
future, free of any conflict with the rights of any other person, except to the
extent that the reasonably anticipated costs of such activities would
significantly outweigh the reasonably anticipated benefits of such activities to
the business of AIRNET.
8.9 Insurance.
(a) Maintain or cause to be maintained comprehensive casualty
insurance policies insuring the Collateral and all other property of AIRNET
against loss by fire, theft, explosion, collision and such other risks, in such
amounts, subject to such loss deductible amounts and with such responsible
insurance companies as may be satisfactory to INVESTORS, in INVESTORS'
reasonable discretion exercised in good faith, and, in all events, against such
risks, in such amounts and subject to such loss deductible amounts as are
customary in AIRNET's industry, and in such minimum amounts that AIRNET will not
be deemed a coinsurer under applicable insurance laws, regulations, policies or
practices, and (ii) endorsements to such insurance policies satisfactory to
INVESTORS, in INVESTORS' reasonable discretion exercised in good faith, naming
INVESTORS as loss payees with respect to all Collateral insured thereunder.
(b) Maintain or cause to be maintained (i) in the maximum amount
available, flood insurance policies insuring all property of the AIRNET which is
located in an area that has been, or subsequently is, identified as having
special flood or mudslide hazards and in which the sale of flood insurance has
been made available under the National Flood Insurance Act of 1968, as amended
from time to time, and (ii) endorsements to such insurance policies satisfactory
to INVESTORS, in the INVESTORS' discretion exercised in good faith, naming the
INVESTORS as loss payee with respect to all Collateral insured thereunder;
(c) Maintain in amounts and with responsible insurance companies
satisfactory to INVESTORS, in INVESTORS' discretion exercised reasonably and in
good faith, such additional insurance against such risks and subject to such
loss deductible amounts as may be satisfactory to INVESTORS, in
41
INVESTORS' discretion exercised reasonably and in good faith, including, without
limitation, personal injury and property damage liability insurance, automobile
liability insurance, product liability insurance, worker's compensation
insurance, business interruption insurance, employee dishonesty insurance, and
directors' and officers' liability insurance, all such insurance in all events
to insure against such risks, in such amounts and subject to such loss
deductible amounts as are customary in AIRNET's industry, as applicable;
(d) Maintain endorsements to all insurance policies of AIRNET naming
INVESTORS as additional insureds, and endorsements to such policies, providing
that such policies may not be canceled or materially altered, and that INVESTORS
may not be removed as loss payee or additional insured, without at least 30 days
prior written notice to INVESTORS; and
(e) Deliver to INVESTORS from time to time, and periodically if
INVESTORS shall reasonably so require, evidence satisfactory to INVESTORS that
all insurance and policy endorsements required pursuant to this Agreement are in
full force and effect.
8.10 Information.
(a) Deliver to INVESTORS promptly upon INVESTORS' reasonable request,
and periodically if INVESTORS shall so require, such written statements,
schedules or reports (which shall be certified if required by INVESTORS) in such
form, containing such information and accompanied by such documents as may be
reasonably satisfactory to INVESTORS from time to time concerning the
Collateral, AIRNET's business, assets, operations, business products or
financial condition or any other matter or matters, including, without
limitation, an independent auditor's management letter (if prepared) and a
compliance certificate signed by AIRNET's chief executive officer or chief
financial officer, and permit INVESTORS, their agents and designees, to discuss
AIRNET's business, assets, operations, business prospects or financial condition
with AIRNET's directors, officers, employees or agents; and
(b) Promptly notify INVESTORS in writing if any financial statement,
schedule, report, certificate or information previously or hereafter supplied to
INVESTORS by or on behalf of AIRNET, including, without limitation, any of the
same previously or hereafter supplied to INVESTORS pursuant to or in connection
with this Agreement or any transaction involving or affecting, AIRNET, shall, to
AIRNET's knowledge, subsequently become inaccurate or misleading in any material
respect.
8.11 Notice of Event of Default. Immediately notify INVESTORS of the
occurrence of any Default or any Event of Default and the facts with respect
thereto.
8.12 Employee Benefit Plans.
(a) At all times administer, maintain and operate, each of its
Benefit Plans in conformity with all applicable provisions of ERISA and other
federal and state statutes relating to employee benefit plans (including the
continuation coverage requirements of ERISA and the Code for group health plans
under the Code under ERISA;
42
(b) At all times make all required contributions and premium payments
under each Benefit Plan for all periods after the date hereof;
(c) Comply with all applicable reporting, disclosure and other
requirements of ERISA and the Code as they relate to Benefit Plans, and, if
requested in writing by INVESTORS, furnish INVESTORS with copies of all reports
filed in connection therewith promptly after the filing thereof.
8.13 Hazardous Substances; Contamination.
(a) Give notice to INVESTORS immediately upon AIRNET's acquiring
knowledge of the release of any Hazardous Materials on any property owned,
leased, occupied or controlled by AIRNET or of any contamination by Hazardous
Materials;
(b) Promptly comply with any laws requiring the removal, treatment or
disposal of Hazardous Materials or Hazardous Materials contamination and provide
INVESTORS with reasonably satisfactory evidence of such compliance; provided,
however, that nothing contained herein shall prohibit AIRNET from contesting
liability for any such release or contamination prior to undertaking any
removal.
(c) Provide INVESTORS, within thirty (30) days after a demand by
INVESTORS, with financial assurance evidencing to INVESTORS' reasonable
satisfaction that the necessary funds are available to pay the cost of removing,
treating, and disposing of such Hazardous Materials or Hazardous Materials
contamination and discharging any Lien which may be established as a result
thereof on any property owned or controlled by AIRNET or for which AIRNET is
responsible; and
(d) Defend, indemnify and hold harmless INVESTORS and their agents,
employees, trustees, successors and assigns from any and all claims which may
now or in the future (whether before or after the termination of this Agreement)
be asserted as a result of the presence of any Hazardous Materials on any
property owned or controlled by AIRNET or for which AIRNET is responsible for
any Hazardous Materials contamination. AIRNET acknowledges and agrees that this
indemnification shall survive the termination of this Agreement and the payment
and performance of all of the other obligations hereunder.
8.14 Securities Filings. AIRNET shall file all reports required to be
filed by it under the Securities Act of 1933 and the Securities and Exchange Act
of 1934 and the rules and regulations adopted by the SEC thereunder, and all
applicable State securities laws.
9. NEGATIVE COVENANTS
AIRNET covenants and agrees with INVESTORS that, until satisfaction by
AIRNET of all of its obligations under the Notes, AIRNET will not, directly or
indirectly, without INVESTORS' prior written consent:
9.1 Indebtedness.
Create, incur, assume or permit to exist any Indebtedness except:
43
(a) Indebtedness to INVESTORS;
(b) Current indebtedness incurred in the ordinary course of business;
(c) Existing indebtedness disclosed herein or previously disclosed by
AIRNET to INVESTORS in writing; or
(d) Purchase money indebtedness secured by purchase money liens on
the Collateral incurred in the ordinary course of business.
9.2 Liens. Create, incur, assume or permit to exist, directly or
indirectly, any Lien upon AIRNET's property or assets, now owned or hereafter
acquired by AIRNET, except for Permitted Liens, as defined in Section 5.3(e),
and except as permitted under Section 9.1(d), above.
9.3 Merger, Sale of Assets.
(a) Dissolve or liquidate, or become a party to any merger or
consolidation,
(b) Sell, assign, pledge, or otherwise transfer in a single
transaction or a series of transactions, all, or substantially all of AIRNET's
property, assets or business, or a material portion (10% or more) thereof if the
sale is outside AIRNET's ordinary course of business; or
(c) Acquire by purchase, lease or otherwise substantially all of the
property, assets or business of or more than 50% of the outstanding stock or
voting power of any other entity;
9.4 Guaranty. Except as otherwise permitted under this Section 9.04,
guarantee or otherwise in any way become or be responsible for obligations or
indebtedness of any other person, whether by agreement to purchase the
indebtedness of any other person, by agreement for the furnishing of funds to
any other person for the purchase of goods, supplies or services, or by way of
stock purchase, capital contribution, advance or loan for the purpose of paying
or discharging Indebtedness of any other person, or otherwise, except that
AIRNET may endorse negotiable drafts for collection in the ordinary course of
business.
9.5 Dividends, Bonuses or Shareholder Distributions. During any fiscal
year, declare or pay dividends, or shareholder distributions, or, except as
approved by the Board of Directors, declare or pay bonuses to employees.
9.6 Fiscal Year. Change AIRNET's fiscal year.
9.7 Advances for Employee Expenses. Make any loan or advance to any
employee for any reason other than to cover anticipated travel or other business
expenses in the ordinary course of business.
9.8 Change of Name. Change the name of AIRNET.
44
10.9 Trade Names. Use any trade name other than AIRNET's true corporate
name.
9.10 Subsidiaries. Form, acquire or invest in any subsidiary.
9.11 Issuance of Capital Stock, Etc. Except in connection with the
issuance of stock pursuant to the exercise of stock options or warrants
outstanding on the date hereof or contemplated by this Agreement, issue, or
agree or commit to issue, any shares of capital stock, or 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, note or other
instrument or obligation which has the power to vote in respect to the corporate
affairs and management of AIRNET; provided, however, that with respect to the
30,742,986 shares of Common Stock authorized for issuance under AIRNET's Stock
Option Plan: (a) AIRNET may grant options to purchase 21,766,212 shares at any
time after the Closing; (b) AIRNET may grant options to purchase up to 6,327,475
shares as and when the INVESTORS elect to convert accrued interest under the
Notes into shares of Common Stock, which grants may not exceed 10% of the number
of shares issued to the INVESTORS upon conversion of such interest; and (c)
AIRNET may grant options to purchase up to 379,700 shares as and when any of the
warrants outstanding on the date hereof are exercised, which grants may not
exceed 10% of the number of shares issued upon the exercise of such warrants,
with all of the foregoing numbers subject to appropriate adjustment in the event
of stock splits or combinations and the like.
9.12 Employee Benefit Plans.
With respect to any Benefit Plan:
(a) Engage, or knowingly permit any party in interest (as defined in
Section 3(14) of ERISA) or any disqualified person (as defined in Section
4975(e)(2) of the Code) to engage, in any prohibited transaction;
(b) Incur any accumulated funding deficiency under Section 302 of
ERISA or Section 412 of the Code, whether or not waived;
(c) Take any action which would adversely affect the qualification of
any Benefit Plan.
9.13 Stock Redemptions. Purchase, redeem, retire or otherwise acquire for
value any shares of AIRNET's capital stock or any other equity interest in
AIRNET.
9.14 Investments. Except pursuant to normal cash management and treasury
policies and functions, make any capital contribution to, make any loan or
advance to, purchase or acquire a beneficial interest in any stock, securities
or evidences of Indebtedness of, or make any investment or acquire any interest
in, any Person, in excess of $50,000 in the aggregate.
9.15 Change in Compensation or Workforce. Except with the approval of the
Board of Directors of AIRNET, increase the rate or amount of compensation
payable to management-level
45
employees (except to reflect cost of living adjustments); increase the level of
benefits provided under any Employee Benefit Plan or otherwise modify or amend
any Employee Benefit Plan in a manner that would increase the costs to AIRNET
thereunder; adopt any new Employee Benefit Plan or bonus program, or other
compensation plan; or hire any new employee whose rate of compensation exceeds
$100,000 per annum, except to replace a former employee performing in a
comparable position for comparable compensation.
10. DEFAULTS AND REMEDIES
10.1 An "Event of Default" occurs if:
(a) AIRNET defaults in the payment of any principal or interest under
either 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 AIRNET; or
(b) AIRNET defaults in the performance or observance of any other
material agreement, term or condition contained in the Notes, the Security
Agreement, the Escrow Agreement, or the Collateral Assignment Agreement,
relating to the perfection of the security interest granted to INVESTORS or
preservation of the secured assets of AIRNET and such default shall not have
been remedied within five (5) days after written notice of such default shall
have been received by AIRNET (regardless of the source of such notice); or
(c) AIRNET shall default in the payment of any principal of, or
premium, if any, or interest on, any other indebtedness in excess of $250,000 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) AIRNET, 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 (initiated by parties
other than the INVESTORS) which is not dismissed within thirty (30) days of the
commencement thereof, or
46
(e) A court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that:
(i) provides for relief against AIRNET in an involuntary case,
(ii) appoints a Custodian of AIRNET for all or substantially all
of its property, or
(iii) orders the liquidation of AIRNET,
(f) A final judgment for the payment of money in an amount in excess
of $50,000 shall be rendered against AIRNET (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 AIRNET 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 and such
misrepresentation or inaccuracy results, or is likely to result, in a Material
Adverse Effect;
(h) AIRNET breaches any covenant in this Agreement (i) and that
breach results, or is likely to result, in a Material Adverse Effect, and (ii)
if such breach is capable of being cured or remedied, AIRNET fails to cure or
remedy such breach to the reasonable satisfaction of INVESTORS within fifteen
(15) business days after written notice from an INVESTOR, provided that for
purposes of this paragraph (h), a breach of any of Sections 8.5, 8.8, 9.1, 9.2,
9.3, 9.4, 9.5, 9.10. 9.11, 9.13 and 9.14 shall be deemed to be not capable of
being cured or remedied; and further provided that the second breach in any
calendar year of Section 8.1(d) shall be deemed to be not capable of being cured
or remedied; and further provided that a breach of Section 8.2 which arises as a
result of the failure to comply with any of clauses (b), (c), or (d) thereof
shall be deemed to be not capable of being cured or remedied.
(i) AIRNET shall take any action resulting, or likely to result, in
or shall suffer the occurrence of an event constituting or likely to result in a
Material Adverse Effect and AIRNET shall not cure the existence of such action
or event within fifteen (15) business days after notice from both TECORE and SCP
of the existence of such action or event.
Upon (x) the occurrence of any Event of Default described in paragraphs (c) or
(d), 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 AIRNET, 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 INVESTORS may, at their
option, by notice in writing to AIRNET, 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 AIRNET.
In the event that the unpaid principal amount of and accrued interest on the
Notes shall have become due and payable pursuant to clause (x) or clause
47
(y), then the INVESTORS shall have no further obligation to make the payments on
account of the purchase price of the Notes set forth in Section 1.1.
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. AIRNET 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.
10.2 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.
11. INDEMNIFICATION
AIRNET and INVESTORS agree as follows:
11.1 General Indemnification by AIRNET. AIRNET covenants and agrees that,
in addition to, and not in lieu of, any remedies provided to INVESTORS in
Section 10, AIRNET will indemnify, defend, protect and hold harmless INVESTORS
at all times, from and after the date of this Agreement until the Expiration
Date, from and against all claims, damages, actions, suits, proceedings,
demands, assessments, adjustments, costs and expenses (including specifically,
but without limitation, reasonable attorneys' fees and reasonable expenses of
investigation) (collectively, "Losses") incurred by INVESTORS as a result of or
arising from:
(a) Any breach of the representations and warranties of AIRNET set
forth herein or on the schedules or certificates delivered in connection
herewith;
(b) Any breach of any covenant or agreement on the part of AIRNET
under this Agreement;
48
11.2 Indemnification by INVESTORS. Each of the INVESTORS,
severally and not jointly, covenants and agrees that it will indemnify, defend,
protect and hold harmless AIRNET at all times from and after the date of this
Agreement until the Expiration Date, from and against all claims, damages,
actions, suits, proceedings, demands, assessments, adjustments, costs and
expenses (including specifically, but without limitation, reasonable attorneys'
fees and expenses of investigation) incurred by AIRNET as a result of or arising
from (a) any breach by that INVESTOR of its representations and warranties set
forth herein or on the schedules or certificates delivered in connection
herewith, or (b) any breach of any agreement on the part of that INVESTOR under
this Agreement.
11.3 Third Person Claims. Promptly after any party hereto (hereinafter the
"Indemnified Party") has received notice of or has knowledge of any claim by a
Third Person or of the commencement of any action or proceeding by a Person not
a party to this Agreement (a "Third Person"), the Indemnified Party shall, as a
condition precedent to a claim with respect thereto being made against any party
obligated to provide indemnification pursuant to Section 11.1 or 11.2 hereof
(hereinafter the "Indemnifying Party"), give the Indemnifying Party written
notice of such claim or the commencement of such action or proceeding. Such
notice shall state the nature and the basis of such claim and a reasonable
estimate of the amount thereof. The Indemnifying Party shall have the right to
defend and settle, at its own expense and by its own counsel, any such matter so
long as the Indemnifying Party pursues the same in good faith and diligently,
provided that the Indemnifying Party shall not settle any criminal proceeding
without the written consent of the Indemnified Party, such consent not to be
unreasonably withheld or delayed. If the Indemnifying Party undertakes to defend
or settle, it shall promptly notify the Indemnified Party of its intention to do
so, and the Indemnified Party shall cooperate, at the Indemnifying Party's
expense, with the Indemnifying Party and its counsel in the defense thereof and
in any settlement thereof. Such cooperation shall include, but shall not be
limited to, furnishing the Indemnifying Party with any books, records or
information reasonably requested by the Indemnifying Party that are in the
Indemnified Party's possession or control. All Indemnified Parties shall
endeavor to use the same counsel, which shall be the counsel selected by the
Indemnifying Party, provided that if counsel to the Indemnifying Party shall
have a conflict of interest in the opinion of such counsel that prevents counsel
for the Indemnifying Party from representing the Indemnified Party, the
Indemnified Party shall have the right to participate in such matter through
counsel of its own choosing and the Indemnifying Party will reimburse the
Indemnified Party for the reasonable expenses of its counsel and experts. After
the Indemnifying Party has notified the Indemnified Party of its intention to
undertake to defend or settle any such asserted liability, and for so long as
the Indemnifying Party diligently pursues such defense, the Indemnifying Party
shall not be liable for any additional legal expenses incurred by the
Indemnified Party in connection with any defense or settlement of such asserted
liability, except (i) as set forth in the preceding sentence and (ii) to the
extent such participation is requested by the Indemnifying Party, in which event
the Indemnified Party shall be reimbursed by the Indemnifying Party for
reasonable additional legal expenses and out-of-pocket expenses. If the
Indemnifying Party desires to accept a final and complete settlement of any such
Third Person claim and the Indemnified Party refuses to consent to such
settlement, then the Indemnifying Party's liability under this Section with
respect to such Third Person claim shall be limited to the amount so offered in
settlement to said Third Person, plus all indemnifiable costs and expenses
incurred to date, the Indemnifying Party shall be relieved of its duty to defend
and shall tender the Third Person claim back to the Indemnified Party, who shall
thereafter, at its own expense, be responsible for the defense and negotiation
of such Third Person claim. If the Indemnifying Party does not undertake to
defend such matter to which the Indemnified Party is entitled to indemnification
hereunder, or fails diligently to pursue such
49
defense, the Indemnified Party may undertake such defense through counsel of its
choice, at the cost and expense of the Indemnifying Party, and the Indemnified
Party may settle such matter, and the Indemnifying Party shall reimburse the
Indemnified Party for the amount paid in such settlement and any other
liabilities or expenses incurred by the Indemnified Party in connection
therewith, provided, however, that under no circumstances shall the Indemnified
Party settle any Third Person claim without the written consent of the
Indemnifying Party, which consent shall not be unreasonably withheld or delayed.
All settlements hereunder shall effect a complete release of the Indemnified
Party, unless the Indemnified Party otherwise agrees in writing. The parties
hereto will make appropriate adjustments for any Tax benefits, Tax detriments or
insurance proceeds in determining the amount of any indemnification obligation
under this Section, provided that no Indemnifying Party shall be obligated to
seek any payment pursuant to the terms of any insurance policy.
11.4 Limitations on Indemnification. INVESTORS and the other Persons or
entities indemnified pursuant to Section 11.1 shall not assert any claim other
than a Third Person claim for indemnification hereunder against AIRNET until
such time as, and with respect to any individual claim, unless and until such
claim or claims, individually or in the aggregate, exceed Twenty Five Thousand
Dollars ($25,000). AIRNET shall not assert any claim for indemnification
hereunder against either of the INVESTORS until such time as, and solely to the
extent that, the aggregate of all claims which AIRNET may have against that
INVESTOR exceeds Twenty Five Thousand Dollars ($25,000).
12. TERMINATION OF AGREEMENT
12.1 Termination. This Agreement may be terminated at any time prior to
the Closing Date solely:
(a) by mutual written consent of INVESTORS and AIRNET;
(b) by either of the INVESTORS, or by AIRNET, if the transactions
contemplated by this Agreement to take place at the Closing shall not have been
consummated by July 31, 2003, unless the failure of such transactions to be
consummated is due to the willful failure of the party seeking to terminate this
Agreement to perform any of its obligations under this Agreement to the extent
required to be performed by it prior to or on the Closing Date; or
(c) by AIRNET, if a material breach or default shall be made by
either of the INVESTORS in the observance or in the due and timely performance
of any of the covenants, agreements or conditions contained herein, and the
curing of such default shall not have been made on or before the Closing Date;
or
(d) by either of the INVESTORS, if a material breach or default shall
be made by AIRNET in the observance or in the due and timely performance of any
of the covenants, agreements or conditions contained herein, and the curing of
such default shall not have been made on or before the Closing Date; or
(e) by either of the INVESTORS, in the event of the delisting of the
AIRNET Common Stock from the NASDAQ Stock Market, except for the potential
delisting from NMS and transfer to
50
NASDAQ's Small Cap as a result of AIRNET's failure to maintain the minimum bid
price criteria of $1.00, or in the event that AIRNET shall have failed to
satisfy one or more other conditions to continued listing of such Common Stock
on NASDAQ's Small Cap pursuant to written notice from NASDAQ dated after the
date of this Agreement, such that, with the passage of time, the Common Stock
may be delisted at any time after the Closing Date, except with respect to the
minimum bid price criteria of $1.00, which could be cured by a reverse stock
split and except with respect to the minimum net equity condition.
(f) by AIRNET, pursuant to Section 5.4 of this Agreement.
12.2 Liabilities in Event of Termination. The termination of this
Agreement will in no way limit any obligation or liability of any party based on
or arising from a breach or default by such party with respect to any of its
representations, warranties, covenants or agreements contained in this
Agreement, including, but not limited to, legal and audit costs and out of
pocket expenses.
13. GENERAL
13.1 Cooperation. AIRNET and INVESTORS shall each deliver or cause to be
delivered to the other on the Closing Date, and at such other times and places
as shall be reasonably agreed to, such additional instruments as the other may
reasonably request for the purpose of carrying out this Agreement. AIRNET will
cooperate and use its reasonable efforts to have the present officers, directors
and employees of AIRNET cooperate with INVESTORS on and after the Closing Date
in furnishing information, evidence, testimony and other assistance in
connection with any Tax Return filing obligations, actions, proceedings,
arrangements or disputes of any nature with respect to matters pertaining to all
periods prior to the Closing Date.
13.2 Successors and Assigns. This Agreement and the rights of the parties
hereunder may not be assigned (including by operation of law) without the
consent of the other parties and shall be binding upon and shall inure to the
benefit of the parties hereto, and the successors of INVESTORS and AIRNET.
13.3 Entire Agreement. This Agreement (including the Schedules, exhibits
and annexes attached hereto) and the documents delivered pursuant hereto
constitute the entire agreement and understanding among AIRNET and INVESTORS and
supersede any prior agreement and understanding relating to the subject matter
of this Agreement. This Agreement, upon execution, constitutes a valid and
binding agreement of the parties hereto enforceable in accordance with its terms
and may be modified or amended only by a written instrument executed by AIRNET
and INVESTORS.
13.4 Counterparts; Facsimile Signatures. This Agreement may be executed
simultaneously in two or more counterparts, each of which shall be deemed an
original and all of which together shall constitute but one and the same
instrument. Signatures may be exchanged by telecopy, and each party agrees that
it will be bound by its telecopied signature and that it accepts the telecopied
signatures of the other parties to this Agreement.
13.5 Brokers and Agents. Each party represents and warrants that it
employed no broker or agent in connection with this transaction and agrees to
indemnify the other parties hereto against all loss,
51
cost, damages or expense arising out of claims for fees or commissions of
brokers employed or alleged to have been employed by such indemnifying party.
13.6 Expenses. Upon request from INVESTORS, AIRNET shall promptly
reimburse INVESTORS: (a) for all reasonable legal fees and expenses related to
the transaction contemplated herein incurred after December 1, 2002; and (b) up
to Twenty-Five Thousand Dollars ($25,000) for each INVESTOR, for financial
consulting fees related to the transaction contemplated herein; up to a maximum
of $200,000 in the aggregate for (a) and (b) above to both INVESTORS, allocated
between the INVESTORS in proportion to the amount of each Note. INVESTORS may
elect to deduct such expenses from the amount to be paid to AIRNET at Closing or
any future payments on account of the purchase price of the Notes. AIRNET shall
be permitted to pay its legal fees relating to this Agreement and the
transactions contemplated hereby at the Closing.
13.7 Notices. All notices or communications required or permitted
hereunder shall be in writing and shall be deemed to have been given when
personally delivered or upon receipt if sent by first class certified mail,
return receipt requested or the next business day if sent by telex (receipt
confirmed and followed up by one of the other delivery methods discussed herein
as well), or upon delivery if sent by express mail, in each case postage prepaid
and addressed as follows:
(a) If to TECORE:
TECORE, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇ ▇▇▇▇▇▇▇
with copies to:
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & Preston L.L.P.
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
(b) If to SCP:
SCP Private Equity Partners II, LP
300 Building
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇
52
with copies to:
▇▇▇▇ ▇▇▇▇▇, LLP
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇., Esq.
(c) If to AIRNET:
AirNet Communications Corporation
▇▇▇▇ ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇. ▇▇▇▇▇ ▇▇▇▇▇
with copies to:
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇, Esq.
or to such other address or counsel as any party hereto shall specify pursuant
to this Section 11.7 from time to time.
13.8 Governing Law. This Agreement shall be construed in accordance with
the laws of the State of Delaware, except that matters herein within the purview
of the matters covered by the General Corporation Law of the State of Delaware
shall be governed by such General Corporation Law, in each case without
reference to conflicts of laws principles.
13.9 Exercise of Rights and Remedies. Except as otherwise provided herein,
no delay of or omission in the exercise of any right, power or remedy accruing
to any party as a result of any breach or default by any other party under this
Agreement shall impair any such right, power or remedy, nor shall it be
construed as a waiver of or acquiescence in any such breach or default, or of
any similar breach or default occurring later; nor shall any waiver of any
single breach or default be deemed a waiver of any other breach or default
occurring before or after that waiver.
13.10 Time. Time is of the essence with respect to this Agreement.
13.11 Reformation and Severability. In case any provision of this Agreement
shall be invalid, illegal or unenforceable, it shall, to the extent possible, be
modified in such manner as to be valid, legal and enforceable but so as to most
nearly retain the intent of the parties, and if such modification is not
possible, such provision shall be severed from this Agreement, and in either
case the validity, legality and enforceability of the remaining provisions of
this Agreement shall not in any way be affected or impaired thereby.
53
13.12 Remedies Cumulative. No right, remedy or election given by any term
of this Agreement shall be deemed exclusive but each shall be cumulative with
all other rights, remedies and elections available at law or in equity.
13.13.Captions. The headings of this Agreement are inserted for
convenience only, shall not constitute a part of this Agreement or be used to
construe or interpret any provision hereof.
13.14 Amendments and Waivers. Any term of this Agreement may be amended and
the observance of any term of this Agreement may be waived only with the written
consent of all of the parties. Any amendment or waiver effected in accordance
with this Section 13.14 shall be binding upon each of the parties hereto and
their successors or assigns.
IN WITNESS WHEREOF, the parties hereto have executed this Stock Purchase
Agreement as of the day and year first above written.
TECORE:
TECORE, INC.
By: /s/ ▇▇▇ ▇▇▇▇▇▇▇
-----------------------------------
SCP:
SCP PRIVATE EQUITY PARTNERS II, LP
By: SCP Private Equity II,
General Partner, L.P.,
its General Partner
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------
a Manager
AIRNET:
AIRNET COMMUNICATIONS CORPORATION
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
-----------------------------------
as its President and CEO
54
Exhibit A
EIGHTH AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
AIRNET COMMUNICATIONS CORPORATION
TABLE OF CONTENTS
ARTICLE I..................................................................1
ARTICLE II.................................................................1
ARTICLE III................................................................1
ARTICLE IV.................................................................1
A. CLASSES OF STOCK.................................................. .1
B. RIGHTS, PREFERENCES, PRIVILEGES AND RESTRICTIONS OF COMMON
STOCK...............................................................2
1. Dividends...........................................................2
2. Stock Split, Reclassification, etc..................................2
3. Liquidation.........................................................2
4. Voting..............................................................3
5. No Pre-emptive or Subscription Rights...............................3
C. RIGHTS, PREFERENCES, PRIVILEGES AND RESTRICTIONS OF PREFERRED
STOCK...............................................................3
D. RIGHTS, PREFERENCES, PRIVILEGES AND RESTRICTIONS OF SENIOR
SECURED CONVERTIBLE NOTES...........................................3
ARTICLE V..................................................................4
ARTICLE VI.................................................................4
ARTICLE VII................................................................5
ARTICLE VIII...............................................................5
ARTICLE IX.................................................................6
ARTICLE X..................................................................6
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EIGHTH AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
AIRNET COMMUNICATIONS CORPORATION
Pursuant to the provisions of Sections 242 and 245 of the General Corporation
Law of Delaware, the undersigned Corporation adopts the following Eighth Amended
and Restated Certificate of Incorporation:
FIRST: The name of the Corporation is AirNet Communications Corporation
(the "Corporation").
SECOND: The following Eighth Amended and Restated Certificate of
Incorporation was adopted by the Board of Directors and the stockholders of the
Corporation in accordance with Sections 242 and 245 of the General Corporation
Law of Delaware.
The Restated Certificate of Incorporation of the Corporation (originally filed
under the name of Overture Systems, Inc. incorporated on January 11, 1994), as
previously amended, is hereby deleted in its entirety and is amended and
restated as follows:
ARTICLE I
---------
The name of the Corporation is AirNet Communications Corporation.
ARTICLE II
----------
The registered office of the Corporation in the State of Delaware is
located at The ▇▇▇▇▇▇▇▇-▇▇▇▇ Corporation System, Inc., ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇
▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ of New Castle. The name of the registered agent at
such address is The ▇▇▇▇▇▇▇▇-▇▇▇▇ Corporation System, Inc.
ARTICLE III
-----------
The purpose of the Corporation is to engage in any lawful act or activity
for which a corporation may be organized under the General Corporation Law of
Delaware.
ARTICLE IV
----------
A. CLASSES OF STOCK. The aggregate number of shares of capital stock which
the Corporation shall have authority to issue is 403,184,713 shares, consisting
of two classes of capital stock:
(a) 400,000,000 shares of Common Stock, par value $.001 per share
("Common Stock");
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(b) 3,184,713 shares of Preferred Stock, par value $.01 per share
("Preferred Stock").
B. RIGHTS, PREFERENCES, PRIVILEGES AND RESTRICTIONS OF COMMON STOCK.
Notwithstanding any provision to the contrary contained herein, the rights,
preferences, privileges and restrictions granted to and imposed upon Common
Stock are set forth in this Article IV.B. Except as otherwise expressly provided
in this Article IV.B., all shares of Common Stock shall be identical and shall
entitle the holders thereof to the same rights and privileges.
1. Dividends. When, as and if dividends on Common Stock are declared by
the Corporation's Board of Directors, whether payable in cash, in property or in
securities of the Corporation, the holders of Common Stock shall be entitled to
share equally in and to receive, in accordance with the number of shares of
Common Stock held by each such holder, all such dividends.
Dividends payable under this Article IV.B. shall be paid to the holders of
record of the outstanding Common Stock as their names shall appear on the stock
register of the Corporation on the record date fixed by the Board of Directors
of the Corporation in advance of declaration and payment of each dividend. Any
Common Stock issued as a dividend pursuant to this Article IV.B. shall, when so
issued, be duly authorized, validly issued, fully paid and non-assessable and
free of all liens and charges. The Corporation shall not issue fractions of
Common Stock on payment of such dividend but shall issue a whole number of
shares to such holder of Common Stock rounded up or down in the Corporation's
sole discretion to the nearest whole number, without compensation to the
stockholder whose fractional share has been rounded down or from any stockholder
whose fractional share has been rounded up.
Notwithstanding anything contained herein to the contrary, no dividends on
Common Stock shall be declared by the Corporation's Board of Directors or paid
or set apart for payment by the Corporation at any time that such declaration,
payment, or setting apart is prohibited by applicable law.
2. Stock Split, Reclassification, etc. The Corporation shall not in any
manner subdivide (by any stock split, reclassification, stock dividend,
recapitalization or otherwise) or combine the outstanding shares of one class of
Common Stock unless the outstanding shares of all classes of Common Stock shall
be proportionately subdivided or combined.
3. Liquidation. Upon any voluntary or involuntary liquidation, dissolution
or winding-up of the affairs of the Corporation, after payment shall have been
made to holders of outstanding Preferred Stock, if any, of the full amount of
which they are entitled pursuant to this Certificate of Incorporation and any
resolutions that may be adopted from time to time by the Corporation's Board of
Directors, in accordance with Article IV.C. below (for the purpose of fixing the
voting rights, designations, preferences and relative participating, optional or
other special rights of any class or series of Preferred Stock), the holders of
Common Stock shall be entitled, to the exclusion of the holders of Preferred
Stock, if any, to share ratably, in accordance with the number of shares of
Common Stock held by each such holder, in all remaining assets of
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the Corporation available for distribution among the holders of Common Stock,
whether such assets are capital, surplus, or earnings. For the purposes of this
Article IV.B., neither the consolidation or merger of the Corporation with or
into any other corporation or corporations in which the stockholders of the
Corporation receive capital stock and/or other securities (including debt
securities) of the acquiring corporation (or of the direct or indirect parent
corporation of the acquiring corporation), nor the sale, lease or transfer by
the Corporation of all or any part of its assets, nor the reduction of the
capital stock of the Corporation, shall be deemed to be a voluntary or
involuntary liquidation, dissolution, or winding-up of the Corporation as those
terms are used in this Article IV.B.
4. Voting. Each holder of Common Stock shall be entitled to one vote for
each share of such stock issued and outstanding and registered in such holder's
name and shall be entitled to vote upon such matters and in such manner as may
be provided by Delaware law and this Certificate of Incorporation.
5. No Pre-emptive or Subscription Rights. No holder of Common Stock shall
be entitled to pre-emptive or subscription rights.
C. RIGHTS, PREFERENCES, PRIVILEGES AND RESTRICTIONS OF PREFERRED STOCK.
Pursuant to authority conferred by this Article IV.C. upon the Board of
Directors of the Corporation under the Seventh Amended and Restated Certificate
of Incorporation, in effect at the relevant time, the Board of Directors created
a series of 3,184,713 shares of preferred stock designated as Series B
Convertible Preferred Stock by filing a Certificate of Designation of the
Corporation with the Secretary of State of the State of Delaware on May 14,
2001, and the voting powers, designations, preferences and relative
participating and other special rights, and the qualifications, limitations and
restrictions, of the Series B Convertible Preferred Stock of the Corporation are
as set forth in Annex I hereto and are incorporated herein by reference. Any
shares of Series B Convertible Preferred Stock converted into Common Stock of
the Corporation pursuant to Section 6 of such Certificate of Designation shall
be canceled and shall not under any circumstances be reissued; and the
Corporation may from time to time take such appropriate corporate action as may
be necessary to reduce accordingly the number of authorized shares of Series B
Convertible Preferred Stock. The Board of Directors of the Corporation shall not
issue any additional authorized but unissued shares of Series B Preferred Stock
of the Corporation without the approval of stockholders of the Corporation
holding at least 90% of the voting stock of the Corporation.
Subject to the provisions of this Certificate of Incorporation and this
Article IV.C., the Board of Directors of the Corporation is authorized to
decrease the number of shares of any series of preferred stock (but not below
the number of shares of such series then outstanding) subsequent to the issue of
shares of that series. Any and all Preferred Stock issued and for which full
consideration has been paid or delivered shall be deemed fully paid stock and
the holder thereof shall not be liable for any further payment thereon.
D. RIGHTS, PREFERENCES, PRIVILEGES AND RESTRICTIONS OF SENIOR SECURED
CONVERTIBLE NOTES. Reference is made to (i) the Senior Secured Convertible Note
of the Corporation issued to SCP Private Equity Partners II, LP ("SCP") (the
"SCP Note") and (ii) the Senior Secured Convertible Note of the Corporation
issued to TECORE, Inc.
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("Tecore") (the "Tecore Note," and together with the SCP Note, the "Notes")
pursuant to the Securities Purchase Agreement by and among the Corporation, SCP
and Tecore dated on or about ., 2003 (the "Purchase Agreement"). Pursuant to the
provisions of Section 221 of the General Corporation Law of Delaware, SCP and
Tecore as holders of the Notes of the Corporation (the "Noteholders") are
granted the power to vote in respect to the corporate affairs and management of
the Corporation as follows:
Except as otherwise required by law or as provided herein, each Noteholder
shall be entitled to vote on all matters submitted to the stockholders of the
Corporation for a vote, and shall be entitled to that number of votes equal to
the number of shares of Common Stock into which such holder's then outstanding
Note, and all or any portion of accrued and unpaid interest, is convertible
pursuant to the terms thereof on the record date for the determination of
stockholders entitled to vote on such matter or, if no such record date is
established, on the date such vote is taken or any written consent of
stockholders is solicited, provided, however, that, solely for purposes of
determining the number of votes to which a Noteholder is entitled pursuant to
this Article IV.D., the price per share at which the Note, and all or any
portion of accrued and unpaid interest, may be converted shall be deemed to be
$.; provided further, that if the Corporation at any time subdivides (by any
stock split, stock dividend, recapitalization or otherwise) its outstanding
shares of Common Stock into a greater number of shares, the deemed conversion
price in effect immediately prior to such subdivision shall be proportionately
reduced, and conversely, in the event the outstanding shares of Common Stock
shall be combined (by reverse stock split or otherwise) into a smaller number of
shares, the deemed conversion price in effect immediately prior to such
combination shall be proportionately increased. The holders of the Notes shall
be deemed to be stockholders, and their Notes shall be deemed to be shares of
stock, for the purpose of any provision of the Delaware General Corporation Law
which requires the vote of stockholders as a prerequisite to any corporate
action. Except as expressly otherwise provided herein or as required by law, the
Noteholders shall vote together with the holders of shares of the Corporation's
Common Stock as a single class on all matters. The Noteholders shall be entitled
to notice of all stockholders' meetings in accordance with the Corporation's
by-laws and the General Corporation Law of the State of Delaware.
ARTICLE V
---------
The Board of Directors shall have the power, in addition to the
stockholders, to make, repeal, alter, amend and rescind any or all of the bylaws
of the Corporation.
ARTICLE VI
----------
The Board of Directors shall be constituted as follows:
(i) The number of directors which will constitute the whole Board of
Directors of the Corporation shall be fixed at ten (10) until such time as the
Tecore Note (referenced in Article IV.D. above) is fully converted into Common
Stock of the Corporation, when the number of directors which will constitute the
whole Board of Directors of the Corporation shall be fixed at eleven (11).
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(ii) The term of each director shall be the period from the effective date
of such director's election to the next annual meeting of stockholders. The term
of each director who is serving as a director on [date of amendment to Charter]
shall expire at the next annual meeting of stockholders after such date, or upon
such director's earlier resignation or removal, notwithstanding that such
director may have been elected for a term that extended beyond the date of such
next annual meeting of stockholders.
(iii) Notwithstanding the foregoing provisions of this Article VI, each
director shall serve until his successor is duly elected and qualified or until
his death, resignation or removal. Directors may be removed from office with or
without cause by the holders of a majority of the shares then entitled to vote
at an election of directors. No decrease in the number of directors constituting
the Board of Directors shall shorten the term of any incumbent director.
(iv) In furtherance and not in limitation of the powers conferred by
statute, the Board of Directors shall have the power to make, adopt, amend or
repeal the Bylaws, or adopt new Bylaws for this Corporation, by a resolution
adopted by a majority of the directors.
(v) Vacancies in the Board of Directors may be filled by a majority of
the remaining directors, though less than a quorum, or by a sole remaining
director.
(vi) Elections of directors need not be by written ballot unless the
bylaws of the Corporation shall so provide.
ARTICLE VII
-----------
Meetings of stockholders may be held within or without the State of
Delaware, as the bylaws may provide. The books of the Corporation may be kept
(subject to any provision contained in the General Corporation Law of Delaware)
outside the State of Delaware at such place or places as may be designated from
time to time by the Board of Directors or in the bylaws of the Corporation.
ARTICLE VIII
------------
A director of the Corporation shall not be personally liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (i) for any breach of the director's
duty of loyalty to the Corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under Section 174 of Title 8 of the General Corporation
Law of Delaware, or (iv) for any transaction from which the director derived any
improper personal benefit. The foregoing sentence notwithstanding, if the
General Corporation Law of Delaware is hereafter amended to authorize further
limitations of the liability of a director of a corporation, then a director of
the Corporation, in addition to the circumstances in which a director is not
personally liable set forth in the preceding sentence, shall not be liable to
the fullest extent permitted by the General Corporation Law of Delaware as so
amended. Any repeal or modification of the foregoing provisions of this Article
VIII by the stockholders of the Corporation shall not
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adversely affect any right or protection of a director of the Corporation
existing at the time of such repeal or modification.
ARTICLE IX
----------
The Corporation shall indemnify and hold harmless any director and officer
of the Corporation from and against any and all expenses and liabilities that
may be imposed upon or incurred by such person in connection with, or as a
result of, any proceeding in which such person may become involved, as a party
or otherwise, by reason of the fact that such person is or was such a director
or officer of the Corporation, whether or not such person continues to be such
at the time such expenses and liabilities shall have been imposed or incurred.
It is the intention of this Article IX to provide indemnification to the fullest
extent permitted by the laws of the State of Delaware, as they may be amended
from time to time.
ARTICLE X
---------
Subject to the provisions contained herein, the Corporation reserves the
right to amend, alter, change or repeal any provision contained in this Eighth
Amended and Restated Certificate of Incorporation, in the manner now or
hereafter prescribed by statute, and all rights conferred upon stockholders
herein are granted subject to this reservation.
This Eighth Amended and Restated Certificate of Incorporation was duly
adopted in accordance with the provisions of Sections 242 and 245 of the General
Corporation Law of the State of Delaware by the Board of Directors and the
stockholders of the Corporation.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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I, THE UNDERSIGNED, being the President and Chief Executive Officer of the
Corporation, hereby declare, under penalties of perjury, that this is the act
and deed of the Corporation and the facts herein stated are true, and
accordingly, I have executed this Eighth Amended and Restated Certificate of
Incorporation as of the ____ day of ., 2003.
AIRNET COMMUNICATIONS CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇
President and Chief
Executive Officer
ATTESTED:
-------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Corporate Secretary
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Annex I
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AIRNET COMMUNICATIONS CORPORATION
SERIES B CONVERTIBLE PREFERRED STOCK
CERTIFICATE OF DESIGNATION
-------------------------
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
-------------------------
AirNet Communications Corporation (the "Corporation"), a corporation
organized and existing under the General Corporation Law of the State of
Delaware, does hereby certify that pursuant to the authority vested in the Board
of Directors of the Corporation by its Certificate of Incorporation, as amended,
and pursuant to the provisions of Section 151 of the General Corporation Law of
the State of Delaware, said Board of Directors, adopted the following resolution
at a meeting duly called and held on April 2, 2001, which resolution remains in
full force and effect as of the date hereof:
RESOLVED, that pursuant to the authority vested in the Board of Directors
of the Corporation (the "Board of Directors") by its Certificate of
Incorporation, as amended (hereinafter referred to as the "Certificate of
Incorporation"), the Board of Directors does hereby create, authorize and
provide for the issuance of Series B Convertible Preferred Stock, par value $.01
per share, consisting of 3,184,713 shares, having the following designations,
preferences and relative and other special rights, qualifications, limitations
and restrictions:
1. DESIGNATION AND AMOUNT. The designation of such series is "Series B
Convertible Preferred Stock" (hereinafter in this Certificate of Designation
called the "Series B Preferred Stock") and the number of shares constituting
such series shall be 3,184,713, which number may be decreased (but not
increased) by the Board of Directors without a vote of stockholders; provided,
however, that such number may not be decreased below the number of then
currently outstanding shares of Series B Preferred Stock, plus shares issuable
upon the exercise of any then outstanding options, warrants or rights to acquire
Series B Preferred Stock, including dividends payable pursuant to the terms of
the Series B Preferred Stock. All capitalized terms used in this Certificate of
Designation and not otherwise defined shall have the meaning given to such terms
in Section 13 hereof.
2. DIVIDENDS. (a) The Holders of shares of the Series B Preferred Stock,
in preference to the holders of all Junior Capital Stock and on a pari passu
basis with holders of
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Parity Capital Stock, will be entitled to receive, when, as and if dividends are
declared by the Board of Directors, out of funds of the Corporation legally
available therefor, cumulative dividends as provided in this Section 2.
Dividends on each outstanding share of Series B Preferred Stock shall be payable
in cash, or at the option of the Corporation, in such number of shares of Series
B Preferred Stock as is set forth in Section 2(d) below, and accrue (whether or
not earned or declared) at the rate of 8% per annum on the sum of (i) the
Purchase Price and (ii) all accumulated and unpaid dividends accrued thereon
from the date of issuance thereof (the "Series B Dividends"). Such dividends
will be calculated and accrued on a quarterly basis on the last day of each
fiscal quarter of the Corporation in respect of the prior three month period
prorated on a daily basis for partial periods.
(b) If the Corporation at any time pays less than the total amount of
Series B Dividends then accrued with respect to the Series B Preferred Stock,
such payment shall be distributed ratably among the Holders based upon the
aggregate accrued but unpaid Series B Dividends on the Series B Preferred Stock
held by each such Holder.
(c) In the event that the Corporation declares or pays any dividends
upon the Common Stock (whether payable in cash, securities or other property)
other than dividends payable solely in shares of Common Stock, the Corporation
shall also declare and pay to the Holders at the same time that it declares and
pays such dividends to the holders of the Common Stock, the dividends which
would have been declared and paid with respect to the Series B Preferred Stock
had all of the outstanding Series B Preferred Stock been converted in accordance
with Section 6(a) immediately prior to the record date for such dividend, or if
no record date is fixed, the date as of which the record holders of Common Stock
entitled to such dividends are to be determined.
(d) The Corporation may pay the Series B Dividends to each Holder by
the issuance of such number of shares of Series B Preferred Stock as equals the
quotient of (i) the accrued and unpaid Series B Dividends with respect to the
shares of Series B Preferred Stock held such Holder and (ii) the Purchase Price.
3. LIQUIDATION PREFERENCE. (a) In the event of any (each a "Liquidation
Event") liquidation, dissolution or winding up of the affairs of the
Corporation, either voluntarily or involuntarily, each Holder shall be entitled,
after payment of the Corporation's debts and other liabilities and any
preferential amounts due to the holders of Senior Capital Stock, to be paid in
full, before any distribution is made on any Junior Capital Stock but on a pari
passu basis with any distribution on Parity Capital Stock, an amount (the
"Liquidation Amount") with respect to each share of Series B Preferred Stock
held by such Holder equal to the sum of (i) the product of (x) the Purchase
Price and (y) two and (ii) the Series B Dividends accrued on such share of
Series B Preferred Stock. After payment of the preferences to all holders of
preferred stock of the Corporation, all remaining assets of the Corporation
legally available for distribution, if any, shall be distributed ratably to the
holders of the Common Stock, Series B Preferred Stock (on an as-if converted to
Common Stock basis) and any other Capital Stock of the Corporation entitled to
share in such distribution.
(b) Deemed Liquidation. The Majority Holders may elect in writing by
notice delivered to the Corporation, prior to the closing of a Sale of the
Corporation, to treat a specific
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proposed Sale of the Corporation (other than a Qualified Sale of the
Corporation) as a Liquidation Event for purposes of Section 3(a).
(c) Partial Payment. The Corporation shall, not later than 20 days
prior to the earlier of the record date for the taking of a vote of stockholders
with respect to any Liquidation Event or the date set for the consummation of a
Liquidation Event, provide to the Holders such information concerning the terms
of the Liquidation Event and the value of the assets of the Corporation or such
other relevant information as may be reasonably requested by the Holders. If,
upon a Liquidation Event, the net assets of the Corporation available for
payment to the Holders of Series B Preferred Stock and the holders of Parity
Capital Stock are not sufficient to pay in full the Liquidation Amount to the
Holders of Series B Preferred Stock and the preferential amounts due to the
holders of Parity Capital Stock, the Holders of Series B Preferred Stock and the
holders of Parity Capital Stock shall share equally and ratably in any
distribution of assets of the Corporation in proportion to the full liquidation
preference to which each is entitled.
(d) No Additional Distributions. Holders of Series B Preferred Stock
shall not be entitled to any additional distribution in the event of any
Liquidation Event in excess of the amount set forth in Section 3(a) hereof.
4. VOTING RIGHTS OF SERIES B PREFERRED STOCK. (a) Except as otherwise
required by law or as provided herein, each Holder of Series B Preferred Stock
shall be entitled to vote on all matters and shall be entitled to that number of
votes equal to the number of shares of Common Stock into which such Holder's
shares could be converted pursuant to the provisions of Section 6(a) hereof on
the record date for the determination of stockholders entitled to vote on such
matter or, if no such record date is established, on the date such vote is taken
or any written consent of stockholders is solicited, provided, however, that,
solely for purposes of determining the number of votes a Holder of Series B
Preferred Stock is entitled to pursuant to this Section 4, the Conversion Price
(as defined in Section 6(d) hereof), if then less than $2.8438, shall be deemed
to be $2.8438 (the shares deemed convertible for purposes of such determination
shall be hereinafter referred to as the "Holders' Voting Shares"). Except as
otherwise expressly provided herein or as required by law, the Holders of shares
of the Series B Preferred Stock shall vote together with the holders of shares
of the Corporation's Common Stock as a single class on all matters. The Holders
shall be entitled to notice of all stockholders meetings in accordance with the
Corporation's by-laws and General Corporation Law of the State of Delaware.
(b) Notwithstanding the above paragraph or any provision to the contrary
contained herein, the Holders of Series B Preferred Stock shall be entitled,
voting together as a separate single class, to nominate, and upon amendment of
the Corporation's Certificate of Incorporation as described below to elect, two
(2) members of the Board of Directors in accordance with the terms set forth in
this Section 4(b) and subject to the limitations set forth in Section 4(c)
below. Until such time as the Corporation's stockholders have approved an
amendment to the Corporation's Certificate of Incorporation (the "Charter
Amendment") providing for the right of the Holders of Series B Preferred Stock
to elect two (2) members of the Board of Directors and such Charter Amendment is
filed with the Delaware Secretary of State and effective (the "Charter Amendment
Effective Date") and subject to the limitations set forth in Section 4(c)
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below, the Holders of Series B Preferred Stock, voting together as a separate
single class, are entitled to designate two (2) nominees for election to the
class of the Board of Directors whose term expires at the Corporation's 2001
Annual Stockholders Meeting ("Class III") and at each subsequent election of
Class III directors prior to the Charter Amendment Effective Date, and the Board
of Directors shall nominate such designees and recommend to the Corporation's
stockholders that such designees be elected as members of Class III of the Board
of Directors.
With respect to the two (2) directors to be designated for nomination by
the Holders of Series B Preferred Stock, one individual shall be designated by
SCP Private Equity Partners II, L.P. ("SCP") so long as SCP holds any Series B
Preferred Stock (the "SCP Designee for Nomination") and one individual shall be
designated by Tandem PCS Investments, L.P. ("Tandem") so long as Tandem holds
any Series B Preferred Stock (the "Tandem Designee for Nomination"). For
nominees for election at the Corporation's 2001 Annual Stockholders Meeting,
each of SCP and Tandem shall notify the Corporation in writing of the identity
of its designee no later than ten (10) days following the date on which they
become Holders of Series B Preferred Stock. For all subsequent elections of
Class III directors, each of SCP and Tandem shall notify the Corporation in
writing of the identity of its designee for nomination to Class III of the Board
of Directors no later than the last date (the "Designee Notice Due Date") on
which shareholder proposals may be submitted for an election year when they have
such a right, which notice shall be conclusive evidence of the consent of such
designee to serve as a director of the Corporation. In the event either SCP or
Tandem fails to provide such notice, the SCP Designee for Nomination and Tandem
Designee for Nomination (or the SCP representative and Tandem representative in
the case of the notice for the Corporation's 2001 Annual Stockholders' Meeting)
serving on the Board of Directors on the Designee Notice Due Date shall be
deemed to be renominated. In the event SCP or Tandem has no designee serving (or
otherwise designated to serve in the event of the resignation, death, removal or
inability to serve of a designee, as provided in the last sentence of this
paragraph) on the Board of Directors on the Designee Notice Due Date, the Board
of Directors shall be entitled to make the nomination for which such notice was
required. In the event either SCP or Tandem fails to hold any Series B Preferred
Stock, the Holders of Series B Preferred Stock, voting together as a separate
single class, shall be entitled to the director nomination rights previously
held by SCP or Tandem, as the case may be. If neither SCP nor Tandem holds any
Series B Preferred Stock, the Holders of Series B Preferred Stock, voting
together as a separate single class, shall be entitled to the director
nomination rights previously held by SCP and Tandem. The notice shall include
all information with respect to such designee as is required to be included in a
proxy statement soliciting proxies for the election of directors pursuant to
Regulation 14A of the Exchange Act. In the event of any vacancy arising by
reason of the resignation, death, removal (which may include a removal by the
Holders of Series B Preferred Stock, with or without cause, at the written
request of SCP or Tandem, as applicable, as the party designating such director)
or inability to serve of the SCP Designee for Nomination or the Tandem Designee
for Nomination, SCP or Tandem, as applicable, shall notify the Corporation of
its choice to fill such vacancy, and the Board of Directors shall appoint such
person to fill such vacancy and serve until the next meeting of the
Corporation's stockholders for the election of Class III directors.
At all times after the Charter Amendment Effective Date and subject to the
limitations set forth in Section 4(c) below, the Holders of Series B Preferred
Stock, voting together as a separate
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single class, shall be entitled to elect two (2) members of Class III of the
Board of Directors at each election of Class III directors. With respect to the
two (2) directors to be designated for election by the Holders of Series B
Preferred Stock, one individual shall be designated by SCP so long as SCP holds
any Series B Preferred Stock (the "SCP Designee for Election") and one
individual shall be designated by Tandem so long as Tandem holds any Series B
Preferred Stock (the "Tandem Designee for Election"). Each of SCP and Tandem
shall notify the Corporation in writing of the identity of its designee for
election to Class III of the Board of Directors no later than the Designee
Notice Due Date, which notice shall be conclusive evidence of the consent of
such designee to serve as a director of the Corporation. In the event either SCP
or Tandem fails to provide such notice, the SCP designee and Tandem designee
serving on the Board of Directors on the Designee Notice Due Date shall be
deemed to be the applicable designee. In the event either SCP or Tandem has no
designee serving (or otherwise designated to serve in the event of the
resignation, death, removal or inability to serve of a designee, as provided in
the last sentence of this paragraph) on the Board of Directors on the Designee
Notice Due Date, the Board of Directors shall be entitled to make the nomination
for which such notice was required. In the event SCP or Tandem fails to hold any
Series B Preferred Stock, the Holders of Series B Preferred Stock, voting
together as a separate single class, shall be entitled to the director election
rights previously held by SCP or Tandem, as the case may be. If neither SCP nor
Tandem holds any Series B Preferred Stock, the Holders of Series B Preferred
Stock, voting together as a separate single class, shall be entitled to the
director election rights previously held by SCP and Tandem. The notice shall
include all information with respect to such designee as is required to be
included in a proxy statement soliciting proxies for the election of directors
pursuant to Regulation 14A of the Exchange Act. In the event of any vacancy
arising by reason of the resignation, death, removal (which may include a
removal by the Holders of Series B Preferred Stock, with or without cause, at
the written request of SCP or Tandem, as applicable, as the party designating
such director) or inability to serve of the SCP Designee for Election or the
Tandem Designee for Election, SCP or Tandem, as applicable (provided SCP or
Tandem, as applicable, then holds Series B Preferred Stock) shall notify the
Corporation of its choice to fill such vacancy, and the Board of Directors shall
appoint such person to fill such vacancy and serve until the next meeting of the
Corporation's stockholders for the election of Class III directors.
The class voting rights granted to the Holders of Series B Preferred Stock
pursuant to this Section 4(b) shall be in addition to, and not in lieu of, the
voting rights granted to such Holders under Section 4(a) hereof. Accordingly,
the Holders of Series B Preferred Stock shall be entitled to vote together with
the holders of shares of the Corporation's Common Stock as a single class with
respect to the election of those directors for which the Holders do not have
class voting rights.
(c) Notwithstanding the provisions of Section 4(b) above, the class voting
rights to which the Holders of Series B Preferred Stock are entitled pursuant to
such section shall be limited, and in certain cases eliminated, in the event the
Holders of Series B Preferred Stock fail to maintain certain threshold levels of
ownership of the Corporation's voting securities, as set forth below. In the
event the sum of (i) the Holders' Voting Shares, plus (ii) the shares of Common
Stock issued and outstanding and owned by the Holders (the total of such shares
from time to time is hereinafter referred to as the "Holders' Share Total" and
with respect to a specific
-5-
Holder, a "Share Total") constitutes less than 15% of the sum of (i) the
Corporation's outstanding shares of Common Stock plus (ii) the Holders' Voting
Shares (the total of such shares is hereinafter referred to as the "Deemed
Outstanding Shares") on a Designee Notice Due Date, the Holders of Series B
Preferred Stock shall be entitled to only one designee for nomination or
election, as the case may be, with respect to such election. In such case, SCP
or Tandem, whichever entity has a higher Share Total, shall be entitled to make
such designation. In the event, SCP and Tandem have equal Share Totals on a
Designee Notice Due Date on which the Holders are entitled to only one designee,
SCP and Tandem shall agree on a mutually acceptable designee. In the event the
Holders' Share Total constitutes less than 10% of the Deemed Outstanding Shares
on a Designee Notice Due Date, the Holders of Series B Preferred Stock shall not
be entitled to designate a director for such election and the Holders shall be
entitled to voting rights in accordance with Section 4(a) above with respect to
such election.
5. RESTRICTED ACTIONS. (a) The affirmative vote of the Majority Holders,
acting by written consent as a separate class or voting separately as a separate
class, shall be necessary to authorize the Corporation or any Subsidiary of the
Corporation to take any of the following actions:
(i) authorize, create, issue, modify the material terms of, or
change the amount of authorized or issued shares of, any Senior Capital
Stock (or any securities convertible into or exchangeable for any Senior
Capital Stock) or Indebtedness that by its terms is convertible or
exchangeable into Senior Capital Stock (or any securities convertible into
or exchangeable for Senior Capital Stock;
(ii) effect (x) any Sale of the Corporation other than a
Qualified Sale of the Corporation or a Qualified Public Offering or (y) any
Reorganization of the Corporation;
(iii) alter the rights, preferences or privileges of the Series
B Preferred Stock;
(iv) increase the authorized number of shares of Series B
Preferred Stock;
(v) redeem, purchase or otherwise acquire any shares of Common
Stock or Preferred Stock (or pay into a sinking fund for such purpose);
provided, however, that this restriction shall not apply to any redemption
specifically permitted pursuant to this Certificate of Designation or to
the repurchase of shares of Common Stock at the original purchase price
from employees, officers, directors or other persons performing services
for the Corporation.
(b) Notwithstanding the foregoing provisions of this Section 5 and
except as otherwise required by law, the creation, authorization or issuance of
any shares of any Junior Capital Stock or Parity Capital Stock, or the increase
or decrease in the amount of authorized Junior Capital Stock or Parity Capital
Stock of any class shall not require the affirmative vote or consent of the
Majority Holders and shall not be deemed to materially affect adversely the
rights, preferences, privileges or voting rights of shares of Series B Preferred
Stock.
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(c) In any case in which the Holders of Series B Preferred Stock shall
be entitled to vote (as Holders of Series B Preferred Stock rather than on an
as-if-converted basis) pursuant hereto or pursuant to the General Corporation
Law of the State of Delaware, each Holder of Series B Preferred Stock entitled
to vote with respect to such matters shall be entitled to one vote for each
share of Series B Preferred Stock held.
6. CONVERSION RIGHTS.
(a) Optional Conversion. At any time and from time to time, any Holder
shall have the right, at its option, to convert all or any portion of the shares
of Series B Preferred Stock (including all accrued dividends paid or payable in
shares of Series B Preferred Stock and any fraction of a share) held by such
Holder into such number of shares of fully paid and nonassessable Common Stock
as equals the product of (i) the number of shares of Series B Preferred Stock to
be converted by such Holder and (ii) the quotient of (x) the Purchase Price and
(y) the Conversion Price in effect on the Conversion Date. Each optional
conversion of Series B Preferred Stock shall be deemed to have been effected as
of the close of business on the effective date of such conversion specified in a
written notice by such Holder to the Corporation (the "Conversion Date");
provided, however, that the Conversion Date shall not be a date earlier than the
date such notice is so given, and if such notice does not specify a conversion
date, the Conversion Date shall be deemed to be the date such notice is given to
the Corporation. On the Conversion Date, the rights of the holder of such Series
B Preferred Stock as such Holder shall cease and the Person or Persons in whose
name or names any certificate or certificates for shares of Common Stock are to
be issued upon such conversion shall be deemed to have become the holder or
holders of record of the shares of Common Stock represented thereby.
Notwithstanding any other provision hereof, if a voluntary conversion of Series
B Preferred Stock is to be made in connection with a public offering other than
a Qualified Public Offering or a Sale of the Corporation other than a Qualified
Sale of the Corporation, such conversion may, at the election of the Holder, be
conditioned upon the consummation of the respective public offering or Sale of
the Corporation, in which case such conversion shall not be deemed to be
effective until the closing of such public offering or Sale of the Corporation,
as the case may be.
(b) Mandatory Conversion. Immediately upon any Mandatory Conversion
Event, all shares of Series B Preferred Stock held by each Holder (including all
accrued dividends paid or payable in shares of Series B Preferred Stock and any
fraction of a share of Series B Preferred Stock) shall automatically be
converted into the number of fully paid and nonassessable shares of Common Stock
of the Corporation as equals the product of (i) the number of shares of Series B
Preferred Stock held by such Holder and (ii) the quotient of (x) the Purchase
Price and (y) the Conversion Price in effect on the Conversion Date. A
"Mandatory Conversion Event" shall mean (A) the closing of a Qualified Public
Offering; (B) the closing of a Qualified Sale of the Corporation or (C) the
written election of the Majority Holders, including each Lead Investor.
(c) Conversion Procedure.
(i) Delivery of Certificates. As soon as practicable after any
conversion of Series B Preferred Stock pursuant to this Section 6, but in
any event within ten (10) business days after the holder has delivered the
certificates or affidavits of loss, if
-7-
applicable, evidencing the shares of Series B Preferred Stock converted
into shares of Common Stock in accordance herewith, the Corporation shall
deliver to the converting holder:
(x) a certificate or certificates representing, in the
aggregate, the number of shares of Common Stock issued upon
such conversion in the same name or names as the
certificates representing the converted shares (unless such
holder shall have provided written notice to the
Corporation to issue some or all of such converted shares
in another name or names, in which case the Corporation
shall deliver such certificates for such converted shares
in such other name or names provided such holder delivers
to the Corporation an opinion of counsel acceptable to the
Corporation specifying that such issuance of converted
shares to other parties is permissible under an available
exemption from the registration requirements of the
Securities Act of 1933, as amended, and the securities laws
of any applicable state) and in such denomination or
denominations as the converting holder shall specify and a
check for cash with respect to any fractional interest in a
share of Common Stock; and
(y) with respect to an optional conversion pursuant to Section
6(a) above, a certificate representing any shares of Series
B Preferred Stock that were represented by the certificate
or certificates delivered to the Corporation in connection
with such conversion but that were not converted.
From the Conversion Date and until such time as a holder of shares of
Series B Preferred Stock shall surrender its certificate or certificates
therefor as provided above, such certificates shall be deemed to represent
the shares of Common Stock to which such holder shall be entitled upon the
surrender thereof.
(ii) Fully Paid Shares. The issuance of certificates for shares
of Common Stock upon conversion of Series B Preferred Stock shall be made
without charge to the Holders of such Series B Preferred Stock for any
issuance tax in respect thereof or other cost incurred by the Corporation
in connection with such conversion and the related issuance of shares of
Common Stock. Upon conversion of any shares of Series B Preferred Stock,
the Corporation shall take all such actions as are necessary in order to
insure that the Common Stock so issued upon such conversion shall be
validly issued, fully paid and nonassessable.
(iii) Timely Conversion. The Corporation shall not close its
books against the transfer of Series B Preferred Stock or of Common Stock
issued or issuable upon conversion of Series B Preferred Stock in any
manner that interferes with the timely conversion of Series B Preferred
Stock. The Corporation shall assist and cooperate with any holder of shares
of Series B Preferred Stock required to make any governmental filings or
obtain any governmental approval prior to or in connection with any
conversion
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of shares of Series B Preferred Stock hereunder (including, without
limitation, making any filings required to be made by the Corporation). The
Corporation shall take all such actions as may be necessary to assure that
all such shares of Common Stock may be so issued without violation of any
applicable law or governmental regulation or any requirements of any
domestic securities exchange upon which shares of Common Stock may be
listed (except for official notice of issuance which shall be immediately
delivered by the Corporation upon each such issuance).
(iv) Reservation of Common Stock. The Corporation shall at all
times reserve and keep available out of its authorized but unissued shares
of Common Stock, solely for the purpose of issuance upon the conversion of
or otherwise pursuant to the terms of the Series B Preferred Stock, such
number of shares of Common Stock as are issuable upon the conversion of or
otherwise pursuant to the terms of all outstanding Series B Preferred
Stock.
(v) Fractional Shares. No fractional shares of Common Stock or
scrip shall be issued upon conversion of shares of the Series B Preferred
Stock. If more than one share of Series B Preferred Stock shall be
surrendered for conversion at any one time by the same Holder, the number
of full shares of Common Stock issuable upon conversion thereof shall be
computed on the basis of the aggregate number of shares of Series B
Preferred Stock so surrendered. Instead of any fractional shares of Common
Stock which would otherwise be issuable upon conversion of any shares of
Series B Preferred Stock, the Corporation shall pay a cash adjustment in
respect of such fractional interest equal to the fair market value of such
fractional interest as determined by the Corporation's Board of Directors.
(d) Conversion Price. The initial conversion price shall be three and
14/100 dollars ($3.14), which may be adjusted from time to time hereafter (as so
adjusted, the "Conversion Price"). If and whenever on or after the original date
of issuance of the Series B Preferred Stock the Corporation issues or sells, or
in accordance with Section 6(e) below is deemed to have issued or sold, any
shares of its Common Stock or Convertible Securities (other than Excluded
Securities) for a consideration per share less than the Conversion Price in
effect immediately prior to the time of such issue or sale, then upon such issue
or sale, the Conversion Price in effect immediately prior to the time of such
issue or sale shall be reduced to an amount equal to the consideration per share
applicable to the Common Stock or Convertible Securities so issued or sold or
deemed issued or sold in accordance with Section 6(e) below.
(e) Effect on Conversion Price of Certain Events. For purposes of
determining the adjusted Conversion Price under Section 6(d), the following
shall be applicable:
(i) Issuance of Convertible Securities. If the Corporation in
any manner issues or sells any Convertible Securities, whether or not the
rights to exercise, exchange or convert any such Convertible Securities are
immediately exercisable, and the price per share for which Common Stock is
issuable upon such exercise, conversion or exchange is less than the
Conversion Price in effect immediately prior to the time of such issue or
sale, then the maximum number of shares of Common Stock issuable upon
exercise, conversion or exchange of such Convertible Securities shall be
deemed to be
-9-
outstanding and to have been issued and sold by the Corporation at the time
of the issuance or sale of such Convertible Securities for such price per
share. For the purposes of this paragraph, the "price per share for which
Common Stock is issuable" shall be determined by dividing (x) the total
amount received or receivable by the Corporation as consideration for the
issue or sale of such Convertible Securities, plus the cumulative minimum
aggregate amount of additional consideration, if any, payable to the
Corporation upon the exercise, conversion or exchange thereof and, if
applicable, the exercise, conversion and exchange of any other Convertible
Securities that such Convertible Securities may be converted into or
exchanged for, by (y) the total maximum number of shares of Common Stock
issuable upon the exercise, conversion or exchange of all such Convertible
Securities. No further adjustment of the Conversion Price shall be made
when Common Stock and, if applicable, any other Convertible Securities, are
actually issued upon the exercise, conversion or exchange of such
Convertible Securities.
(ii) Change in Exercise, Price or Conversion Rate. If the
additional consideration payable to the Corporation upon the exercise,
conversion or exchange of any Convertible Securities, or the rate at which
any Convertible Securities are convertible into or exercisable or
exchangeable for Common Stock, changes at any time, the Conversion Price in
effect at the time of such change shall be readjusted to the Conversion
Price that would have been in effect at such time had such Convertible
Securities that are still outstanding provided for such changed additional
consideration or changed conversion rate, as the case may be, at the time
such Convertible Securities were initially granted, issued or sold.
(iii) Exceptions for Excluded Securities. Notwithstanding the
foregoing, no adjustments shall be made under this Section 6(e) with
respect to the issuance of any Excluded Securities.
(f) Subdivision or Combination of Common Stock. If the Corporation at
any time subdivides (by any stock split, stock dividend, recapitalization or
otherwise) its outstanding shares of Common Stock into a greater number of
shares, the Conversion Price in effect immediately prior to such subdivision
shall be proportionately reduced, and conversely, in the event the outstanding
shares of Common Stock shall be combined (by reverse stock split or otherwise)
into a smaller number of shares, the Conversion Price in effect immediately
prior to such combination shall be proportionately increased.
(g) Certain Events. If an event not specified in this Section 6
occurs that has substantially the same economic effect on the Series B Preferred
Stock as those specifically enumerated, then this Section 6 shall be construed
liberally, mutatis mutandis, in order to give the Series B Preferred Stock the
intended benefit of the protections provided under this Section 6. In such
event, the Corporation's Board of Directors shall make an appropriate adjustment
in the Conversion Price so as to protect the rights of the Holders.
(h) Notices.
(i) Immediately upon any adjustment of the Conversion Price,
the Corporation shall give written notice thereof to all Holders, setting
forth in reasonable
-10-
detail and certifying the calculation of such adjustment and the facts upon
which such adjustment is based.
(ii) The Corporation shall give written notice to all Holders
at least twenty (20) days prior to the date on which the Corporation closes
its books or takes a record (x) with respect to any pro rata subscription
offer to Holders of Common Stock, (y) with respect to any Liquidation Event
or (z) with respect to any other right afforded to any holder of Common
Stock.
(i) Determination of Consideration. For purposes of this Section 6,
consideration received by the Corporation for the issue or sale of Convertible
Securities in the form of property other than cash shall be computed at the fair
value thereof at the time of such issue, as determined in good faith by the
Board of Directors of the Corporation.
7. REDEMPTION.
(a) Unless the following rights are waived or deferred in writing by
the Majority Holders (including each Lead Investor), at any time after May 31,
2006, any Holder may elect to have all shares of Series B Preferred Stock held
by such Holder redeemed by the Corporation (an "Optional Redemption"). In any
such case, any Holder desiring to exercise its Optional Redemption right (a
"Redeeming Holder") shall notify the Corporation in writing of its intent to
exercise the rights afforded by this Section 7(a) and specify a date not less
than ten (10) nor more than sixty (60) days from the date of such notice on
which all of such Holder's shares of Series B Preferred Stock shall be redeemed
(an "Optional Redemption Date"). Within three (3) Trading Days after receipt by
the Corporation of any such notice, the Corporation shall promptly notify each
of the other Holders in writing of such Optional Redemption and provide a copy
of the notice from such Redeeming Holder with such notice, whereupon each of the
other Holders shall have an option for a period of fifteen (15) days to notify
the Corporation in writing of its intent to exercise its Optional Redemption
right on the Optional Redemption Date. On such Optional Redemption Date, the
Corporation shall redeem all shares of Series B Preferred Stock held by such
Redeeming Holder as well as all other Holders exercising such Optional
Redemption right, as aforesaid, in cash by wire transfer of immediately
available funds at a redemption price (the "Redemption Price") equal to the sum
of (i) the product of (x) the number of shares of Series B Preferred Stock held
by such Redeeming Holder and each other Holder, respectively, and (y) the
Purchase Price and (ii) all accrued but unpaid dividends thereon calculated to
the Optional Redemption Date.
(b) If the funds of the Corporation legally available for redemption of
shares of Series B Preferred Stock on an Optional Redemption Date are
insufficient to redeem the total number of shares of Series B Preferred Stock
requested to be redeemed by Redeeming Holders on such Optional Redemption Date,
the Redeeming Holders requesting redemption on such Optional Redemption Date
shall share ratably in any funds legally available for redemption of such shares
according to the respective amounts that would be payable with respect to the
full number of shares owned by them if all such shares were redeemed in full. At
any time, and from time to time, thereafter when additional funds of the
Corporation are legally available for the redemption of such shares of Series B
Preferred Stock, such funds will be used at the earliest permissible time to
redeem the balance of such shares, or such portion thereof for which funds
-11-
are then legally available. Such funds shall not be used by the Corporation for
any other purpose, including the redemption by the Corporation of any shares of
Convertible Securities which the Corporation is obligated to redeem on any
subsequent date. The Corporation shall be obligated to use its reasonable
efforts to take such actions as may be necessary in order to permit the full and
timely redemption of the shares of Series B Preferred Stock entitled to
redemption.
(c) If, for any reason, the Corporation fails to redeem all shares of
Series B Preferred Stock entitled to redemption on any Optional Redemption Date,
the unredeemed shares shall remain outstanding and shall continue to have all
rights and preferences (including, without limitation, dividend and voting
rights) provided for herein and the Holders of such unredeemed shares shall have
the ongoing right to be redeemed together with such rights and remedies as may
be available under applicable law.
(d) The notices provided for in this Section 7 shall be sent, (i) if by
or on behalf of the Corporation, to the Holders at their respective addresses as
shall then appear on the records of the Corporation by first class mail, postage
prepaid, notifying such recipient of the redemption, the date of such
redemption, the number of shares of Series B Preferred Stock to be redeemed, and
the Redemption Price therefor and stating the place or places at which the
shares that have been requested to be redeemed shall, upon presentation and
surrender of such certificates representing such shares, be redeemed, and (ii)
if by or on behalf of a Holder, to the Corporation at its executive office,
currently located in Melbourne, Florida.
(e) Any shares of Series B Preferred Stock redeemed pursuant to this
Section 7 or otherwise acquired by the Corporation in any manner whatsoever
shall be canceled and shall not under any circumstances be reissued; and the
Corporation may from time to time take such appropriate corporate action as may
be necessary to reduce accordingly the number of authorized shares of Series B
Preferred Stock.
8. EXCLUSION OF OTHER RIGHTS. Except as may otherwise be required by law,
the shares of Series B Preferred Stock shall not have any preferences or
relative, participating, optional or other special rights, other than those
specifically set forth in this Certificate of Designation.
9. RANK. The Series B Preferred Stock shall, with respect to redemption,
dividend distributions and distributions upon liquidation, winding-up and
dissolution of the Corporation, rank (i) senior to all classes of Common Stock
of the Corporation, and to each other class of Capital Stock or series of
Preferred Stock (including Series A Preferred Stock) now outstanding or
hereafter created by the Board of Directors other than Parity Capital Stock or
Senior Capital Stock (collectively referred to herein, together with all classes
of Common Stock of the Corporation, as the "Junior Capital Stock"), (ii) equally
with any class of Capital Stock or series of Preferred Stock hereafter created
by the Board of Directors and which expressly provide that such class or series
will rank on a parity with the Series B Preferred Stock as to redemption,
dividend distributions and distributions upon liquidation, winding-up and
dissolution of the Corporation (collectively referred to as "Parity Capital
Stock"); and (iii) junior to each class of Capital Stock or series of Preferred
Stock hereafter created by the Board of Directors the terms of which have been
approved by the Majority Holders in accordance with Section 5(a)(i) hereof and
which expressly provide that such class or series will rank senior to the Series
B Preferred
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Stock as to redemption, dividend distributions and distributions upon
liquidation, winding-up and dissolution of the Corporation (collectively
referred to as "Senior Capital Stock").
10. IDENTICAL RIGHTS. Each share of the Series B Preferred Stock shall
have the same relative rights and preferences as, and shall be identical in all
respects with, all other shares of the Series B Preferred Stock.
11. CERTIFICATES. So long as any shares of the Series B Preferred Stock are
outstanding, there shall be set forth on the face or back of each stock
certificate issued by the Corporation a statement that the Corporation shall
furnish without charge to each shareholder who so requests, a full statement of
the designation and relative rights, preferences and limitations of each class
of stock or series thereof that the Corporation is authorized to issue and of
the authority of the Board of Directors to designate and fix the relative
rights, preferences and limitations of each series.
12. AMENDMENTS; WAIVERS. Any provision of these terms of the Series B
Preferred Stock may be amended, modified or waived if and only if the Majority
Holders (including each Lead Investor) have consented in writing or by an
affirmative vote to such amendment, modification or waiver of any such provision
of this Certificate of Designation.
13. DEFINITIONS.
"Acquirer Stock" has the meaning set forth within the definition of
Qualified Sale of the Corporation.
"Capital Stock" means (a) as to any Person that is a corporation (i) the
authorized shares of such Person's capital stock, including all classes of
common, preferred, voting and nonvoting capital stock of such Person, (ii) any
rights, options or warrants to purchase any capital stock (including all classes
of common, preferred, voting and nonvoting capital stock of such Person) of such
Person, and (iii) securities of any type whatsoever that are, or may become,
convertible into or exercisable or exchangeable for, or that carry or may carry
rights to subscribe for, any capital stock (including all classes of common,
preferred, voting and nonvoting capital stock of such Person) of such Person;
and (b) as to any Person that is not a corporation or an individual (i) the
ownership interests in such Person (however evidenced), including, without
limitation, the right to share in profits and losses, the right to receive
distributions of cash and property, and the right to receive allocations of
items of income, gain, loss, deduction and credit and similar items from such
Person, whether or not such interests include voting or similar rights entitling
the holder thereof to exercise control over such Person, and (ii) any rights,
options, warrants or securities of any type whatsoever that are, or may become,
convertible into or exercisable or exchangeable for, or that carry or may carry
rights to subscribe for, any such ownership interests in such Person.
"Certificate of Designation" means this Certificate of Designation of the
Series B Preferred Stock.
"Certificate of Incorporation" means the Certificate of Incorporation of
the Corporation, as amended and/or restated from time to time.
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"Closing Price" means on any day the reported last sale price on such day,
or in case no sale takes place on such day, the average of the reported closing
bid and ask prices on the principal national securities exchange (which shall
include NASDAQ) on which such stock is listed or admitted to trading (and if the
Common Stock is listed or admitted to trading on more than one U.S. national or
non-U.S. securities exchange, the Corporation shall determine, in its reasonable
discretion, the principal securities exchange on which such Common Stock is
listed or admitted to trading), as reported by Bloomberg Financial Markets (or a
comparable reporting service of national reputation selected by the Corporation
and reasonably acceptable to the Majority Holders if Bloomberg Financial Markets
is not then reporting the last sale price of such security) ("Bloomberg"), or if
not listed or admitted to trading on any securities exchange, the last reported
sale price of such security in the over-the-counter market on the electronic
bulletin board for such security as reported by Bloomberg, or, if no last sale
price is reported for such security by Bloomberg, the average of the reported
closing and bid prices of all market makers for such security as reported in the
"pink sheets" by the National Quotation Bureau, Inc., in each case for such date
or, if such date was not a trading date for such security, on the next preceding
date which was a trading date. If the Closing Price cannot be calculated for
such security as of either of such dates on any of the foregoing bases, the
Closing Price of such security on such date shall be the fair market value as
reasonably determined by an investment banking firm selected by the Corporation
and reasonably acceptable to the Majority Holders, with the costs of such
appraisal to be borne by the Corporation.
"Common Stock" means the Corporation's Common Stock, $.001 par value.
"Common Stock Deemed Outstanding" means, at any given time, the number of
shares of Common Stock actually outstanding at such time, plus the number of
shares of Common Stock issuable upon the exercise, conversion or exchange in
full of all Convertible Securities whether or not the Convertible Securities are
exercisable for, convertible into or exchangeable for, Common Stock at such
time.
"Conversion Date" has the meaning set forth in Section 6(a) hereof.
"Conversion Price" has the meaning set forth in Section 6(d) hereof.
"Convertible Securities" means securities or obligations that are
exercisable for, convertible into or exchangeable for shares of Common Stock.
The term includes options, warrants or other rights to subscribe for or purchase
Common Stock or to subscribe for or purchase other securities that are
convertible into or exercisable or exchanged for Common Stock.
"Excluded Securities" means any (a) shares of Common Stock or options to
purchase Common Stock, including shares of Common Stock issuable upon exercise
of such options, (as the same may be adjusted in connection with any stock
split, stock dividend, combination or recapitalization) issued or granted
pursuant to employee stock option or executive incentive ownership plans
approved by the Board of Directors and the stockholders of the Corporation; (b)
the shares of Common Stock issuable upon conversion of any Convertible
Securities outstanding on March 30, 2001 (c) the shares of Common Stock issuable
upon the conversion of the Series B
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Preferred Stock; and (d) any shares of Capital Stock issued to the Corporation's
stockholders in connection with any stock split, stock dividend or
recapitalization.
"Holders" means the Holders from time to time of shares of Series B
Preferred Stock, and the term "Holder" means any one of them.
"Junior Capital Stock" has the meaning given such term in Section 9 above.
"Lead Investor" shall mean any of SCP Private Equity Partners, II, L.P.,
Tandem PCS Investments, L.P., and Mellon Ventures, L.P. so long as such party
holds shares of Series B Preferred Stock.
"Liquidation Amount" has the meaning set forth in Section 3(a) hereof.
"Liquidation Event" has the meaning set forth in Section 3(a) hereof.
"Low Trading Volume" means that the total number of shares of Acquirer
Stock (or any Capital Stock into which the Acquirer Stock is convertible into,
exercisable or exchangeable for) received or receivable by all holders of
Capital Stock of the Corporation in connection with a Sale of the Corporation is
greater than the average daily reported volume of Capital Stock of the same
class as the Acquirer Stock (or any Capital Stock into which the Acquirer Stock
is convertible into, exercisable or exchangeable for) calculated based upon the
average daily trading volume of Acquirer Stock on all national securities
exchanges and/or the automated quotation system of a registered securities
association (as such terms are used in Rule 144 promulgated under the Securities
Act of 1933) during the 12 week period immediately preceding the date of the
closing of the Sale of the Corporation.
"Majority Holders" means the Holders of a majority of the outstanding
shares of Series B Preferred Stock.
"Mandatory Conversion Event" has the meaning set forth in Section 6(b)
hereof.
"NASDAQ" means the National Association of Securities Dealers Automated
Quotation System.
"Optional Redemption" has the meaning set forth in Section 7(a) hereof.
"Optional Redemption Date" has the meaning set forth in Section 7(a)
hereof.
"Parity Capital Stock" has the meaning set forth in Section 9 hereof.
"Person" means an individual, partnership, corporation, association, trust,
joint venture, unincorporated organization and any government, governmental
department or agency or political subdivision thereof.
"Purchase Price" of any share of Series B Preferred Stock shall be thirty
one and 40/100 dollars ($31.40), such price to be equitably adjusted in the
event of any stock dividend, stock
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split, combination, recapitalization or other similar event with respect to the
Series B Preferred Stock.
"Qualified Sale of the Corporation" means any Sale of the Corporation at a
price per share in cash or other securities not less than three times the
Conversion Price other than a Sale of the Corporation in which the Holders or
any other holders of Capital Stock of the Corporation receive Capital Stock of a
Person (the "Acquirer Stock") that is subject to a Significant Restriction.
"Qualified Public Offering" means any public offering by the Corporation of
its Common Stock consummated pursuant to an effective registration statement
under the Securities Act of 1933 or any similar federal statute then in force
and yielding the Corporation gross proceeds of at least $70,000,000, and at a
public offering price per share of not less than three times the then applicable
Conversion Price, other than an offering of shares being issued as consideration
in a business acquisition or combination or an offering in connection with an
employee benefit plan.
"Reorganization" means any merger, reorganization, recapitalization or
consolidation, which affects any Capital Stock of the Corporation, other than a
Sale of the Corporation.
"Sale of the Corporation" means a single transaction or a series of
transactions to which the Corporation is a party pursuant to which a Person or
Persons acquire (i) Capital Stock of the Corporation possessing the voting power
to elect a majority of the Corporation's board of directors or more than fifty
percent (50%) of the voting power of the Corporation (whether by merger,
consolidation or sale or transfer of the Corporation's Capital Stock), provided,
however, that a Qualified Public Offering or the sale of Series B Preferred
Stock that results in an acquisition of voting power shall not be a Sale of the
Corporation; or (ii) all or substantially all of the Corporation's assets
determined on a consolidated basis.
"Senior Capital Stock" has the meaning set forth in Section 9 hereof.
"Series A Preferred Stock" means the Corporation's Series A Junior
Participating Preferred Stock.
"Series B Dividends" has the meaning set forth in Section 2(a) hereof.
"Series B Preferred Stock" means the Corporation's Series B Convertible
Redeemable Preferred Stock, $.01 par value per share.
"Significant Restriction" shall mean (a) Low Trading Volume, with respect
to any Acquirer Stock that is publicly traded and (b) any shares of a
privately-held company or shares of a publicly-traded company that are not
registered, or will not be registered within 45 days following an applicable
Sale of the Corporation, pursuant to an effective registration statement for
resale under the Securities Act of 1933, as amended.
"Subsidiary" means, with respect to any Person, any corporation,
partnership, association or other business entity of which (i) if a corporation,
a majority of the total voting power of shares of stock entitled (without regard
to the occurrence of any contingency) to vote in the election of directors,
managers or trustees thereof is at the time owned or controlled, directly or
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indirectly, by that Person or one or more of the other Subsidiaries of that
Person or a combination thereof, or (ii) if a partnership, association or other
business entity, a majority of the partnership or other similar ownership
interest thereof is at the time owned or controlled, directly or indirectly, by
any Person or one or more Subsidiaries of that person or a combination thereof.
For purposes hereof, a Person or Persons shall be deemed to have a majority
ownership interest in a partnership, association or other business entity if
such Person or Persons shall be allocated a majority of partnership, association
or other business entity gains or losses or shall be or control the managing
general partner of such partnership, association or other business entity.
"Trading Day" means, in respect of any securities exchange or securities
market, each Monday, Tuesday, Wednesday, Thursday and Friday, other than any day
on which securities are not traded on the applicable securities exchange or in
the applicable securities market.
14. SEVERABILITY OF PROVISIONS. If any right, preference or limitation of
the Series B Preferred Stock set forth in this Certificate of Designation (as
such Certificate of Designation may be amended from time to time) is invalid,
unlawful or incapable of being enforced by reason of any rule, law or public
policy, all other rights preferences and limitations set forth in this
Resolution (as so amended) which can be given effect without implicating the
invalid, unlawful or unenforceable right preference or limitation shall,
nevertheless, remain in full force and effect, and no right, preference or
limitation herein set forth shall be deemed dependent upon any other right,
preference or limitation unless so expressed herein.
IN WITNESS WHEREOF, this Certificate of Designation is executed on behalf
of the Corporation by its President and Chief Executive Officer on May 14, 2001.
By: /s/ R. ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇.
-------------------------------------
R. ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇.
President and Chief Executive Officer
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Exhibit B
AMENDED AND RESTATED
AIRNET BONUS PROGRAM
DATED AND EFFECTIVE _______ __, 2003
The Amended and Restated AirNet Bonus Program (the "BONUS PROGRAM") shall
consist of an Acquisition Bonus Program for Employees and a Management Bonus
Program, each described below. This BONUS PROGRAM replaces the Amended and
Restated AirNet Bonus Program dated and effective August 12, 2002.
I. BONUS PROGRAM FOR EMPLOYEES TIED TO SALE OF CONVERTIBLE NOTES OTHER THAN
IN CONNECTION WITH THE SALE OF THE COMPANY.
AirNet Communications Corporation has issued secured convertible promissory
notes in the aggregate amount of $16,000,000 ("Convertible Notes") to TECORE,
Inc. ("Tecore") and to SCP Private Equity Partners II, LLP ("SCP") (SCP and
Tecore, and any of their affiliates who acquire an interest in the respective
Convertible Notes each referred to as a "Noteholder" and together referred to as
"Noteholders"). The employee share under this Bonus Program tied to the sale of
Convertible Notes ("CNBP") shall be ten percent (10%) ("Allocation Amount")
calculated as a percentage of the aggregate proceeds in excess of the principal
balance and related accrued and unpaid interest then outstanding under the
Convertible Note (or portion of a Convertible Note sold) and paid to any
Noteholder in connection with the sale by such Noteholder to any party of all or
any portion of the Convertible Notes, other than in connection with a Sale of
the Company (as defined below). By way of illustration: (a) if the principal
balance under a Convertible Note is $9,000,000 and the amount of accrued and
unpaid interest is $1,000,000 and a Noteholders sells 100% of the Convertible
Note for $20,000,000, the Sale of Note Proceeds (defined below) available for
distribution to the Noteholder in connection with their sale of all of the
Convertible Note would be $10,000,000, and $1,000,000 would be allocated to the
CNBP; and (b) if the principal balance then outstanding under a Convertible Note
is $9,000,000 and the amount of accrued and unpaid interest is $1,000,000 and a
Noteholder sells one half of the Convertible Note for $7,000,000, the Sale of
Note Proceeds available for distribution to the Noteholder would be $2,000,000
(the amount in excess of one half of the principal balance or $4,500,000 plus
one half of the related accrued and unpaid interest, or the amount in excess of
$5,000,000) and the Allocation Amount to be allocated to the CNBP would be 10%
of $2,000,000 or $200,000.
The obligation of the Noteholders to fund the CNBP is contained in the Tag Along
Allocation Agreement dated as of _____ __, 2003 by and among the Company and the
Noteholders (the "Tag Along Allocation Agreement"). If either or both of the
Noteholders receive consideration other than cash for the sale of the
Convertible Notes other than in connection with the Sale of the Company then the
CNBP may be funded in-kind in the same proportion the Noteholders receive
in-kind consideration. Whether in cash or in-kind the Company shall withhold
payroll taxes at the time of the distribution of the Allocation Amount available
for distribution under this CNBP in the minimum amount required by law (unless
an Eligible Employee requests additional withholding) in compliance with all
applicable Internal Revenue Service ("IRS") and other regulations. If the
distribution is other than in cash then the Company shall withhold stock or
property equal to the withholding amount at the transaction value in compliance
with IRS regulations or other regulations. The Company shall remit payment to
the IRS and applicable taxing authorities in accordance with applicable IRS and
other regulations.
II. MANAGEMENT AND EMPLOYEE BONUS PROGRAM IN CONNECTION WITH THE SALE OF THE
COMPANY.
In the event of the Sale of the Company (as defined below), ten percent (10%) of
the Net Proceeds to Securityholders (as defined below) will be allocated by the
Company to the Management and Employee Bonus Program ("MBP").
If the Securityholders of the Company receive consideration other than cash in
connection with the Sale of the Company then the MBP may be funded in-kind in
the same proportion the Securityholders of the Company receive in-kind
consideration in connection with the Sale of the Company. By way of
illustration, if the Acquisition Price is $31,000,000 and the Net Proceeds to
Securityholders is $29,000,000, then $2,900,000 would be allocated to the MBP.
The obligation of the Noteholders to fund the MBP is contained in the Tag Along
Allocation Agreement. This obligation shall be reduced to the extent the amounts
payable to Eligible Employees is reduced due to such Employees' In-the-money
Options as described in Paragraph 3 below. Whether in cash or in-kind the
Company shall withhold payroll taxes at the time of the distribution of the Net
Proceeds to Securityholders available for distribution in the minimum amount
required by law (unless an Eligible Employee requests additional withholding) in
compliance with all applicable IRS and other regulations. If the distribution is
other than in cash then the Company shall withhold stock or property equal to
the withholding amount at the transaction value in compliance with IRS
regulations or other regulations. The Company shall remit payment to the IRS and
applicable taxing authorities in accordance with applicable IRS and other
regulations.
III. DEFINITIONS.
"SALE OF NOTE PROCEEDS" shall mean the proceeds paid to Noteholders for the sale
of all or any portion of the Convertible Notes by the Noteholders, other than in
connection with the Sale of the Company, in excess of the amount of the then
outstanding principal balance and related accrued unpaid interest payable under
the Convertible Notes sold or such portion of the Convertible Notes so sold, if
only a portion is sold.
"SECURITIES" of the Company shall mean shares of common stock, preferred stock,
or securities convertible into shares of common stock or preferred stock,
including options, warrants, the Convertible Notes, and any other convertible
notes.
"SECURITYHOLDERS" shall mean holders of the Company's then outstanding
Securities.
"NET PROCEEDS TO SECURITYHOLDERS" shall mean the net sales proceeds available
for distribution to the Company's Securityholders in connection with the Sale of
the Company, after deducting from the Acquisition Price transaction expenses
relating directly to the Sale of the Company including attorneys fees,
accounting fees, and underwriting or brokerage commissions; provided that if a
Noteholder or the Noteholders sell all or any portion of their Convertible Notes
in connection with a Sale of the Company, (or if a Noteholder or the Noteholders
receive sales proceeds in satisfaction of the indebtedness represented by their
Convertible Notes) only the proceeds payable to such Noteholders in excess of
the amount of the then outstanding principal balance and related accrued unpaid
interest payable under the Convertible Notes sold or such portion of the
Convertible Notes so sold shall be included in NET PROCEEDS TO SECURITYHOLDERS.
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"SALE OF THE COMPANY" shall mean (i) a sale or exchange of all or substantially
all of the assets of the Company (including a sale, disposition, or exchange in
a liquidation but excluding any such sale or exchange to a direct or indirect
subsidiary ("Successor Subsidiary") of the Company) by the Company or by a
Successor Subsidiary or (ii) a sale or exchange of all or substantially all of
the outstanding capital stock of the Company or Successor Subsidiary resulting
in a Change of Control of the Company or Successor Subsidiary, or (iii) a
merger, consolidation or other business combination (excluding any issuance of
previously un-issued voting securities from the Company in connection with an
investment in the Companyby a Noteholder or any third party or exercise of
conversion rights by a Noteholder) resulting in a Change of Control of the
Company or Successor Subsidiary, as a result of which the Company or the
Successor Subsidiary is not the continuing or surviving corporation.
"CHANGE OF CONTROL" means the acquisition by any individual, entity or group of
50% or more of the outstanding voting securities of the Company or 50% or more
of the combined voting power of then outstanding voting securities of the
Company entitled to vote generally in the election of directors.
"ACQUISITION PRICE" means the aggregate sum of money and/or fair market value of
property (valued as of the date of closing) to be paid by an acquiring party to
the Company or to its Securityholders in connection with a Sale of the Company.
For purposes of the Bonus Program, if the acquiring party is then a current
Securityholder or an affiliate of a current Securityholder ("CURRENT
SECURITYHOLDER ACQUIRING PARTY") which is (a) acquiring the assets of the
Company in a transaction in which the Current Securityholder Acquiring Party
receives no distribution of money or property with respect to its Securities or
a distribution which is less than the per-share amount received by other
Securities holding the same class or series of Securities, on an as-converted
basis, (b) engaging in a merger, consolidation or other business combination
with the Company in which the Company is not the continuing or surviving
corporation and in which the Current Securityholder Acquiring Party receives no
money or property in exchange for its Securities or an amount of money or
property which is less than the per-share amount received by other
Securityholders holding the same class or series of Securities, on an
as-converted basis, or (c) acquiring Company Securities from Securityholders but
not from itself or the current Securityholder affiliated with the Current
Securityholder Acquiring Party, the amount of the Acquisition Price shall
include the value of the shares of Company common stock held by such Current
Securityholder Acquiring Party or underlying any Convertible Notes or other
convertible Securities held by such Current Securityholder Acquiring Party based
on the same value per share that will be paid or distributed to Securityholders
owning the same class or series of shares, Convertible Notes or other
convertible securities.
Should a Current Securityholder Acquiring Party be the purchaser in a Sale of
the Company and that party does not receive, or waives its right to receive, all
or any portion of the purchase price otherwise payable to Securityholders, then
and only in that event, the Net Sales Proceeds to Securityholders shall include
the value of the Company Securities held by such Current Securityholder
Acquiring Party based on the same value per share that will be paid or
distributed to Securityholders owning the same class or series of shares,
Convertible Notes or other convertible securities (the "Value Adjustment"). The
payment of bonuses applicable to the Value Adjustment is an obligation of the
Company and shall not reduce the amount of Net Proceeds to Securityholders
otherwise payable to Securityholders other than the Eligible Employees
hereunder.
THE CNBP AND THE MBP SHALL BE ADMINISTERED AS FOLLOWS:
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1. Only employees (the "ELIGIBLE EMPLOYEES") designated by the Company's Chief
Executive Officer, with the review and approval of the Compensation Committee
and the Company's Board of Directors (the "BOARD") shall be entitled to
participate in the CNBP and the MBP.
2. Anything contained herein to the contrary notwithstanding, the total amount
allocable to the Eligible Employees from the CNBP shall not exceed ten percent
(10%) of the Sale of Note Proceeds and the total amount allocable to the
Eligible Employees from the MBP shall not exceed ten percent (10%) of the Net
Proceeds to Securityholders.
3. All amounts payable from the MBP to an Eligible Employee shall be reduced by
an amount equal to the value of the difference between the exercise price of
each Company common stock option ("IN-THE-MONEY OPTIONS") held by such Eligible
Employee that is "in-the-money" and the price of an underlying share of the
Company's common stock (the "PER-SHARE PRICE"); provided the shares underlying
the In-the-Money Options are purchased by the acquiring party in connection with
the Sale of the Company. Such Per-Share Price shall be calculated by dividing
the Net Proceeds to Securityholders by the number of shares of the Company's
common stock deemed to be outstanding just prior to the Sale of the Company,
including shares underlying Convertible Notes, if any, and all In-The-Money
Options. Options exercised from and after the effective date of this Amended and
Restated Bonus Program and preceding a Sale of the Company shall be included in
the calculation described in this Section 3.
4. The allocation of the Sale of Note Proceeds under the CNBP and the Net
Proceeds to Securityholders under the MBP among the Eligible Employees shall be
at the discretion the Company's Chief Executive Officer, with the review and
approval of the Compensation Committee and the Board of Directors. Any
consideration received by an Eligible Employee pursuant to the Bonus Program
shall be in addition to, and shall not reduce or replace, the amount of
consideration such Eligible Employee may otherwise be entitled to as a
stockholder of the Company.
5. All payments due from the Company to Plan Participants under this Bonus
Program, will be made within five (5) business days from the Company's receipt
of the Allocation Amount with respect to the CNBP and within five (5) business
days from the closing of a Sale of the Company with respect to the MBP.
-4-
Exhibit C
FIRST AMENDMENT TO SECURITY AGREEMENT
-------------------------------------
THIS FIRST AMENDMENT TO SECURITY AGREEMENT (this "Amendment") is made and
entered into this ____ day of __________, 2003, by and among AIRNET
COMMUNICATIONS CORPORATION (the "Borrower"), SCP PRIVATE EQUITY PARTNERS II,
L.P. ("SCP"), and TECORE, INC. ("TECORE").
RECITALS:
---------
The parties are parties to that certain Security Agreement, dated January
24, 2003 (the "Security Agreement") pursuant to which the Borrower granted unto
SCP and TECORE, as the Lenders, a security interest in and to certain
Collateral. Capitalized terms used herein that are defined in the Security
Agreement shall have the meanings defined therein.
The Lenders have, effective as of the date hereinabove set forth, extended
additional credit, and made additional loans, to Borrower. The Borrower has
issued to SCP a Senior Secured Convertible Note in the principal amount of
$4,000,000 (the "SCP Note"), and the Borrower has issued to TECORE a Senior
Secured Convertible Note in the principal amount of $12,000,000 (the "TECORE
Note") and, together with the SCP Note, the "Convertible Notes"). The parties
desire to amend the Security Agreement to reflect their agreement and
understanding that the rights and privileges granted to the Lenders thereunder
shall apply to the indebtedness evidenced by the Convertible Notes.
NOW, THEREFORE, for and in consideration of the credit extended to the
Borrower by the Lenders, as reflected in the Convertible Notes, and in further
consideration of the premises, and intending to be legally bound, the parties
covenant and agree as follows:
1. Amendments to Security Agreement. The Security Agreement is hereby
amended as follows:
a. The following new definitions are added to Section 1:
"Senior Secured Convertible Notes" shall mean that certain Senior
Secured Convertible Note, in the principal amount of $12,000,000,
issued by the Borrower and payable to the order of TECORE, dated
___________, 2003, and that certain Senior Secured Convertible Note, in
the principal amount of $4,000,000, issued by the Borrower and payable
to the order of SCP dated ______________, 2003.
"Securities Purchase Agreement" shall mean that certain Securities
Purchase Agreement, dated _____________, 2003, by and among Borrower
and the Lenders, pursuant to which the Borrower issued the Senior
Secured Convertible Notes to the Lenders."
b. The following sentence shall be added to the end of the
definition of the term "Debt" in Section 1:
"Without limiting the generality of the foregoing, the term "Debt"
shall also include all indebtedness, both principal and interest, of
the Borrower to the Lenders now or hereafter due and evidenced by the
Senior Secured Convertible Notes."
c. The definition of the term "Event of Default" in Section 1 shall
be revised by deleting the period at the end of the sentence, and by adding the
following phrase:
", or (iii) any default by the Borrower in the performance of its
obligations under either of the Senior Secured Convertible Notes, or
under the Securities Purchase Agreement, or any of the Events of
Default described therein."
d. The definition of the term "Loan Documents" in Section 1 shall
be revised to add the following at the end thereof:
"Without limiting the generality of the foregoing, the term "Loan
Documents" shall include the Senior Secured Convertible Notes and the
Securities Purchase Agreement."
e. Section 2 of the Security Agreement is hereby amended by adding
the phrase ", the Senior Secured Convertible Notes" immediately after the word
"Notes" in the first sentence thereof.
f. Section 10 of the Security Agreement is hereby deleted, and the
following new Section 10 is hereby substituted in lieu thereof:
"10. Termination.
(a) Subject to the provisions of this Section 10, upon payment and
performance in full of the Debt, this Agreement shall terminate and be
of no further force and effect and the Lenders shall thereupon
terminate their security interest in the Collateral. Until such time,
however, this Agreement shall be binding upon and shall inure to the
2
benefit of the parties, their successors and assigns provided that,
without the prior written consent of the Lenders, the Borrower may not
assign this Agreement or any of its rights under this Agreement or
delegate any of its duties or obligations under this Agreement and any
such attempt at assignment or delegation shall be null and void. This
Agreement is not intended and shall not be construed to obligate the
Lenders to take any action whatsoever with respect to the Collateral or
to incur expenses or perform or discharge any obligation, duty or
disability of the Borrower, nor shall this Agreement be construed to
abrogate any responsibility of the Lenders under the applicable
provisions of the Uniform Commercial Code relating to the disposition
of the Collateral.
(b) For purposes of this Agreement, the Debt shall be deemed paid
and performed in full upon both (i) the conversion into common stock of
all amounts, including principal and interest, represented by the
Senior Secured Convertible Notes pursuant to the terms of said Senior
Secured Convertible Notes, and (ii) the payment in full of all accrued
but unpaid interest under the Notes, as amended by the Allonges, dated
____________________, 2003.
(c) If, after receipt of any payment of, or application of the
proceeds of, the Collateral to the payment of all or any part of, the
Debt, Lenders, or either of them, are compelled to surrender or
voluntarily surrender such payment or proceeds to any person, because
such payment or application of proceeds is or may be avoided,
invalidated, declared fraudulent, set aside, declared to be void or
voidable as a preference, fraudulent conveyance, impermissible set-off,
or diversion of trust funds, or because of any settlement or compromise
of such claim, this Agreement shall be reinstated and shall continue to
be in full force and effect. This reinstatement and continuing effect
shall exist as if such payment or proceeds had not been received by
Lenders notwithstanding any revocation or termination of this
Agreement, or the surrender of any instrument evidencing the Debt, or
the return or cancellation of any instrument or document relating to
the Debt."
2. Acknowledgment and Ratification. The parties hereto hereby acknowledge,
confirm and ratify the terms of the Security Agreement, as amended by this
Amendment.
3. Counterparts. The Amendment may be executed in several counterparts,
each of which shall be deemed an original, but all of which shall constitute one
and the same instrument.
3
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Amendment as of the day and year first hereinabove set forth.
BORROWER:
AIRNET COMMUNICATIONS CORPORATION
By:
------------------------------------
LENDERS:
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,
its manager
By:
------------------------------------
TECORE, INC.
By:
------------------------------------
4
Exhibit D
This Note has been acquired for investment and has not been registered
under the Securities Act of 1933, as amended, or the securities laws of any
other jurisdiction. This Note is subject to the terms of a Securities Purchase
Agreement, dated as of June 5, 2003, among the issuer, TECORE, Inc, and SCP
Private Equity Partners II, L.P. (the "Purchase Agreement"), a copy of which may
be obtained by the registered holder hereof from the Secretary of the issuer.
The sale and transfer of this Note is restricted under the terms of the Tag
Along Allocation Agreement, dated as of the date of this Note between the
issuer, TECORE, Inc, and SCP Private Equity Partners II, L.P.(the "Tag Along
Agreement"). No transfer of any interest in this Note shall be effective unless
permitted by and made in accordance with the Purchase Agreement and the Tag
Along Agreement, and by accepting this Note the holder of this Note agrees to be
bound by the Purchase Agreement and the Tag Along Agreement.
$12,000,000
AIRNET COMMUNICATIONS CORPORATION
Senior Secured Convertible Note
__________ __, 2003
1. General. AIRNET COMMUNICATIONS CORPORATION, a Delaware corporation
(hereinafter called the "Company"), for value received, hereby promises to pay
to TECORE, INC. ("TECORE"), or registered assigns, the principal amount of
TWELVE MILLION DOLLARS ($12,000,000.00), or so much thereof as shall have been
paid to the Company by TECORE pursuant to the terms of the Securities Purchase
Agreement, dated as of June 5, 2003, among the Company, TECORE, Inc, and SCP
Private Equity Partners II, L.P. (the "Purchase Agreement"), as set forth on
Schedule A attached hereto and made a part hereof, on _________ __, 2007 (the
"Maturity Date"), and to pay interest on the unpaid balance of the principal
hereof from the date hereof at the rate of twelve percent (12%) per annum (which
shall accrue on a daily basis), payable at maturity, and to pay interest at the
rate of fifteen percent (15%) per annum on any overdue principal, from the due
date thereof until the obligation of the Company with respect to the payment
thereof shall be discharged. All payments of principal and interest on this Note
shall be paid by Company check or official bank check sent first class mail,
postage prepaid, to such address as the holder hereof shall notify the Company
of in writing, or, absent such notice, to the last address of such holder as
recorded in the Company' s books (in which case the Company may rely on such
address and shall be deemed to have discharged its obligations hereunder as to
any payments made to that address). At the option of the holder, the Company
shall pay principal and interest on this Note by wire transfer in accordance
with wire transfer instructions provided by the holder to the Company at least
ten (10) days prior to the date on which the principal and interest is payable
hereunder. The Company shall have no right to prepay any principal or interest
due under this Note.
2. The Notes. As used herein, the term "Note" or "Notes" refer to the
Senior Secured Convertible Notes in the aggregate principal amount of
$16,000,000 issued pursuant to the
Purchase Agreement and to any Note or Notes executed and delivered by the
Company in exchange or replacement hereof pursuant to Section 9 hereof or
pursuant to any transfer of a Note. Unless the context otherwise requires, the
term "holder" is used herein to mean the person named as payee in Section 1
hereof or any other person who shall at the time be the holder or assignee of
this Note. This Note is referred to in the Purchase Agreement and is entitled to
the benefits of the terms and provisions of the Purchase Agreement. No reference
herein to the Purchase Agreement and no provision of this Note or the Purchase
Agreement shall alter the obligation of the Company, which is absolute and
unconditional, to pay the principal and interest on the Note at the time and in
the manner prescribed herein.
3. Security Interest. This Note is secured by and is entitled to the
benefits of (i) the Security Agreement, dated as of January 24, 2003, by and
among the Company and the purchasers of the Notes (the "Original Security
Agreement"), as amended by the First Amendment to Security Agreement, dated as
of _________ __, 2003, by and among the Company and the purchasers of the Notes
(the "Amendment to Security Agreement") (the Original Security Agreement, as so
amended by the Amendment to Security Agreement is referred to as the "Amended
Security Agreement"), (ii) the "Amended and Restated Technology Collateral
Escrow Agreement, dated as of _______ __, 2003, by and among the Company and the
purchasers of the Notes (the "Escrow Agreement"), and (iii) the Amended and
Restated Collateral Assignment of Patents, Trademarks & Copyrights, dated as of
_________ __, 2003, by and among the Company and the purchaser of the Notes (the
"Collateral Assignment"). (The Amended Security Agreement, the Escrow Agreement,
and the Collateral Assignment are sometimes referred to herein as the
"Collateral Agreements.") In addition to the rights and remedies given it by
this Note, the Collateral Agreements, and the Purchase Agreement, the holder
shall have all those rights and remedies allowed by applicable laws, including
without limitation, the Uniform Commercial Code. The rights and remedies of the
holder are cumulative, and recourse to one or more right or remedy shall not
constitute a waiver of the others. The Company shall be liable for all
commercially reasonable costs, expenses and attorneys' fees incurred by the
holder in connection with the collection of the indebtedness evidenced by the
Note.
4. Voting Rights.
4.1. General Rights. Except as otherwise provided herein or as
required by law, the holders of the Notes:
4.1.1. shall be entitled to vote in respect to the corporate
affairs and management of the Company to the extent hereinafter
provided;
4.1.2. shall have the same right of inspection of the books,
accounts and other records of the Company which the holders of Common
Stock have or may have under the Delaware General Corporation Law (the
"GCL") or the Company's certificate of incorporation; and
2
4.1.3. shall be deemed to be stockholders of the Company, and
the Notes shall be deemed to be stock, for the purpose of any provision
of the GCL which requires the vote of stockholders as a prerequisite to
any corporate action.
4.2. Number of Votes. The Notes shall be voted equally with the
shares of the Common Stock of the Company, and not as a separate class, at any
annual or special meeting of stockholders of the Company or in connection with
any solicitation of written consents in lieu of a meeting, upon the following
basis: the holder of this Note shall be entitled to such number of votes as
shall be equal to the whole number of shares of Common Stock into which this
Note is convertible pursuant to Section 5 hereof immediately after the close of
business on the record date fixed for such meeting or the effective date of such
written consent; provided, however, that in calculating the number of shares
into which this Note is then convertible for purposes of calculating such number
of votes, the initial Conversion Price, as hereinafter defined, shall be deemed
to be $.57 representing the average closing price of the Common Stock on the
date of execution of the Purchase Agreement and the four business days prior to
such execution (the "Deemed Conversion Price") (which Deemed Conversion Price is
subject to adjustment in the same manner that the Conversion Price is subject to
adjustment as provided in Sections 5.5 and 5.6).
5. Conversion of Note.
5.1. Right to Convert. Subject to and upon compliance with the
provisions hereof, the holder of this Note shall have the right, at such
holder's option, at any time, to convert all or any portion of the unpaid
principal amount hereof and all or any portion of accrued but unpaid interest
into shares of Common Stock, $.001 par value, of the Company ("Common Stock") at
the price of $0.10810 per share (the "Original Conversion Price"), or, in case
an adjustment of such price has taken place pursuant to the further provisions
of this Section 5, then at the price as last adjusted and in effect on the date
this Note or portion hereof is presented for conversion (the Original Conversion
Price or the Original Conversion Price as last adjusted, as the case may be,
being referred to herein as the "Conversion Price"). The minimum principal
amount of this Note which may be converted at any time shall be the lesser of
(a) $100,000 or (b) the outstanding principal balance of this Note.
5.2. Exercise of Conversion Privilege. In order to exercise the
conversion privilege, the holder of this Note shall present it to the Company at
the office of the Company, accompanied by written notice to the Company (with
copies to the holders of any other Notes) that the holder elects to convert this
Note, or, if less than the entire unpaid principal amount hereof and interest
thereon is to be converted, the portion hereof to be converted. Such notice
shall also state the name or names (with address) in which the certificate or
certificates for shares of Common Stock which shall be issuable on such
conversion shall be issued. As soon as practicable after the receipt of such
notice and the presentation of this Note, the Company shall issue and shall
deliver to the holder of this Note a certificate or certificates for the number
of full shares of Common Stock issuable upon the conversion of this Note (or
portion hereof), and provision shall be made for any fraction of a share as
provided in Section 5.3 hereof. Such conversion shall be deemed to have been
effected immediately prior to the close of business on the date on which such
notice shall have been received by the Company and this Note shall have been
3
presented as aforesaid, and conversion shall be at the Conversion Price in
effect at such time, and at such time the rights of the holder of this Note as
such holder shall cease (to the extent this Note is so converted) and the person
or persons in whose name or names any certificate or certificates for shares
shall be issuable upon such conversion shall be deemed to have become the holder
or holders of record of the shares represented thereby. Upon conversion of less
than all of the unpaid principal amount and interest of this Note, appropriate
notation shall be made on this Note of the principal amount and/or interest so
converted, and this Note shall be retained by the holder following such
notation. Upon conversion of the balance of the principal amount and interest of
this Note, this Note shall be deemed cancelled and the holder shall surrender
this Note to the Company.
5.3. Adjustment for Fractional Shares. No fractional shares or scrip
shall be issued upon conversions of the Note. Any remaining principal amount
shall be paid in cash.
5.4. Adjustment of Conversion Price.
5.4.1. Upon Dilutive Issuances. If the Company shall issue or
sell shares of its Common Stock or "Common Stock Equivalents" (as
defined in Section 5.4.2 below) without consideration or at a price per
share or "Net Consideration Per Share" (as defined in Section 5.4.3
below) less than the Conversion Price in effect immediately prior to
such issuance or sale, then in each such case the Conversion Price,
except as hereinafter provided, shall be lowered so as to be equal to
the greater of (1) the net aggregate consideration, if any, received or
receivable by the Company for the total number of such additional
shares of Common Stock so issued or deemed to be issued divided by the
number of shares of Common Stock so issued or deemed to be issued, or
(2) $0.001.
5.4.2. Common Stock Equivalents.
(a) General. For the purposes of this Section 5.4, the
issuance of any warrants, options, subscription or
purchase rights with respect to shares of Common Stock
and the issuance of any securities convertible into or
exchangeable for shares of Common Stock and the issuance
of any warrants, options, subscription or purchase
rights with respect to such convertible or exchangeable
securities (collectively, "Common Stock Equivalents"),
shall be deemed an issuance of Common Stock. Any
obligation, agreement or undertaking to issue Common
Stock Equivalents at any time in the future shall be
deemed to be an issuance at the time such obligation,
agreement or undertaking is made or arises. No
adjustment of the Conversion Price shall be made under
this Section 5.4 upon the issuance of any shares of
Common Stock which are issued pursuant to the exercise,
conversion or exchange of any Common Stock Equivalents
if any adjustment shall previously have been made upon
the issuance of any such Common Stock Equivalents as
above provided.
4
(b) Adjustments for Adjustment, Cancellation or
Expiration of Common Stock Equivalents. Should the Net
Consideration Per Share of any such Common Stock
Equivalents be decreased or increased from time to time,
then, upon the effectiveness of each such change, the
Conversion Price will be that which would have been
obtained (1) had the adjustments made pursuant to
Section 5.4.1 upon the issuance of such Common Stock
Equivalents been made upon the basis of the new Net
Consideration Per Share of such securities, and (2) had
the adjustments made to the Conversion Price since the
date of issuance of such Common Stock Equivalents been
made to such Conversion Price as adjusted pursuant to
clause (1) above. Any adjustment of the Conversion Price
with respect to this Section which relates to any Common
Stock Equivalent shall be disregarded if, as, and when
such Common Stock Equivalent expires or is canceled
without being exercised, or is repurchased by the
Company at a price per share at or less than the
original purchase price, so that the Conversion Price
effective immediately upon such cancellation or
expiration shall be equal to the Conversion Price that
would have been in effect had the expired or canceled
Common Stock Equivalent not been issued.
5.4.3. Net Consideration Per Share. For purposes of this
Section 5.4, the "Net Consideration Per Share" which shall be
receivable by the Company for any Common Stock Equivalents shall be
determined as follows:
(a) The "Net Consideration Per Share" shall mean the
amount equal to the total amount of consideration, if
any, received by the Company for the issuance of such
Common Stock Equivalents, plus the minimum amount of
consideration, if any, payable to the Company upon
exercise, conversion or exchange thereof, divided by the
aggregate number of shares of Common Stock that would be
issued if all such Common Stock Equivalents were
exercised, exchanged or converted.
(b) The "Net Consideration Per Share" which shall be
receivable by the Company shall be determined in each
instance as of the date of issuance of Common Stock
Equivalents without giving effect to any possible future
upward price adjustments or rate adjustments which may
be applicable with respect to such Common Stock
Equivalents.
5.4.4. Stock Dividends for Holders of Capital Stock Other Than
Common Stock. In the event that the Company shall make or issue, or
shall fix a record date for the determination of holders of any capital
stock of the Company,
5
other than holders of Common Stock, entitled to receive a dividend or
other distribution payable in Common Stock or securities of the
Company convertible into or otherwise exchangeable for shares of
Common Stock of the Company, then such Common Stock or other
securities issued in payment of such dividend shall be deemed to have
been issued for a consideration of $0.001.
5.4.5. Consideration Other than Cash. For purposes of this
Section 5.4, if a part or all of the consideration received by the
Company in connection with the issuance of shares of the Common Stock
or the issuance of any of the securities described in this Section 5.4
consists of property other than cash, such consideration shall be
deemed to have a fair market value as is reasonably determined in good
faith by the Board of Directors of the Company. In the event of any
dispute between the holders of the Note and the Company regarding the
determination of fair market value, at the option of the holder of the
Note, the Company shall engage a consulting firm or investment banking
firm, reasonably acceptable to the holder of the Note, to prepare an
independent appraisal of the fair market value of such property to be
distributed. The expenses of any appraisal by such consulting or
investment banking firm shall be borne by the Company only if the fair
market value of such property to be distributed, as determined in the
independent appraisal, differs from the amount determined by the Board
of Directors by at least ten percent (10%), and otherwise the expenses
of any such appraisal shall be paid by the holders of the Notes.
5.4.6. Exercise of Outstanding Warrants or Options.
(a) In the event that the holder of a warrant to
purchase Common Stock which is outstanding on the date
of original issuance of this Note (an "Outstanding
Warrant") (such date referred to as the "Original
Issuance Date") shall exercise such Outstanding Warrant
on a date subsequent to the Original Issuance Date,
then, in each such case, the Conversion Price of this
Note then in effect shall be automatically adjusted
downward so that the number of shares of Common Stock
into which this Note is convertible (at such adjusted
Conversion Price) shall represent the same Percentage
Ownership (as hereinafter defined) as the Percentage
Ownership which the shares into which this Note was
convertible at the unadjusted Conversion Price
represented immediately prior to the exercise of such
Outstanding Warrant.
(b) In the event that the holder of an option to
purchase Common Stock which is outstanding on the
Original Issuance Date (an "Outstanding Option") shall
exercise such option on a date subsequent to the
Original Issuance Date, then, in each such case, the
Conversion Price of this Note then in effect shall be
automatically adjusted downward so that the number of
shares of Common Stock
6
into which this Note is convertible (at such adjusted
Conversion Price) shall represent the same Percentage
Ownership (as hereinafter defined) as the Percentage
Ownership which the shares into which this Note was
convertible at the unadjusted Conversion Price
represented immediately prior to the exercise of such
Outstanding Option; provided that the adjustment to the
Conversion Price required by this subparagraph (b) shall
not apply with respect to the exercise of Outstanding
Options to purchase up to 300,000 shares of Common Stock
(with appropriate adjustments to such number of shares
to reflect adjustments to the number of shares of Common
Stock issuable under outstanding options in accordance
with the anti-dilution terms of such options).
(c) In the event that the holder of preferred stock,
convertible into Common Stock, which is outstanding on
the Original Issuance Date ("Outstanding Preferred")
shall convert such Outstanding Preferred on a date
subsequent to the Original Issuance Date, then, in each
such case, the Conversion Price of this Note then in
effect shall be automatically adjusted downward so that
the number of shares of Common Stock into which this
Note is convertible (at such adjusted Conversion Price)
shall represent the same Percentage Ownership (as
hereinafter defined) as the Percentage Ownership which
the shares into which this Note was convertible at the
unadjusted Conversion Price represented immediately
prior to the conversion of such Outstanding Preferred.
Notwithstanding the foregoing, no adjustment to the
Conversion Price shall be made as a result of the
conversion of any shares of Series B Convertible Stock
on the Original Issuance Date.
(d) For purposes of this Section 5.4.6, the term
"Percentage Ownership" of particular shares shall mean
the number of votes such shares possess with respect to
the election generally of directors, divided by the
number of votes possessed by all Voting Securities at
such time with respect to the election generally of
directors. For this purpose, the term "Voting
Securities" shall mean all outstanding securities (debt
or equity) of the Company entitled to vote generally in
the election of directors (excluding the Notes) plus the
shares into which the Notes are then convertible plus
the shares into which all other outstanding convertible
securities (which term expressly excludes any
Outstanding Options, Outstanding Warrants, or
Outstanding Preferred) are then convertible plus the
shares which are then issuable upon the exercise of
options granted after the Original Issuance Date which
remain unexercised on the date of determination plus the
shares which are then issuable upon the
7
exercise of up to 300,000 Outstanding Options which
remain outstanding on the date of determination).
5.4.7. Exceptions to Anti-dilution Adjustments. This Section
5.4 shall not apply under any of the following circumstances:
(a) upon the occurrence of any event which would
constitute an Extraordinary Common Stock Event (as
described below);
(b) except as provided in Section 5.4.6, upon the
exercise or conversion of any warrants, options, or
convertible securities issued and outstanding on the
date of original issuance of this Note;
(c) upon the grant of any options to purchase Common
Stock under any employee benefit plan now existing or
implemented in the future, provided the grant of such
options is approved by the Board of Directors of the
Company, and further provided the total number of shares
of Common Stock subject to options granted on or after
the date of original issuance of this Note is no greater
than 21,766,212 plus amounts permitted pursuant to
Section 9.11 of the Purchase Agreement; or
(d) upon the exercise of any options referenced in
Section 5.4.7(c).
5.5. Adjustment Upon Extraordinary Common Stock Event. Upon the
happening of an Extraordinary Common Stock Event (as hereinafter defined), the
Conversion Price shall, simultaneously with the happening of such Extraordinary
Common Stock Event, be adjusted by multiplying the Conversion Price by a
fraction, the numerator of which shall be the number of shares of Common Stock
outstanding immediately prior to such Extraordinary Common Stock Event and the
denominator of which shall be the number of shares of Common Stock outstanding
immediately after such Extraordinary Common Stock Event, and the product so
obtained shall thereafter be the Conversion Price, which, as so adjusted, shall
be readjusted in the same manner upon happening of any successive Extraordinary
Common Stock Event Events.
An "Extraordinary Common Stock Event" shall mean (i) the issue of
additional shares of Common Stock as a dividend or other distribution on
outstanding shares of Common Stock, (ii) subdivision of outstanding shares of
Common Stock into a greater number of shares of Common Stock, or (iii) a
combination or reverse stock split of outstanding shares of Common Stock into a
smaller number of shares of the Common Stock.
5.6. Adjustment Upon Capital Reorganization or Reclassification. If
the Common Stock shall be changed into the same or different number of shares of
any other class or classes of capital stock, whether by capital reorganization,
recapitalization, reclassification or otherwise (other than an Extraordinary
Common Stock Event), then and in each such event the holder of each Note shall
have the right thereafter to convert such Note into, in lieu of the num-
8
ber of shares of Common Stock which the holder would otherwise have been
entitled to receive, the kind and amount of shares of capital stock and other
securities and property receivable upon such reorganization, recapitalization,
reclassification or other change by the holders of the number of shares of
Common Stock into which such Note could have been converted immediately prior to
such reorganization, recapitalization, reclassification or change, all subject
to further adjustment as provided herein. The provision for such conversion
right shall be a condition precedent to the consummation by the Company of any
such transaction.
5.7. Certificate as to Adjustments; Notice by Company. In each case
of an adjustment or readjustment of the Conversion Price, the Company at its
expense will furnish each holder of the Note with a certificate prepared by the
Treasurer or Chief Financial Officer of the Company, showing such adjustment or
readjustment, and stating in detail the facts upon which such adjustment or
readjustment is based.
5.8. Consolidation or Merger. If any consolidation or merger of the
Company with another corporation shall be effected, then, as a condition of such
consolidation or merger, lawful and adequate provision shall be made whereby the
holder of the Note shall thereafter have the right to receive upon the basis and
upon the terms and conditions specified herein and in lieu of the shares of
Common Stock of the Company immediately theretofore receivable upon the
conversion of the Note, such shares of stock, securities or assets as may be
issued or payable with respect to or in exchange for a number of outstanding
shares equal to the number of shares of Common Stock immediately theretofore so
receivable by such holder had such consolidation or merger not taken place, and
in any such case appropriate provision shall be made with respect to the rights
and interests of such holder to the end that the provisions hereof (including
without limitation provisions for adjustment of the Conversion Price) shall
thereafter be applicable, as nearly as may be, in relation to any shares of
stock, securities or assets thereafter deliverable upon the exercise of such
conversion rights. The Company shall not effect any such consolidation or
merger, unless prior to or simultaneously with the consummation thereof the
successor corporation (if other than the Company) resulting from such
consolidation or merger shall assume by written instrument executed and mailed
or delivered to the holder hereof, the obligation to deliver to such holder such
shares of stock, securities or assets as, in accordance with the foregoing
provisions, such holder may be entitled to receive. Except as expressly set
forth in this Section 5.8, however, nothing contained in this Section 5.8 will
be deemed to restrict the Company from entering into a consolidation or merger;
provided, however, that the restrictions of the Purchase Agreement shall remain
applicable.
5.9. Notice of Certain Actions. In case at any time:
5.9.1. the Company shall declare any dividend upon shares of
its capital stock payable in securities or make any special dividend or
other distribution;
5.9.2. the Company shall offer for subscription pro rata to the
holders of any class of its capital stock any additional securities of
any class or other rights;
9
5.9.3. there shall be any capital reorganization, or
reclassification of the capital stock of the Company, or consolidation
or merger of the Company with, or sale of all or substantially all its
assets to, another corporation;
5.9.4. there shall be a voluntary or involuntary dissolution,
liquidation or winding-up of the Company; or
5.9.5. the Company shall enter into an agreement or adopt a
plan for the purpose of effecting a consolidation, merger, or sale of
all or substantially all of its assets;
then, in any one or more of said cases, the Company shall give written notice,
by first class mail, postage prepaid, to the registered holder hereof, of the
date on which (a) the books of the Company shall close or a record shall be
taken for such dividend, distribution or subscription rights, or (b) such
reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation or winding-up shall take place, as the case may be. Such notice
shall also specify the date as of which the holders of shares of record shall
participate in such dividend, distribution or subscription rights, or shall be
entitled to exchange their shares for securities or other property deliverable
upon such reorganization, reclassification, consolidation, merger, sale,
dissolution, liquidation, or winding-up, as the case may be. Such written notice
shall be given at least 30 days prior to the action in question and not less
than 30 days prior to the record date or the date on which the Company's
transfer books are closed in respect thereto.
5.10. Registration and Listing. If any shares required to be
reserved for purposes of conversions of the Note hereunder require registration
with or approval of any governmental authority under any federal (other than the
Securities Act of 1933 or similar federal statute then in force) or state law,
or listing on any national securities exchange, before such shares may be issued
upon conversion, the Company will, at its expense, as expeditiously as possible
cause such shares to be duly registered or approved, or listed on the relevant
national securities exchange, as the case may be.
5.11. Automatic Conversion.
5.11.1. Events Causing Conversion. Immediately (A) upon the
closing of a Qualified Public Offering, as hereinafter defined, but
subject to such closing, or (B) upon the closing of a Qualified Sale of
the Company, but subject to such closing, this Note shall be converted
automatically into the number of shares of Common Stock into which the
Note is then convertible pursuant to Section 5.1 as of the closing and
consummation of such Qualified Public Offering or the date of the event
constituting the Qualified Sale of the Company, without any further
action by the holder of the Note and whether or not the Note is
surrendered to the Company or its transfer agent.
10
5.11.2. Definitions.
(a) A "Qualified Public Offering" shall mean an
underwritten public offering on a firm commitment basis
pursuant to an effective registration statement filed
pursuant to the Securities Act of 1933, as amended
(other than on Form S-4 or S-8 or any successor forms
thereto), covering the offer and sale of Common Stock
for the account of the Company in which the Company
actually receives gross proceeds equal to or greater
than $70,000,000 (calculated before deducting
underwriters discounts and commissions and before
calculation of expenses), and in which the price per
share of Common Stock equals or exceeds $0.3243 (such
price subject to adjustment in the same manner that the
Conversion Price is subject to adjustment under this
Section 5).
(b) A "Qualified Sale of the Company" shall mean a Sale
of the Company which provides for minimum consideration
payable with respect to each share of Common Stock (on a
fully diluted basis) of at least $0.3243 in cash or in
market value of "Liquid Stock" (such price subject to
adjustment in the same manner that the Conversion Price
is subject to adjustment under this Section 5).
(c) The term "Sale of the Company" shall mean a merger
or consolidation of the Company with another company
which is not an Affiliate of the Company, the sale of
all or substantially all of the assets of the Company to
a company which is not an Affiliate of the Company, or
the sale of all or substantially all of the outstanding
Common Stock of the Company to a person or persons who
are not then stockholders of the Company or an Affiliate
of the Company.
(d) "Liquid Stock" shall mean capital stock which is
registered under Section 12(b) or Section 12(g) of the
Securities Exchange Act of 1934, as amended, the
disposition of which would not be significantly
restricted by low trading volume; provided, that capital
stock which is either (i) listed for trading on the
NASDAQ National Market System with average daily trading
volume over the past six months of at least 75,000
shares, or (ii) listed for trading on the New York Stock
Exchange, Inc. shall be deemed to be Liquid Stock.
(e) The term "Affiliate" shall mean a person who
controls, is controlled by, or is under common control
with, the Company.
5.11.3. Automatic Conversion Upon Failure to Pay Purchase Price
Installment. In the event that the holder shall fail to pay any
installment of the pur-
11
chase price of this Note when due pursuant to any of Sections
1.1(b)(ii)-(ix) of the Purchase Agreement, and such failure shall not
be cured on or before the 20th calendar day following such due date,
this Note shall immediately be converted automatically into the number
of shares of Common Stock into which the Note is then convertible
pursuant to Section 5.1 as of the close of business of such 20th day,
without any further action by the holder of the Note and whether or not
the Note is surrendered to the Company or its transfer agent.
5.11.4. Surrender of Certificates Upon Automatic Conversion.
Upon the occurrence of the conversion event specified in either Section
5.11.1 or 5.11.3, the holder of the Note shall, upon notice from the
Company, surrender the Note at the office of the Corporation or its
transfer agent for the Common Stock. Thereupon, there shall be issued
and delivered to such holder a certificate or certificates for the
number of shares of Common Stock into which the Note so surrendered was
convertible on the date on which the conversion occurred. The Company
shall not be obligated to issue such certificates unless the Note is
either delivered to the Company or any such transfer agent or the
holder notifies the Company that the Note has been lost, stolen or
destroyed and executes an agreement satisfactory to the Company to
indemnify the Company from any loss incurred by it in connection
therewith.
6. Event of Default. In case an Event of Default, as defined in the
Purchase Agreement, shall have occurred and be continuing, the unpaid principal
of the Note and any accrued and unpaid interest thereon may be declared, and
upon such declaration shall become, due and payable, in the manner, with the
effect and subject to the conditions provided in the Purchase Agreement and the
Collateral Agreements.
7. Covenants. The Company covenants and agrees with the registered holder
of this Note to do (or refrain from doing) all those things required of the
Company pursuant to the covenants set forth in the Purchase Agreement and the
Collateral Agreements.
8. Exchange or Replacement of Note.
8.1. The holder of the Note, at its option, may in person or by duly
authorized attorney surrender the Note for exchange at the office of the
Company, and at the expense of the Company receive in exchange therefor a new
Note in the same aggregate principal amount as the aggregate unpaid principal
amount of the Note so surrendered and bearing interest at the same annual rate
as the Note so surrendered, each such new Note to be dated as of the date to
which interest has been paid on the Note so surrendered and to be in such
principal amount and, subject to the restrictions on transfer contained in the
Purchase Agreement, payable to such person or persons, or order, as such holder
may designate in writing; provided, however, that the Company shall not be
required to pay any tax which may be payable in respect of any transfer involved
in the issuance and delivery of any new Note in a name other than that of the
holder of the Note surrendered in exchange therefor. Five days prior written
notice of the holder's intention to make such exchange shall be given to the
Company.
12
8.2. Upon receipt by the Company of evidence satisfactory to it of
the loss, theft, destruction or mutilation of this Note and (in case of loss,
theft or destruction) of indemnity satisfactory to it, and upon reimbursement to
the Company of all reasonable expenses incidental thereto, and upon surrender
and cancellation of this Note, if mutilated, the Company will make and deliver a
new Note of like tenor in lieu of this Note. Any Note made and delivered in
accordance with the provisions of this paragraph (b) shall be dated as of the
date to which interest has been paid on this Note.
9. Amendments and Waivers. The holders of more than 80% in aggregate
principal amount of the Notes at the time outstanding and the Company may from
time to time enter into agreements for the purpose of amending or waiving any
covenant, agreement or condition of the Notes or changing in any manner the
rights of the holder of the Notes or the Company; and action of the holders of
more than 80% in aggregate principal amount of the Notes at the time outstanding
shall bind all holders of the Notes, each future-holder of the Notes and upon
the Company, whether or not such Notes shall have been marked to indicate such
amendment or waiver, but any substitute Note issued thereafter shall bear a
notation referring to any such amendment or continuing waiver.
10. Communications. All communications provided for hereunder shall be made
in accordance with the requirements of Section 14.7 of the Purchase Agreement.
11. Severability. Should any part but not the whole of this Note for any
reason be declared invalid, such decision shall not affect the validity of any
remaining portion, which remaining portion shall remain in force and effect as
if this Note had been executed with the invalid portion thereof eliminated, and
it is hereby declared the intention of the parties hereto that they would have
executed the remaining portion of this Note without including therein any such
part which may, for any reason, be hereafter declared invalid.
12. Captions. The descriptive headings of the various Sections or parts of
this Note are for convenience only and shall not affect the meaning or
construction of any of the provisions hereof.
13. Successors and Assigns. This Note shall be binding upon the parties and
their respective successors and assigns.
14. Governing Law. This Note shall be governed by the laws of the State of
Delaware.
AIRNET COMMUNICATIONS CORPORATION
By: /s/
-------------------------------------
13
SCHEDULE A
This schedule sets forth the principal amount borrowed by the Company from
TECORE, up to the maximum amount set forth on the face of this Note.
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Date Principal Amount Signature of Authorized Officer of
the Company
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SCHEDULE B
This schedule sets forth the principal amount and/or interest converted
into Common Stock.
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Date Principal Amount Converted Interest Amount Converted
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AIRNET COMMUNICATIONS CORPORATION
SENIOR SECURED CONVERTIBLE NOTE
CONVERSION NOTICE
AirNet Communications Corporation:
The undersigned holder of this Note hereby irrevocably exercises the option
to convert this Note, or such portion hereof as is specified below, into shares
of Common Stock of AirNet Communications Corporation in accordance with the
terms of this Note, and directs that the shares issuable and deliverable upon
the conversion be issued in the name of and delivered to the undersigned unless
a different name has been indicated below. If shares are to be issued in the
name of a person other than the undersigned, the undersigned will pay transfer
taxes payable with respect thereto. If this conversion involves fractional
shares, please issue the related check to the same person entitled to receive
the shares.
Dated: ____________________ Principal Amount to be converted (if less
than all):
$
--------------------------
Accrued Interest on Principal Amount to be
converted:
If shares are to be issued
otherwise than to owner:
Tax Identification
Number of Transferee_______ --------------------------------------
Signature of Owner
---------------------------
---------------------------
---------------------------Please print name and address of Transferee
(including zip code)
Exhibit E
This Note has been acquired for investment and has not been registered
under the Securities Act of 1933, as amended, or the securities laws of any
other jurisdiction. This Note is subject to the terms of a Securities Purchase
Agreement, dated as of June 5, 2003, among the issuer, TECORE, Inc, and SCP
Private Equity Partners II, L.P. (the "Purchase Agreement"), a copy of which may
be obtained by the registered holder hereof from the Secretary of the issuer.
The sale and transfer of this Note is restricted under the terms of the Tag
Along Allocation Agreement, dated as of the date of this Note between the
issuer, TECORE, Inc, and SCP Private Equity Partners II, L.P.(the "Tag Along
Agreement"). No transfer of any interest in this Note shall be effective unless
permitted by and made in accordance with the Purchase Agreement and the Tag
Along Agreement, and by accepting this Note the holder of this Note agrees to be
bound by the Purchase Agreement and the Tag Along Agreement.
$4,000,000
AIRNET COMMUNICATIONS CORPORATION
Senior Secured Convertible Note
_______ __, 2003
1. General. AIRNET COMMUNICATIONS CORPORATION, a Delaware corporation
(hereinafter called the "Company"), for value received, hereby promises to pay
to SCP PRIVATE EQUITY PARTNERS II, L.P. ("SCP"), or registered assigns, the
principal amount of FOUR MILLION DOLLARS ($4,000,000.00) on _________ __, 2007
(the "Maturity Date"), and to pay interest on the unpaid balance of the
principal hereof from the date hereof at the rate of twelve percent (12%) per
annum (which shall accrue on a daily basis), payable at maturity, and to pay
interest at the rate of fifteen percent (15%) per annum on any overdue
principal, from the due date thereof until the obligation of the Company with
respect to the payment thereof shall be discharged. All payments of principal
and interest on this Note shall be paid by Company check or official bank check
sent first class mail, postage prepaid, to such address as the holder hereof
shall notify the Company of in writing, or, absent such notice, to the last
address of such holder as recorded in the Company' s books (in which case the
Company may rely on such address and shall be deemed to have discharged its
obligations hereunder as to any payments made to that address). At the option of
the holder, the Company shall pay principal and interest on this Note by wire
transfer in accordance with wire transfer instructions provided by the holder to
the Company at least ten (10) days prior to the date on which the principal and
interest is payable hereunder. The Company shall have no right to prepay any
principal or interest due under this Note.
2. The Notes. As used herein, the term "Note" or "Notes" refer to the
Senior Secured Convertible Notes in the aggregate principal amount of
$16,000,000 issued pursuant to the terms of the Securities Purchase Agreement,
dated as of June 5, 2003, among the Company, TECORE, Inc, and SCP Private Equity
Partners II, L.P. (the "Purchase Agreement"), and to any Note or Notes executed
and delivered by the Company in exchange or replacement hereof pursuant to
Section 9 hereof or pursuant to any transfer of a Note. Unless the context
otherwise re-
quires, the term "holder" is used herein to mean the person named as payee in
Section 1 hereof or any other person who shall at the time be the holder or
assignee of this Note. This Note is referred to in the Purchase Agreement and is
entitled to the benefits of the terms and provisions of the Purchase Agreement.
No reference herein to the Purchase Agreement and no provision of this Note or
the Purchase Agreement shall alter the obligation of the Company, which is
absolute and unconditional, to pay the principal and interest on the Note at the
time and in the manner prescribed herein.
3. Security Interest. This Note is secured by and is entitled to the
benefits of (i) the Security Agreement, dated as of January 24, 2003, by and
among the Company and the purchasers of the Notes (the "Original Security
Agreement"), as amended by the First Amendment to Security Agreement, dated as
of ________ __, 2003, by and among the Company and the purchasers of the Notes
(the "Amendment to Security Agreement") (the Original Security Agreement, as so
amended by the Amendment to Security Agreement is referred to as the "Amended
Security Agreement"), (ii) the "Amended and Restated Technology Collateral
Escrow Agreement, dated as of ________ __, 2003, by and among the Company and
the purchasers of the Notes (the "Escrow Agreement"), and (iii) the Amended and
Restated Collateral Assignment of Patents, Trademarks & Copyrights, dated as of
____________ __, 2003, by and among the Company and the purchaser of the Notes
(the "Collateral Assignment"). (The Amended Security Agreement, the Escrow
Agreement, and the Collateral Assignment are sometimes referred to herein as the
"Collateral Agreements.") In addition to the rights and remedies given it by
this Note, the Collateral Agreements, and the Purchase Agreement, the holder
shall have all those rights and remedies allowed by applicable laws, including
without limitation, the Uniform Commercial Code. The rights and remedies of the
holder are cumulative, and recourse to one or more right or remedy shall not
constitute a waiver of the others. The Company shall be liable for all
commercially reasonable costs, expenses and attorneys' fees incurred by the
holder in connection with the collection of the indebtedness evidenced by the
Note.
4. Voting Rights.
4.1. General Rights. Except as otherwise provided herein or as
required by law, the holders of the Notes:
4.1.1. shall be entitled to vote in respect to the corporate
affairs and management of the Company to the extent hereinafter
provided;
4.1.2. shall have the same right of inspection of the books,
accounts and other records of the Company which the holders of Common
Stock have or may have under the Delaware General Corporation Law (the
"GCL") or the Company's certificate of incorporation; and
4.1.3. shall be deemed to be stockholders of the Company, and
the Notes shall be deemed to be stock, for the purpose of any provision
of the GCL which requires the vote of stockholders as a prerequisite to
any corporate action.
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4.2. Number of Votes. The Notes shall be voted equally with the
shares of the Common Stock of the Company, and not as a separate class, at any
annual or special meeting of stockholders of the Company or in connection with
any solicitation of written consents in lieu of a meeting, upon the following
basis: the holder of this Note shall be entitled to such number of votes as
shall be equal to the whole number of shares of Common Stock into which this
Note is convertible pursuant to Section 5 hereof immediately after the close of
business on the record date fixed for such meeting or the effective date of such
written consent; provided, however, that in calculating the number of shares
into which this Note is then convertible for purposes of calculating such number
of votes, the initial Conversion Price, as hereinafter defined, shall be deemed
to be $.57 representing the average closing price of the Common Stock on the
date of execution of the Purchase Agreement and the four business days prior to
such execution (the "Deemed Conversion Price") (which Deemed Conversion Price is
subject to adjustment in the same manner that the Conversion Price is subject to
adjustment as provided in Sections 5.5 and 5.6).
5. Conversion of Note.
5.1. Right to Convert. Subject to and upon compliance with the
provisions hereof, the holder of this Note shall have the right, at such
holder's option, at any time, to convert all or any portion of the unpaid
principal amount hereof and all or any portion of accrued but unpaid interest
into shares of Common Stock, $.001 par value, of the Company ("Common Stock") at
the price of $0.10810 per share (the "Original Conversion Price"), or, in case
an adjustment of such price has taken place pursuant to the further provisions
of this Section 5, then at the price as last adjusted and in effect on the date
this Note or portion hereof is presented for conversion (the Original Conversion
Price or the Original Conversion Price as last adjusted, as the case may be,
being referred to herein as the "Conversion Price"). The minimum principal
amount of this Note which may be converted at any time shall be the lesser of
(a) $100,000 or (b) the outstanding principal balance of this Note.
5.2. Exercise of Conversion Privilege. In order to exercise the
conversion privilege, the holder of this Note shall present it to the Company at
the office of the Company, accompanied by written notice to the Company (with
copies to the holders of any other Notes) that the holder elects to convert this
Note, or, if less than the entire unpaid principal amount hereof and interest
thereon is to be converted, the portion hereof to be converted. Such notice
shall also state the name or names (with address) in which the certificate or
certificates for shares of Common Stock which shall be issuable on such
conversion shall be issued. As soon as practicable after the receipt of such
notice and the presentation of this Note, the Company shall issue and shall
deliver to the holder of this Note a certificate or certificates for the number
of full shares of Common Stock issuable upon the conversion of this Note (or
portion hereof), and provision shall be made for any fraction of a share as
provided in Section 5.3 hereof. Such conversion shall be deemed to have been
effected immediately prior to the close of business on the date on which such
notice shall have been received by the Company and this Note shall have been
presented as aforesaid, and conversion shall be at the Conversion Price in
effect at such time, and at such time the rights of the holder of this Note as
such holder shall cease (to the extent this Note is so converted) and the person
or persons in whose name or names any certificate or certificates for shares
shall be issuable upon such conversion shall be deemed to have become the
3
holder or holders of record of the shares represented thereby. Upon conversion
of less than all of the unpaid principal amount and interest of this Note,
appropriate notation shall be made on this Note of the principal amount and/or
interest so converted, and this Note shall be retained by the holder following
such notation. Upon conversion of the balance of the principal amount and
interest of this Note, this Note shall be deemed cancelled and the holder shall
surrender this Note to the Company.
5.3. Adjustment for Fractional Shares. No fractional shares or scrip
shall be issued upon conversions of the Note. Any remaining principal amount
shall be paid in cash.
5.4. Adjustment of Conversion Price.
5.4.1. Upon Dilutive Issuances. If the Company shall issue or
sell shares of its Common Stock or "Common Stock Equivalents" (as
defined in Section 5.4.2 below) without consideration or at a price per
share or "Net Consideration Per Share" (as defined in Section 5.4.3
below) less than the Conversion Price in effect immediately prior to
such issuance or sale, then in each such case the Conversion Price,
except as hereinafter provided, shall be lowered so as to be equal to
the greater of (1) the net aggregate consideration, if any, received or
receivable by the Company for the total number of such additional
shares of Common Stock so issued or deemed to be issued divided by the
number of shares of Common Stock so issued or deemed to be issued, or
(2) $0.001.
5.4.2. Common Stock Equivalents.
(a) General. For the purposes of this Section 5.4, the
issuance of any warrants, options, subscription or
purchase rights with respect to shares of Common Stock
and the issuance of any securities convertible into or
exchangeable for shares of Common Stock and the issuance
of any warrants, options, subscription or purchase
rights with respect to such convertible or exchangeable
securities (collectively, "Common Stock Equivalents"),
shall be deemed an issuance of Common Stock. Any
obligation, agreement or undertaking to issue Common
Stock Equivalents at any time in the future shall be
deemed to be an issuance at the time such obligation,
agreement or undertaking is made or arises. No
adjustment of the Conversion Price shall be made under
this Section 5.4 upon the issuance of any shares of
Common Stock which are issued pursuant to the exercise,
conversion or exchange of any Common Stock Equivalents
if any adjustment shall previously have been made upon
the issuance of any such Common Stock Equivalents as
above provided.
(b) Adjustments for Adjustment, Cancellation or
Expiration of Common Stock Equivalents. Should the Net
Consideration Per Share of any such Common Stock
Equivalents be decreased or increased
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from time to time, then, upon the effectiveness of each
such change, the Conversion Price will be that which
would have been obtained (1) had the adjustments made
pursuant to Section 5.4.1 upon the issuance of such
Common Stock Equivalents been made upon the basis of the
new Net Consideration Per Share of such securities, and
(2) had the adjustments made to the Conversion Price
since the date of issuance of such Common Stock
Equivalents been made to such Conversion Price as
adjusted pursuant to clause (1) above. Any adjustment of
the Conversion Price with respect to this Section which
relates to any Common Stock Equivalent shall be
disregarded if, as, and when such Common Stock
Equivalent expires or is canceled without being
exercised, or is repurchased by the Company at a price
per share at or less than the original purchase price,
so that the Conversion Price effective immediately upon
such cancellation or expiration shall be equal to the
Conversion Price that would have been in effect had the
expired or canceled Common Stock Equivalent not been
issued.
5.4.3. Net Consideration Per Share. For purposes of this
Section 5.4, the "Net Consideration Per Share" which shall be
receivable by the Company for any Common Stock Equivalents shall be
determined as follows:
(a) The "Net Consideration Per Share" shall mean the
amount equal to the total amount of consideration, if
any, received by the Company for the issuance of such
Common Stock Equivalents, plus the minimum amount of
consideration, if any, payable to the Company upon
exercise, conversion or exchange thereof, divided by the
aggregate number of shares of Common Stock that would be
issued if all such Common Stock Equivalents were
exercised, exchanged or converted.
(b) The "Net Consideration Per Share" which shall be
receivable by the Company shall be determined in each
instance as of the date of issuance of Common Stock
Equivalents without giving effect to any possible future
upward price adjustments or rate adjustments which may
be applicable with respect to such Common Stock
Equivalents.
5.4.4. Stock Dividends for Holders of Capital Stock Other Than
Common Stock. In the event that the Company shall make or issue, or
shall fix a record date for the determination of holders of any capital
stock of the Company, other than holders of Common Stock, entitled to
receive a dividend or other distribution payable in Common Stock or
securities of the Company convertible into or otherwise exchangeable
for shares of Common Stock of the Company, then
5
such Common Stock or other securities issued in payment of such
dividend shall be deemed to have been issued for a consideration of
$0.001.
5.4.5. Consideration Other than Cash. For purposes of this
Section 5.4, if a part or all of the consideration received by the
Company in connection with the issuance of shares of the Common Stock
or the issuance of any of the securities described in this Section 5.4
consists of property other than cash, such consideration shall be
deemed to have a fair market value as is reasonably determined in good
faith by the Board of Directors of the Company. In the event of any
dispute between the holders of the Note and the Company regarding the
determination of fair market value, at the option of the holder of the
Note, the Company shall engage a consulting firm or investment banking
firm, reasonably acceptable to the holder of the Note, to prepare an
independent appraisal of the fair market value of such property to be
distributed. The expenses of any appraisal by such consulting or
investment banking firm shall be borne by the Company only if the fair
market value of such property to be distributed, as determined in the
independent appraisal, differs from the amount determined by the Board
of Directors by at least ten percent (10%), and otherwise the expenses
of any such appraisal shall be paid by the holders of the Notes.
5.4.6. Exercise of Outstanding Warrants or Options.
(a) In the event that the holder of a warrant to
purchase Common Stock which is outstanding on the date
of original issuance of this Note (an "Outstanding
Warrant") (such date referred to as the "Original
Issuance Date") shall exercise such Outstanding Warrant
on a date subsequent to the Original Issuance Date,
then, in each such case, the Conversion Price of this
Note then in effect shall be automatically adjusted
downward so that the number of shares of Common Stock
into which this Note is convertible (at such adjusted
Conversion Price) shall represent the same Percentage
Ownership (as hereinafter defined) as the Percentage
Ownership which the shares into which this Note was
convertible at the unadjusted Conversion Price
represented immediately prior to the exercise of such
Outstanding Warrant.
(b) In the event that the holder of an option to
purchase Common Stock which is outstanding on the
Original Issuance Date (an "Outstanding Option") shall
exercise such option on a date subsequent to the
Original Issuance Date, then, in each such case, the
Conversion Price of this Note then in effect shall be
automatically adjusted downward so that the number of
shares of Common Stock into which this Note is
convertible (at such adjusted Conversion Price) shall
represent the same Percentage Ownership (as hereinafter
defined) as the Percentage Ownership which the shares
into
6
which this Note was convertible at the unadjusted
Conversion Price represented immediately prior to the
exercise of such Outstanding Option; provided that the
adjustment to the Conversion Price required by this
subparagraph (b) shall not apply with respect to the
exercise of Outstanding Options to purchase up to
300,000 shares of Common Stock (with appropriate
adjustments to such number of shares to reflect
adjustments to the number of shares of Common Stock
issuable under outstanding options in accordance with
the anti-dilution terms of such options).
(c) In the event that the holder of preferred stock,
convertible into Common Stock, which is outstanding on
the Original Issuance Date ("Outstanding Preferred")
shall convert such Outstanding Preferred on a date
subsequent to the Original Issuance Date, then, in each
such case, the Conversion Price of this Note then in
effect shall be automatically adjusted downward so that
the number of shares of Common Stock into which this
Note is convertible (at such adjusted Conversion Price)
shall represent the same Percentage Ownership (as
hereinafter defined) as the Percentage Ownership which
the shares into which this Note was convertible at the
unadjusted Conversion Price represented immediately
prior to the conversion of such Outstanding Preferred.
Notwithstanding the foregoing, no adjustment to the
Conversion Price shall be made as a result of the
conversion of any shares of Series B Convertible Stock
on the Original Issuance Date.
(d) For purposes of this Section 5.4.6, the term
"Percentage Ownership" of particular shares shall mean
the number of votes such shares possess with respect to
the election generally of directors, divided by the
number of votes possessed by all Voting Securities at
such time with respect to the election generally of
directors. For this purpose, the term "Voting
Securities" shall mean all outstanding securities (debt
or equity) of the Company entitled to vote generally in
the election of directors (excluding the Notes) plus the
shares into which the Notes are then convertible plus
the shares into which all other outstanding convertible
securities (which term expressly excludes any
Outstanding Options, Outstanding Warrants, or
Outstanding Preferred) are then convertible plus the
shares which are then issuable upon the exercise of
options granted after the Original Issuance Date which
remain unexercised on the date of determination plus the
shares which are then issuable upon the exercise of up
to 300,000 Outstanding Options which remain outstanding
on the date of determination).
7
5.4.7. Exceptions to Anti-dilution Adjustments. This Section
5.4 shall not apply under any of the following circumstances:
(a) upon the occurrence of any event which would
constitute an Extraordinary Common Stock Event (as
described below);
(b) except as provided in Section 5.4.6, upon the
exercise or conversion of any warrants, options, or
convertible securities issued and outstanding on the
date of original issuance of this Note;
(c) upon the grant of any options to purchase Common
Stock under any employee benefit plan now existing or
implemented in the future, provided the grant of such
options is approved by the Board of Directors of the
Company, and further provided the total number of shares
of Common Stock subject to options granted on or after
the date of original issuance of this Note is no greater
than 21,766,212 plus amounts permitted pursuant to
Section 9.11 of the Purchase Agreement; or
(d) upon the exercise of any options referenced in
Section 5.4.7(c).
5.5. Adjustment Upon Extraordinary Common Stock Event. Upon the
happening of an Extraordinary Common Stock Event (as hereinafter defined), the
Conversion Price shall, simultaneously with the happening of such Extraordinary
Common Stock Event, be adjusted by multiplying the Conversion Price by a
fraction, the numerator of which shall be the number of shares of Common Stock
outstanding immediately prior to such Extraordinary Common Stock Event and the
denominator of which shall be the number of shares of Common Stock outstanding
immediately after such Extraordinary Common Stock Event, and the product so
obtained shall thereafter be the Conversion Price, which, as so adjusted, shall
be readjusted in the same manner upon happening of any successive Extraordinary
Common Stock Event Events.
An "Extraordinary Common Stock Event" shall mean (i) the issue of
additional shares of Common Stock as a dividend or other distribution on
outstanding shares of Common Stock, (ii) subdivision of outstanding shares of
Common Stock into a greater number of shares of Common Stock, or (iii) a
combination or reverse stock split of outstanding shares of Common Stock into a
smaller number of shares of the Common Stock.
5.6. Adjustment Upon Capital Reorganization or Reclassification. If
the Common Stock shall be changed into the same or different number of shares of
any other class or classes of capital stock, whether by capital reorganization,
recapitalization, reclassification or otherwise (other than an Extraordinary
Common Stock Event), then and in each such event the holder of each Note shall
have the right thereafter to convert such Note into, in lieu of the number of
shares of Common Stock which the holder would otherwise have been entitled to
receive, the kind and amount of shares of capital stock and other securities and
property receivable upon such reorganization, recapitalization, reclassification
or other change by the holders of the num-
8
ber of shares of Common Stock into which such Note could have been converted
immediately prior to such reorganization, recapitalization, reclassification or
change, all subject to further adjustment as provided herein. The provision for
such conversion right shall be a condition precedent to the consummation by the
Company of any such transaction.
5.7. Certificate as to Adjustments; Notice by Company. In each case
of an adjustment or readjustment of the Conversion Price, the Company at its
expense will furnish each holder of the Note with a certificate prepared by the
Treasurer or Chief Financial Officer of the Company, showing such adjustment or
readjustment, and stating in detail the facts upon which such adjustment or
readjustment is based.
5.8. Consolidation or Merger. If any consolidation or merger of the
Company with another corporation shall be effected, then, as a condition of such
consolidation or merger, lawful and adequate provision shall be made whereby the
holder of the Note shall thereafter have the right to receive upon the basis and
upon the terms and conditions specified herein and in lieu of the shares of
Common Stock of the Company immediately theretofore receivable upon the
conversion of the Note, such shares of stock, securities or assets as may be
issued or payable with respect to or in exchange for a number of outstanding
shares equal to the number of shares of Common Stock immediately theretofore so
receivable by such holder had such consolidation or merger not taken place, and
in any such case appropriate provision shall be made with respect to the rights
and interests of such holder to the end that the provisions hereof (including
without limitation provisions for adjustment of the Conversion Price) shall
thereafter be applicable, as nearly as may be, in relation to any shares of
stock, securities or assets thereafter deliverable upon the exercise of such
conversion rights. The Company shall not effect any such consolidation or
merger, unless prior to or simultaneously with the consummation thereof the
successor corporation (if other than the Company) resulting from such
consolidation or merger shall assume by written instrument executed and mailed
or delivered to the holder hereof, the obligation to deliver to such holder such
shares of stock, securities or assets as, in accordance with the foregoing
provisions, such holder may be entitled to receive. Except as expressly set
forth in this Section 5.8, however, nothing contained in this Section 5.8 will
be deemed to restrict the Company from entering into a consolidation or merger;
provided, however, that the restrictions of the Purchase Agreement shall remain
applicable.
5.9. Notice of Certain Actions. In case at any time:
5.9.1. the Company shall declare any dividend upon shares of
its capital stock payable in securities or make any special dividend or
other distribution;
5.9.2. the Company shall offer for subscription pro rata to the
holders of any class of its capital stock any additional securities of
any class or other rights;
5.9.3. there shall be any capital reorganization, or
reclassification of the capital stock of the Company, or consolidation
or merger of the Company with, or sale of all or substantially all its
assets to, another corporation;
9
5.9.4. there shall be a voluntary or involuntary dissolution,
liquidation or winding-up of the Company; or
5.9.5. the Company shall enter into an agreement or adopt a
plan for the purpose of effecting a consolidation, merger, or sale of
all or substantially all of its assets;
then, in any one or more of said cases, the Company shall give written notice,
by first class mail, postage prepaid, to the registered holder hereof, of the
date on which (a) the books of the Company shall close or a record shall be
taken for such dividend, distribution or subscription rights, or (b) such
reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation or winding-up shall take place, as the case may be. Such notice
shall also specify the date as of which the holders of shares of record shall
participate in such dividend, distribution or subscription rights, or shall be
entitled to exchange their shares for securities or other property deliverable
upon such reorganization, reclassification, consolidation, merger, sale,
dissolution, liquidation, or winding-up, as the case may be. Such written notice
shall be given at least 30 days prior to the action in question and not less
than 30 days prior to the record date or the date on which the Company's
transfer books are closed in respect thereto.
5.10. Registration and Listing. If any shares required to be reserved
for purposes of conversions of the Note hereunder require registration with or
approval of any governmental authority under any federal (other than the
Securities Act of 1933 or similar federal statute then in force) or state law,
or listing on any national securities exchange, before such shares may be issued
upon conversion, the Company will, at its expense, as expeditiously as possible
cause such shares to be duly registered or approved, or listed on the relevant
national securities exchange, as the case may be.
5.11. Automatic Conversion.
5.11.1. Events Causing Conversion. Immediately (A) upon the
closing of a Qualified Public Offering, as hereinafter defined, but
subject to such closing, or (B) upon the closing of a Qualified Sale of
the Company, but subject to such closing, this Note shall be converted
automatically into the number of shares of Common Stock into which the
Note is then convertible pursuant to Section 5.1 as of the closing and
consummation of such Qualified Public Offering or the date of the event
constituting the Qualified Sale of the Company, without any further
action by the holder of the Note and whether or not the Note is
surrendered to the Company or its transfer agent.
5.11.2. Definitions.
(a) A "Qualified Public Offering" shall mean an
underwritten public offering on a firm commitment basis
pursuant to an effective registration statement filed
pursuant to the Securities Act of 1933, as amended
(other than on Form S-4 or S-8 or any successor forms
10
thereto), covering the offer and sale of Common Stock
for the account of the Company in which the Company
actually receives gross proceeds equal to or greater
than $70,000,000 (calculated before deducting
underwriters discounts and commissions and before
calculation of expenses), and in which the price per
share of Common Stock equals or exceeds $0.3243 (such
price subject to adjustment in the same manner that the
Conversion Price is subject to adjustment under this
Section 5).
(b) A "Qualified Sale of the Company" shall mean a Sale
of the Company which provides for minimum consideration
payable with respect to each share of Common Stock (on a
fully diluted basis) of at least $0.3243 in cash or in
market value of "Liquid Stock" (such price subject to
adjustment in the same manner that the Conversion Price
is subject to adjustment under this Section 5).
(c) The term "Sale of the Company" shall mean a merger
or consolidation of the Company with another company
which is not an Affiliate of the Company, the sale of
all or substantially all of the assets of the Company to
a company which is not an Affiliate of the Company, or
the sale of all or substantially all of the outstanding
Common Stock of the Company to a person or persons who
are not then stockholders of the Company or an Affiliate
of the Company.
(d) "Liquid Stock" shall mean capital stock which is
registered under Section 12(b) or Section 12(g) of the
Securities Exchange Act of 1934, as amended, the
disposition of which would not be significantly
restricted by low trading volume; provided, that capital
stock which is either (i) listed for trading on the
NASDAQ National Market System with average daily trading
volume over the past six months of at least 75,000
shares, or (ii) listed for trading on the New York Stock
Exchange, Inc. shall be deemed to be Liquid Stock.
(e) The term "Affiliate" shall mean a person who
controls, is controlled by, or is under common control
with, the Company.
5.11.3. [Omitted].
5.11.4. Surrender of Certificates Upon Automatic Conversion.
Upon the occurrence of the conversion event specified in either Section
5.11.1 or 5.11.3, the holder of the Note shall, upon notice from the
Company, surrender the Note at the office of the Corporation or its
transfer agent for the Common Stock. Thereupon, there shall be issued
and delivered to such holder a certificate or certificates for the
number of shares of Common Stock into which the Note so surrendered was
11
convertible on the date on which the conversion occurred. The Company
shall not be obligated to issue such certificates unless the Note is
either delivered to the Company or any such transfer agent or the
holder notifies the Company that the Note has been lost, stolen or
destroyed and executes an agreement satisfactory to the Company to
indemnify the Company from any loss incurred by it in connection
therewith.
6. Event of Default. In case an Event of Default, as defined in the
Purchase Agreement, shall have occurred and be continuing, the unpaid principal
of the Note and any accrued and unpaid interest thereon may be declared, and
upon such declaration shall become, due and payable, in the manner, with the
effect and subject to the conditions provided in the Purchase Agreement and the
Collateral Agreements.
7. Covenants. The Company covenants and agrees with the registered holder
of this Note to do (or refrain from doing) all those things required of the
Company pursuant to the covenants set forth in the Purchase Agreement and the
Collateral Agreements.
8. Exchange or Replacement of Note.
8.1. The holder of the Note, at its option, may in person or by duly
authorized attorney surrender the Note for exchange at the office of the
Company, and at the expense of the Company receive in exchange therefor a new
Note in the same aggregate principal amount as the aggregate unpaid principal
amount of the Note so surrendered and bearing interest at the same annual rate
as the Note so surrendered, each such new Note to be dated as of the date to
which interest has been paid on the Note so surrendered and to be in such
principal amount and, subject to the restrictions on transfer contained in the
Purchase Agreement, payable to such person or persons, or order, as such holder
may designate in writing; provided, however, that the Company shall not be
required to pay any tax which may be payable in respect of any transfer involved
in the issuance and delivery of any new Note in a name other than that of the
holder of the Note surrendered in exchange therefor. Five days prior written
notice of the holder's intention to make such exchange shall be given to the
Company.
8.2. Upon receipt by the Company of evidence satisfactory to it of
the loss, theft, destruction or mutilation of this Note and (in case of loss,
theft or destruction) of indemnity satisfactory to it, and upon reimbursement to
the Company of all reasonable expenses incidental thereto, and upon surrender
and cancellation of this Note, if mutilated, the Company will make and deliver a
new Note of like tenor in lieu of this Note. Any Note made and delivered in
accordance with the provisions of this paragraph (b) shall be dated as of the
date to which interest has been paid on this Note.
9. Amendments and Waivers. The holders of more than 80% in aggregate
principal amount of the Notes at the time outstanding and the Company may from
time to time enter into agreements for the purpose of amending or waiving any
covenant, agreement or condition of the Notes or changing in any manner the
rights of the holder of the Notes or the Company; and action of the holders of
more than 80% in aggregate principal amount of the Notes at the time out-
12
standing shall bind all holders of the Notes, each future-holder of the Notes
and upon the Company, whether or not such Notes shall have been marked to
indicate such amendment or waiver, but any substitute Note issued thereafter
shall bear a notation referring to any such amendment or continuing waiver.
10. Communications. All communications provided for hereunder shall be made
in accordance with the requirements of Section 14.7 of the Purchase Agreement.
11. Severability. Should any part but not the whole of this Note for any
reason be declared invalid, such decision shall not affect the validity of any
remaining portion, which remaining portion shall remain in force and effect as
if this Note had been executed with the invalid portion thereof eliminated, and
it is hereby declared the intention of the parties hereto that they would have
executed the remaining portion of this Note without including therein any such
part which may, for any reason, be hereafter declared invalid.
12. Captions. The descriptive headings of the various Sections or parts of
this Note are for convenience only and shall not affect the meaning or
construction of any of the provisions hereof.
13. Successors and Assigns. This Note shall be binding upon the parties and
their respective successors and assigns.
14. Governing Law. This Note shall be governed by the laws of the State of
Delaware.
AIRNET COMMUNICATIONS CORPORATION
By:
---------------------------------
13
SCHEDULE A
This schedule sets forth the principal amount and/or interest converted
into Common Stock.
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Date Principal Amount Converted Interest Amount Converted
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AIRNET COMMUNICATIONS CORPORATION
SENIOR SECURED CONVERTIBLE NOTE
CONVERSION NOTICE
AirNet Communications Corporation:
The undersigned holder of this Note hereby irrevocably exercises the option
to convert this Note, or such portion hereof as is specified below, into shares
of Common Stock of AirNet Communications Corporation in accordance with the
terms of this Note, and directs that the shares issuable and deliverable upon
the conversion be issued in the name of and delivered to the undersigned unless
a different name has been indicated below. If shares are to be issued in the
name of a person other than the undersigned, the undersigned will pay transfer
taxes payable with respect thereto. If this conversion involves fractional
shares, please issue the related check to the same person entitled to receive
the shares.
Dated: ____________________ Principal Amount to be converted (if less
than all):
$
--------------------------
Accrued Interest on Principal Amount to be
converted:
If shares are to be issued
otherwise than to owner:
Tax Identification
Number of Transferee_______ ---------------------------------------
Signature of Owner
---------------------------
---------------------------
---------------------------Please print name and address of Transferee
(including zip code)
Exhibit F
INTERCREDITOR AND SUBORDINATION AGREEMENT
-----------------------------------------
THIS AGREEMENT is dated as of the ____ day of ________________, 2003, by
and among: AIRNET COMMUNICATIONS CORPORATION, a Delaware corporation (the
"Borrower"), FORCE COMMUNICATIONS CORPORATION, a Delaware corporation ("Force"),
SANMINA CORPORATION, a Delaware corporation ("Sanmina"), and BROOKTROUT, INC.,
Massachusetts corporation ("Brooktrout" and together with Force and Sanmina,
collectively and individually, the "Subordinated Lender"); and SCP PRIVATE
EQUITY PARTNERS II, LP, a Delaware limited partnership ("SCP II") and TECORE,
INC., a Texas corporation ("Tecore" and together with SCP II, collectively and
individually, the "Lenders").
W I T N E S S E T H T H A T:
-----------------------------
In order to induce the Lenders to make financial accommodations to the
Borrower, and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the Borrower and the Subordinated
Lender hereby agree with the Lenders that, so long as any Senior Indebtedness
(as hereinafter defined) is outstanding or committed to be advanced, each such
party will comply with such of the following provisions as are applicable to it:
1. Certain Definitions.
1.1 Senior Indebtedness. The term "Senior Indebtedness" shall mean:
(a) any and all loans, advances, extensions of credit to, and all
other indebtedness, obligations and liabilities, whether now existing or
hereafter arising, direct or contingent, of the Borrower now or hereafter
owing to the Lenders outstanding from time to time, whether pursuant to:
(i) that certain Securities Purchase Agreement dated as of
April ____, 2003, by and between the Borrower and the Lenders, as the same
may be amended, restated, supplemented, renewed, replaced or extended from
time to time (the "Purchase Agreement");
(ii) those certain Convertible Promissory Notes dated April
___, 2003, as the same may be amended, restated, supplemented, renewed,
replaced or extended from time to time (the "Notes"), issued by the
Borrower to the Lenders from time to time in the original aggregate
principal amount of up to $16,000,000.00, or
(iii) otherwise, including, without limitation, any and all
indebtedness to the Lenders in respect of any and all future loans or
advances or extensions of credit made to the Borrower by the Lenders, or
any of them, prior to,
during or following any proceeding in respect of any Reorganization
(as defined in Section 3.2 hereof); and
(b) all interest thereon and all fees, expenses and other amounts
(including costs of collection and reasonable attorneys' fees) at any time
owing to the Lenders, whether arising in connection with the Purchase
Agreement, the Notes or such other indebtedness (regardless of the extent
to which the Purchase Agreement, the Notes or such other indebtedness is
enforceable against the Borrower and regardless of the extent to which such
amounts are allowed as claims against the Borrower in any Reorganization,
and including any interest thereon accruing after the commencement of any
Reorganization and any other interest that would have accrued thereon but
for the commencement of such Reorganization).
All Senior Indebtedness shall be entitled to the benefits of this Agreement
without notice thereof being given to the Subordinated Lender.
1.2 Subordinated Indebtedness. The term "Subordinated Indebtedness" shall
mean all existing and hereafter arising indebtedness, obligations and
liabilities of the Borrower, to the Subordinated Lender, whether direct or
contingent, and all claims, rights, causes of action, judgments and decrees in
respect of the foregoing, including, without limitation:
(i) all indebtedness and obligations under that certain (a)
Settlement Agreement dated October 29, 2001 between Borrower, as debtor,
and Force, as creditor (the "Force Settlement Agreement"); (b) Settlement
Agreement dated November 7, 2001 between Borrower, as debtor, and Sanmina,
as creditor (the "Sanmina Settlement Agreement"), (c) Settlement Agreement
dated November 14, 2001 between Borrower, as debtor, and Brooktrout, as
creditor (the "Brooktrout Settlement Agreement") and together with the
Force Settlement Agreement and the Sanmina Settlement Agreement, the
"Settlement Agreements"), which Settlement Agreements evidence obligations
of Borrower to Subordinated Lender in an amount not to exceed in the
aggregate the sum of $4,500,000 (the "Subordinated Settlement Agreements");
and
(ii) the obligations of each party (other than the Subordinated
Lender) to, under or in respect of any agreement or instrument securing any
of the Borrower's obligations to the Subordinated Lender under the
Subordinated Settlement Agreements (the "Subordinated Security Documents")
(the Subordinated Settlement Agreement and the Subordinated Security
Documents and any other agreement evidencing or relating to Subordinated
Indebtedness being hereinafter collectively referred to as the
"Subordinated Agreements").
2. Representations and Warranties. The Subordinated Lender and the
Borrower each hereby, severally and not jointly, represents and warrants to the
Lenders that: (a) At the date hereof, the total outstanding and unpaid
Subordinated Indebtedness owing by the Companies to the Subordinated Lender
pursuant to the Subordinated Agreements is $[1,179,000]; (b) There is no default
in respect of the Subordinated Indebtedness; (c) The Subordinated Lender is the
holder of the Subordinated Agreements free and clear of all liens, claims and
encumbrances, and
-2-
the Subordinated Lender is not subject to any contractual limitation or
restriction which would impair in any way its ability to execute or perform its
obligations under this Agreement; and (d) True, accurate and complete copies of
the Subordinated Agreements are attached hereto as Exhibit A.
3. Terms of Subordination.
3.1 Permitted Payments of Subordinated Indebtedness. The Borrower may,
from time to time, pay or cause to be paid to the Subordinated Lender, and the
Subordinated Lender may accept and retain, regularly scheduled payments of
principal and interest as and at the times when due and payable under the
Subordinated Settlement Agreements, as originally executed and delivered.
3.2 The Subordinated Lender's Junior Security. The Subordinated Lender
hereby confirms that, regardless of the relative times and method of attachment
or perfection thereof (or any failure to perfect) or the order of filing of
financing statements, mortgages or other security agreements or documents, or
anything in the Subordinated Agreements or this Agreement to the contrary, the
security interests and liens granted or to be granted from time to time to
secure the Senior Indebtedness, shall in all respects be first and senior
security interests and liens, superior to any security interests and liens
granted or to be granted to the Subordinated Lender in assets of, or ownership
interests in, the Borrower or any other person pursuant to the Subordinated
Agreements or otherwise, it being the express intention of the parties that,
notwithstanding anything in this Agreement to the contrary, all liens and
security interests granted to the Lenders from time to time shall be prior and
superior to any liens or security interests granted to the Subordinated Lender.
4. Limit on Right of Action. (a) The Subordinated Lender agrees for the
benefit of the Lenders and all future holders of the Senior Indebtedness that so
long as the Senior Indebtedness remains outstanding or committed to be advanced,
the Subordinated Lender will not, directly or indirectly, without the prior
written consent of the Lenders, take any action to exercise any of its remedies
in respect of the Subordinated Indebtedness or any guarantee of payment thereof,
to initiate any Reorganization of, or litigation against, the Borrower or any
guarantor of the Subordinated Indebtedness, or to foreclose or otherwise realize
on any security given by the Borrower or any other person to secure the
Subordinated Indebtedness.
(b) The foregoing provisions of this Section 4 are solely for the purpose
of defining the relative rights of the Lenders, on the one hand, and the
Subordinated Lender, on the other, and shall not otherwise limit or affect any
rights which the Subordinated Lender may have against the Borrower under the
terms of the Subordinated Agreements.
5. Agreement to Hold in Trust. If the Subordinated Lender shall receive
any payment on account of the Subordinated Indebtedness in violation of this
Agreement, it shall hold such payment in trust for the benefit of the Lenders
and, promptly upon discovery or notice of such violation, pay it over to the
Lenders for application in payment of the Senior Indebtedness.
-3-
6. Further Assurances. The Borrower and the Subordinated Lender covenant
to execute and deliver to the Lenders such further instruments and documents and
take such further actions as the Lenders may from time to time reasonably
request, and the Borrower and the Lenders agree to execute and deliver to the
Subordinated Lender such further instruments and documents and take such further
actions as the Subordinated Lender may from time to time reasonably request, in
each case for the purpose of carrying out the provisions and intent of this
Agreement.
7. Successors: Continuing Effect; Etc. This Agreement is being entered
into for the benefit of the holders of the Senior Indebtedness and the
Subordinated Indebtedness, and their respective successors and assigns.
8. Entire Agreement; Amendment. This Agreement constitutes the entire
agreement of the parties with respect to the subject matter hereof, and no
modification or waiver of any provision of this Agreement shall in any event be
effective unless the same shall be in writing signed by the Lenders, and the
Subordinated Lender (unless such amendment or modification shall impose any
additional obligations upon the Borrower, in which case such amendment or
modification shall also require execution by the Borrower).
9. Counterparts. This Agreement may be executed by the parties hereto in
several counterparts hereof and by different parties hereto on separate
counterparts hereof, each of which shall be an original and all of which
counterparts shall together constitute one and the same agreement. Delivery of
an executed signature page of this Agreement by facsimile transmission shall be
effective as an in-hand delivery of an original executed counterpart thereof.
*Signatures on next page*
-4-
IN WITNESS WHEREOF, each of the undersigned has executed this Intercreditor
and Subordination Agreement or caused this Agreement to be executed by its duly
authorized officer, partner or representative, as applicable, as of the day and
year first above written.
SUBORDINATED LENDER:
Force Computers, Inc. FORCE COMPUTERS, INC.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ By:
Attention: General Counsel -----------------------------
Telecopy No.: 510-25208450 Name:
-----------------------------
Title:
-----------------------------
Sanmina Corporation SANMINA CORPORATION
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ By:
Attention: V.P. & Corporate Counsel -----------------------------
Telecopy No.: ▇▇▇-▇▇▇-▇▇▇▇ Name:
-----------------------------
Title:
-----------------------------
Brooktrout, Inc. BROOKTROUT, INC.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ By:
Attention: Corporate Counsel -----------------------------
Telecopy No.: ▇▇▇-▇▇▇-▇▇▇▇ Name:
-----------------------------
Title:
-----------------------------
BORROWER:
AirNet Communications Corporation
▇▇▇▇ ▇▇▇ ▇▇▇▇ AIRNET COMMUNICATIONS CORPORATION
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇, President By:
and Chief Executive Officer -----------------------------
Telecopy No.: Name:
----------------------- -----------------------------
Title:
-----------------------------
SCP Private Equity Partners II, LP LENDERS:
300 Building
435 Devon Park Drive SCP PRIVATE EQUITY PARTNERS II, LP
▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇ By:
Telecopy No. -----------------------------
------------------------ Name:
-----------------------------
Title:
-----------------------------
Tecore, Inc. TECORE, INC.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ By:
Attention: ▇▇▇ ▇▇▇▇▇▇▇, President -----------------------------
Telecopy No.: Name:
----------------------- -----------------------------
Title:
-----------------------------
EXHIBIT A
---------
Copies of Subordinated Agreements
---------------------------------
Exhibit G
TAG ALONG ALLOCATION AGREEMENT
This Tag Along Allocation Agreement ("Agreement") dated _______ ___, 2003
is among AirNet Communications Corporation, a Delaware corporation (the
"Company"), and SCP Private Equity Partners II, LP ("SCP") and TECORE, Inc.
("Tecore") as holders (the "Note Holders") of the $16,000,000 Secured
Convertible Notes (the "Notes") issued by the Company to the Note Holders on the
date hereof.
WHEREAS, the Board of Directors of the Company (the "Board") has approved
the Amended and Restated Bonus Program attached to this Agreement as Exhibit 1
(the "Plan") as in the best interests of the Company; and
WHEREAS, under the terms of the Plan, the employees who participate in the
Plan (the "Plan Participants") will be entitled to receive a portion of the
proceeds otherwise payable to the Note Holders in connection with a sale of
either or both of the Notes by SCP or Tecore;
NOW, THEREFORE, the parties agree as follows:
1. Implementation of the Plan is in the best interests of the Company
and as an inducement for the Company's issuance of the Notes to SCP and Tecore,
SCP and Tecore have agreed to allocate to Employees of the Company a portion of
proceeds they receive in a potential sale of their Notes.
2. In the event of a sale of all or a portion of the Notes by either or
both of SCP or Tecore, other than in connection with the Sale of the Company (as
defined in the Plan), each of SCP and Tecore severally agree that they will
allocate for distribution to Plan Participants ten and percent (10%) ("Sale of
Note Allocation Amount") of the aggregate sale proceeds in excess of the amount
of the then outstanding principal balance and related accrued unpaid interest
payable under the Notes sold or such portion of the Notes so sold, if only a
portion is sold ("Note Sale Proceeds") received by SCP or Tecore, respectively,
in connection with such sale of all or a portion of the Notes to any party.
3. In the event of a sale of all or a portion of the Notes by either of
both of SCP or Tecore in connection with the Sale of the Company, each of SCP
and Tecore severally agree that they will allocate for distribution to Plan
Participants ten percent (10%) ("Acquisition Allocation Amount") of the
aggregate sale proceeds in excess of the amount of the then outstanding
principal balance and related accrued unpaid interest payable under the Notes
sold or such portion of the Notes so sold ("Acquisition Note Sale Proceeds")
received by SCP or Tecore, respectively, in connection with such sale of all or
a portion of the Notes to any party in connection with the Sale of the Company;
provided that the Acquisition Allocation Amount shall be reduced to the extent
the amounts payable to Eligible Employees (as defined in the Plan) is reduced
due to such Employees' In-the-money Options (as defined in the Plan) as
described in the Plan. (Note Sale Proceeds and Acquisition Note Sale Proceeds
collectively defined as the "Sale of Note Proceeds". Sale of Note Allocation
Amount and Acquisition Allocation Amount collectively defined as the "Allocation
Amounts")
3. SCP and Tecore agree to forward the Allocation Amounts to the Company
within two (2) business days following their receipt of Sale of Note Proceeds.
4. The Company agrees to hold the Allocation Amounts for the benefit of
the employee Plan Participants in accordance with the terms of the Plan and as
set forth in paragraph 5 below and to distribute payments of the Allocation
Amounts to Plan Participants within five (5) business days of the Company's
receipt of the Allocation Amounts from any Note Holder.
5. The Company is directed and authorized by the Note Holders: (a) to
administer and modify the list of eligible Plan Participants from time to time;
and (b) upon the transmittal of the Allocation Amounts from the Note Holders to
the Company, (i) to determine the eligibility of each Plan Participant to
receive a portion of the Allocation Amounts under the Plan, (ii) to allocate the
proceeds from such Allocation Amounts to the eligible Plan Participants and
(iii) to transmit the payments directly to the Plan Participants, subject to all
withholding and other taxes required to be withheld by the Company.
6. The Company agrees to withhold from the Allocation Amounts to be
distributed to eligible Plan Participants all applicable taxes it is required to
withhold, including any excise taxes that may be payable under Section 280G of
the Internal Revenue Code or any other applicable law or regulation.
7. This Agreement confers full rights and remedies upon each Plan
Participant. Each such Plan Participant individually, and all of them
collectively, shall be treated as third-party beneficiaries of this Agreement.
8. All issues and questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware, without giving
effect to any choice of law or conflict of law rules or provisions thereof.
9. This Agreement may be executed simultaneously in two or more
counterparts, any one of which need not contain the signatures of more than one
party, but all such counterparts taken together shall constitute one and the
same Agreement.
-2-
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
date first written above.
AIRNET COMMUNICATIONS CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇,
President and CEO
TECORE, INC.
By:
---------------------------------
Name:
---------------------------------
Title:
---------------------------------
SCP PRIVATE EQUITY PARTNERS II, LP
By: SCP Private Equity II,
General Partner, L.P.,
its General Partner
By:
---------------------------------
Name:
---------------------------------
Title:
---------------------------------
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